CISG-online 583

Jurisdiction Germany

Tribunal Oberlandesgericht Stuttgart (Court of Appeal Stuttgart)

Date of the decision 28 February 2000

Case no./docket no. 5 U 118/99

Case name Floor coverings case

Translation* by Ruth M. Janal**

Translation edited by Veit Konrad***

Facts of the case:

The German [plaintiff] is a manufacturer of floor covering. The defendant [buyer], a Spanish 1
entity, installs floor coverings, mostly in sports grounds. The [plaintiff] demands that the
[buyer] pay for several deliveries of floor coverings, basing the jurisdiction of the German
courts on its German place of business. The [buyer] objects, claiming that it always contracted
only with Company D[...], an independent company under Spanish law. According to [buyer],
the German courts lack international jurisdiction to decide the case and the claim is un-
founded.

I. 2
Between 1990 and 1996 the [plaintiff] delivered floor covering and equipment to the [buyer]
in the overall amount of roughly 1,8 million DM [Deutsche Mark]. The claim is based on deliv-
eries effected during the time between November 1992 and December 1993, amounting to
roughly 84,000 DM, which the [buyer] paid neither to the [plaintiff], nor to its alleged con-
tracting party, Company D[...].

II. 3
The [plaintiff] submits that it is the [buyer]’s contractual partner with respect to the deliveries
in question. At the time, the [plaintiff] had not yet held 100% of Company D’s shares. Company
D[...] had been the [plaintiff]’s commercial agent without the power to close a deal. The

* All translations should be verified by cross-checking against the original text. For purposes of this translation,
the Plaintiff-Appellant is referred to as [seller]; the Defendant-Appellee is referred to as [buyer]. Amounts in
German currency (Deutsche Mark) are indicated as [DM].
Translator’s note on other abbreviations: Brussels Convention = Convention of 27 September 1968 on Jurisdic-
tion and the Enforcement of Judgments in Civil and Commercial Matters; ECJ = European Court of Justice; EGBGB
= Einführungsgesetz zum Bürgerlichen Gesetzbuche [German Code on the Conflict of Laws]; HGB = Han-
delsgesetzbuch [German Commercial Code]; NJW = Neue Juristische Wochenschrift [pre-eminent German law
journal].
**
Ruth M. Janal, LL.M (UNSW) is a PhD candidate at Albert-Ludwigs-Universität Freiburg.
***
Veit Konrad has studied law at Humboldt University, Berlin since 1999. During 2001-2002 he spent a year at
Queen Mary College, University of London, as an Erasmus student.
 CISG-online 583 (Translation)

[buyer] had been informed of the nature of the relationship between the [plaintiff] and Com-
pany D[...], before they entered their business relations. All matters of importance had been
dealt with directly by the parties. At the beginning of the business relationship the [buyer]’s
legal representative had traveled to the [plaintiff]’s place of business in Germany. While the
parties had not closed a formal framework contract at the time, they had negotiated the de-
livery conditions. The [buyer] always directed its requests to Company D[...], who then for-
warded the requests according to the agreed procedure to the [plaintiff]. The [plaintiff] sent
both goods and invoices to the [buyer] itself. The [buyer] partly paid the purchase price to the
[plaintiff], but – upon [plaintiff]’s request – also partly effected payment to Company D[...].

The [plaintiff] further submits that the United Nations Convention on Contracts for the Inter-
national Sale of Goods (CISG) is the applicable law, as the case concerns the cross-border de-
livery of goods. According to Art. 57(1)(a) CISG, the place of performance of the buyer’s obli-
gation to pay the purchase price is the seller’s place of business, which is why the Court of
First Instance possessed international jurisdiction under Art. 5(1) of the Brussels Convention.

The [plaintiff] requests relief as granted by the Court.

The [buyer] objects to the international and local jurisdiction of the Court of First Instance. 4
[Buyer] initially denied that it ordered the goods and received the deliveries and the invoices.
After the [seller] presented the [buyer]’s faxes to Company D[...] and the list of unpaid deliv-
eries drawn up by the [buyer] itself, it no longer keeps up its denial. However, it submits that
with respect to the deliveries at hand its sole contact was with Company D[...], regarding both
orders and payments. [Buyer] does not submit any non-conformities of the deliveries in ques-
tion or any other deliveries made by the [plaintiff].

On 31 May 1999, the Court of First Instance dismissed the claim due to lacking international 5
jurisdiction of the German courts. The Court held that there was no international sales con-
tract, as the [plaintiff] failed to prove that the delivery contracts had been concluded with the
[plaintiff]. The offer had consisted of the respective fax or telephone call by the [buyer] and
had been accepted by Company D[…]; the invoices later issued by the [plaintiff] did not change
the fact that the contract had been concluded between the [buyer] and Company D[...]. Fi-
nally, the closest relationship had existed between the latter two parties.

