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Regional Court in Zilina
29 March 2004 [22 Cbm/1/2002]
JUDGMENT IN THE NAME OF THE SLOVAK REPUBLIC
The Regional Court in Zilina, deciding by a single judge, JUDr. Erika Canadyova, in the case of Plaintiff P.G.D. [Seller], with its registered office in S.-M., ___, Republic of Austria, represented by JUDr. R.S., attorney, versus Defendant F., spol. s r.o. [Buyer], with its registered office in D.S., ___ Slovak Republic, represented by JUDr. M.B., attorney, …, regarding payment of 12,468.36 Euro [EUR] and appurtenances
h a s d e c i d e d a s f o l l o w s:
The action is dismissed.
The [Seller] is obliged to pay to the [Buyer] a reimbursement of costs of the proceedings in amount of 58,330.- Slovak koruna [Sk] within three days after the judgment comes into force.
REASONING
The [Seller] claimed in the proceedings by its action of 13 June 2002, delivered to the District Court in Zilina, its right to payment of the principal amounting to 12,468.36 EUR and interest of 20 % annually on the sum of 6,249.52 EUR for the period from 31 August 2001 until payment, and on the sum of 6,218.84 EUR for the period from 1 September 2001 until payment and to reimbursement of costs of the proceedings. The [Seller] claimed the principal as a purchase price for delivered goods – PP powdered granulate modixen orientation, HDPE powder, natural fibres and PP natural powder dried and grit. The [Seller] asserted its right to payment of the purchase price by presenting invoices no. 40108033 of 30 August 2001 and no. 40108044 of 31 August 2001 in total amount of 12,468.36 EUR. [Seller] alleged that the [Buyer] failed to pay these invoices despite several calls for payment.
After filing the action, the [Seller] partially withdrew it with respect to payment of interest of 20 % annually on the sum of 6,249.52 EUR for the period from 31 August 2001 until 29 September 2001, on the sum of 6,218.84 EUR for the period from 1 September 2001 until 29 September 2001, interest of 7 % annually on the sum of 6,249.52 EUR for the period from 30 September 2001 until payment, interest of 7 % annually on the sum of 6,218.84 EUR for the period from 1 October 2001 until payment. The Court stayed the proceedings with respect to this part of the action by its resolution of 6 May 2003, rec. no. 22 Cbm 1/02-93 which came into force on 11 November 2003.
After another partial withdrawal of the action, the Court stayed the proceedings by its resolution of 31 October 2000, rec. no. 22 Cbm 1/02-99 with respect to payment of interest of 10 % annually on the sum of 6,249.52 EUR for the period from 30 September 2001 until paymen and on the sum of 6,218.84 EUR for the period from 1 October 2001 until payment. This resolution came into force on 4 December 2003.
The [Seller] insisted in its action on payment of the principal amounting to 12,468.46 EUR and interest of 3 % annually on the sum of 6,249.52 EUR for the period from 30 September 2001 until payment and on the sum of 6,218.84 EUR for the period from 1 October 2001 until payment.
The [Buyer] asked the court to dismiss the action, alleging that the arguments of the [Seller], including submitted evidence, do not prove the concluding of a contractual relationship and performance of contractual obligations. The [Buyer] argued that no goods, as prescribed in the invoices, were delivered to the [Buyer]; that the goods were never handed over to [Buyer] as specified in the invoices.
The Court gathered evidence by reading the submitted documents, interrogation of witness K. M. and witness T.S. and thereby investigated the following factual situation.
With reference to the evidence gathered, the Court notes that the [Seller] claims its right to payment of the principal amounting to 12,468.36 EUR as the purchase price for delivered goods, as it was billed by invoice no. 40108033 of 30 August 2000 and invoice no. 40108044 of 31 August 2001. However, the [Seller] did not specify the factual circumstances about concluding of the contract and agreeing about basic elements of the contract, i.e., about creation of a contractual relationship pursuant to which it delivered goods to the [Buyer]. The [Seller] evidenced its statements by submitting copies of invoices no. 40108044 of 31 August 2001 and no. 40108033 of 30 August 2001 drawn for sums 6,218.84 EUR and 6,249.52 EUR. The Court deduced from the invoices that the [Seller] invoiced the price for:
- “PP Pulver, natur trocken, grob” in amount of 12,730.- kg for a unit price 0.43 EUR per kg; and - - “HOPE Staub, Fäden, nature” in amount of 1,790.- kg netto for a unit price 0.36 EUR per kg in the invoice no. 40108044 from 31 August 2001.
