Source: http://www.cisg.law.pace.edu/cisg/wais/db/cases2/980922g1.html
Timestamp: 2019-04-24 04:42:43+00:00

Document:
A Norwegian seller, plaintiff, sold raw salmon to a Danish Company (the "Company"), which after processing it, sold smoked salmon to a German buyer, defendant. When the Company got into financial difficulties, the seller sent a confirmation order to the buyer. Pursuant thereto, the seller had to deliver the raw salmon to a specified delivery address, which was other than the Company's place of business, under the Incoterm DDP. Upon receipt of the confirmation order, the buyer signed and returned such order to the seller through the Company. Thereafter, the seller delivered the raw salmon to the Company and sent the invoices to the buyer. The invoices indicated the Company's place of business as the delivery address. As a result of the bankruptcy of the Company, the buyer did not receive the raw salmon and as such, refused to pay the purchase price. Then, the seller sued the buyer.
The first instance court allowed the claim. The buyer appealed declaring the avoidance of the contract. The appellate court upheld the decision of the first instance court.
The court determined that the CISG was applicable under articles 1(1) CISG and 4 CISG.
The court held that the seller's confirmation order constituted an offer for the delivery of raw salmon and that the request for prompt confirmation clearly showed the seller's intention to conclude a purchase agreement with the buyer. The buyer accepted the offer by signing the confirmation order and as such, the parties concluded a purchase agreement. The court found that no additional interpretation of the confirmation order under article 8 CISG was necessary, and that the receipt of the signed confirmation order by the seller, through the Company, was of no particular relevance.
The court further held that the seller discharged its delivery obligation, although delivery occurred at a place other than the place stipulated by the contract and the Incoterm DDP. This was insignificant, as the buyer was indicated as recipient of the raw salmon in the delivery note.
The court found that the seller was not in fundamental breach of contract under article 25 CISG. Despite the financial difficulties of the Company and the delivery of the salmon at the Company's place of business, the fulfilment of the contract was not jeopardized. The court further found that, even if there had been a breach of contract, the buyer had failed to declare the avoidance of the contract within a reasonable period of time as provided by article 49(2)(b) CISG. Moreover, the buyer failed to require delivery at the stipulated place pursuant to articles 46 and 47 CISG and this was interpreted as the buyer's agreement to the delivery at the Company's address.
The court concluded that the seller complied with its obligations and that the risk had passed to the buyer (article 69(2) CISG). Hence, the buyer was obliged to pay the purchase price (article 66 CISG), even if it did not receive the raw salmon.
[Seller] is a Norwegian joint-stock corporation. [Seller] is bringing an action against the [buyer] for the payment of a delivery of 25,219 kg [kilograms] of salmon.
[Buyer], a German company, had been purchasing smoked salmon from a Danish company, [a processing company]. This company in turn received the raw salmon from the [seller]. When the [processing company] got into financial difficulties in the early summer of 1995, [seller] sent to the [buyer] a fax with the heading "CONFIRMATION OF ORDER". According to this fax, 40 tons of salmon were to be delivered at a price of 3.60 DKK [Danish Kroner] per kg. The delivery address was specified as a cold-storage depot in [Denmark]. [Buyer] signed the confirmation and on 14 June 1995 returned it by fax to the [processing company], who forwarded it to the [seller]. On 15 / 16 June 1995, the [seller] delivered 6,508 kg and 18,711 kg of salmon to the [processing company] for smoking. The [seller] sent the [buyer] invoices dated 13 and 14 June 1995 in the amounts of 199,144.80 DKK and 572,556.60 DKK. Both the invoices and the delivery notes noted as the delivery address the place of business of the [processing company]. The smoked salmon was never delivered to the [buyer], as the [processing company] went bankrupt in July of 1995.
[Seller] submits that, due to the [processing company]'s continuous default of payment, the [processing company] had suggested that the [processing company]'s customers should order their deliveries directly with the [seller]. Accordingly, the [processing company] had forwarded the confirmation of order and the [seller] had delivered the goods.
[Seller] is asking the Court to order the [buyer] to pay 771,701.40 DKK [*] with interest of 5% on 199,144.80 DKK from 5 July 1995 and on 771,701 DKK from 6 July 1995, as well as DM [Deutsche Mark] 150.- of pre-judicial costs.
[Buyer] is asking the Court to dismiss the action.
