Judgment of the Maritime and Commercial Court of Copenhagen of 31 January 2002
Transcript
Case No. H-0126-98 1
Dr. S. Sergueev Handelsagentur v. DAT-SCHAUB A/S
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Court composed of Claus Forum Petersen, Jørgen Sieverts, Niels Hofman Laursen.
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Appearances: Anders Aagaard, advokat, for the buyer; Thomas O. Smitt-Jeppesen, advokat, for the seller.
The main issues in this case are whether a consignment of fish delivered by the seller DAT-SCHAUB A/S (hereinafter referred to as “DAT-SCHAUB”) to the buyer Dr. S. Sergueev Handelsagentur (hereinafter referred to as “Dr. Sergueev”) conformed to the specifications in the order, whether the fish had been caught in November/December 1996 as required by the contract, and whether the notice of lack of conformity as to the period of catch had been given in time by Dr. Sergueev.
Claims
Dr. Sergueev claims that DAT-SCHAUB be ordered to pay US$ 107,299, alternatively a smaller amount determined by the court plus interest on it as from 29 June 1997, alternatively as from a later date.
Particulars:
Prepayment to DAT-SCHAUB US$ 70,000
Customs duty US$ 5,459
Customs duty US$ 100
Unloading US$ 477
SGS report US$ 1,260
Expenses to Vaara & Partners US$ 2,590
Storage expenses US$ 29,563
Less income on resale US$ -2,120
Total US$ 107,229
DAT-SCHAUB moves for dismissal of the buyer’s claim, alternatively dismissal of the buyer’s claim for the payment of a smaller amount.
DAT-SCHAUB claims separately that Dr. Sergueev be ordered to pay US$ 5,822.75 plus interest as from 23 July 1997. This amount equals the balance owing on the consignment of fish after the prepayment of US$ 70,000 made by Dr. Sergueev.
Dr. Sergueev moves for dismissal of the separate claim by the seller.
De Poel Import Export BV, the Netherlands (hereinafter referred to as “de Poel”) was brought in as a third party to the proceedings by DAT-SCHAUB seeking an indemnity for any amount it might be ordered to pay in the main proceedings.
Based on an agreement between the parties to the case, the court decided to hear the main proceedings separately pursuant to section 253 of the Danish Administration of Justice Act.
Before the case was set down for judgment, DAT-SCHAUB discontinued the third party proceedings.
Facts
In a fax of 2 December 1996 to DAT-SCHAUB, de Poel offered to deliver “80 tons of frozen mackerel, Whole Round” from Peru in boxes of 22.5 kg at a price of US$ 865 per metric ton. Time of delivery was indicated as “beginning of January 1997”.
Following a telephone conversation between Dr. Stanislav Sergueev and Mr. Torben Sørensen of DAT-SCHAUB at the end of January 1997 concerning the delivery of mackerel, DAT-SCHAUB received confirmation from de Poel that de Poel was still able to deliver under the terms of the offer of 2 December 1996. Consequently, DAT-SCHAUB informed Dr. Sergueev that delivery could be effected. Dr. Sergueev asked for further specifications and DAT-SCHAUB requested and received further specifications from de Poel for the purpose of preparing the information requested by Dr. Sergueev. On 3 February 1997 de Poel faxed its specifications to DAT-SCHAUB showing that the product was “Tiefgefrorene Mackerel – Whole Round”, “400-500 gr.” from Peru with the Latin name “Trachurus Symmetricus Murphyi”, packed in boxes of 22.5 kg. The fax also stated: “Date of production: November/December 1996”.
Later on 3 February 1997, DAT-SCHAUB faxed the specifications to Dr. Sergueev’s Russian buyer in St. Petersburg and to Dr. Sergueev in Germany. The fax, which was signed by Mr. Christian Lommer of DAT-SCHAUB, read:
”Lieber Herr Sergueev,
Betr. Bastardmakrele für Rußland.
Mit Referenz an Ihr Telefongespräch mit Herrn Sørensen betr. Makrele senden wir Ihnen hiermit Spezifikation wie versprochen:
Ware: Tiefgefrorene Makrele, ganz gefroren (whole Round)
Grösse: 400-500 gr./Stück
Ursprung - Peru
Lateinischer Name: Trachurus Symmetricus Murphyi
Verpackung: 22, 5 Kg. net pro Karton
Produktionsdatum: Nov/Dez. 1996
Wir hoffen bald von Ihnen zu hören.
