Source: http://www.cisg.law.pace.edu/cisg/wais/db/cases2/970709g3.html
Timestamp: 2019-04-23 02:30:54
Document Index: 595503624

Matched Legal Cases: ['Art. 1', 'Art. 1', 'Art. 27', 'Art. 59', 'Art. 69', 'Art. 67', 'Art. 67', 'Art. 67', 'Art. 67']

Germany 9 July 1997 Appellate Court Köln (Video camera case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/970709g3.html]
CASE NUMBER/DOCKET NUMBER: 2 U 175/95
CASE HISTORY: 1st instance LG Köln (8 O 457/93) 19 October 1995 (reversed)
GOODS INVOLVED: Video cameras and equipment
GERMANY: Oberlandesgericht Köln 9 July 1997
Case law on UNCITRAL texts (CLOUT) abstract no. 283
A Spanish seller, defendant, concluded a dealer agreement with a German buyer, a company in which the plaintiff was a shareholder. As part of its security for payment, the seller held a mortgage on land owned by the plaintiff. According to the agreement, the seller was obliged to deliver goods at "list price ex works". The buyer denied having received one of the shipments that was to have been made under the agreement, which consisted of some hundred video cameras and equipment, and refused payment. The matter came before the court as an action to oppose the seller's foreclosure of this mortgage.
Noting that the parties had agreed that German law would govern, the court held that the CISG was applicable, even though the parties had concluded the dealer agreement in 1988 and the CISG only became part of German law in 1991. The court found that the material time for the determination of the law applicable to the purchase money claim was not the conclusion of the dealer agreement, but rather, the moment of the purchase order in 1992. A choice of law clause in a contract, which governs future trading relations between two parties, must be construed in such a way so as to refer to the national law at the time of the conclusion of the contract and to all relevant changes in the law during the period of time that is governed by the contract. The court described this as a "dynamic reference" to a national law, as opposed to a "static reference" (article 1(1) CISG).
The court stated that, unless the parties had agreed upon another time, the seller can require the buyer to pay the price only after the goods or the documents controlling disposition of the goods are placed at the buyer's disposal (articles 58(1) and 62 CISG). According to the seller's interpretation, "list price ex works" meant that delivery and the passage of risk took place in Japan, at the production factory of the goods. According to the buyer, the terms were to be interpreted as referring only to the price and not to passage of risk. The court found that there was no inconsistency between the terms and the provisions of article 67(1) of the CISG, according to which the risk passes to the buyer when the goods are handed over to the first carrier. It found that the seller had been unable to discharge its burden of proof that delivery to the first carrier had been made. A bill of lading which indicated that a container said to contain the specified brand name and number of goods had been delivered to a freight forwarder, but which did not indicate the name of the buyer as recipient, was not sufficient proof of delivery (article 67(1) CISG).
The court held that, as the seller had no right to claim payment of the purchase price under article 61(1) of the CISG, it had no right to foreclose on the mortgage against the land.
Key CISG provisions at issue: Articles 6 ; 58(1) ; 62 ; 67(1) [Also cited: Articles 1(1) ; 59 ; 61(1) ; 66 ; 69 ]
58A [Buyer to pay when goods placed at buyer's disposition];
62A [Seller may compel performance of any of buyer's obligations: obligation to pay price];
67D [Risk when contract involves carriage of goods: risk did not pass because of insufficient proof of delivery (bill of lading did not specify buyer)]
Descriptors: Applicability ; Choice of law ; Price ; Specific performance ; Passage of risk
Original language (German): cisg-online.ch <http://www.cisg-online.ch/cisg/urteile/495.htm
Appellate Court Köln, 2nd Civil Division
9 July 1997, 2 U 175/95
Translation by [*] Tobias Koppitz [**]
By way of action the Plaintiff [Buyer] raises an objection to the admissibility of the enforcement of the notarial document described in the operative provisions of the judgment.
On 1 July 1988, the Defendant [Seller] concluded a dealer agreement with a company ... with its seat in ... in which the [Buyer] participated (see pages 65-76 of the record). Due to its details, reference is made to this dealer agreement. Through this agreement, company ... was assigned the exclusive distribution of the products for the area. ... In � 2 of the agreement, the duration of the agreement was determined from 13 April 1988 until 31 March 1991, subject to the provision that unless the agreement was terminated within a period of six months, the agreement should be prolonged for another year each. According to � 7(I) of the agreement, the goods were to be delivered from ... to ... "at list price ex works in German Marks of the Federal Republic of Germany in a package customary in the trade". The parties are in dispute over the meaning of the formulation "ex works". According to � 10(4) of the dealer agreement of 1 July 1988, "the construction of this contract and the resolution of all disputes arising in connection with this contract are subject to the law of the Federal Republic of Germany". It is also mentioned that "compensatory claims of the commercial agent for loss of clientele at the termination of the agreement" are excluded. In the follow-up time, company ... entered into the contract of 1 July 1988 with the [Seller], replacing the company ..., with the consent of those concerned. The [Buyer] also participated in this company. ...
According to the notarial document of 20 March 1990 - UR-No. 195 for 1990 of the notary ... in ... (see pages 7, 7 R, 8 of the record) - the [Buyer] created a mortgage in favor of the [Seller] in the amount of Deutsche Mark [DM] 1,000,000.-- as well as 10% interest from 20 March 1990 on its real property, registered in the land register of ... of the Local Court in Köln. In this document [Seller] subjected itself to the immediate execution of the encumbered property with regard to the mortgage amount and interest, subject to the provision that the execution should be admissible against the current owner. By typing its name in the pre-printed text of the document and thus supplementing the document, the [Buyer], at the same time, assumed personal liability for the payment of a sum in the amount of the mortgage and interest and, on account of its personal liability, subjected itself to immediate execution of its entire property based on the document. On 20 March 1990, the [Seller] was given an enforceable copy of this document (see the execution clause page 8 R of the record).
