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Reproduced with permission from the Cornell Review of the Convention on Contracts for the International Sale of Goods (1995) 51-94

excerpts from

Judicial Interpretation and Application of The CISG in Germany 1988-1994

Martin Karollus [*]

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[Comments on Article 4(a) validity issues]

According to Article 4, the CISG does not govern questions of contract validity.[83] Therefore, only national law applies to the question of whether the contract is the correct manifestation of the parties' intent.[84] There is, however, much controversy surrounding the treatment of non-conforming goods because the CISG does not expressly exclude consideration of such non-conformity; one could therefore argue that a challenge to contract validity would be possible under national law.[85] Nevertheless, almost all German authors take the view that the CISG precludes a challenge to contract validity based on non-conforming goods.[86] This interpretation is influenced by the fact that a similar preclusion exists under German national law. It is also argued that this interpretation is necessary to ensure uniformity [LG Aachen 14 May 1993].[87]

The LG Aachen interpreted the term "validity" very broadly in a case where contracting parties agreed that the contract was contingent on certain circumstances.[88] In particular, the parties agreed that the contract would become effective only after the buyer had paid for earlier deliveries, which he actually did not. According to the LG Aachen, this contractual provision concerns "validity" under Article 4 and therefore is not governed by the CISG. I do not agree because there is no issue of "validity." The parties simply agreed on a contract term that should have been interpreted according to Article 8.

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FOOTNOTES

* Professor of Law at the University of Bonn, Germany, from 1992 to February 1995. Currently, Professor of Law at the University of Linz, Austria. Address: Institut für Handels-und Wertpapierrecht, Universität Linz, A-4040 Linz-Auhof, Austria, Europe.

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83. CISG, supra note 4, art. 4(a). There are exceptions. For example, Article 29 excludes the doctrine of "consideration." See Honnold, supra note 1, §§ 201, 204.1-204.4. Furthermore, the CISG should prevail over national statutes that declare invalid contracts that cannot be performed at formation (anfängliche Unmöglichkeit). For examples of such laws, see BGB § 306; Allgemeines Bürgerliches Gesetzbuch [ABGB] § 878 (Aus.);Schweizerisches Obligationenrecht [OR] art. 20(1) (Switz.). For discussion of the relation between national sales laws and the CISG as to impossibility, see Karollus, supra note 20, at 43; Hans Stoll, Art. 79: Hinderungsgrund außerhalb des Einflußbereichs des Schuldners, in Kommentar zum Einheitlichen UN-Kaufrecht 679, 686 (Ernst von Caemmerer & Peter Schlechtriem eds., 2d ed. 1995). But see Denis Tallon, Article 79, in Commentary on the International Sales Law 572 (C.M. Bianca & M.J. Bonell eds., 1987); Wanki Lee, Exemptions of Contract Liability Under the 1980 United Nations Convention, 8 Dick. J. Int'l L. 375, 386-87 (1990).

84. See, e.g., BGB § 119.

85. This is unlike ULIS, which expressly excludes consideration of non-conforming goods. ULIS, supra note 3, art. 34.

86. See Ulrich Huber, Art. 45: Rechtsbehelfe des Käufers; keine zusätzliche Frist, in Kommentar zum Einheitlichen UN-Kaufrecht 401 (Ernst von Caemmerer & Peter Schlechtriem eds., 2d ed. 1995); Karin Flesch, Mängelhaftung und Beschaffenheitsirrtum beim Kauf 127-58 (1994). Some Austrian authors disagree. See Rudolf Lessiak, UNCITRAL-Kaufrechtsabkommen und Irrtumsanfechtung, 1989 Juristische Blätter [JBl] 487; Karollus, supra note 20, at 41-42.

87. The LG Aachen agreed with this argument. Judgment of May 14, 1993, 1993 RIW at 761.

88. Id.


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[Comments on applications of Article 29]

Article 29 governs the termination or modification of the contract by mere agreement of the parties, such as a mutual respite in payment [LG Hamburg 26 September 1990] [137] or a settlement agreement [LG Aachen 14 May 1993].[138] Although Article 29 is in Part III of the CISG, the rules of Part II apply to the formation of agreements that modify or terminate a contract [LG Hamburg 26 September 1990; OLG Köln 22 February 1994].[139] Therefore, under Article 18(1), mere silence or inactivity does not amount to acceptance of an offer to terminate the contract. Nevertheless, the OLG Köln found an acceptance where the other party had not enforced the contract despite the receipt of non-conforming goods [OLG Köln 22 February 1994].[140]

Under these circumstances, the OLG Köln may have been correct. However, the general rule that silence is not an acceptance should be overruled only under exceptional circumstances that make clear the offeree's implicit acceptance. Otherwise we would reach the result that Article 18(1) is intended to prevent: an acceptance when the offeree regarded the offer only as an unacceptable nuisance and therefore did not see any reason to answer.

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FOOTNOTES

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137. Judgment of Sept. 26, 1990, LG Hamburg, 1991 IPRax at 402.