[Dear Mr. Sergueev
Horse Mackerel for Russia
Referring to your telephone conversation with Mr. Sørensen concerning the mackerel, we hereby send you the promised specifications:
Product: Frozen mackerel (whole round)
Size: 400-500 gr. each
Origin: Peru
Latin name: Trachurus Symmetricus Murphyi
Packing: boxes of 22.5 kg net
Date of production: Nov./Dec. 1996.
We look forward to hearing from you soon.]
After having read the specifications, Dr. Sergueev placed his order.
The order confirmation of 5 February 1997 from DAT-SCHAUB described the goods as “WHOLEROUND MACKEREL”. The Latin name of the goods, which was mentioned in the specification, was not found in the order confirmation, but the information about the size of the fish, place of origin and the weight of the boxes had been repeated.
DAT-SCHAUB then ordered the consignment of fish from de Poel at a price of US$ 800 per metric ton. It appears from DAT-SCHAUB’s invoice to Dr. Sergueev that the consignment was sold to Dr. Sergueev for US$ 1,175 per metric ton. In the invoice the fish was referred to as “WHOLE ROUND MACKEREL” from Peru without the Latin name, but the information about size and the weight of the boxes had been repeated. The goods were to be transported in three trucks from Harlingen in the Netherlands on 10 February 1997 to Dr. Sergueev’s buyer, “Minos”, in St. Petersburg, Russia.
It appeared from the CMR waybills that the consignment consisted of 956 boxes of “frozen Mackerel, whole round”, that the temperature of the goods on loading should be -20ºC. The temperature during transport was also specified as -20ºC.
A Dutch ”Health Certificate” dated 10 February 1997 with pre-printed text in both Russian and English accompanied the CMR waybills. The English text concerning the goods included the following particulars:
“Name of product: Mackerel
Species (scientific name): Trachurus Symmetricus Murphyi
State of processing: frozen, Whole Round
Temperature during storage and transport -20°C
d) The fish or/and fishery product is/are fit for human consumption.”
The producer was identified as ”Corporacion de Pesca S.A.”
The goods arrived in St. Petersburg on 17 February 1997 and were delivered to Dr. Sergueev’s buyer on 19 February 1997. From that date and until end-1997, the goods were stored in refrigerated wagons. Shortly after the delivery of the goods, Dr. Sergueev’s buyer sent a notice that the goods did not conform to the species required by the contract to Dr. Sergueev, who then telephoned his notice of lack of conformity to DAT-SCHAUB.
On 10 March 1997 Dr. Sergueev sent an invoice for US$ 75,822.75 together with the following letter to DAT-SCHAUB addressed to Mr. Torben Sørensen:
” .... hiermit erhalten Sie die Rechnung für die falschen Lieferung Makrele nach St. Petersburg. Die ganze Menge steht nach wie vor in St.,Petersburg Ihnen zur Verfügung. Ich bekam die Rechnung von meinem Kunde und muss so schnell wie möglich ihm das Geld zurück überweisen. Nach Ihren Wunsch kann mein Kunde die Ware Ihnen nach Dänemark oder nach Moskau zurückliefern ….”
[...I hereby send you an invoice for wrongful delivery of mackerel to St. Petersburg. All the goods are still at your disposal in St. Petersburg. I received the invoice from my buyer and will have to repay him as soon as possible. My buyer is willing to return the goods to you in Denmark or to Moscow according to your instructions…]
In a fax of 11 March 1997 DAT-SCHAUB (Mr. Sørensen) replied to Dr. Sergueev’s letter stating, inter alia:
”Wir haben zum ersten Mal am 31.01 1997 über diesen Auftrag gesprochen. Am Montag den 03.02.1997 haben wir über die genaue Spezifikation gesprochen und wir haben alle Informationen über diesen Auftrag per Fax geschickt. Auch der Lateinische Name “Trachurus Symmetricus Murphyi”.
Am Mittwoch Nachmittag haben Sie drei LKW´s bestätigt und wir am 06.02.1997 eine Auftragsbestätigung mit falschen Spezifikation an Ihnen geschickt.
Unsere Meinung nach haben wir die genaue Spezifikation an Ihnen geschickt und deswegen sind wir nicht verantwortlich dass der Kunde nicht die waren gebrauchen kann.
Aber wir werden noch einmal versuchen die Waren an einen anderen Kunden zu verkaufen ....”
