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Date:   19 February 2004
Court:   Tallinn Circuit Court
Local case reference:   2-2/111/2004
CISG Nordic ID:   040219EE
Country of decision:   Estonia
Buyer's country:   Estonia
Seller's country:   Germany
Goods involved:   Tomato Paste
Case history:   Judgment of the court of first instance was given on 15.04.2003 by the Tallinn City Court (civil matter no. 2/319-1073/02) who did not satisfy the claim. The Tallinn Circuit Court reversed the decision by its judgment of 17.06.2003. The Supreme Court confirmed the appeal court’s findings by the judgment of 14.11.2003 (civil matter no. 3-2-1-124-03) and sent the matter back to the Tallinn Circuit Court.
Original language:   Estonian
Provisions cited:   CISG articles 4, 53, 64, 76
Original court document:   Available
Rapporteur:   Aleksandra Vasiljeva, Gea Lepik and the University of Tartu
Case citations:   n/a



An abstract is also available at globalsaleslaw.org.

by Gea Lepik and the University of Tartu

A German company Novia Handelsgesellschaft mbH (the Seller) filed an action against an Estonian company AS Maseko (the Buyer) based on a sales contract concluded on 11 November 1999 (the Contract). The Contract was concluded by way of signing by the Buyer the written sales confirmation of 11.11.1999 no. 11461 issued by the Seller. Under the Contract the Seller agreed to sell and deliver to the Buyer 500 000 kg of tomato paste at the price of 0,7850 USD/kg. The deliveries were supposed to be made in installments according to regular orders by the Buyer during the time period from 11.11.1999 until August 2000. The Buyer fulfilled the Contract partially by placing orders and setting delivery dates for 176 003 kg of tomato paste. The Buyer did not set the delivery dates for the remaining 322 997 kg of tomato paste, justifying it with reference to a decline in the market price and a market slump. On 5 April 2001 the Seller declared the Contract avoided under Art 64 of the CISG and claimed damages in the amount of 53 456 USD based on Art 74 of the CISG.
According to the Seller the Buyer breached his obligations under Art 53 of the CISG pursuant to which the Buyer must pay the price of the goods and take delivery of them as required by the contract and the CISG. The alleged damages resulted from the Seller’s loss of income as the market price of tomato paste had been in constant decline in 2000 and the Seller was deprived of the expected profit. The total amount of damages was calculated in accordance with Art 76 (1)-(2) of the CISG which stipulate that if the contract is avoided and there is a current price for the goods, the party claiming damages may recover the difference between the price fixed by the contract and the current price at the time of avoidance, while the current price is the price prevailing at the place where delivery of the goods should have been made.
The Buyer did not accept the claims. According to the Buyer there had been no offer and acceptance by the parties to conclude the Contract. The sales confirmation no. 11461 of 11.11.1999 was merely a written confirmation and did not constitute a sales contract. Even if there had been a contract, the Seller had not suffered any damages according to Art 76 of the CISG in relation to the non-supply of tomato paste to the Buyer. Since the Seller was only acting as an intermediary in the sales process and was not an independent seller himself, the Seller did not carry any business risks. The Buyer also claimed that since Art 76 of the CISG requires that the object of the sales contract has a „current price“ and tomato paste, not being a quoted good, does not have a current price, Art 76 was not applicable.
The Tallinn City Court (first instance) found that the Contract had been duly concluded, but did not satisfy the claim as the requirements of Art 76 of the CISG were not fulfilled. The court explained that the Seller had not proven the occurrence of any damages, in particular the Seller had not presented evidence that the goods for which the Buyer failed to place orders were owned by the Seller at the time of avoidance of the Contract and that it was impossible for the Seller to conclude a substitute transaction. The Seller filed an appeal to the Tallinn Circuit Court (court of appeal), who reversed the judgment of the Tallinn City Court and decided to send the case back to the court of first instance. Following a cassation by the Buyer, the Supreme Court confirmed most of the findings of the appeals court but decided that the matter should be decided by the Tallinn Circuit Court, instead of the court of first instance.
In its new judgment the Tallinn Circuit Court (the Court) reiterated the previous finding that the sales Contract had been duly concluded by the parties. At the time of conclusion of the Contract, Estonian laws required international contracts to be concluded in written form. In the present case this requirement was met as the Buyer had accepted the Seller’s offer by signing the written sales confirmation no. 11461. In the opinion of the Court the signed document indicated the agreement of the parties that the Seller sells and the Buyer purchases 500 000 kg of tomato paste at the price of 0,7850 USD/kg and that the delivery would be made in regular installments until August 2000.
With regard to Art 76 of the CISG the Court followed the instructions given by the Supreme Court in its judgment of 14.11.2003 in the same civil matter and found that the provision was applicable in the present case. The Supreme Court had identified three conditions for applying Art 76: (1) the sales contract is avoided; (2) the current price of the goods is proved; (3) lack of a substitute transaction. In the opinion of the Court, all three requirements were fulfilled. Concerning the second condition, the Court did not agree with the Buyer’s opinion that current price could only be determined with respect to quoted goods, which tomato paste was not. In the present case the Seller had produced evidence to substantiate the exact current price of the goods prevailing in Turkey where delivery of the goods should have been made according to the agreed CIF delivery.
The Court also refuted the findings of the court of first instance by explaining that the relevant articles of the CISG do not require that the Seller owns the goods and/or that selling the goods by a substitute transaction is impossible. The Court explained that sales contracts can be concluded with respect to goods to be acquired by the Seller in the future. Furthermore, in accordance with Art 4 (b) of the CISG all issues of ownership are excluded from the scope of application of the convention.

Based on the above, the Court concluded that the Seller’s claim for damages was fully founded. The Seller’s appeal was satisfied and the judgment of the court of first instance was annulled.


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