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Date:   20 November 2007
Court:   The Court of Limbazi District
Local case reference:   C21025707
CISG Nordic ID:   071120LV
Country of decision:   Latvia
Buyer's country:   The Netherlands
Seller's country:   Latvia
Goods involved:   Sausages
Case history:   n/a
Original language:   Latvian
Provisions cited:   CISG articles 1, 26, 30, 49, 71, 81
Original court document:   n/a
Rapporteur:   Aleksandrs Potaičuks
Case citations:   n/a

 

Abstract

by Aleksandrs Potaičuks

The Buyer (Dutch company) sued the Seller (Latvian company) for the recovery of the debt, refund of the purchase price and lawful interest on it for the time period from 4 October 2006 to 13 July 2007, and lawful interest on the final recovery debt (purchase price + lawful interest on it) for the time period from 13 July 2007 up to the day when the court would deliver the judgment.

The Seller offered to sell 140,376 boxes of “B.P.K.” sausages. The Buyer accepted the Seller’s offer and on 4 October 2006 the Buyer received the Seller’s confirmation that the Seller would deliver the goods to the Buyer the very next week after the receipt of payment. The Buyer paid the purchase price, but the Seller did not deliver the goods neither after the reminder nor after the delivery deadline extension.

The Buyer declared the contract avoided and required the purchase price refunded and lawful interest until 2 February 2007. The Seller refused to repay the purchase price.

The case was referred to the Court of Limbazi District.

The Seller brought a counterclaim against the Buyer claiming that the Buyer had contractual obligation not to resell goods in the Scandinavian (Swedish, Finnish, Danish and Norwegian) market. The Seller discovered that the Buyer was preparing itself to resell the goods in Scandinavia, thus breaching its contractual obligations. Therefore, the Seller suspended the performance of its obligations according to Article 71 (1) (b).

The Court held that the Buyer’s claim was founded and should be satisfied. However, the Court did not satisfy the Seller’s counterclaim.  

The Court further noted that Latvia and the Netherlands have ratified the UN Convention on the International Sale of Goods (CISG) and for this reason the CISG should be applied to this case.   

The Court stated that according to Article 1 (1) (a) of the CISG the Convention applies to contracts of sale of goods between parties whose places of business are in different States and when the States are Contracting States. The Court noted that the Seller must deliver the goods, hand over any documents relating to them and transfer the property in the goods, as required by the contract and this Convention (Article 30 of the CISG). The Buyer may declare the contract avoided in case of non-delivery, if the Seller does not deliver the goods within the additional period of time fixed by the Buyer in accordance with paragraph (1) of Article 47 or declares that he will not deliver within the period so fixed (Article 49 (1) (b) of CISG). A declaration of avoidance of the contract is effective only if made by notice to the other party (Article 26 of CISG). A party who has performed the contract either wholly or in part may claim restitution from the other party of whatever the first party has supplied or paid under the contract (Article 81 (2) of CISG). If the Seller is bound to refund the price, he must also pay interest on it, from the date on which the price was paid (Article 84 (1) of CISG).

The Court found that the Seller did not perform its obligations and therefore should refund the price and pay interest on it (as stated in Article 84 (1) of CISG) for the time period from 4 October 2006 to 13 July 2007. As for interest rate, the Court noted that the CISG does not set interest rates. However, the Court agreed to the Buyer’s opinion that since the Seller is located in Latvia, the interest rate must be stipulated according to Article 1765 of the Civil Law of Latvia, which in cases where the law requires calculation of interest set by law, shall be fixed at six per cent per year.
As for the lawful interest for the time period from 13 July 2007 up to the day when the court will deliver the judgment, the Court disagreed with the Buyer that the lawful interest must be calculated on the final recovery debt (purchase price + lawful interest on it for the time period from 4 October 2006 to 13 July 2007). The Court concluded that the interest rate for the time period from 13 July 2007 up to the day when the court will deliver judgment must be calculated on the purchase price only (according to Article 195 of Civil Procedure Law of Latvia).   

As for the Seller’s counterclaim, the Court did not find that the Buyer had a contractual obligation not to resell its goods in Scandinavia.

 

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