[We first discussed this order on 31 January 1997. On Monday 3 February 1997 we discussed the exact specifications of the goods and sent you all the information by fax. Also the Latin name “Trachurus Symmetricus Murphyi”. Wednesday afternoon you agreed to the three trucks, and on 6 February 1997 we sent you an order confirmation containing wrong specifications. We believe that we sent you the exact specifications and that we are therefore not to blame if your buyer has no use of the goods. However, we will again try to sell the goods to another buyer…]
Then followed an exchange of several letters between the lawyers representing the parties.
In a letter of 22 May 1997, Dr. Sergueev’s lawyer argued that DAT-SCHAUB was liable to pay damages and asked DAT-SCHAUB to “… cooperate and take back the goods in order to mitigate the loss on resale”. In a letter of 29 May 1997 the damages were assessed to US$ 75,822.75 and the letter ended: “We reserve the right to claim interest under the provisions of the Danish Interest on Overdue Payments Act”.
In his letters DAT-SCHAUB’s lawyer disputed the buyer’s claims. In a letter of 3 June 1997, he wrote, inter alia: “I urge your client to take the necessary steps to mitigate the loss…”
After a meeting between the parties on 20 June 1997, where the parties failed to reach an agreement, DAT-SCHAUB’s lawyer sent a letter dated 23 June 1997 in which he demanded payment of the balance of the price, US$ 5,822.75, and also claimed interest under the provisions of section 3(2) of the Danish Interest on Overdue Payments Act.
In a letter of 29 July 1997, Dr. Sergueev’s lawyer maintained “the avoidance of the contract by my client and his claim for repayment of the price paid” and he observed that the fish ought to be “sold or destroyed” as soon as possible. It was further stated that “my client will take steps to mitigate the loss in relation to DAT-SCHAUB”.
In a letter of 13 August 1997, DAT-SCHAUB’s lawyer wrote that DAT-SCHAUB had no interest in keeping the fish stored in refrigerated wagons if the parties could agree that “Trachurus Symmetricus Murphyi” had been delivered in the quantity and units described in DAT-SCHAUB’s fax of 3 February 1997.
DAT-SCHAUB urged Dr. Sergueev or his buyer to sell the fish at the best possible price and noted that they were in a better position than DAT-SCHAUB to sell the goods in the Russian market.
On 11 September 1997 Dr. Sergueev’s lawyer sent another letter to DAT-SCHAUB’s lawyer, in which he wrote:
“My client and his Russian buyer of the consignment in dispute have taken steps to dispose of the fish in order to mitigate the loss. It was found that the fish were caught in the autumn of 1995 and in the spring of 1996 and not in November/December 1996 as stated in the fax of 3 February 1997 from your client.
In addition to the declaration of avoidance already made, I invoke the wrong period of catch and the age of the goods as further reasons for declaring the contract avoided.
My client has asked the well-reputed firm of surveyors SGS to examine the goods immediately and prepare a report.”
SGS prepared a report dated 17 September 1997. The parties agree that it does not form part of the proceedings as it was requested unilaterally.
In a letter of 25 September 1997 to DAT-SCHAUB, de Poel rejected the claim of lack of conformity with the contract and stated, inter alia:
“….In February 1997, we have sold and delivered 3 loads of frozen Mackerel to you.
We have imported these goods and submitted them to the approval of the competent veterinary authorities. The goods and the packages have been approved, which have been appeared by the documents which have accompanied the loads.
After more than half a year you come to us with objections about the delivered goods”.
After a further exchange of letters between the lawyers, DAT-SCHAUB’s lawyer urged Dr. Sergueev’s lawyer in a letter of 27 October “… to arrange for an expert opinion to be prepared in accordance with Part 19 of the Danish Administration of Justice Act”.
In a fax of 12 November 1997, the Peruvian supplier, Corporacion de Pesca S.A. informed de Poel that the production date of the goods was November/December 1996, that the product “is fish frozen”, and that the quality had been checked by the research institute “CERPER S.A.”
A letter of 11 October 1999 from Corporacion de Pesca S.A. to de Poel stated, inter alia:
"At that time our company used boxes with prestamped production dates which more than once created the situation that boxes remaining from previous period were used in a new period and that the production dates stamped on the boxes did not correspond with the actual production dates. We confirm once again that the containers of horse mackerel delivered to you in early 1997 had been produced in November and December 1996 and that the product had been fresh frozen in that period. Insofar as the production dates stamped on the boxes show an earlier production date, these production dates are incorrect and only result from the use of the wrong boxes."