138. Judgment of May 14, 1993, LG Aachen, 1993 RIW at 761.

139. Judgment of Sept. 26, 1990, LG Hamburg, 1990 IPRax at 402; Judgment of Feb. 22, 1994, OLG Köln, 1994 RIW at 973.

140. Judgment of Feb. 22, 1994, OLG Köln, 1994 RIW at 973.


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[Comments on place for delivery (Article 31)]

The LG Aachen implicitly held that Article 31(a) applies only if the parties have agreed to it. In any other case, Article 31(b) or (c) applies [LG Aachen 14 May 1993].[141] This apparently comports with the language of Article 31, which supports the conclusion that Article 31(a) is an exception to Articles 31(b) and (c). The carriage of goods, however, is usually required in international trade. For this reason, there should be a presumption that the parties intended carriage of goods, and the application of Article 31(a) should be the basic rule.[142]

If the parties agree that delivery shall be made frei Haus,[143] Article 31(a) and Article 67 are not applicable. The clause frei Haus concerns not only the place and costs of delivery, but also the passing of risk. The risk of non-performance passes from the seller to the buyer only upon delivery of the goods to the buyer's place of business.[144] If a seller could prove only that the goods were handed over to the carrier but not their arrival, he has not completed performance and is not entitled to payment [OLG Karlsruhe 20 November 1992].[145]

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FOOTNOTES

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141. Judgment of May 14, 1993, LG Aachen, 1993 RIW at 761.

142. See Ulrich Huber, Art. 31: Inhalt der Lieferpflicht und Ort der Lieferung, in Kommentar zum Einheitlichen UN-Kaufrecht 264, 269 (Ernst von Caemmerer & Peter Schlechtriem eds., 2d ed. 1995); Karollus, supra note 20, at 108; Piltz, supra note 52, at 1104.

143. The term frei Haus corresponds with a delivery agreed to be made FOB buyer's place of business.

144. Bringschuld is a term for the obligation to deliver at the buyer's place of business.

145. See Judgment of Nov. 20, 1992, OLG Karlsruhe, 1993 NJW-RR 1316.


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[Comments on damages under Article 74]

Article 74 allows only monetary damages for breach of contract; compensation in kind is not permitted.[213] Nevertheless, the OLG Düsseldorf held that a buyer of defective goods who became liable to a second buyer could demand discharge from his liability as a seller of defective goods to the second buyer from the original seller [OLG Düsseldorf 2 July 1993].[214] Although this holding is arguably incorrect,[215] I agree. As soon as the first buyer paid damages to the second buyer, he could recover the sum paid from the original seller. There is no reason why the original seller should not pay directly the second buyer.[216]

The recovery of interest under CISG Article 78 is only a minimum, allowed "without prejudice to any claim for damages." For example, the seller can recover damages if his sales are prefinanced and he has to pay interest for any delay in payment [LG Aachen 3 April 1990],[217] or if he has to pay interest for other credit obtained as a necessary consequence of a delayed payment [OLG Koblenz 17 September 1993].[218] However, the courts do not agree on the showing required for such consequential damages. Two decisions have held that the seller has to specify and prove his loss exactly, and that it is not sufficient for the seller to declare generally that he is working on credit as a consequence of delayed payment [LG Frankfurt 16 September 1991; OLG Frankfurt 18 January 1994].[219] In another decision, however, the court tried to moderate these burdens [LG Hamburg 26 September 1990].[220] Although the seller did not prove that he had to obtain credit because of payment delay, the court granted damages based on the discount rate in the seller's country.

According to the second sentence of Article 74, damages suffered as a consequence of a breach of contract are recoverable only if such damages were foreseeable to the party in breach at the time the contract was concluded. No German court has yet barred a claim for damages because of this provision. A court has held that the buyer's liability to third parties was foreseeable when the goods were not timely delivered [LG Aachen 14 May 1993],[221] and in another case that the buyer could foresee that non-payment would force the seller to obtain credit [OLG Koblenz 17 September 1993].[222]

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FOOTNOTES

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213. See Victor Knapp, Article 74, in Commentary on the International Sales Law 538, 540 (C.M. Bianca & M.J. Bonell eds., 1987); Hans Stoll, Art. 74: Umfang des Schadenersatzes, in Kommentar zum Einheitlichen UN-Kaufrecht 623, 635-36 (Ernst von Caemmerer & Peter Schlechtriem eds., 2d ed. 1995); Enderlein et al., supra note 14, at 235; Karollus, supra note 20, at 213.

214. Judgment of July 2, 1993, OLG Düsseldorf, 1993 RIW at 845-46.

215. See Peter Schlechtriem, Kurzkommentar, 1993 EWiR 1075 (1993).

216. See also Stoll, supra note 213, at 635-36 (arguing that a party who has suffered damages from the other party's breach should be discharged from liability under the contract when the extent of damages is not calculable).

217. Judgment of Apr. 3, 1990, LG Aachen, 1990 RIW at 492.

218. Judgment of Sept. 17, 1993, OLG Koblenz, 1993 RIW at 936-37.

219. Judgment of Sept. 16, 1991, LG Frankfurt am Main, 1991 RIW at 954; Judgment of Jan. 18, 1994, OLG Frankfurt am Main, 1994 RIW at 241.

220. Judgment of Sept. 26, 1990, LG Hamburg, 1991 IPRax at 403 (referring to Herbert Asam & Peter Kindler, Ersatz des Zins-und Geldentwertungsschadens nach dem Wiener Kaufrechtsübereinkommen vom 11.4.1980 bei deutsch-italienischen Kaufverträgen, 1989 RIW 841, 844-45 (1989)).

221. Judgment of May 14, 1993, LG Aachen, 1993 RIW at 761.

222. Judgment of Sept. 17, 1993, OLG Koblenz, 1993 RIW at 937.

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Pace Law School Institute of International Commercial Law - Last updated June 9, 1999
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