KS TT - 36Cbm/6/2003sk en

Regional Court in Trnava


12 January 2006 [36 Cbm/6/2003]





[slovenske znenie]




The Regional Court in Trnava, deciding by a single judge, JUDr. Maria Usacevova, in the case of Plaintiff A.A. [Buyer], with its registered office in L. ___, Switzerland, represented by attorney JUDr. Mag. J. C. versus K. u. K. Z. V. a A., S.r.o. [Seller], with its registered office in C., ___, D.S. [Slovak Republic], represented by attorney Doc. JUDr. L.K. CSc. regarding payment of 12,760.96 Euro [EUR] and appurtenances


h a s   d e c i d e d   a s   f o l l o w s:


The court dismisses the action.


The [Buyer] is obliged to pay to the [Seller] reimbursement of costs of the proceedings in the amount of 58,012.50 Slovak koruna [Sk] within three days after the judgment comes into force.


      The court stays the proceedings with respect to the sum of 767.- EUR.




By its action filed with the court on 24 November 2003, the [Buyer] claimed the right to payment of principal amounting to 12,212.96 Sk and damages due to the [Seller]’s delay in performance amounting to 767.- EUR. The [Buyer] stated in its action that:


-         It concluded an agreement of cooperation in planting, production and trade with decorative pumpkins on 1 January 2002 under the title “Contract on Association”, under which the [Seller] was obliged to deliver to the [Buyer] the goods – decorative pumpkins.


-         The [Seller] delivered goods on 25 September 2002 that did not conform to the contract, since they were of a lower quality and of a smaller amount than prescribed and the [Buyer] notified the [Seller] of the lack of conformity within twenty-four hours after the delivery.


-         The [Buyer] subsequently had to incur additional costs to buy substitute decorative pumpkins from other producers and costs emerging from notifying the lack of conformity and asserting its claims.


-         On 28 September 2002, the [Buyer] sent to the [Seller] a call for payment of 12,212.96 EUR as a reimbursement of costs incurred. Since the [Seller] did not react to this call, the [Buyer] drew an invoice for the abovementioned sum and sent it to the [Seller] with another call for payment. The [Buyer] also called to urge the [Seller] to pay this sum via its legal counsel on 29 May 2003. The [Seller] did not react to this call either.


[Buyer] filed this action with the court asserting its right to payment of this sum and to reimbursement of the costs of the judicial proceedings.


The [Seller] asked the court via its legal counsel to dismiss the action in its entirety.


-         The [Seller] pointed out that the goods delivered to the [Buyer] and other customers were of a vegetable character. Such goods are subject to strict botanical and medical controls both in internal and international trade when imported and exported. The goods cannot leave the territory of the state and get customs clearance without being officially certified by state controlling authorities. This was the case with regard to the delivery on 25 September 2002, where the [Seller] fulfilled all official requirements, as is evidenced by botanic-medical certificate C 005769 dated 23 September 2002.


-         Furthermore, the [Seller] pointed out that the pumpkins delivered to the [Buyer] were planted from original seed provided and controlled by the [Buyer]. When notifying of the lack of conformity, the [Buyer] did not present the Swiss botanic-medical certificate for these goods and, without such certificates, the Swiss customs and internal authorities could not investigate the quality of the goods as it is stated in the action.


-         The [Seller] also pointed that the [Buyer] is not its only foreign customer, as in 2002 it also supplied pumpkins to Germany. [Seller] stressed that because of a very special natural character of the goods, each delivery was pre-consulted between the [Seller] and each customer with regard to its quantity and quality.


-         Finally, the [Seller] stated that, in case of previous deliveries, the parties to this dispute used to resolve all problems by an agreement and without the assistance of courts. To ensure the satisfaction of a customer, the [Seller] always provided a surplus of 5-6 % of goods in a delivery. Furthermore, each delivery was loaded on a transport in the registered office of the [Seller] and delivered to the [Buyer] according to the [Buyer]’s instructions. With respect to the legal point of view, the parties to the dispute concluded an innominate contract based on principles of contract of sale under the Slovak Commercial Code (hereinafter referred to as “CC”). After receiving the goods, the [Buyer] subsequently re-exported them and therefore has to bear all legal implications emerging from these subsequent contracts. The passing of risk on the goods should be governed by sec. 455 CC under which the risk passes to the [Buyer] at the time when the [Seller] hands over the goods, i.e., at the time when the goods are loaded on a transport arranged by the [Buyer].