The [Seller] billed by invoice no. 40108033 of 30 August 2001 a price for the delivered goods “PP powder granulate modixen orientation” in the amount of 14,380.- kg netto for a unit price 0.43 EUR per kg. The invoices prescribe a due date of 30 days after receipt of the invoice.
The [Seller] did not provide in the proceedings any further documents proving creation of a contract and its performance (bills of lading). The Court was not able to determine from the submitted invoices the date of their delivery to the [Buyer] and they did not contain any confirmation of delivery of goods by the [Buyer].
The Court deduced from interrogation of witness K.M. performed at the hearing on 23 June 2003, rec. no. 80, that the witness was an employee of the [Seller] in the year 2001 in the position of manager of exports and was responsible for exporting goods. The witness stated that over a period of two years, the [Buyer] had been ordering goods by telephone and subsequently the [Buyer] would come to the premises of the [Seller] by car, inspect the goods, have them handed over and loaded them in its car. The witness stated that the goods concerned in this dispute were ordered by the [Buyer] in the same abovementioned manner by telephone. The purchase price was due in 30 days. The witness confirmed that representatives of the [Buyer] also with respect to this case came to the premises of the [Seller], inspected the goods, were handed over the goods and loaded them in the car. The witness stated that he was present at the inspection of the goods and the [Buyer] was represented by Mr. S and Mr. P and Mr. R. who was in charge of procurement for the [Buyer]. The witness confirmed that the invoice was submitted to the representatives of the [Buyer] who accepted it when the goods were loaded. Therefore, the invoice became due 30 days after handing over the goods. The witness mentioned that no lack of conformity was noticed when handing over the goods. The witness stated that after the [Buyer] failed to pay the purchase price on time, he personally got in contact with Mr. S as a representative of the [Buyer] who said that the [Buyer] will notify the [Seller] of the lack of conformity of the goods, since they cannot be used for manufacturing. The witness stated that the [Seller] did not accept the notice and argued that the goods were duly delivered and the [Seller] asked the [Buyer] to return the goods. The [Buyer] informed the [Seller] that it cannot return the goods as they were transferred to a third party – a customer of the [Buyer] – and the transport back to the [Seller] would be too expensive. The witness confirmed that the [Buyer] only failed to pay two abovementioned invoices in the course of the mutual relationship which lasted two years. The witness mentioned that the invoices were drawn at the same day when the goods were handed over to the [Buyer] and transported.
The Court also interrogated witness T.S. who during the period from 19 July 1999 to 24 March 2003 -- as recorded in the Companies Register maintained by the District Court in Zilina – was acting as an executive of the [Buyer] and was empowered to act exclusively in the name of the [Buyer]. The witness stated at the hearing held on 29 March 2004 that the parties to the proceedings were also trading before the year 2001 in a manner that the [Buyer] would telephone representatives of the [Seller], either Mr. K, Mr. R. or Mr. P., and order the delivery of the goods or these persons would contact the [Buyer] and propose a sale of goods to the [Buyer] and send to the [Buyer] samples of the goods. The [Buyer] would inspected the samples and subsequently order the goods in a determined amount by telephone. The witness stated that subsequent to such purchase orders, the [Seller] would send to the [Buyer] a pro forma invoice which contained information about the goods (amount, quality), unit price and total price. The [Buyer] then paid the pro forma invoice and sent proof of payment to the [Seller] via telefax. The witness stated that he usually communicated with Mr. K, Mr. R or Mr. P. After receiving the payment, the [Seller] contacted the [Buyer] (usually by phone) and informed it about the time when the [Buyer] can take over the goods at the premises of the [Seller], with the [Buyer] obliged to arrange for carriage of the goods, either by its own vehicles or by a contracted carrier. The witness confirmed that the goods were never handed over to the [Buyer] before the payment of purchase price had been made (upon pro forma invoices).