In connection with the creation of the mortgage, the [Buyer] signed a "declaration of appropriation and supplement of the mortgage" addressed to the [Seller] on 20 March 1990 (see pages 10, 11 of the record). In this declaration, in which the [Seller], the ... public limited company, after the explanation in the first sentence of the document, is denominated as "..." it is said amongst others:
"1. The mortgage provides security for all existing and arising - also conditional and limited in time - claims of the ... with its entire domestic and foreign shareholders against
- hereinafter called ... -
- individually or together out of the business relation, especially out of current accounts, or
- out of the granting of credits of all kinds, out of assigned claims or claims assigned by operation of law as well as out of bills of exchange (even as far as these bills of exchange were taken in by third parties). In case of a change of the owner, a change of the legal structure or a succession in law on ...'s side, the mortgage remains effective until the final settlement of the ... - claims.
"4. Should ... be in default, ... is allowed to seek satisfaction by way of judicial execution; it can also sell the mortgage.
"5. After the extinction of all secured claims, ... has to release the mortgage and the interest subject to my/our instruction, as far as they have not been made use of."
The mortgage has been registered in the land register on 23 March 1990 (see extract from the land register at pages 79 et seq. [87] of the record).
In the summer of 1992, ... ordered from the [Seller] several video cameras and video supply. With a fax dated 17 August 1992 (copy page 94 of the records) under the letter heading "...-bureau ...," the [Buyer] asked the [Seller] to send a part of these goods by air freight. The [Seller] conferred to ... an invoice of 27 November 1992 - Factura No. 50-3501.6323 - (see pages 98 et seq. of the record). In this document, drafted in the Spanish language, a total of DM 888,440.-- were billed for 420 video cameras type LC 210 C, 80 video cameras type LC 255 SC, 360 video cameras type LC 215 C, 108 video cameras type LC 225 C and 420 adapter (supply for video cameras) type CCA 80. In this invoice, the routing was given as: "ENVIO: DESDE KOBE VIA ALGECITRAS DE LAS PALMAS".
In a fax of 10 December 1992 (see page 97 of the record) to the [Seller], sent from the bureau of ... in Köln, the [Buyer] remarks that it had been informed by a Mr..., an employee of ..., that this said employee had received the invoice of 27 November 1992, however, he had not received any bills of lading. No information could be gathered from the commissioned forwarding agency about the lot. In the following time, the [Seller] repeatedly gave notice requiring the payment of the invoice of 27 November 1992. ... did not pay the invoice amount.
Since the spring of 1993, the business relations between ... and the [Seller] ceased to exist anymore.
On 29 July 1993, the [Seller] had a bailiff deliver the document of 20 March 1990 to the [Buyer]. The [Seller] levied the execution of this document against the [Buyer] for a partial amount of DM 100,000.--.
The [Buyer] submitted that the [Seller] was not entitled to any claims against. ... The [Seller] could especially not demand the payment of the amount of its invoice of 27 November 1992. ... had neither received the goods denoted in the invoice, nor had it received the bill of lading. It is not known to the [Buyer] for what reasons the goods did not reach its contractual final destination and its recipient, .... In light of the confusion regarding the events, the [Buyer] raises the plea of ignorance that the manufacturer, company ... Ltd., had even properly and completely handed over the goods ordered to the carrier commissioned by it or the [Seller]. The [Buyer] holds the opinion that the formulation "ex works" in � 7 of the dealer agreement of 1 July 1988 merely states that the buyer ... had to bear the costs of transportation. A regulation as to the passage of risk has not been made by that.
The [Buyer] further submitted that the account of ... at the [Seller] is also therefore balanced, because it had exercised the right of set-off of potentially arisen claims of the [Seller] against counterclaims in the amount of DM 3,539,540.--. Due to the termination of the business relations in the spring, the [Seller] had been obliged to compensate ... for its expenses for advertising and investing in connection with the distribution of the products of the [Seller]. At the beginning of the business relations, the [Seller] had guaranteed cooperation for a time period of at least 25 to 30 years and had declared that, in case of a different development of the business relations, all investments and the value of the established distribution and the acquired market-position would be reimbursed. It is true that this promise is not contained in the written contract of 1 July 1988. The [Seller] had, however, declared that while, according to its legal department, the standard contract at issue is not subject to changes, the oral promises nevertheless held validity.
The [Buyer] further submitted that the assumption of personal liability in the document of the creation of the mortgage of 20 March 1990 violated � 9 AGBG [*] and is thus invalid.
The [Buyer] requested the Landgericht [District Court] to declare the execution out of the enforceable document of the notary ... dated 20 March 1990, UR-No.: 195/1990 inadmissible.
The [Seller] requested the dismissal of the [Buyer]'s action. It alleges that it is entitled to various claims against ..., amongst others the claim for payment of the invoice amount of the invoice of 27 November 1992. The goods denoted in that invoice had been received by ...
According to its order of 31 March 1994, the District Court had gathered written declarations of several people regarding the question what had been stipulated by the clause in � 7 of the dealer agreement of 1 July 1988.
In its judgment of 19 October 1995, which is referred to for its content and references, the District Court dismissed the action. It stated that the [Buyer] was not entitled to any defenses against the foreclosure of the mortgage created on 20 March 1990, that the [Seller] levied. The [Seller] is rather entitled to levy the foreclosure, as the prerequisites of the declaration of appropriation and supplement of the mortgage were met. According to � 433(2) BGB [*], the [Seller] is entitled to a claim against ... for payment of the goods denoted in the invoice of 27 November 1992. The risk had passed to ... with the dispatching of the goods, which the [Buyer] did not substantially deny. It is to be suspected that the [Buyer]'s submission, the ... did not receive the goods, is inappropriate.
It is of no concern, whether the assumption of personal liability in the notarial document was invalid due to a violation of � 9 AGBG [*], because the invalidity of the personal joint liability does not affect the creation of the mortgage as an independent regulation.
Against this judgment that has been served upon the [Buyer] on 3 November 1995, the [Buyer] lodged an appeal on Monday, 4 December 1995, which it substantiated, after the time limit to substantiate the appeal had been extended to 5 February 1996, by a memorandum that has been received at the Oberlandesgericht [Appellate Court] on 2 February 1996.
The [Buyer] repeats and supplements its submissions of first instance. It is of the opinion that the invoice claim of DM 888,440.-- is not justified. The goods denoted in that invoice had not been delivered by the [Seller]. The [Seller] did not perform the order that was the basis for the invoice due to the upcoming end of the business relations with ... - the [Seller] had wanted to take over the Canary Islands market itself and to distribute its products there through its own subsidiary company. It is disputed that the goods were handed over to the carrier for transport to company ... and shipped at all. Besides that, the consignment per ship as alleged by the [Seller] opposes the contractual agreement of dispatching at least a part of the goods by airfreight, the ... in any case did not receive the goods denoted in the invoice of 27 November 1992. Accordingly, there were no more justified claims of the [Seller] against the ... unsettled. The goods that ... had received had also been paid for.
