Source: http://cisgw3.law.pace.edu/cases/981211i3.html
Timestamp: 2017-03-30 20:25:33
Document Index: 393545182

Matched Legal Cases: ['art. 7', 'art. 7', 'art. 75', 'art. 74', 'Art. 7', 'Art. 7', 'Art. 7', 'Art. 25', 'Art. 1375', 'Art.\n7', 'Art. 74']

Italy 11 December 1998 Appellate Court Milan (Bielloni Castello v. EGO) (Printer device case) [translation available] [Cite as: http://cisgw3.law.pace.edu/cases/981211i3.html] Primary source(s) of information for case presentation: Case text
DATE OF DECISIONS: 19981211 (11 December 1998) JURISDICTION: Italy TRIBUNAL: Corte di Appello di Milano JUDGE(S): Unavailable CASE NUMBER/DOCKET NUMBER: Unavailable CASE NAME: Bielloni Castello S.p.A. v. EGO S.A. CASE HISTORY: 1st instance Tribunale di Milano 30 November 1994 / 26 January 1995 [partly reversed] SELLER'S COUNTRY: Italy (plaintiff) BUYER'S COUNTRY: France (defendant) GOODS INVOLVED: Printer device Case abstract
As to the principle of good faith invoked by the buyer, the court stated that, in light of art. 7(1) CISG, the circumstances affecting the buyer could not be taken into account. In addition, in the case concerned art. 7(2) CISG would apply, therefore the buyer's allegations should be settled according to Italian law. These allegations, however, were inconsistent also pursuant to Italy's domestic law. Finally, the court found that the considerable delay of the buyer had caused the seller a substantial loss and, applying art. 75 CISG, held that this latter was entitled to damages in the measure of the difference between the contract price and the price of the substitute transaction. The court, in fact, rejected the seller's claim to recover damages according to the criterion of art. 74 CISG, since this claim appeared unjustified and not supported by convincing evidence. The court, however, stated that the seller was entitled to interest at the Italian legal rate.
APPLICABLE CISG PROVISIONS AND ISSUES Key CISG provisions at issue: Articles 7(1) ; 63(1) ; 64(1)(b) ; 74 ; 75 ; 78 ; 79 [Also cited: Articles 7(2) ; 26 ] Classification of issues using UNCITRAL classification code
7A3 [Observance of good faith: principle of good faith held to preclude possibility of taking into account
any impediments to perform];
78A [Interest on delay in receiving price: rate set at domestic law (citing Art. 7(2)) from date of avoidance
79A [Impediment excusing party from damages] Descriptors: Applicability ; Choice of law ; Fundamental breach ; Exemptions or impediments ; Intent ; Damages ; Cover transactions ; Interest ; General principles ; Good faith Go to Case Table of Contents Editorial remarks
CITATIONS TO OTHER ABSTRACTS OF DECISION English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=359&step=Abstract>
CITATIONS TO TEXT OF DECISION Original language (Italian): Rivista trimestrale di diritto e procedura civile (1999) 112-116; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=359&step=FullText>
CITATIONS TO COMMENTS ON DECISION English: Bernstein & Lookofsky, Understanding the CISG in Europe, 2d ed., Kluwer (2003) §: 2-6 n.79; Larry A. DiMatteo et al., 34 Northwestern Journal of International Law & Business (Winter 2004) 299-440 at n.502; Schwenzer & Fountoulakis ed., International Sales Law, Routledge-Cavendish (2007) at p. 456
On 20 February 1990, Bielloni Castello [seller] filed, before the Courts of Milan, an action
against Ego S.A. [buyer], a French company, with relevant place of business in Oyonnax. The [seller] alleged that the [buyer] breached the contract entered into by the parties on 27
January 1989 for the sale of a printer device [hereinafter, the "goods"] for the price of �IT [Italian Lira] 528,000,000. The [seller] alleged that without success he has repeatedly urged -- ever since the
month after the term agreed for delivery (5 January 1989) -- the [buyer] to pay the residual
price and to finally pick up the goods. The [seller] forwarded his last notice
on 6 December 1989.
The [seller] asked the Court to hold the [buyer] liable for damages in the amount of �IT 200,000,000 or subordinately, in such other amount as the Court would deem most
appropriate. The [buyer] counterclaimed that the goods were ordered with the intent to be
placed at a subsequent time in certain premises still to be built. The [buyer] alleged that this
construction, however, for reasons beyond its control, had been substantially delayed. For
this reason, the [buyer] asked the [seller] -- and deemed the request accepted -- to withhold
the delivery until May 1990. The [buyer], claiming a violation of the provisions of Article
1375 of the Italian Civil Code [hereinafter, the "C.C."], asked the Court to rule that the
contract was breached by the [seller] and to thereby order the restitution of the down payment
advanced by the [buyer] in the amount of �IT 105,600,000 plus damages.
The Tribunale di Milano on 30 November 1994 - 26 January 1995, rendered its decision in
which, not acknowledging any agreed modification of the terms of delivery, declared that the
[seller] breached the contract. This Court of First Instance based its decision on the
unsuccessful expiration of the 15-day term given in the first notice to the [buyer] on 17
November 1989, and condemned the [seller] to return the down payment to the [buyer], not
granting any damages to the [buyer] and setting off the legal fees.