In a letter of 5 November 1997 DAT-SCHAUB’s lawyer recommended that the Helsinki-based firm of Vaara & Partners, which has an office in St. Petersburg, should be instructed to examine the goods. The lawyer specified the issues to be resolved by an examination, including the period of catch, the marking of the boxes, the quantity and storage of the fish, and he wrote: “…I recommend that your client instruct the above firm to examine the fish.”
In a document containing the questions to be examined and dated 18 November 1997, Dr. Sergueev’s lawyer instructed Vaara & Partners to prepare a report. The final survey report was dated 4 February 1998. In a letter of 20 November 1997 to Dr. Sergueev’s lawyer, the surveyor, David Axam of Vaara & Partners, wrote, inter alia, that the St. Petersburg office of Vaara & Partners had been in contact with Dr. Sergueev’s Russian buyer FINTRADE, and that Vaara knew that an SGS report had already been prepared. In letters dated 5 and 16 November 1997, DAT-SCHAUB’s lawyer did not want to commit himself as to the probative value of the report by Vaara & Partners, and in a letter of 5 December he urged Dr. Sergueev to mitigate the loss because DAT-SCHAUB did not want to have disposal of the goods.
As to the fish stored in the refrigerated wagons, the report prepared by Vaara & Partners included the following findings:
1563 boxes without production date
1056 boxes marked: Apr. 1996
80 boxes marked: Mar. 1996
92 boxes marked: Sept. 1995
48 boxes marked: Jul. 1995
In addition to the 2812 intact boxes, 8 boxes were damaged, causing the production date stamped thereon to be illegible.
The report specified the species of fish as “ Whole Round Jack Mackerel Trachurus Picturatus Murpyi”, and stated that this species could only be caught in a specified area in the Pacific Ocean.
As to the condition of the fish, the report said:
”...Without a production date
- Fish has flabby consistency
- Muscular tissue is easily split off the bone
- Gills are light red in colour at the centre but grey on the ends
- Fish itself is yellow-grey in colour
- After defrosting the fish had a sharp smell of oxided fish fat
- Fish is visibly different than that of a freshly caught fish
Production Dated in 1995
... [see above]
Production Dated in 1996
- Fish has rather tight consistency
- Fish flesh flattens immediately when pressed by finger
- Fish is grey-blue in colour
- Scales are present
- Gills are dark red in colour and covered in slime
- Fat under skin has oxidated and is yellow in colour
- Smell of oxidated fish fat
- Fish is visibly similar to that of freshly caught fish.…”
At the time of examination, the fish were in the same condition as when they arrived in St. Petersburg, according to the report.
As to the conditions of storage, the report said:
“... the storage of the fish is done in a proper manner as to allow efficient circulation of air and to maintain the temperatures in the storage wagons over a long period of time. It must be stated that due to the type of wagon used the cartons must be rotated to different wagons from time to time. This allows the freezing chamber of the wagons to be defrosted from time to time, this is done to maintain the efficiency of the wagons' freezer units. The temperature logs of the wagons were inspected and the temperatures have been maintained from –9 °C to -18 °C.
The temperature of the fish flesh was measured and was seen to be generally in the range of –13 °C in Wagon No. ... and –9 °C in Wagon No. … The temperature seen in the logs it must be pointed out are higher than the recommended temperatures as stated on the CMR and in the Health Certificates.
From the examined cartons there was no evidence of cargo defrost. The cartons were seen to be dry and without external staining.”
It appeared from a “Statement of Sampling” dated 25 November 1997 and accompanying the report that Mr. Boris L. Madorsky of FINTRADE had been present during the taking of samples from the fish for the purpose of “bacteriological and chemical tests”.
On 1 December 1997 the Russian health authorities refused to grant permission to sell the fish for human consumption, but accepted that the fish could be sold as “Frozen fish for furry animals”.
Around New Year 1997/1998 the fish were sold to the fur industry and removed from storage.
In the present case photos and a drawing of the label put on the boxes were presented. The heading read:
"WHOLE ROUND JACK MACKEREL
(TRACHURUS PICTURATUS MURPHYI)
JUREL”
Dated (24 and 25 November 1997) photos of pallets with boxes of fish stacked from floor to ceiling in the refrigerated wagons were included as appendices to the survey report. Some boxes were marked with dates. In some photos a thermometer protrudes from a box showing temperatures of -13ºC and –12.5ºC, while the temperature in one of the refrigerated wagons is shown as -12.1ºC. One photo shows a wagon in wintry and snowy conditions.