III. 6
The [plaintiff] appeals the decision of the Court of First Instance. It repeats its submission be-
fore the Court of First Instance and presents a written confirmation of order issued by the
[plaintiff] on 4 August 1993, as well as original price lists of the years 1992 and 1993.

The [plaintiff] requests relief as granted by the Court

The [buyer] requests to dismiss the appeal. 7

The [buyer] defends the decision of the Court of First Instance. Despite the Court’s invitation
it did not voice any objections against the merits of the claim.

2
 CISG-online 583 (Translation)

With respect to the further submissions of the parties, the Court refers to the briefs and the
attachments presented by the parties as well as to the statement of facts in the decision of
the Court of First Instance.

The Court heard the testimony given by witnesses P[...] and R[...]. The [plaintiff] dispensed
with hearing witness O.

Grounds for the Decision:

The [plaintiff]’s appeal is successful. The German courts have international jurisdiction over 8
the present dispute. The claim is justified.

I. 9
The German courts have international jurisdiction over the dispute under Art. 5(1) and 53 of
the Brussels Convention.

1.
The Brussels Convention as amended by the Third Accession Convention of 26 May 1989 en-
tered into force in the Federal Republic of Germany on 1 December 1994 and in Spain on
1 February 1991. The claim was submitted in the year 1997.

2. 10
According to Art. 57(1) CISG, the place of performance for the [buyer]’s obligation to pay the
purchase price is the [plaintiff]’s place of business in Germany.

a) 11
According to Art. 1(1)(a) CISG, the Convention is the applicable law for the present contracts
over the sale of goods, since the parties have their places of business in different Contracting
States. The CISG entered into force in the Federal Republic of Germany on 1 January 1991 and
in Spain on 1 August 1991. The deliveries of floor covering and equipment, for which the
[plaintiff] seeks payment, concern goods. The CISG applies to both contracts for the sale of
goods and for the supply of goods to be manufactured (Art. 3(1) CISG).

b) 12
Following the hearing of evidence, the Court is convinced that the contracts were concluded
with the [plaintiff] and that the [plaintiff]’s place of business in Germany was the decisive one,
because it held the closest connection to the contracts and their performance.

aa) 13
As the Court of First Instance correctly pointed out, the conclusion of the contracts is to be
evaluated under Art. 14 and following CISG provisions. Regard is to be had to Art. 8(1) CISG,
which provides that statements made by and other conduct of a party are to be interpreted
according to its intent where the other party knew or could not have been unaware what that
intent was. Under Art. 8(3) CISG, due consideration is to be given to all relevant circumstances
of the case including the negotiations, any practices which the parties have established be-
tween themselves, usages and any subsequent conduct of the parties.
3
 CISG-online 583 (Translation)

The documents presented and the testimony given by the witnesses P[...] and R[...] lead the 14
Court to conclude that the contracts were concluded between the parties to the dispute and
not between the [buyer] and Company D[...].

Company D[...] was the [plaintiff]’s agent without the power to close a deal (cf. the agent 15
contract concluded on 15 April 1986). The Court was convinced by the respective testimony
given by witness P[...], the chairman of Company D[...]. The relationship between Company
D[...] and the [plaintiff] was also known to the [buyer]. Witness P[...] convincingly illustrated
that he and the [buyer]’s director had conferred about this matter before entering into a busi-
ness relationship, as the [buyer]’s representative had voiced its surprise over the evidently
low turnover of Company D[...]. After the unpaid deliveries had been effected, but before the
legal dispute arose, Company D[...] informed the [buyer] by letter of 9 February 1994 that it
had acted as an agent of the [plaintiff] («como representante») with respect to the delivery of
the floor covering.

According to the testimony given by witness P[...] and witness R[...] (the [plaintiff]’s export 16
sales manager) the [buyer]’s representatives, including its director, further visited the [plain-
tiff] in Germany before the start of the business relationship, not only to view sports grounds
that had been fitted with the [plaintiff]’s material, but also to negotiate the delivery condi-
tions. It was obvious that the [plaintiff] was to be the contracting partner. Even if there had
been a reason to conceal this fact before Spain became a member of the European Union, this
reason ceased to exist in the year 1992. Import quotas for floor covering no longer applied.