The [Buyer] alternatively submits that following the premature termination of the business relations the ... is entitled to counterclaims in the amount of DM 3,539,540.-- due to its pioneer achievements with the positioning of the brand ... in the Canary Islands on grounds of an agreement reached with a Mr... as the representative of the [Seller] (proof: certificate ...). As a precaution, the already declared set-off with these counterclaims is repeated.
The [Buyer] requests the court to change the appealed decision and to declare the execution out of the document of 20 February 1990 of the notary ... with the seat in ... inadmissible and to grant the [Buyer] to provide security also by way of bank guarantee.
The [Seller] requests the court to dismiss the appeal. It defends the appealed judgment under repetition and supplement of its submissions of first instance. It alleges that according to the freight papers (see sheet page 515 of the record), the goods denoted in the invoice of 27 November 1992 had been sent off to ... from Kobe in Japan. The goods had been handed over to ... for transport with the ship ... from ... to... and had arrived in Las Palmas where they were presented to customs by the Agente de ... and were delivered to ... .
The [Seller] was entitled to further claims against the company ... in the amount of DM 619,023.18 according to the scheme on page 2 of the memorandum of 9 May 1996 (pages 424 et seq. [425] of the record) which is being referred to here (proof: bundle of papers, pages 427 - 492 of the record; testimony Mrs..., testimony ...).
Counterclaims of ... do not exist. As is documented in � 2 of the dealer agreement, the [Buyer] could not rely on a lasting business relation. A compensation payment had not been promised. Mr... was neither entitled to give such promises, nor did it actually give one.
With regard to all further details of the position of the stage of the proceedings, reference is made to the content presented in the memoranda exchanged until the date of 4 June 1997 including the attachments to these memoranda. By order of 27 March 1996 (pages 391 et seq. of the record), the court made references to the parties. In this order and in an order of the court of 13 May 1996 (pages 464 et seq. of the record), the court drew the [Seller]'s attention to the necessity of substantiated submissions on the alleged further claims against the ..., that are not based on the order of the video cameras to the price of DM 888,400.--. After counsel for the [Seller] announced a supplementary submission in that regard in the court hearing on 10 June 1996, the court set a time limit to the [Seller] until 19 June 1996 by order of 10 June 1996 (pages 501, 502 of the record). The [Seller]'s request for an extension of this time was dismissed by the court by order of 21 June 1996 (page 522 of the record), the request of 5 August 1996 to discharge the order of 21 June 1996 was refused by order of 12 August 1996 (pages 615 et seq. of the record).
On the grounds of the order for evidence of 28 August 1996 (pages 621 et seq. of the record) and the order of 30 September 1996 (page 640 of the record), the court took evidence by hearing the witnesses ... and ... with the result obvious in the minutes of proceedings of 4 June 1997 (pages 747 - 764 of the record). The witnesses ... and ... who were named by the [Buyer] and who are listed in the order for evidence of 28 August 1996 have not been summoned as the [Buyer] had waived their hearing subsequent to the pronouncement of the order for evidence.
After the implementation of the taking of evidence, the [Seller] explained in the court hearing on 4 June 1997 that it was to provide evidence regarding the subject of the hearing of evidence number I 2 of the order of 28 August 1996 by naming the now officiating president of the ... Ltd., ..., as witness and by presenting the accompanying documents of the goods in question on the way from the company ... to the company ... . In that respect the court referred to � 420 ZPO [*]. The [Seller] did not present the documents that it had designated.
The procedurally correct appeal of the [Buyer] is successful on the merits of the case. According to �� 767(1), 794(1)(No. 5), 795 ZPO, the action to oppose execution is founded.
The starting point of the District Court, that the action was directed against the [Seller]'s "foreclosure of the mortgage", is inappropriate. According to � 767(1) ZPO, the action raising an objection to the judgment claim is rather directed - based on substantive objections against the enforceable claim - to declare the execution out of the enforceable judgment inadmissible. A mortgage is a real right (lien on real property), not a title for execution. The single enforcement measure, that the title creditor applied for, can be the reason for raising the action raising an objection to the judgment claim. However, it is not this enforcement measure that determines the matter of dispute. The motion for judgment determines the matter of dispute and thereby the subject matter that the trial court has to reach a decision about as well as the necessary examination of the matter in controversy.
As already in first instance, the [Buyer]'s application in the appellate instance is also directed to declare the execution out of the notarial document of 20 March 1990 (altogether) inadmissible. The deviating formulation of the petition of appeal, that it would be requested, -- changing the appealed decision of the District Court -- to declare inadmissible the "execution out of the document of 20 February 1990" (emphasis only here) is based on an obvious typing mistake, evident in the adoption of the respective denotation of the notarial document in the repetition of the motion for judgment of first instance in the statement of facts of the judgment of the District Court of 19 October 1995. In this statement of facts, the motion for judgment made in the first instance is - due to a typing mistake - repeated in deviation to the minutes of 3 March 1994 and of 16 August 1995 and the motion for judgment of 9 August 1993 referred to within. The notarial document, in which the [Buyer], according to �� 794(1)(No.5), 800(1) ZPO [*], subjects itself to execution for a personal claim and a claim in rem provided that the execution out of the claim based upon the mortgage to tolerate the execution into the encumbered property (�� 1147, 1191(1), 1192(1) BGB [*]) should be admissible, derives from 20 March 1990 - as is displayed in the copy of the document in the records and as is undisputed between the parties. The present action is directed against the admissibility of the execution out of this title.
The action is substantiated. The [Seller]'s execution out of the title in rem is to be declared inadmissible (�� 767(1), 794(1)(No.5), 795 ZPO). The [Seller]'s claim in rem pursuant to �� 1147, 1191(1), 1192(1) BGB to tolerate the execution into the encumbered property for the amount of the mortgage and the interest arose on 23 March 1990 with the registration of the mortgage in the land register. This happened after the parties agreed on the creation of the mortgage in accordance with the declared allowance in the notarial document of 20 March 1990. The [Buyer] did not raise any objections, even after the respective reference under number I 2 of the order of the court of 27 March 1996. The existence of a contractual claim to be secured is not a prerequisite for the creditor of the mortgage's claim to tolerate the foreclosure, � 1192(1) BGB.