-         With respect to the [Buyer]’s notice of lack of conformity, the [Seller] was provided with no objective analysis of the [Buyer]’s statements, that could be provided by the local Swiss controlling authority. The [Seller] also stated that the smaller pumpkins were packed in containers, while the bigger ones were, because of the lack of packages provided by the [Buyer], strawed to ensure their safe transport.


The [Seller] therefore asked the court to dismiss the action in its entirety and to grant the [Seller] a right to reimbursement of costs of the judicial proceedings.


The [Buyer] responded to the [Seller]’s statements as follows:


-         [Buyer] alleged that [Seller]’s statements were not correct, since the phyto-inspector, when issuing the botanic-medical certificate, does not examine the quality of the goods and the quality of the goods was indeed the reason for claiming their lack of conformity.


-         The [Buyer] argued that the goods in question were dirty, of toneless color, partially overripe and partially unripe, as was evidenced by photos made on 23 September 2002.


-         The [Buyer] furthermore objected to the [Seller]’s statement that the goods were planted from seeds provided by the [Buyer], since under the Contract on Association, both parties to the contract were entitled to provide the seeds and the [Seller] did not prove that the pumpkins in question were planted from seeds provided by the [Buyer].


-         With regard to the [Seller]’s statement that it always supplied a surplus of 5-6 %, the [Buyer] stated that this was incorrect, since all three deliveries performed by the [Seller] were incomplete.


-         Concerning the claimed non-providing of the packing for the goods, the [Buyer] pointed out that it was not obliged under the Contract on association to provide such packing.


-         And the [Buyer] did not provide the certificate of the liquidation of goods from the Swiss state authority, since with respect to a special character of the goods delivered, the [Buyer] had no time to obtain such certificate, but it provided evidence of liquidation of the defective goods.


The Regional Court in Trnava examined evidence by interrogation of the attorneys and the parties to the dispute, reading the submitted documents and determined that the asserted claim was based on a right to remedies for breach of the contract amounting to 12,212.96 EUR emerging from the lack of conformity of the goods delivered, consisting of:  


-         The right to reduce the purchase price under art. 50 of the UN Convention on Contracts for the International Sale of Goods published as no. 160/1991 Coll. (hereinafter referred to as “Convention”); and


-         The right to damages under art. 74 of the Convention for the loss sustained because of the delivery of defective goods, compensation for the contractual penalty that the [Buyer] had to pay in sum of 6,351.50 EUR, costs of liquidation of the defective goods amounting to 882.- EUR, wages of the employees performing the liquidation in amount of 2,865.- EUR and costs of the carriage of these goods amounting to 1,450.- EUR.


In the course of the proceedings the [Buyer] withdrew its action partially in sum of 767.- EUR and since the [Seller] accepted it, the court stayed the proceedings in this part with reference to sec. 96 part 1, 2 CPC.


The court’s investigation determined that:


-         The [Buyer] is a legal person established under Swiss law with its registered office in Switzerland. The [Seller] is a legal person established under Slovak law and this constitutes a court proceedings with an international aspect in which this court is competent to try the case, with respect to the subject-matter of the case, under sec. 9 part 3 i) CPC and, with respect to the territorial aspect of the case, under sec. 85 part 1 CPC, as the [Seller] has its registered office in the circuit of this court.


-         The parties to the dispute concluded a Contract on Association (where the [Seller] was incorrectly identified) on 1 January 2002, in which the parties agreed in sec. 7 that in case of a dispute, the dispute will be resolved by the German-Swiss Trade Chamber as a court of arbitration and the parties agreed that the applicable law will be the Swiss law supplemented by private international law and Incoterms.


Under sec. 3 of the Contract the parties agreed that:


-         The [Seller] undertakes with its best efforts to produce the agreed species of decorative pumpkins in the agreed amount where the [Buyer] undertakes to provide to the [Seller] its requirements on quality of these goods until 15 March each year.


-         Seed can be supplied by both parties after a preceding mutual agreement.


-         The pricing for the next years will be subsequently determined by both parties. The [Buyer] will determine the amount of goods to be delivered until 15 March each year with tolerance of 10 %.


-         The [Buyer] undertakes to accept the goods from the [Seller] in accordance with plan of deliveries commencing from 10 August, in packings required by the [Buyer].