While it is true that the [buyer]’s written inquiries regarding the deliveries in dispute were 17
addressed to Company D[...], not to the [plaintiff], the Court is of the opinion that these faxes
and phone calls did not constitute offers in the meaning of Art. 14 CISG. According to the tes-
timony given by the witness R[...], the price was oftentimes issue of subsequent negotiations
between the [plaintiff] and the [buyer]. When taking into account the other circumstances,
the fact that the requests were addressed to Company D[...] does not make this company
party to the contract. The [buyer] has neither submitted why it would have been necessary
for Company D[...] to be a party to the contract with respect to at least some of the orders of
floor covering, nor are any such reasons self-evident. The [plaintiff] moreover presented a
confirmation of order (dated 4 August 1993) with respect to the [buyer]’s request of 21 July
1993 regarding 1,858 m2 of floor covering. The Court is convinced that this confirmation of
order concerns the [buyer]’s request of 21 July 1997, which the [plaintiff] invoiced on 11 Au-
gust 1993, as the Court excludes the possibility that the same amount of floor covering was
ordered twice on the same day. In so far as confirmation of orders were not issued with re-
spect to the other inquiries, the sales contracts were formed through the deliveries and in-
voices; these constituted the offers which were implicitly accepted by [buyer]’s taking of the
goods.

It is of importance that all invoices were issued by the [plaintiff] in its name. The invoices 18
contained further terms and conditions concerning the method of payment and remedies for
breach of contract. The invoices further yield that the deliveries were cross-border transac-
tions within the European Union and thus VAT-free. The Court is therefore convinced that the

4
 CISG-online 583 (Translation)

deliveries constituted cross-border sales between the [plaintiff] and the [buyer], and not
cross-border deliveries fulfilling obligations of Company D[...].

The [buyer] mostly paid the purchase price to Company D[...]. However, some of the deliveries 19
made before the time period in dispute had been paid to the [plaintiff]. There is also evidence
that subsequent deliveries were paid to the [plaintiff] directly. Finally, the [plaintiff] presented
two original price lists from the years 1992 and 1993. According to clause 9 of the conditions
of sale included in these lists, all payments on invoices issued by the [plaintiff] were to be
made in convertible Spanish Pesetas, payable either in Germany or to one of [plaintiff]’s Span-
ish accounts.

bb) 20
For the reasons stated above, the Court is furthermore convinced that both formation and
performance of the contract were so decisively determined by the [plaintiff] that it is justified
to qualify the transaction as an international sales contract under the CISG. It is therefore
irrelevant to the dispute whether Company D[...] constituted a place of business of the [seller]
in the meaning of Arts. 1 and 10 CISG.

A place of business exists if a party uses it openly to participate in trade 21

(von Caemmerer/Schlechtriem-Herber, Kommentar zum Einheitlichen UN-Kaufrecht, 2nd ed.
1995, Art. 1 n. 26; Staudinger-Magnus, Wiener UN-Kaufrecht, 1999, Art. 1 n. 63 and 65, Art. 10
n. 4; Reithmann/Martiny, Internationales Vertragsrecht, 5th ed. 1996, n. 633), which means
that the place of business must not be merely temporary and must display a certain degree of
independence. The requirements of permanence, stability and principally an independent
ability to act are met by Company D[...], as it is an independent corporation under Spanish
law. Both the company’s name – which was used without an addition indicating the company’s
position as an agent – and the partly identical members of the board of directors give the
impression that Company D[...] is a place of business of the [plaintiff]. Witness P[...] testified
that the company acted «just as a place of business». In reality, however, Company D[...] in its
relationship to the [plaintiff] did not possess representative authority. Thus, it did not possess
an independent authority to act in the form of power to decide upon and close a deal (accord-
ing to the testimony given by witness R[...], the company’s only competence was to decide
not to forward inquiries to the [plaintiff]). The company thus did not posses sufficient actual
weight in its relationship to the [plaintiff], a fact known to the [buyer]. Negotiations concern-
ing the formation of a contract, prices, delivery periods and remedies had to be held with the
[plaintiff].

Even if the Court followed the broad interpretation of «place of business» given by the ECJ to 22
Art. 5 No. 5 of the Brussels Convention (cf. ECJ NJW 1988, 625), the requirements of negotia-
tions in the name of a higher association and the closure of a deal are missing in the present
dispute (see also ECJ NJW 1981, 341, in which the Court denied the classification as a place of
business under very narrow conditions).

In the end, this is of no concern. If Company D[...] did constitute a place of business of the 23
[seller], the application of the CISG would still have to be decided taking into account Art. 10(a)
CISG. Thus, if a party has more than one place of business, the place of business is that which

5
 CISG-online 583 (Translation)

has the closest relationship to the formation and performance of the contract
(cf. von Caemmerer/Schlechtriem-Herber, ibid., Art. 10 n. 3; Staudinger-Magnus, ibid., Art. 10
n. 5; Martiny, ibid., n. 634). This is the [plaintiff]’s place of business in B., Germany. The phys-
ical proximity between the [buyer] and Company D[...], and the latter company’s part in pro-
curing the contract diminish against the [plaintiff]’s control over the formation and perfor-
mance of the contract, which the [buyer] was well aware of.

II. 24
The [buyer] did not object to the merits of the claim. The [plaintiff]’s claim for interest on the
purchase price is based on Art. 78 CISG, the interest rate follows from Art. 28(2) EGBGB and
§ 352 HGB.