In a letter of 9 February 1998 Dr. Sergueev specified his claim against DAT-SCHAUB and explained why the claim was maintained. As to interest, he wrote: “This letter is also a notice of interest according to the Danish Interest on Overdue Payments Act so that the failure to pay the balance owed to my client will make you liable to pay interest in so far as a right to claim payment of interest has not already accrued.”
It appeared from statistical data from the Danish Directorate of Fisheries concerning the average prices of mackerel and horse mackerel used for human consumption and landed in Danish ports by Danish and foreign fishers in 1997 that the highest average price of mackerel was Danish kroner 9.95 per kg. (June) and the lowest average price was Danish kroner 2.85 per kg. (December). The highest average price of horse mackerel was Danish kroner 4.45 per kg. (November) and the lowest was Danish kroner 0.65 per kg. (October). The data also contained specifications for landings of Danish and foreign fish separately.
The Association of Danish Fish Processing Industries and Exporters has submitted the following answers to questions from the parties:
“… 1. Question: Is the designation ”Mackerel” used about horse mackerel in the trade?
1. Answer: No. To be certain of the identity of the goods the Latin name is used.
2. Question: Does the trade use the designation “Mackerel from Peru” to refer to horse mackerel?
2. Answer: Not exclusively.
3. Question: Is it generally known within the trade that mackerel is not found in the waters off the coast of Peru?
3. Answer: Persons trading in fish internationally know that there are several species of mackerel in the waters mentioned.”
During the proceedings excerpts from books on fish were presented:
“Havfisk og Fiskeri i Nordvesteuropa” [Sea Fish and Fishing in North-western Europe] (Bent J. Muus, 1985):
”Horse Mackerel, Trachurus trachurus … Mainly found in the Mediterranean and off Western Africa …Processed as sardines, sold fresh, smoked or sold for industrial use. Related species in all warm-temperate waters.”
“Mackerel, Scomber scombrus … Sold smoked or fresh and iced, some exported frozen. 1 or 2-year-old mackerel used in the canning industry, largely in oils …Mainly caught by Norway, the USSR and Poland.”
Fishes of the North-eastern Atlantic and the Mediterranean:
“Scomber japonicus…..Common names: Chub mackerel (En) , Macquereau espanol (Fr) ... Distribution: eastern Atlantic from the Canaries and the Azores .. – Frequent in the Mediterranean and the southern part of the Black Sea... Elsewhere, worldwide in warm-temperate waters."
“Scomber scombrus .... Common names: Atlantic mackerel (En) , Maquereau common (Fr) , Makrele (G) . . . ”
The two fish mentioned are classified under the species ”scombridae”.
“Trachurus picturatus. ... Common names: Blue jack mackerel (En) , Chinchard du large (Fr) , Jurel de alture, Chicharro (SP) .”
“Trachurus trachurus….Common names: Atlantic horse mackerel (En) , Chinchard d 'Europe, Chinchard commun (Fr), Jurel (Sp).
"Trachurus trecæ .... Common names: horse-mackerel (En) , Chinchard commun (Fr) , Jurel cunene (Sp).”
The three fish mentioned are classified under the species ”carangidae”.
Multilingual Dictionary of Fish and Fish Products:
“Horse mackerel ... Trachurus .... Also known as: Jack Mackerel . . . . D: Bastardmakrele, Holzmakrele. DK: Hestemakrel.
"Mackerel…Scomber....Scomber Scombrus .... Scomber Japonicus .... D: Makrele, DK Makrel.
"FAO SPECIES CATALOGUE", vol. 2 “Scombrids of the world” (Rome 1983), states, inter alia, that the Danish name for "scomber scombrus” is ”Almindelig makrel”, the German name is ”Makrele” or ”Gemeine Makrele” and the English name is ”Atlantic mackerel”.
Evidence of the Parties
In his evidence Dr. Sergueev explained that he is now manager of the Russian branch of the Danish company of Steff Houlberg. His agency business, Dr. S. Sergueev Handelsagentur, has discontinued operations.
He had previously bought 10 to 15 carloads of goods from DAT-SCHAUB, including one consignment of fish. This trading had not given rise to any problems. He knew that the main business of DAT-SCHAUB was the exportation of meat. He assumed that DAT-SCHAUB primarily acted as an intermediary when dealing in fish.
He talked to Mr. Torben Sørensen on the telephone when, at the end of January 1997, he contacted DAT-SCHAUB concerning the delivery of a consignment of mackerel.
