Luc Demeyere April 8 2003 Sales Convention Applies Unless Expressly Excluded Allen & Overy LLP | Litigation - Belgium Luc Demeyere Litigation Background Facts Decision Comment BackgroundThe Vienna Sales Convention(1) applies to international contracts for the sale of (movable) goods if the contracting parties are established in different member states or the contract is governed by the law of a member state. The provisions of the convention supersede national law for certain matters, unless the parties have explicitly excluded its application.Under Article 78 of the convention interest for late payment is charged without notice of default being required. According to Article 45 and Article 74 of the convention the purchaser is entitled to damages for late delivery, including lost profit.FactsIn November 1998 a Belgian manufacturer sold and delivered a tool to a German purchaser. The agreement was drawn up in German and referred to the delivery conditions recommended by a German association of manufacturers of such tools.The purchaser only partially paid the invoices of the vendor, which began proceedings before the Namur Court of Commerce to recover the outstanding amount, including interest under Article 78 of the Vienna Sales Convention.In its counterclaim, the purchaser claimed damages from the vendor for late delivery under Article 45 and Article 74 of the convention.DecisionOn January 15 2002 the Namur Commercial Court(2) determined which law applied to the international purchase agreement. The court ruled that the Vienna Sales Convention applied. At the time the sale purchase agreement was concluded, the convention had entered into force in both Belgium and Germany.Further, there was no indication that the parties intended to exclude the convention's application. The court ruled that although the agreement was drawn up in German and referred to delivery conditions applicable to German sales (ie, between a German purchaser and a German vendor), this did not mean that the parties intended to apply domestic German law to the agreement and thus exclude the Vienna Sales Convention. As a consequence, the court ruled that the convention applied.The court applied Article 78 of the convention to the principal claim regarding late payment. This article provides that interest for late payment is charged as from the due date of the invoice, without any requirement of prior notice of default. The Belgian seller was thus granted interest for late payment as from the due date, even though he had not send notice to the German purchaser. The court found that Article 45 and Article 74 of the Vienna Sales Convention applied to the purchaser's counterclaim for late delivery. According to these articles the purchaser is entitled to any damages, including for lost profit, which the purchaser suffered as a consequence of the late delivery. It is up to the purchaser to prove this damage. Since the court considered that the German purchaser did not produce sufficient evidence of the damage allegedly suffered, its counterclaim was rejected.CommentThe Vienna Sales Convention applies to international contracts for the sale of movable goods when the contracting parties are established in different member states at the time the sale contract is concluded. The convention forms a part of the national law of the member states.Contracting parties may exclude the application of the convention. However, such exclusion must be agreed on explicitly and unambiguously. For further information on this topic please contact Luc Demeyere at Allen & Overy by telephone (+32 3 287 7222) or by fax (+32 3 287 7244) or by email ([email protected]). Endnotes(1) UN Convention on Contracts for the International Sale of Goods of April 11 1980. (2) Namur Commercial Court (Belgium), January 15 2002, JLMB, 2002, p1589.