[Buyer] submits that at the time the contract was concluded, it had agreed with the [processing company] that it would pay the invoices when the sum was due, insofar as [buyer] had payment obligations towards the [processing company]. [Buyer] also explicitly stated the above in a separate fax accompanying the "CONFIRMATION OF ORDER". The order itself was made by the [processing company].
In a brief that had not been allowed by the Court of First Instance, the [buyer] further maintained that the delivery had been made considerably later and had been received by one of [seller]'s subsidiaries that had taken over the [processing company] on 17 July 1998.
In its decision of 8 May 1998, the Court of First Instance allowed the claim. In its findings, the Court basically argues that a sales contract had been formed between the parties and that therefore [buyer] was bound to pay the price according to Art. 53 CISG. The Court held that [buyer] did not prove an agreement stipulating otherwise.
[Buyer] is appealing the decision.
[Buyer] submits that irrespective of the legal implications of the agreement, [seller] did not deliver the goods to the delivery address, but directly to the [processing company]. The delivery address noted in the "CONFIRMATION OF ORDER" was a public cold-storage depot, where the goods would have been stored for the [buyer] and would only have been released with [buyer]'s explicit consent. Therefore, [seller] had not performed its obligation to deliver the goods. [Buyer] is furthermore declaring avoidance of the contract.
[Buyer] is asking the Court to reverse the decision of the Court of First Instance and dismiss the action.
[Seller] is asking the Court to dismiss the appeal.
[Seller] defends the decision of the Court of First Instance in its reply to the appeal.
For the further submission of the parties, the Court refers to their memoranda, the minutes of the hearing, and the findings of fact of the Court of First Instance.
[Buyer]'s appeal is unsuccessful. Under Art. 53 of the Convention on Contracts for the International Sale of Goods (CISG), the [buyer] is obliged to pay the purchase price.
The parties have their place of business in different Contracting States. There is no indication that the parties agreed to exclude the application of the Convention, therefore the CISG is the applicable law (Staudinger-Magnus, Art. 6 n. 2). There is, furthermore no doubt that the contract in question is a contract for the sale of goods (Art. 1(1), Art. 4 CISG). The "CONFIRMATION OF ORDER" signed by the [seller] constituted an offer to sell to the [buyer] up to 40 tons of salmon at a price of 30.60 DKK [*] per kg. The fax noted the time allowed for delivery (15 - 25 June), the delivery address, and the terms for delivery (Incoterms DDP). The [processing company] is not even mentioned. Since the writing contained a request for a prompt reply ("we kindly ask for your prompt confirmation"), it was clear that the [seller] intended to be party to the contract with the [buyer]. Due to this obvious wording, no further interpretation under Art. 8 CISG is necessary. [Buyer] accepted the offer just as unambiguously with the signature of its authorized signatory. The fact that [seller] received [buyer]'s acceptance by way of the [processing company] is without significance to the validity of the contract. Therefore, a contract was concluded between the parties at the terms contained in the "CONFIRMATION OF ORDER".
[Buyer] has not proved that the parties have made any further arrangements beside the contract as it has been recorded in writing. Admittedly, [buyer]'s fax sent to the [processing company] on 14 June 1995 suggests that the payment arrangements were also a subject of the conversation between the former and the latter. However, the taking of evidence before of the Court of First Instance did not produce anything that would support the notion that [buyer]'s independent obligation towards the [seller] was to have any immediate connection with the [processing company]'s claims. Witness C. has testified that he could not remember whether the additional fax sent to the [processing company] on 14 June 1995 had also been forwarded to the [seller]. It is therefore unclear whether [seller] received [buyer]'s writing reserving unconditional willingness to pay the price at the same time [seller] received [buyer]'s acceptance of its offer.
Even if this matter had been brought up in earlier conversations between the parties, the Court cannot draw the conclusion that [seller] would have consented to such a reservation. Due to the [processing company]'s financial difficulties, the [seller] was obviously interested in a contract with the company's customers, so that [seller] would possess a direct claim against the customers. This is apparent from the testimony of witness C., who testified that the [seller] had expressly asked what had happened to the "CONFIRMATION OF ORDER", and the fact that the deliveries in question would most likely not have been made had the [buyer] not signed and sent back that confirmation. A contract between the [buyer] and the [seller] was therefore the decisive prerequisite without which the [processing company] would not have received any raw salmon from the [seller] at all. This supports the assumption that the parties did not make any arrangements that had not been fixed in writing.