His buyer in Russia requested confirmation of the date of catch and he therefore asked DAT-SCHAUB for specifications. DAT-SCHAUB faxed the specifications on 3 February. He was not familiar with the Latin name of the fish mentioned in the fax at the time, and he did not concern himself with the Latin name. It was sufficient that the goods were specified as deep-frozen mackerel.
After having received the fax and dispatched it to his Russian buyer, he phoned Mr. Sørensen and told him that they would like to buy the fish. He is quite certain that the Russian buyer had read the fax. The buyer had no objections and did not concern themselves with the Latin name but only with the mackerel being caught in the autumn of 1996. He is sure that Mr. Sørensen did not know what the Latin name referred to.
Dr. Sergueev’s buyer in Russia deals commercially in fish. They buy frozen fish, defrost them and smoke them before the fish are resold. The fish of this consignment were scheduled to have been smoked. It was therefore important that the fish had been caught in the autumn of 1996.
After placing the order he received DAT-SCHAUB’s order confirmation and was content that the subject matter of the contract was mackerel caught in November/December 1996.
He also received the invoices, which were as expected.
He received the “Health Certificate” issued by the Dutch health authorities at the same time as the consignment was delivered. He had not seen the document prior to this date.
When the buyer discovered that the fish were horse mackerel, Dr. Sergueev requested that the labels on the boxes in Russia were sent to him, following which he contacted DAT-SCHAUB.
The reason why he stated that, in his letter of 10 March 1997, the goods were at the disposal of DAT-SCHAUB was that he had had a meeting with Mr. Lommer of DAT-SCHAUB, who had indicated that DAT-SCHAUB would try to find another buyer for the goods in Moscow. The likely reason for the failure to find a buyer was the different prices of mackerel and horse mackerel.
For the purposes of these proceedings, he was not familiar with the German word “Bastard”, neither standing alone nor in connection with “Makrele”. He is not that proficient in German.
Dr. Sergueev’s previous dealing in fish with DAT-SCHAUB was based on the Latin name.
Mr. Torben Sørensen explained that he took up his position as sales manager with DAT-SCHAUB in end-1996. He had previously held a position as sales manager in Germany for three months and therefore speaks some German. DAT-SCHAUB acts as an intermediary, mainly in the sale of casings but also meat, poultry, salami, vegetables and occasionally fish.
The witness had not previously dealt in fish and had no special knowledge of mackerel.
When the witness took up his present position, he got Dr. Sergueev as a customer. Dr. Sergueev bought pork but had bought fish on one previous occasion.
A contract with Dr. Sergueev was usually concluded after he had phoned DAT-SCHAUB. Occasionally DAT-SCHAUB would call Dr. Sergueev and inform him of an advnatageous offer. If the type of goods was known, the contract would be concluded over the phone. If the type of goods was unknown, DAT-SCHAUB would fax Dr. Sergueev the specifications in order to clarify any queries.
The first conversation was on Thursday 30 or Friday 31 January. Dr. Sergueev called the witness saying that he would like to buy some mackerel. The conversation was in German. He did not say what the fish would be used for. The witness said that he would look into the matter and call back later. Dr. Sergueev knew that DAT-SCHAUB had to obtain an offer.
The witness already had an offer from de Poel. It was for “frozen mackerel, whole round” and matched Dr. Sergueev’s request. The witness then contacted de Poel, which confirmed that the offer was still open. He then ordered the specification presented in these proceedings and dated 3 February 1997. He skimmed the text and passed it on to Mr. Christian Lommer.
Dr. Sergueev had requested a specification from DAT-SCHAUB, and such a specification was made and faxed to Dr. Sergueev by Mr. Lommer. The witness saw the specification on the following day when he discussed it with Mr. Lommer. He did not note the subject heading “Bastardmakrele….”. The witness did not know what the Latin name referred to but knew that transactions in fish were done on the basis of their Latin names.
After having received the specification, Dr. Sergueev accepted the offer on 4 February in the afternoon or on 5 February in the morning. There was nothing unusual about the acceptance. Dr. Sergueev cannot have been in doubt as to what goods he had ordered, because he had received and read the complete specification.
The price charged was fixed on the basis of the price of de Poel plus carriage and a profit of approximately US$ 100 per metric ton, which is a usual profit. When fixing the price, it was not relevant to consult the quotation of fish prices.
The witness prepared the order confirmation, which is an adapted computerised standard form. Everyone was busy at DAT-SCHAUB at the time, and the order confirmation was therefore brief but contained all the important details, i.e. mackerel, size and place of origin. Dr. Sergueev had already received a complete specification on which the contract was based, and he had not expressed any doubt as to the type of fish concerned.