The [Seller]'s claim pursuant to �� 1147, 1191(1), 1192(1) BGB [*] to tolerate the foreclosure into the encumbered property is, however, subject to a permanent objection resulting from the agreement on the provision of security that the parties reached at the same time they agreed on the creation of the mortgage. Due to this agreement on the provision of security, the [Seller] is obliged to release the mortgage created in its favor. Any further line of action out of a mortgage is then an improper exercise of a right, if the creditor of the mortgage is obliged to release the mortgage according to the security agreement with the person providing security (cf. Palandt/Bassenge, BGB, 56th ed. 1997, � 1191 Nos. 20, 23). This objection of the improper exercise of a right as a substantial objection against the legally enforceable claim in rem to tolerate the execution substantiates the action to oppose execution pursuant to � 767(1) BGB. This is the case at present.
The parties concluded a security agreement with the content of the "declaration of appropriation and supplement of the mortgage" of 20 March 1990, signed by the [Buyer]. According to its own factual presentation, the [Seller] drafted this declaration itself and passed it on to the [Buyer] with the request of signature. The [Seller]'s offer for the conclusion of a respective security agreement contained therein has been accepted by the [Buyer] by complying with the request and signing the prepared declaration and sending it back to the [Seller].
According to item 1 of this security agreement, the mortgage serves to secure all claims of the [Seller] and its domestic and foreign companies out of the business relation to .... According to item 4 of this agreement, it should (only) then be allowed to seek satisfaction by way of execution, if ... was in default. According to item 5 of the contract, the [Seller] is obliged to release the mortgage as soon as all secured claims have become extinct. Not explicitly governed in the security agreement, however, is the question, within what time after the termination of the business relations with ... the [Seller] had to assert its claims against this company against the [Buyer]. From the essence and purpose of the security agreement follows, however, that the [Seller] should not be entitled to keep the mortgage encumbering the [Buyer]'s property for an undetermined time even after the termination of the business relations with the company ... with regard to the theoretical possibility that there could exist claims against this company that it had not asserted yet. The [Seller] could perceive that at the time of the conclusion of the security agreement the [Buyer]'s interest was directed to gain clarity within a reasonable time after the termination of the business relation between the ... as to whether and for what claims the [Seller] would make use of the mortgage. The [Buyer]'s interest was also directed to have the [Seller] release the mortgage after a reasonable time after the termination of this business relation if and as far as the claims asserted within this period do not exist, so that the [Buyer] could use the encumbered property as security for other deals again. This does not impair the [Seller]'s interests unacceptably. The ... is an authorized retailer of the [Seller]. With a proper keeping of the business records, a reliable declaration can be made within a reasonable time after the termination of the business relation as to whether and what claims out of the trading relations with such an authorized retailer are still open. Pursuant to �� 133, 157 BGB [*], the security agreement of the parties has to be supplementary construed in the way that the [Seller] is obliged to release the mortgage after a reasonable time since the termination of the business relation with the company ..., if the [Seller] did not assert any claims against this company within this time or if the asserted claims are not justified. The court referred to the possibility of such a construction of the security agreement under item I 3 of the order of 27 March 1996.
It is undisputed that the business relations between the [Seller] and company ... have been terminated since the spring of 1993. Therefore, it is unnecessary to determine exactly, within what time the [Seller] had to assert the claims against the [Buyer], for which the mortgage should be utilized. At the time of the last hearing before the trial court, more than four years had passed since the termination of the business relation at issue. Even under consideration of the [Seller]'s interests, this is in any case a sufficient period of time for the quantification of its claims against. ... Thus, the [Seller] is at least now obliged to release the mortgage, as it cannot be ascertained that the claims against ... asserted before the court until the end of the hearing do exist. Therefore, the execution out of the claim in rem has to be declared inadmissible.
The [Seller] relies mainly on an alleged claim for the balance of its invoice of 27 November 1992 in the amount of DM 888,440.--. After the result of the taking of evidence in the second instance, the court is not convinced to ascertain that such a claim of the [Seller] against ... did arise.
[Applicable law: CISG]
Contrary to the understanding of the appealed judgment, the contractual relations between the [Seller] and ... are not subject to the Civil Code, but are subject to the Convention of the United Nations of 11 April 1980. The court referred to that also in the order of 27 March 1996 - under item I 5 of this order. It is undisputed between the parties that the contractual relations between the [Seller] and ... are governed by the provisions of the dealer agreement concluded with the company ... on 1 July 1988, into which ... undisputedly entered as a new contractual partner. � 10(3) of the dealer agreement provides, that all disputes arising in connection with this contract should be governed by the law of the Federal Republic of Germany. Thus, the claims out of the business relation are to be judged by German law. A restriction that only a particular part of German law, for instance the law of the Civil Code, should be applicable is not contained in this clause. The clause does also not contain a restriction on the German law valid at the time of the conclusion of the contract. The reference to the law of a particular country in a contract that is supposed to govern a future permanent business relation (trading relation) is regularly not a static reference, but a dynamic reference to the respectively valid law of this country [...], that the parties had wanted anything else here has neither been shown, nor is otherwise apparent. Thus, the claims arising out of the order of video cameras and equipment made in the summer of 1992, that is the basis for the invoice of 27 November 1992, do not have to be judged by German law valid at the time of the day after the conclusion of the dealer agreement with the company ... on 1 July 1988, but rather have to be judged by the German law valid at the time of the purchase order. Therefore, the UN Sales Law (CISG) is applicable here, which is "German law" since it became effective in Germany on 1 January 1991 and whose material scope of application then has priority over the sales law of the Civil Code. This scope of application of the UN Sales Law is determined by Art. 1(1) CISG. Accordingly, the CISG applies to contracts of sale of goods between parties whose places of business are in different States when the States are Contracting States or when the rules of private international law lead to the application of the law of a Contracting State. Presently, these prerequisites are met. The parties to the contract of sale of goods at issue, the [Seller] and the [Buyer], have their places of business in different Contracting States, namely in Germany and in Spain. Both States have been Contracting States at the time of the purchase order at issue, in the summer of 1992. The UN Convention of 11 April 1980 became effective in Spain on 1 August 1991 (cf. Herber/Czerwendka, Internationales Kaufrecht, 1991 pre Art. 1, number 16; v. Caemmerer/CISG-Kommentar, 2nd ed. 1995, appendix I, p. 805). In any case, the application of the rules of international private law - due to the choice of law clause according to Art. 27 EGBGB [*] laid down in the contract of 1 July 1988 - leads to the application of German law and thus also to the application of UN Sales Law. After the respective references made by the court in the course of the argument in the hearing of 27 March 1996 and the order of reference and directions of the court pronounced that day, the parties did not object that the contractual relations at issue between the [Seller] and the [Buyer] are governed by the rules of the UN Convention of 11 April 1980.
