High Court of Ljubljana




[CLOUT case no. 2109; abstract prepared by Ana Vlahek and Tjaša Kalin]

The parties concluded a contract for the supply of walnuts. The buyer (defendant), as an intermediary, resold the walnuts to its clients. Eventually, the seller (plaintiff) filed a claim with the court of first instance demanding payment of the invoices for the walnuts. The buyer objected, claiming that the seller’s claim was time-barred and should anyway be offset against a claim for damages for breach of contract due to delivery of non-conforming walnuts. The buyer alleged that it had found out from one of its clients that the walnuts were of bad quality, and it had immediately informed the seller thereof, and that the seller had issued a credit note for the spoilt walnuts. The buyer added that two of its clients had stopped conducting business due to the poor quality of the walnuts resold to them.

The court of first instance found that a few shipments of walnuts were disputed and partially accepted the buyer’s argument on the basis of the fact that the seller acknowledged the damage by issuing the credit note. However, the court did not find the seller liable for breach of contract because there was no proof of the breach of contract, the notifications of non-conformity were not timely, and the damage was not foreseeable for the seller. The buyer filed an appeal.

In its first judgement (VSL Sodba in sklep I Cpg 285/2019), the High Court of Ljubljana stated that the applicable law to the contract is the CISG, as a contract for sale of goods was concluded between parties having their place of business in different CISG Contracting States. The High Court found that the seller breached the contract and that the notification of the lack of conformity was valid and timely. The buyer had examined the goods in accordance with the HACCP standards, meaning that it examined three or four boxes of walnuts per pallet (a pallet consisting of 54 boxes containing ten kilograms of walnuts each), which is a standard examination in the food industry. The High Court indicated that a requirement to examine every box of walnuts would be unreasonable, especially as the buyer was only an intermediary. As for the timeliness of the notification given 8 or 10 days after delivery, the High Court stated that the notion of reasonable time should be interpreted in light of the facts of each individual case. Since the buyer notified the seller the same day as the buyer was informed by its clients, the notification was given in a reasonable time. In the opinion of the High Court, the walnuts were not such a perishable commodity to require an
immediate notification. Moreover, according to the Hight Court the timeliness of the notification was also shown by the fact that the seller granted the credit note.
In conclusion, the High Court in part granted the appeal and in part repealed the judgement of the first instance and remanded the case to the court of first instance. The court of first instance decided the matter again, awarding the buyer damages for the loss of profit due to the breach of contract. The seller again filed an appeal against the award of damages by claiming they were not foreseeable according to article 74 of the CISG.

In its second judgement (VSL Sodba I Cpg 677/2020), the High Court of Ljubljana explained that at that point the only disputed issue was the liability claim for the breach of contract. It confirmed that the seller breached the contract. Insofar as the limitation of the amount of damage to foreseeable damages, the High Court explained that a distinction should be made between typical and atypical contractual interests. It further explained that the party claiming the damages did not have to prove that it had brought typical contractual interests for specific types of contracts to the attention of the counterparty, but that it only had to indicate that the damage was caused by a typical risk which was presumed to be known to the debtor. It added that, for a buyer acting as an intermediary, the expected profit from the resale of goods was a typical contractual interest, and that the risk of lost business and lost profits was therefore a typical risk of such economic operations, which should be known to the counterparty. It also indicated that the foreseeability of the amount of damages within the meaning of article 74 of the CISG should not be understood in a literal sense, i.e., that the seller should be aware of the expected profit. Accordingly, the High Court dismissed the appeal and confirmed the judgement of the court of first instance.




[Case law on UNCITRAL Texts, A/CN.9/SER.C/ABSTRACTS/229]}}