The goods were sent direct from the Netherlands to Russia, and the witness did not see them.
Shortly after the goods had arrived in Russia, the witness was contacted by Dr. Sergueev, who said that a wrong species of fish had been delivered. The witness replied that the fish delivered were the fish ordered. To be on the safe side he contacted de Poel, which confirmed that it had delivered the fish mentioned in the specification.
The phrase used by the witness in his letter of 11 March 1997, “Auftragsbestätigung mit falschen Spezifikation”, was a repetition of the words used by Dr. Sergueev during the telephone conversation they had just had. The phrase probably meant that the order confirmation was incomplete because it did not contain the Latin name found in the specification.
Dr. Segueev urged DAT-SCHAUB to try to sell the fish to another buyer and DAT-SCHAUB agreed to try to do so in order to preserve the good relationship between the parties. However, it turned out that there was no market for this type of fish in Russia.
The notice from September concerning the wrong time of catch was something quite new and came as a great surprise to DAT-SCHAUB. The dates on the boxes had not been mentioned previously, and the only information the witness had about the time of catch was what de Poel had stated in its specification of 3 February 1997.
In his evidence Mr. Christian Lommer stated that he is export manager for Russia at DAT-SCHAUB, a position he also held in 1997.
Dr. Sergueev had requested a specification – a definition of the type of fish mentioned in the offer. The witness prepared such a specification on the basis of the specification from DAT-SCHAUB’s supplier, de Poel. He looked up the Latin name in a fish dictionary. The name corresponded with the German “Bastardmakrele” and he therefore used this word in the heading of the specification. He did not consider whether this was the type of fish Dr. Sergueev wanted. The witness had not been involved in the actual deal or with Dr. Sergueev, and he therefore did not know what Dr. Sergueev wanted.
Legal Arguments
Dr. Sergueev stated that, in a telephone conversation at the end of January, Mr. Sørensen confirmed that DAT-SCHAUB would able to deliver a consignment of mackerel, i.e. fish of that species.
Mr. Lommer was asked to take over, but Mr. Sørensen did not inform Mr. Lommer of the contents of the contract, and Mr. Sørensen did not know what he was selling. This was not prudent commercial practice, and indeed the deal went wrong.
When Dr. Sergueev received the offer he was not sure whether the goods were mackerel. He had doubts about the Latin name. However, Dr. Sergueev’s and Mr. Sørensen’s statements as to the contents of their conversations are consistent, whereas they disagree about the conclusions. One reason for this may be that the conversations took place more than four years ago. It is argued that, on the basis of the evidence, Dr. Sergueev ordered mackerel, and that Mr. Sørensen knew what Dr. Sergueev wanted.
This is supported by the order confirmation and the text of the invoice. They mention “whole round mackerel”, not “horse mackerel”, “Bastardmakrele” or “Jack Mackerel”. The CMR waybill describes the goods as “frozen mackerel”. The price of the goods is in keeping with the price of landed mackerel in Denmark, whereas it is much higher than the price of landed horse mackerel.
Based on the evidence and the contents of the documents presented, the inevitable conclusion is that the parties contracted to buy and sell mackerel. The Dutch Health Certificate did not pass between the buyer and the seller when the contract was being concluded. This document contains a Latin name that is different from that stated by DAT-SCHAUB. The contents of subsequent documents overrule the contents of earlier documents.
When DAT-SCHAUB delivered a species of fish other than that ordered by Dr. Sergueev, DAT-SCHAUB incurred liability under the UN Convention on Contracts for the International Sale of Goods of 11 April 1980, see Article 35 of the CISG.
In connection with the attempt to sell the goods in order to mitigate the loss, as agreed by the parties’ lawyers, Dr. Sergueev noticed that the fish had not been caught in November/December 1996 as required by the contract, but in the spring of 1996 and the autumn of 1995. Dr. Serguev immediately gave notice of lack of conformity on 11 September 1997. It turned out that none of the boxes were marked November or December 1996, cf. the report prepared by Vaara.
Neither the information about the physical condition of the fish nor the packaging, cf. the Vaara report, agrees with the explanation of the dates on the boxes given to de Poel by the Peruvian producer. It is improbable that dates of packing are stamped on the boxes and those dates are not consistent with their contents. This is also inconsistent with the fact that half of the boxes were without date. It is argued that the explanation by the Peruvian firm, which was given after two years had passed, is creative and should therefore be rejected.