[Substantive rulings]
A claim of the [Seller] against the [Buyer] for the payment of the invoice of 27 November 1992 in the amount of DM 888,440.-- requires according to Arts. 58(1)(1), 59, 62, 66, 67 CISG, that the [Seller] placed either the goods denoted in this invoice or the documents controlling their disposition at [Buyer]'s disposal or that the goods were handed over to the first carrier for transmission to the buyer. According to Art. 59 CISG, the buyer must pay the purchase price for the goods on the date fixed by the contract. According to Arts. 58(1)(1), 61(1)(a), 62 CISG, if no such date is fixed, the seller may require payment as soon as it placed either the goods or the necessary documents at the buyer's disposition. According to Art. 69 CISG the risk passes to the buyer when the goods are handed over to it. Differing from that, Art. 67 CISG provides for the case of a sale to destination according to the buyer's instruction, i.e., when the sale requires a transportation of the goods and the seller is not obliged to hand them over at a particular place, that the risk passes to the buyer when they are handed over to [buyer] [sic!]. Differing from that, Art. 67 CISG provides for the case of a sale to destination according to the buyer's instruction, i.e., when the sale requires a transportation of the goods and the seller is not obliged to hand them over at a particular place, that the risk passes to the buyer when the goods are handed over to the first carrier. Presently, this is such a sale to destination according to the buyer's instruction. The delivery of goods produced in Japan to a dealer in Las Palmas required transportation. It is therefore irrelevant, whether the formulation "list price ex works" in � 7(1) of the dealer agreement of 1 July 1988 as a regulation for the passing of risk has to be understood in the way that the risk passes to the buyer with the sending off of the goods. The clause provides nothing different from what applies nevertheless pursuant to Art. 67(1)(1) CISG, when no particular agreement concerning the passing of risk is reached and when the formulation "ex works" only served as a means to govern the share of the transport costs and not the passing of risk. According to Art. 67(1)(2) CISG, however, the seller bears the risk of transportation if it is agreed that the place of performance is at the place of business of the buyer. That such an agreement had been reached has neither been shown nor is otherwise apparent. Accordingly, it cannot be ascertained that the prerequisites of a purchase price claim of the [Seller] in the amount of DM 888,440.-- are met, because after the result of the taking of evidence in second instance the trial court could neither reach the conviction that ... received the goods denoted in the invoice of 27 November 1992, nor that these goods were sent off in Japan and - as the [Seller] alleges - handed over by the producer to the first carrier for transmission to the buyer.
The witnesses ... and ... have not confirmed the [Seller]'s allegation put to their knowledge, that ... had received the disputed goods. The witness ..., who according to his own testimony was the [Seller]'s state representative agent until the end of 1996 with competence also for the area of the Canary Islands, has rather testified it did not know ("could of course not know"), whether the goods in the case at issue here had reached. ... The witness ... was manager of ... at the decisive time. At his examination by the court he also did not confirm the allegation that ... received the goods at issue; he rather - on the contrary - explicitly excluded the receipt of these goods. In the result, this is consistent with the testimony of witness. ... This witness, who after his own testimony as to the time in question here, had overtaken the tasks of an "administrador" - formerly exercised by the [Buyer] - has testified that after he took over this task and raised questions as to the reason and the payment of the invoice of 27 November 1992 it was explained to him that ... had not received the goods denoted in it. The witness did also not confirm that the ... had received the transport documents for the delivery of the disputed goods.
The witness ... stated the opinion that, should ... have received the goods, there must be respective documents from which the delivery on sale must be evident. However, the [Seller] did not submit such documents. The freight papers (in sheet page 515 of the record) submitted by the [Seller] do not prove, that the ... had received the goods. The "First Original" of the "Bill of Lading" Nr. KOB A 17715 of the ... of 9 November 1992, put to the records in June 1996, just as the previously submitted further counterparts and copies of this "Bill of Lading", merely says that the ... had been given a container for transmission to the company ... and that this container, according to the declaration of the sender ("Said to contain") was to contain 59 packages of "... VHS-C Movie Camera(s)", but does neither prove the content of the container, nor its delivery on sale to the recipient denoted in the freight papers. Even the copy of a customs certificate of the Administracion de ... in Las Palmas attached to this "First Original" does not say anything about a delivery on sale of the goods at issue here to the. ...