The [seller] filed appeal against this decision on 17 October 1995, asking the Appellate Court
to partially modify the decision entered by the Lower Court, and thereby to declare the
[buyer] liable for damages. The [buyer] renewed all its allegations already advanced in the
first trial. The Appellate Court, after having asked the parties to precise their conclusions,
To correctly qualify the relationship between the parties, it is preliminary useful to point out
that, being as the contract was entered into by the parties in January 1989, the determination
of their right and duties must refer to the United Nations Convention on Contracts for the
International Sale of Goods (hereinafter, the "Convention"), ratified by both Italy and France,
and signed in Vienna on 11 April 1980, and enacted on January 1, 1988.
Therefore, except as specified infra, the Italian substantive law provisions found in the
applicable sections of the C.C. do not apply. These internal provisions, derived sometimes
explicitly (by the parties), sometimes implicitly (in the appealed decision, which actually does
not even go that far), again do not apply at the case at bar; Article 1(1)(a) of the Convention
The [seller's] position is strengthened considerably by the intervened breach of the contract
(in light of the new qualification given above) depending upon the notice of the [seller],
pursuant to the provisions of Articles 61-64(1) and 26 of the Convention, and pursuant to
Article 74 in relation to the breach committed by the [buyer]: consisting in the [buyer's] failure
to pay the owed price and to pick up the goods, pursuant to Articles 53, 59 and 60.
In particular, it appears that the [seller] granted the [buyer] an additional term to fulfill its
obligations, and this term had a reasonable length within the meaning of Article 63 of the
In addition, taking into account the term of delivery/payment (originally agreed for 5
September 1989) after a first notification dated 17 November 1989 -- instructing the [buyer]
to pick up the goods within 15 days -- an interlocutory behavior that de facto expanded the
tolerance period already granted. On 6 December the [seller], in a letter to the [buyer],
restated the content of the previous notice; also relevant is the final 15-day term, thus newly
granted to the [buyer] by the [seller].
Therefore, the total extension granted after the deadline of the beginning of September, is two
and a half months long, a term undoubtedly reasonable under the circumstances.
The fact that (i) the [buyer] who benefited from the extension, was impaired from fulfilling
the agreed (and modified) obligations (to pick up the goods) for some additional time for
technical reasons, and that (ii) there was an attempt to settle the controversy in fall (which
obviously failed since the [buyer] was seeking a settlement in its letter dated 29 November
1989) are considerations which do not deserve attention at present time.
In fact, in light of the mutual agreements, of their international nature, and of the necessity
to assure good faith in international transactions (as stated in Article 7(1) of the Convention):
for sake of clarity, it is not possible to discuss circumstances which are presumed to be
obstacles to the fulfillment of the duties provided under the Convention. Moreover, Art. 7(2)
provides that: "questions concerning matters governed by this Convention which are not
expressly settled in it are to be settled in conformity with the general principles on which it
is based or, in the absence of such principles, in conformity with the law applicable by virtue
of the rules of private international law". The position of the buyer is therefore inconsistent
with the circumstances described above to the extent of the application of Italian internal law.
This substantive law would be relevant as of the country in which a buyer has its "permanent
residence", or its relevant place of business. This is to be considered in light of Article 3 of
the Hague Convention of 15 June 1955 on the Law Applicable to International Sales of Goods
which, given its universal application (Art. 7) had replaced since its enactment (in Italy, on
1 September 1964) Art. 25 of the preamble to the C.C., and therefore represents a general
and fundamental conflict of law provision in this area (contractual obligations).
Due to their intrinsic inconsistency, the circumstances alleged by the [buyer], in order to
explain its difficulty in fulfilling the obligations [buyer] originally undertook, can hardly be
usefully referred to in any legal category of Italian internal law. Thus, no presuppositions
mentioned in the [buyer's] pleadings, nor its impossibility to perform, nor any other relevant
defenses, are applicable. In fact, the [buyer] in its defense just mentions the principle of good
faith in performance, as provided by Art. 1375 of C.C., which cannot in any way replace the
definitive and mandatory context of the Convention's provisions which -- as specified in Art.
7(1) -- adopt an independent notion of good faith.
In light of the above, the decision of the Lower Court -- not to grant to the [seller] damages --
does not appear sound.
Thus, also due to its time frame, the transaction may fulfill the provisions of Article 75 of the
Convention: basically a replacement sale (a negative sale) which allows the [seller] to claim
the difference between the contract price and the price in the substitute transaction (in the case
at bar equal to �IT 528,000,000 minus 440,000,000) or �IT 88,000,000. As a practical matter,
the transaction constitutes a loss pursuant Art. 74 (which provides the only remedy available),
since the amount double-claimed by the [seller] appears unjustified (first as a net loss and then
as consequential damages).
In other words, it does not appear that the [seller] was planning (as now [seller] claims) to carry
out an equivalent sale with another client ever since the negotiation of the contract, so that
"should the [buyer] have defaulted [seller] would have sold two printer drivers." Moreover, this
assertion conflicts with the occurrence of the replacement sale described above.
The amount to which the [seller] would be entitled to should be increased by the accrued
interest at the Italian legal rate, from the date of the breach, 1 January 1990, until payment
The Court of Appeal of Milan, deciding on the appeal filed by the [seller] against the [buyer]
on 17 October 1995, and on the partial appeal against the decision entered by the Court of
Milan on 30 November 1994 - 25 January 1995, orders as follows:
1) The [buyer] shall be liable for damages towards the [seller] in the amount of �IT
88,000,000, plus interest accruing from 1 January 1990 until payment is completed.