[Seller] performed its delivery obligations under the contract. It is undisputed that the salmon was delivered directly to the [processing company] and not to the cold-storage depot noted as the delivery address. The delivery notes and the invoices both named the [buyer] as the addressee, so that the goods could be assigned to the proper recipient. A diverging place of delivery does not bar a correct performance of the contractual obligations, even though the [seller] was obliged under the contract and Incoterms "DDP" to deliver the goods at its cost and risk to the delivery address (v. Caemmerer/Schlechtriem, Kommentar zum einheitlichen UN-Kaufrecht, Anh. V, DDP, A3). The diverging delivery directly to the [processing company] was firstly, insignificant and secondly, later condoned by the [buyer].
The salmon was destined for the [processing company] so that it would process the salmon for the [buyer]. Since the [buyer] was named as the recipient of the goods, the salmon was foreign property for the [processing company]. Despite the [processing company]'s financial difficulties, the [buyer] therefore did not require security. The risk that the [buyer] would not receive what it was entitled to expect under the contract with the [seller] was not connected with this delivery, so that the delivery to the [processing company] cannot be viewed as a fundamental breach of contract under Art. 25 CISG. In view of the end purpose known to all of the parties involved, the deviating delivery address was so minimal that the delivery can hardly be considered a breach of contract, let alone as not having been made at all. Finally, even if a fundamental breach of contract had occurred, [buyer] would only be entitled to declare the contract avoided if it had done so within a reasonable period of time (Art. 49(2)(b) CISG). This reasonable period of time expired a long time ago, so that [buyer]'s declaration of avoidance in its brief supporting the appeal does not have an affect on the existence of the contract.
[Buyer] is moreover barred from drawing any rights of a delivery to a place other than the one provided for in the contract, because [buyer] itself condoned the delivery as a performance under the contract. As both the delivery notes and the invoices named the address of the [processing company] as the place of delivery, it was evident to the [buyer] that the [processing company] received the goods -- contrary to the delivery address stated in the "CONFIRMATION OF ORDER". If the [buyer] had not approved of this delivery, it could have required delivery at the contractual place of delivery under Arts. 46, 47 CISG, and otherwise resorted to the remedies available under the CISG. That [buyer] did not object to the deviating place of delivery is evident from the fact that it never complained to the [seller], not even at the occasion of a meeting in December of 1995. In the pre-judicial exchange of documents, [buyer] furthermore took the view that it would only have been obliged to pay the price had it also received the goods from the [processing company]. [Buyer] held this view until the end of the hearing of the Court of First Instance and objected to the place of delivery only in its brief supporting the appeal. This conduct shows unambiguously that the [buyer] initially approved of the delivery to the [processing company] as a performance under the contract. [Buyer] is therefore denied from retrospectively alleging the non-performance of the contract (v. Caemmerer/Schlechtriem, Kommentar zum einheitlichen UN-Kaufrecht, Art. 31, n. 82).
Since the [seller] performed its obligations under the contract, [buyer] is obligated to pay the purchase price, even though [buyer] itself has not received any salmon from the [processing company]. After [seller] had delivered the salmon, the risk passed to the [buyer] under Art. 69(2) CISG, so that the delivery to other customers of the [processing company] does not discharge [buyer] from the obligation to pay the price to the seller (Art. 66 CISG).
* All translations should be verified by cross-checking against the original text. For purposes of this translation, the Plaintiff-Appellee of Norway is referred to as [seller]; the Defendant-Appellant of Germany is referred to as [buyer]. Amounts in Danish currency (Denmark Kroner) are indicated as [DKK]; amounts in German currency (Deutsche Mark) are indicated as [DM]. Quantities in kilograms are referred to as [kg].
** Ruth M. Janal, LL.M (UNSW), a Phd candidate at Albert-Ludwigs-Universitát Freiburg, has been an active participant in the CISG-online website of the University of Freiburg.
*** Camilla Baasch Andersen is a Lecturer in International Commercial Law at the Centre for Commercial Law Studies, Queen Mary, University of London, and a Fellow of the Institute of International Commercial Law of the Pace University School of Law. She is currently finishing her PhD thesis on uniformity of the CISG at the University of Copenhagen.

References: Art. 53
 Art. 53
 Art. 6
 Art. 4
 Art. 8
 Art. 25
 Art. 31
 Art. 69