Even the witness ... could not from his own knowledge make any statement in this regard. However, according to his testimony, the witness P... conceded in a conversation with [Seller], the witness ..., that the goods at issue here had been received at the. ... This does not suffice, however, to prove that it had actually received these goods. When the testimony of the witness ... was put to him, the witness ... denied, that the statement reproduced by that other witness had been made and stated, one was merely talking about the development of the business relations, so that one testimony stands against the other testimony. Judging these testimonies, the court does not oversee the fact that the witness ... could have an own interest in denying the receipt of the goods, because as the former manager of the ... he could be liable for the disappearance of the goods should they - contrary to his statement - have been received by this company, whereas an own interest of the witness ... in a particular outcome of the taking of evidence is not apparent. The court does also not oversee that the explanation of the witness ... for the fact that he, the witness, did not complain to the [Seller] about the absence of the ordered goods is not fully convincing. The Witness's explanation that the communication with the [Seller] - especially due to the existing language barriers - had been mainly carried out via the bureau of the [Buyer], is in contrast to the fact that in another case [Buyer] itself directed a respective complaint to the [Seller], through a fax written in the Spanish language. This is derived from the signed fax of 12 August 1992 (see page 744 of the record) from the date for the taking of evidence [...]. The testimony of the witness ... about the statement made in his presence by the witness ... is at least therefore not suited to prove that the ... had received the goods, because it cannot be excluded, that the witness ... had misunderstood him. At that time, the witness ... did not yet, as stated, speak Spanish, but - apart from German and English - only Portuguese. According to its testimony, the statements of the witness ... had therefore been translated for [Seller] from the Spanish to the English language by another employee of the [Seller], the former sales manager. ... This establishes the risk of a misunderstanding through a translation mistake. Reliable indications that the confirmation of the witness ..., according to the testimony of the witness ... made during the conversation, was actually related to the here disputed goods, could not be established by the court. The testimony of the witness ... about the further content of the conversation gives even more so reason for the assumption of a misunderstanding: The witness ... has stated that the subject of the conversation, during which ... was to have conceded the receipt of the goods, were not "some other" deliveries, but the delivery of camcorders in the amount of about DM 3,000,000.--. The delivery in dispute here is merely worth DM 888,440.--. It is therefore probable that the statement of the witness ... reproduced by the witness ..., which in his opinion was unmistakeable, was indeed related to something different from the order at issue here, for instance - according to the statement of this witness - to the business relations between the [Seller] and the ... so far. This is in congruence with the fact that the witness ..., even after the statement of witness ..., denied to sign the requested declaration of receipt of these goods. Thus, even the testimony of the witness ... could not prove that the company ... had received the goods denoted in the invoice of 27 November 1992.
The [Seller] did also not prove that these goods were handed over to the first carrier for transmission to the company ... at all. The [Buyer] denies in the instance of appeal as well as already - according to the statements on page 9 of its memorandum of 16 January 1994 (pages 137 et seq. [145] of the records) - in first instance, that such a handing over had taken place. Contrary to the opinion of the District Court this denial is not therefore irrelevant, because the [Buyer] does not present details about when and how the goods should have gotten lost. The sending off of the goods in Japan alleged by the [Seller] was not subject to the own perception of the [Buyer]. The sending off of the goods in Japan is also not a proceeding in the [Buyer]'s sphere of business or responsibility. The [Buyer] could therefore - as happened - raise the plea of ignorance pursuant to � 138(4) ZPO [*]. The plea of ignorance does not require a substantiation of facts. A substantiated denial, i.e. a denial with a concrete counterstatement, is only then required, if (only) the denying party knows the factual circumstances well (cf. BGH [*] NJW [*] 1981, 113 [114]; BGH NJW-RR 1986, 60; BGH NJW 1987, 2008 [2009]; Zöller/Greger, ZPO, 20th ed. 1997, 138, No. 10a with further references). However, such a substantiated denial cannot be required, if the party is obviously not close to the events; a simple denial then suffices (cf. BGH NJW-RR 1986, 60). This is the case here: The proceedings in connection with the sending off of the goods alleged by the [Seller] have not taken place in the sphere of responsibility or even the sphere of perception of the [Buyer], but rather in the sphere of the [Seller] and its vicarious agent, the producer in Japan.
Apart from that, the [Buyer] motivated its denial: The [Buyer] stated it assumed, that the [Seller] did not perform the delivery at issue any more, in order to have the goods ordered distributed on the Canary Islands by its own subsidiary company instead of by. ... The [Buyer] also referred to the possibility of tort committed by employees of the [Seller]. The fact that, according to his testimony, the witness ... did not know about a decision in the company of the [Seller], not to deliver to ... anymore, does not exclude that such a decision - perchance shortly before the intended sending off of the goods through the Japanese producer - could have been made. If - as the witness ... has stated - due to the organization in the company of the [Seller], the issuing of a reminder for an invoice sum in the gross amount at issue here already surpassed his competences and was decided on the level of the superintendent, it does at least not seem excluded, that also such a delivery stop, perchance on short notice, could have been decided on the level of the business or division management, without letting witness ... know about it. Therefore, the fact that the [Seller] billed the ... under the date of 27 November 1992 does not already lead to the conclusion that the goods had also been sent to it. It might be the regular course of business that goods - in this order - are ordered, sent off, billed, delivered and paid. It can, however, not be ascertained that it was proceeded according to the regular course of business here. Through the hint of the witness ... to the regular course of business it cannot be excluded that a halt of the delivery to the ... could have been decided and realized via telephonic instruction to the production site in Japan at a time when the documents required by the [Seller] for the later billing had already been printed and sent off in Japan; this way they could have been the basis for the [Seller]'s accounting employee who was not concerned with the contractual relations, but only dealt with the invoicing, and who filled out an invoice for the goods in spite of the delivery stop decided by the management. Through the hint of the witness ... to the regular dealings the possibility is also not excluded that the goods destined for the ... could have been unlawfully taken away from the factory site of the producer in Japan after the provision of the consignment documents, which were the basis for the later invoicing, but yet before their handing over to the carrier.
With regard to whether the goods in question were handed over in Japan to the carrier ... for transport to the company ..., no statements could be made by the witnesses ... and ... who were named by the [Seller] for this question. Moreover, the witness ... has rather explicitly pointed out, that the carrier, whose employee he is, is not familiar with the content of the container handed over for transmission in the circumstances of the case here - "Shippers Load & Count" - "Said to contain".
The proof of the handing over to the first carrier can also be furnished by the freight documents, if they contain specifications about the goods. This is not the case here. The freight documents presented by the [Seller], the "First Original" of the "Bill of Lading" as well as their carbon copies and photocopies, merely evidence that a container was handed over to the ... for transmission to the company ... and which, according to the declaration of the sender, was to contain video cameras ("Said to contain"). This neither proves whether this declaration is actually correct, nor - should it be correct - that these were the goods, which the [Seller] invoiced on 27 November 1992. While the reference of the [Seller] in the hearing on 4 June 1997, that the ... as far as is apparent, did not complain that it had been delivered an empty container, is correct. Even the witness ... did not report anything about that. However, it cannot already be concluded that the goods invoiced on 27 November 1992 were contained in the container, which is mentioned in the "Bill of Lading" KOB A 17715, because it cannot be ascertained, that this container had been handed over to the ... at all. Criminal deeds of employees of the [Seller] and the producer could also have been committed in a way, that the goods had already been unlawfully taken away on the factory site of the production plant, the container to be loaded had still been loaded onto the ship, but loaded with ballast instead of the goods and had only been rerouted in Spain, prior to a delivery to the ..., so as to remove traces.