With respect to invoices no. 40108033 and no. 40108044. the goods described therein were never delivered to the [Buyer]. The witness confirmed that the [Buyer] received these invoices by a post several months after their drawing (30 August 2001 and 31 August 2001) and subsequently the witness personally repeatedly explained to Mr. K. acting in the name of the [Seller] that the [Buyer] is not obliged to pay these invoices, as none of the goods specified therein had ever been delivered to the [Buyer] and handed over to the [Buyer]. The witness stressed that in the course of business of the parties to the proceedings, the [Seller] never delivered goods to the [Buyer] prior to payment of the purchase price upon pro forma invoices.
The representative of the [Seller] referred to documents submitted to the Court, rec. no. 101 to 103 and claimed that the [Buyer] confirmed by these documents that the goods had been handed to the [Buyer, as specified in the respective invoices. This fact is evidenced also by the letter signed by the witness T.S. in the name of the [Buyer] on 18 December 2001, rec. no. 104. The Court concluded from the documents rec. no. 104 and 103 that the [Buyer] represented by its executive T.S. asked the [Seller] to reduce the unit price for the PP-pulver from 0.9 Deutsche Marks [DM] to 0.45 DM as the goods are of lower quality and the [Buyer] stated in the letter that it will pay the purchase price on 15 January 2002. The [Buyer] also stated that the goods were already dispatched to O. in Ukraine and their transport back to the [Seller] is therefore not possible. The [Seller] argued that this letter of 18 December 2001 evidences the delivery of the goods, as they are specified in the letter. However, Witness S. stated at the hearing on 29 March 2004 that the abovementioned letter referred to the sample delivered by Mr. K. in the name of the [Seller] to the [Buyer] in amount of 200 kg. The [Buyer] sent this sample to Ukraine and at that time detected the lack of conformity of this sample. Witness S. explained that the letter of 18 December 2001 states that the sample is of a low quality and therefore the [Buyer] asked the [Seller] to reduce the unit price from 0.90 DM to 0.45 DM. Witness S. disagreed with the argument that this letter referred to the actual delivery of the goods and insisted that it only concerned the sample of 200 kg where its returning to the [Seller] would be too expensive, as the carriage from Ukraine to Austria would be necessary.
With reference to these statements, the Court points out that the letter of 18 December 2001, rec. no. 103 and 104 refers to the goods PP-pulver and a unit price of 0.9 DM which was asked by the [Buyer] to be reduced to 0.45 DM. The submitted invoices, which should prove the claim of the [Seller], refer in invoice no. 40108044 of 31 August 2001 to the goods “PP-pulver, natur, trocken, grob” and prescribe a unit price of 0.85 DM and invoice no. 40108033, refers to the goods “PP Granulat-Pulver modixen orientacion” and prescribes a unit price of 0.85 DM. With reference to these distinctions, the Court found that the letter of 18 December 2001 does not refer to the goods referred to the abovementioned invoices which are the object of these proceedings.
The Court determined from the action that the [Seller] claimed its right to payment of the purchase price for goods which, as argued by the [Seller], have been delivered to the [Buyer] and the [Seller] asserted its right to payment of the purchase price by the abovementioned invoices. The [Seller] subsequently claimed also its right to payment of interest with reference to credit interest rates for credits in the Euro currency valid at the time of commencement of default, rec. no. 73 (bank T, branch B. confirms that on 31 August the interest rate in DM was 4.31563 % and on 3 September 2001 was 4.3150 % with respect to business credits in DM provided in the Slovak Republic.).
The Court determined that the claim of the [Seller] emerges from international trade and refers to an unpaid purchase price. The [Seller] claims its right to payment of the purchase price under article 54 of the UN Convention on Contracts for the International Sale of Goods, published in Collection of Acts as no. 160/1991 Coll. which states that the buyer's obligation to pay the price includes taking such steps and complying with such formalities as may be required under the contract or any laws and regulations to enable payment to be made and under article 53 which prescribes that the buyer must pay the price for the goods and take delivery of them as required by the contract and this Convention.