-         Invoices will be due in 10 days after their drawing.


-         Accountings will be made in EUR.


-         Goods must be clean, ripe, including stalk, undamaged, without brown spots and in bright colors, in order to conform to requirements of high-quality products demanded by the [Buyer] and its customers


Furthermore, the parties agreed that:


-         Goods delivered in a lower quality as stipulated in sec. 3 h) will not be handed over and will be declared and paid for as second class.


-         The term for notifying of lack of conformity is within twenty-four hours after the [Buyer] receives the goods.


-         Pumpkins will be packed in containers placed on pallets to be used repeatedly.


-         Time of delivery must be observed.


-         Contractual penalties are due only if the party proves action of the other party contrary to good faith, as it is defined in Swiss law; in other cases, only if the court of arbitration determines so after further analyse of incomes and outcomes


The court determined from the submitted document – list of expenses no. 207 – that the [Buyer] provided to the [Seller] the agreed list of incomes and outcomes of the trade, taking into consideration received deliveries of decorative corn which did not lack conformity. This list contained the following items:


  1. Notice of lack of conformity of 31 August 2002 (after a mutual agreement of 5 September 2002, the price was decreased from 1,784.- EUR to 1,000.- EUR).


  1. Notice of lack of conformity of 14 September 2002 (accepted by the [Seller], the sum of 2,500.- EUR will be deducted from the last delivery).


  1. Customs declarations for import 25 September 2002 (carriage no. 207) – 40.- EUR.


  1. Carriage by Frigotrans – 25 September 2002 (the goods were of no use, therefore the [Seller] should bear costs of the carriage in sum of 1,450.- EUR).


  1. Compensation for delay – 25 September 2002 (contractual penalty asserted by C – CH.) – 6,351.50 EUR.


  1. Liquidation – 25 September 2002 (pumpkins from the [Seller], no. 207, liquidation performed by the [Buyer]) – 882.- EUR.


  1. Wages for liquidation – 25 September 2002 (95.5 hrs for 30.- EUR each, liquidation performed in on day by ten employees) – 2,865.- EUR


  1. Credit note of balance – 2 September 2002.


  1. Invoice of 20 September 2002 (decorative corn – good quality, 20 September 2002, the rest ready for carriage) – 1,484.50 EUR.


  1. Invoice of 20 September 2002 (decorative corn – good quality, 25 September 2002, the rest ready for carriage) – 550.- EUR.


  1. invoice of 13 September 2002 (baskets – 1000 pc) – 650.- EUR


The total claim specified by the [Buyer] amounts to 12,212.96 EUR.


The court determined from invoice no. 102135 of 11 November 2002 that the claimed sum was invoiced by the [Buyer] to corporation A.K.G.M. with its registered office in Germany. According to the Companies Register, this corporation is a shareholder in the [Seller] (rec. no. 165).


The court determined from the document titled as a final and binding purchase order for pumpkins 2002 (rec. no. 177), that the [Buyer] sent this purchase order to corporation K A. K G.M. with its registered office in Germany, where the [Buyer] informed Mr. K., the executive of the [Seller], that the planting will be performed by two companies and that [Buyer] is expecting high-quality products and therefore only the seed provided by the [Buyer] can be used in prescribed amounts.


The court determined from the notice of lack of conformity of the goods of 31 August 2002 that it was addressed to corporation K.A.K.G.M and not to the [Seller]. It is clear from this document that the [Buyer] confirms that it provided the seed to this corporation (rec. no. 60) and that the notice refers to the claim no. 1 specified in the action.


The court determined from another notice of lack of conformity of 14 September 2002 (rec. no. 78) that this notice is addressed to the [Seller] (invoice no. 02/2002 of 16 August 2002, invoice no. 10/2002 from 24 August 2002), but it also states that the lack of conformity was already partially notified in the abovementioned notice of 31 August 2002 addressed to a different corporation. The [Buyer] also claimed its right to partial reimbursement of the carriage for 17,917 pc SK-CH in the sum of 750.- EUR, partial reimbursement of the costs of carriage for 17,917 pc M.-Z. X in the sum of 400.- EUR and partial reimbursement of the costs of carriage abroad with reference to the record on administrative outcomes amounting to 1,850.- EUR, thereby claiming in total 4,990.45 EUR.