It can also not be ascertained that, if the container denoted in the document No. KOB A 17715 had been delivered to the company ..., that then the goods denoted in the invoice of 27 November 1992 had been sent off to it. Lacking contrary concrete evidence it can also not be excluded that the other one received goods at a sooner point in time, the receipt of which the ... did not deny and which had been orderly paid for by it, whereas the order being the basis for the invoice of 27 November 1992 had not been, as usually destined, sent out to the ... any more, due to a - as portrayed possibly ordered only after the construction of the consignment documents regarding these goods - delivery stop in the company of the [Seller].
The photocopy of a computer printout of an "Invoice & Packing List" (see pages 102 et seq. of the record) handed to the records by the [Seller] in first instance neither proves that the goods denoted in it had left the factory site of the Japanese producer, the company ..., nor that these goods were packed into the container, which the ... took delivery of according to the "Bill of Lading" No. KOB A 17715.
The [Seller] has therefore also not proven the alleged handing over of the goods to the first carrier. The court does not comply with its request, first called for in the hearing of 4 June 1997 and not prior announced in the memorandum, to hear the officiating president of the company ... about the question of evidence No. 1 2 of the order for evidence of 28 August 1996, whether the goods denoted in the invoice of the [Seller] of 27 November 1992 had been handed over to the ... for transmission. The court is rather convinced that the [Seller] merely called for this motion to take evidence to delay the proceedings, with the intent to delay the termination of the dispute otherwise ripe for judgment, in order to use the meantime for further research and then to be able to possibly call for relevant motions to take evidence. The counsel for the [Seller] admitted in the hearing of 4 June 1997, he could hardly imagine, that the officiating president of the company ... had made establishments of his own as to the packaging and forwarding of the goods at issue. The fact that the [Seller] had nevertheless named him after almost four years duration of the lawsuit and repeated hearings even in the instance of appeal for the first time in a court hearing for the taking of evidence in front of the Appellate Court on a topic of evidence that had been made known to the [Seller] months in advance, does fulfil the prerequisites of an intention to delay the proceedings in the sense of � 244(3) StPO - which is analogously applicable in civil proceedings (cf. BGHZ 53, 245 [2591] [sic!]).
In any case, this motion to take evidence has been called for late. The court therefore refuses the motion pursuant to �� 296(1), 520(1), 523, 527 ZPO [*]. As portrayed above, the [Buyer] had already in first instance explicitly raised the plea of ignorance that the goods ordered had been orderly handed over to the carrier commissioned by the producer or the [Seller]. The [Buyer] kept up this plea of ignorance also in the instance of appeal - in accordance with the repeated announcement in the memorandum. In the statement of reasons of appeal, the [Buyer] already stated that it also denied that the shipping of the goods had taken place. By memorandum of 9 May 1996, the [Buyer] affirmed this denial through the reference that in its opinion the evidence for the handing over of the goods to the first carrier had not been produced. The [Seller] was thus obliged to produce the necessary evidence of the alleged handing over of the goods to the first carrier already within the time limit fixed for the response to the appeal through the order of the chairperson of 5 February 1996 (�� 296(1), 527 ZPO), at least, however, within the time limit fixed for further statements through the order of 10 June 1996 (�� 273(1), 296(1), 523 ZPO). The [Seller] did not name the president of the company ... as witness within these time limits. The failure to observe this (these) time limit(s) has not been adequately excused. It was and is one of the major points of dispute of this lawsuit, that the [Buyer] denies that the goods denoted in the invoice of 27 November 1992 had been delivered to the ... and sent off for delivery at all. The potential hope, that the allegation of the sending off of the goods could be proven in another way, for example through the hearing of the witnesses ... and ... named by the [Seller] for this question, is no adequate excuse for the fact that further evidence regarding this question has not been produced in due time. This applies even more so, as it has to be doubtful in any case, whether the witnesses ... and ..., living in the Nuremberg area, could testify anything from their own knowledge regarding the sending off of the goods in Japan. A hearing of a witness from Japan would delay the decision of the lawsuit by months.
The [Seller]'s offer in the hearing of 4 June 1997, to produce the accompanying documents of the goods for evidence at a later point in time is no orderly offer of evidence. The documentary evidence is tendered by producing the document in the hearing, � 420 ZPO [*]. The court immediately referred that to the [Seller]. The [Seller] did not produce said accompanying documents in the hearing.