However, the [Seller] was obliged to prove in the proceedings (had the burden of proof) that the parties to the proceedings concluded their contract of sale in accordance with articles 14 to 24 of the Convention and that the right of the [Seller] to payment of the purchase price actually emerged. The [Buyer] argued in the proceedings that the goods have never been delivered and therefore that the [Buyer] was not obliged to pay purchase price. The witness who acted as executive of the [Buyer] in 2001 stated that contractual relationships were created in oral form following purchase orders of the [Buyer] for specified goods, which were determined after the [Buyer] had inspected sample goods. Subsequently, as stated by the witness, the [Seller] sent a pro forma invoice and, after its payment, the [Buyer] was handed over the goods at the premises of the [Seller]. On the contrary, the witness who used to be employed by the [Seller] stated that he was present at the handing over of the relevant goods to the [Buyer], who was represented by its executives Mr. S. and Mr. K., for which the [Seller] claimed its right to payment of the purchase price by the abovementioned invoices. The [Seller] had to provide evidence to prove that the parties to the proceedings concluded a valid contract of sale, i.e., that they agreed about basic elements of the contract, i.e., about the goods to be delivered (specified its quality and amount) and about the price. However, the Court determined from testimony of Witness S. that the [Buyer] never agreed to the proposal of the [Seller] about the price. The performance of the contract could only have occurred after valid creation of a contract. The [Seller] was obliged to ascertain and evidence factual circumstances proving that the parties to the proceedings have agreed about amount of the purchase price and its due date. The [Seller] stated in the proceedings that the due date was prescribed as the 30th day after receipt of the invoice by the [Buyer]. Witness K. stated at the hearing that the due date was prescribed on 31st day after receipt of the invoice by the [Buyer]. On the contrary, witness S. stated that the purchase price was always paid before handing over the goods to the [Buyer].
With reference to the evidence gathered, because of controversy in the statements of witnesses Mr. K and Mr. S., the Court was not able to determine the due date of the invoices and had found evidence proving that the due date was the 30th day after receipt of the invoices.
The [Seller] bore the burden of proof with respect to proof of agreement about the price and its maturity with respect to invoices no. 40108033 and no. 40108044. The [Seller] was therefore obliged to present evidence that would rebut the assertions of the [Buyer] that in the previous course of business, the price had always been paid before handing over the goods, as was explained by Witness S. Since the [Seller] failed to prove conclusion of a valid contract of sale and failed to prove delivery of the goods, the Court determined that the [Seller] did not justify its claim for payment of the purchase price. Therefore, the Court dismissed the action of the [Seller] as unjustified.
With respect to the claimed interest, the court refers to article 78 of the UN Convention on Contracts for the International Sale of Goods which provides that if a party fails to pay the price or any other sum that is in arrears, the other party is entitled to interest on it, without prejudice to any claim for damages recoverable under article 74. The [Seller] did not prove in the proceedings that the parties to the contract have chosen the interest rate of 3 % and the [Seller] also initially claimed interest of 20 % annually.
The Court points out that the [Seller] did not prove that the parties to the proceedings have made a choice of law governing interest. With respect to right to payment of the purchase price, as already mentioned, this right is governed by the UN Convention, as both Austria and Slovakia are contracting parties to the Convention. As the choice of law was not proved in the proceedings, the Court found that the applicable law has to be determined under sec. 10 part 2 a) of act no. 97/1963 Coll. which prescribes that the applicable law has to be the law of the State where the seller has its registered office. Since article 78 does not prescribe interest rate, it has to be determined under the law of the State where the seller has its registered office and the [Seller] was therefore obliged to prove that its claim to payment of interest of 3 % annually was in accordance with the applicable law. The [Seller] did not justify its claim with respect to the interest rate and did not submit any evidence thereto.
With reference to the abovementioned, the Court dismissed the action being unjustified.
Instruction: An appeal against this judgment must be filed within 30 days after its receipt via this court to the Supreme Court of the Slovak Republic.
JUDr. Erika Canadyova |
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