The court examined document rec. no. 81 proving that, in the week of 23 September 2002 to 28 September 2002, twenty employees were working for the [Buyer] and three of them were management staff. The [Buyer] thereby tried to prove that nine of its employees were working on Wednesday 25 September 2002 on liquidation of the defective pumpkins delivered.


The court determined from document no. 93, minutes from a business meeting held on 2 September 2002 attended by Mr. B.K., representative of the [Buyer], director of K. A. K.G. M.M. a S. and assistant of the [Buyer], that the persons present discussed the incomplete deliveries, non-performed deliveries at the stipulated time, problems with quality of goods and non-providing of information, as it was agreed in the Contract concluded at the beginning of the season, which was repeatedly breached. In this respect, the court points to contract rec. no. 174 which was concluded with a company in Germany and not with the [Seller]. The [Buyer] demanded that company K. pay a prescribed amount of money but Mr. K. asked for a period of one day for consideration of this and therefore no agreement emerged from this meeting.


The court also found that the [Buyer] sent its accounting documents to corporation K.A.K.G.M in Germany (rec. no. 95) where it determines its claims against the [Seller] but subsequently set them off against the claims of the company in Germany and acknowledges the credit note to this company in the amount of 191.04 EUR.


The court determined from the abovementioned documents that the [Buyer] addressed the documents always to Mr. K and did not distinguish between the two legal entities it was referring to – the [Seller] and corporation K.A.K.G.M. in Germany – where both these corporations have Mr. K. as their executive.


The court determined from submitted documents rec. no. 20 and 81, comparing them to the [Buyer]’s specification of the asserted claim amounting to 2,865.- EUR under part 7, that the liquidation of defective pumpkins by the [Buyer] occurred on 25 September 2002, while the [Buyer] stated in its written notice of lack of conformity of the goods on the same day that the [Seller] can examine the delivery until Saturday, 28 September 2002, with warning that after this date it will be liquidated. The court therefore determined that the [Buyer] did not perform liquidation on 25 September 2002, since it offered the [Seller] the opportunity to inspect the goods until 28 September 2002.


Furthermore, from the documents submitted by the [Buyer], the court determined that [Buyer]’s claim to reimbursement of the contractual penalty in the amount of 6,351.50 EUR is unjustified, since with reference to sec. 3 h) of the Contract of Association, the parties agreed that such claim should be evidenced by an analysis provided to the court of arbitration and this did not happen so far. The court could not take into consideration the photos provided by the [Buyer] to prove the low quality of the pumpkins, since as the [Buyer] stated, two corporations were planting the pumpkins and it is not clear which corporation produced the pumpkins in these photos.


With reference to the abovementioned, since the [Buyer] did not distinguish between the deliveries of pumpkins performed by two separate legal entities, [Buyer] did not prove that the loss was incurred from the defective delivery performed by the [Seller]. The [Buyer] also did not prove that it notified the [Seller] of the lack of conformity in the prescribed period of time, since the documents submitted to the court were in the majority addressed to the corporation in Germany and not to the [Seller]. Also, the claimed breach of contract emerging from the purchase order of 2002 was unjustified, since this purchase order was addressed to the corporation in Germany and not to the [Seller]. Therefore, if any breach occurred, it was a breach of the Contract from 1 January 2002 where the [Buyer] was obliged to accept the goods personally or via its employee and to ensure the carriage to its registered seat. As is prescribed in the Contract, if the goods are not in conformity with the prescribed quality, i.e., are dirty, of toneless color, partially overripe or partially unripe, they shall not be handed over to the [Buyer]. Therefore, the presumption can be made that if the [Buyer] accepted delivery of the goods, they must have been of the quality prescribed by the contract. Furthermore, the [Buyer] re-exported the goods to its customers and therefore was liable for any obligations thereby created.


With reference to the factual situation and detailed reasoning:


-         The court dismissed the [Buyer]’s action in its entirety; and


-         The court ruled on other costs of the judicial proceedings with reference to sec. 142 part 1 in connection with sec. 149 part 1 CPC.


The [Seller] was successful in defending against the [Buyer]’s claim in its entirety. It was therefore granted full reimbursement of its costs.


Instruction: An appeal against this judgment must be filed with the Supreme Court of the Slovak Republic via this Regional Court within fifteen days of its receipt in two versions.

Regional Court in Trnava, 12 January 2006

                                                                                                   JUDr. Maria Usacevova



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