The fact that the [Seller] thus did not prove the prerequisites of a claim to payment of DM 888,440.-- pursuant to Arts. 58(1), 59, 62, 66, 67 CISG, works to the disadvantage of the [Seller], as it is burdened with the onus of presentation and the burden of proof for the facts establishing the claim. The seller has to prove the prerequisites of the creation of a purchase price claim. In the result, this apportionment of the burden of proof is not changed by the fact that the [Buyer], by way of defense, replies to the foreclosure of the mortgage with a claim to the release of the mortgage with the reasoning that the claims asserted, in case of their existence secured by the mortgage according to the security agreement, have not been created. As the mortgage does not require the existence of a claim (�1192(1) BGB [*]) and the person providing security can only rely on a defense out of the security agreement in reply to the claim of the creditor of the mortgage, it is regularly the obligation of the person providing security to show and to prove that the defense is good, so that the secured claim has in total or in part not come to existence or has ceased to exist again (cf. BGH WM 1976, 666 [667]; BGH NJW 1992, 1620 [1621] with further references). However, something different applies if the mortgage - as is the case here - has been created to secure all claims out of a future business relation (even to a third party). In that case, the creditor of the mortgage - here: the [Seller] - has to show and prove the extent and the amount of the secured claim (cf. BGH WM 1976, 666 [667]; BGH NJW-RR 1986, 1495 = LM � 1191 BGB No. 16; BGH NJW 1991, 1286 [1287]; BGH NJW 1992, 1620 [1621]). The court made reference also to that in its order of 27 March 1996 - under item I 4. The construction of such a security agreement leads regularly - and here - to the fact that the person providing security only wants to be liable and should only be liable, if and as far as claims of the recipient of security, which are encompassed by the security agreement, arise (cf. BGH NJW-RR 1986, 1495). If a mortgage - as here - shall be liable for the changing existence of claims out of a business relation, the recipient of security - in accordance with general rules - has to prove the creation of the single secured claim, whereas the person providing security has to prove the facts impeding, suspending and defeating a claim (cf. BGH NJW 1996, 719 [720]). In the case in dispute nothing different applies. The parties have rather provided in item 4 of the security agreement of 20 March 1990, that the [Seller] should (only) then be entitled to seek satisfaction by way of execution, if ... was in delay. The utilization of the security is therefore, according to the intent of the parties, linked to another prerequisite, exceeding the creation of the secured claim, that is the occurrence of the delay of the principal debtor, which has to be - in accordance with general rules - proven by the creditor. This evidences the intent of the parties to the contract, that the [Seller] should not at all times be entitled to make use of the security, but only under the prerequisites, to be proven by the [Seller] - also in relation to the principal debtor - of the creation of the secured claim and the delay of the principal debtor. This apportionment of the burden of proof is not impaired by the fact, that the [Buyer] assumed personal liability for the payment of the amount of the mortgage in the document of the creation of the mortgage and had thus given the [Seller] an acknowledgement of indebtedness. To hold the [Buyer] liable out of this acknowledgement is rather linked to the same prerequisites as the utilization of the mortgage. In the document of the creation of the mortgage, the [Buyer] subjected itself to the immediate execution into its entire property with regard to the personal liability assumed in this document. Included in this property is also the real property encumbered with the mortgage. Should the [Seller] be able to proceed out of this personal claim even without the restrictive prerequisites denoted in the security agreement, it would be possible at all times to levy execution even into this property - based on the legally enforceable personal claim; the restriction of the security agreement, that the execution should only be admissible under the further prerequisite of the delay of the ..., would then run idle. This shows, that according to the parties' intent expressed in the security agreement, the personal liability of the [Buyer] should also be linked to the same prerequisites as the liability in rem with the property, so that the security agreement is to be construed in a way that the [Seller] altogether - in case of a proceeding out of the claim in rem as well as out of the personal claim - bears the onus of presentation and the burden of proof for the creation of the claim directed against the ... and the occurrence of the delay.
The [Seller] has already not sufficiently presented, that it is entitled to further purchase price claims against the. ... The [Seller]'s submission of first instance, that ... owed it and its subsidiary companies purchase price payments in the total amount of DM 3,071,247.87. i.e., DM 2,259,786.72 to the [Seller] herself, DM 723,536.-- to the ... in Vienna, DM 75,550.15 at a dollar rate of 1.4835 to the ... and DM 12,375.-- to the ... is, due to the lack of any presentation of facts substantiating a claim, inconclusive and thus not qualified to support the asserted claims. The reference to an accounts receivables statement (see pages 90-92 of the record), which by itself - without explanation - is not comprehensible, can neither substitute the necessary allegations, nor is it able to substantiate the asserted claims. The Regional Court correctly referred this to the [Seller] - under item IV of the order of 31 March 1994 (pages 168 et seq. of the records). The [Seller] has not taken this reference into account.
Even in the instance of appeal, the [Seller] did not substantiate the claims further asserted in a qualified and comprehensible way. The listing of several invoice amounts and delivery dates in the memorandum of 9 May 1996 does not suffice for the presentation of the prerequisites substantiating a purchase price claim. The necessary qualified statement of facts may neither be substituted by the [Seller]'s referral to the testimony of a Mrs..., employed in a company in Bremen, nor by the presentation of a bundle of unarranged documents, not explained in writing. The court repeatedly, even by order of 13 May 1996, referred to that, without the [Seller] supplementing its presentation by the statement necessary for the qualified substantiation of a purchase price claim, as to who ordered when and what from whom and to what conditions (prices).
The [Seller]'s execution out of the personal title is also to be declared inadmissible. As substantiated above, it results from the construction of the security agreement of 20 March 1990, that the [Buyer] should only be held liable on grounds of the personal liability assumed by it under the same prerequisites as out of the mortgage. Accordingly, the [Seller] is now obliged to release the [Buyer] also from the personal liability assumed in the acknowledgement of indebtedness of the document creating the mortgage of 20 March 1990, so that also the [Seller]'s claim out of this acknowledgement is opposed by a defense defeating the claim, which substantiates the action to oppose execution.
The new factual submission in the [Seller]'s memorandum of 16 June 1997, handed to the records after the end of the hearing remains unconsidered pursuant to �� 296a sent. 1, 523 ZPO [*]. A subsequent filing of a memorandum (� 283 ZPO) has not been granted to the [Seller], nor has the [Seller] applied for it. There is no cause to reopen the hearing (� 156 ZPO).
The procedural additional decisions are based on � 91(1) ZPO (costs), on �� 708 No. 10, 711, 108, 769(1), 770(1) ZPO (provisional enforceability and stay of execution) as well as on � 546(2) ZPO (determination of the value of the judgment grievance).
* All translations should be verified by cross-checking against the original text. For purposes of this translation, the Plaintiff-Appellant of Germany is referred to as [Buyer]; the Defendant-Respondent of Spain is referred to as [Seller]. Amounts in German currency (Deutsche Mark) are indicated as [DM].
Translator's note on other abbreviations: AGBG = Gesetz zur Regelung des Rechts der allgemeinen Geschäftsbedingungen [German Law on Standard Form Contracts]; BGB = Bürgerliches Gesetzbuch [German Civil Code]; BGH = Bundesgerichtshof [German Federal Supreme Court]; EGBGB = Einführungsgesetz zum Bürgerlichen Gesetzbuche [German Code on Private International Law]; NJW = Neue Juristische Wochenschrift [a well known German Law Journal]; ZPO = Zivilprozessordnung [German Code on Civil Procedure].
** Tobias Koppitz is a student of law at Humboldt University Berlin. With the team of Humboldt University Berlin, he won the Frédéric Eisemann Award for third place in the 8th Willem C. Vis International Commercial Arbitration Moot 2000/2001. He was coach to the team of Humboldt University Berlin in the 9th Willem C. Vis Moot 2001/2002.