DAT-SCHAUB is also liable under Article 35 of the CISG by having delivered fish with a production date that is different from that required by the contract.
The Vaara report concluded that the quality of the fish delivered rendered the fish unfit for human consumption. The condition of the fish is specified on page 3 of the report. According to the report, the fish had the same condition as when they were delivered in St. Petersburg and that they had been stored correctly, although they had been stored at a temperature that was slightly higher than recommended.
Under Article 36 of the CISG the seller is liable for any lack of conformity which exists at the time when the risk passes to the buyer, even though the lack of conformity becomes apparent only after that time. The Vaara report shows that the fish were not fresh at the time of delivery and therefore unfit for human consumption. Consequently DAT-SCHAUB is liable.
Dr. Sergueev gave notice that the goods did not conform to the species required by the contract immediately after receipt in Russia. In a reasonable continuation of events various examinations were made, and Dr. Sergueev gave notice that the date of catch did not conform to that required by the contract as soon as he became aware of the lack of conformity. Dr. Sergueev caused the goods to be examined within as short a period as was practicable in the circumstances, see Article 39 of the CISG. Consideration must be given to Dr. Sergueev’s prompt notice that the goods did not conform to the species required by the contract, and time must be deemed to have been prevented from running under the provisions of Article 38 of the CISG when the first notice was given. DAT-SCHAUB then became aware that Dr. Sergueev did not accept the goods, and from that time DAT-SCHAUB could safeguard its own interests, cf. also Article 44 of the CISG. It is important that, in his letter of 10 March 1997, Dr. Sergueev placed the goods at the disposal of DAT-SCHAUB, and that DAT-SCHAUB took no steps in that connection.
DAT-SCHAUB did not examine the goods for sale. It is immaterial that DAT-SCHAUB acted as intermediary; the lack of conformity was within DAT-SCHAUB’s sphere of control liability for direct loss.
In these circumstances Dr. Sergueev had complied with his obligation to examine the goods and to give proper notice, see Articles 38 and 39 of the CISG; he was therefore entitled to declare the contract avoided under Article 49 of the CISG and claim damages under Article 45 of the CISG.
Damages are to be assessed according to the rules of Danish law, see Article 7 of the CISG. Consequently Dr. Sergueev is to be placed in the same financial position as if the contract had not been entered into, i.e. damages on a reliance basis. The assessment is to be based on the particulars of loss and damage of Dr. Sergueev.
Dr. Sergueev acted correctly concerning the mitigation of loss. The goods were stored in a prudent manner until Dr. Sergueev arranged for the goods to be sold as agreed with DAT-SCHAUB. In so doing Dr. Sergueev reduced the loss to a minimum and thereby incurred reasonable and foreseeable expenses.
As agreed between the parties, the goods were placed at the disposal of DAT-SCHAUB with a view to selling them to another buyer, which failed; in Dr. Sergueev’s opinion because the goods were priced as if they were mackerel when offered for sale.
DAT-SCHAUB recommended the firm of surveyors Vaara & Partners. The fact that Vaara & Partners contacted the buyer of the fish, or anyone else, is immaterial and does not reduce the probative value of the report; nor does it prevent Dr. Sergueev from recovering the expenses incurred in taking this necessary step from DAT-SCHAUB.
The notice of claim of interest contained in the letter of 29 May 1997 from Dr. Sergueev’s lawyer meets the requirements of section 3(2) of the Danish Interest on Overdue Payments Act, and Dr. Sergueev is entitled to claim interest as from 29 June 1997. In the alternative, interest was claimed as from 9 March 1998, one month after the letter of 9 February 1998 in which a new claim of interest was made.
The allegations on which the claim for damages is based are also submitted in support of the motion for dismissal of the separate claim made by DAT-SCHAUB.
DAT-SCHAUB stated that the question of which contract the parties had made was to be decided by the general rules of Danish law, as Denmark has made a declaration under Article 92 reserving out of the contract formation provisions of the CISG. Otherwise it is agreed that the CISG applies.
Scomber and Trachurus belong to different families of fish but in several languages both have names containing the word “mackerel”. For instance, the English name of “scomber Japonicus” is “chub mackerel”, and in French it is called “imaquereau espagnol”; the English name of “scomber scombrus” is “Atlantic mackerel”, and in French it is called “maquereau commun”; the English name of “trachurus picturatus” is “blue jack mackerel”, and “trachurus trachurus” is called “Atlantic horse mackerel”.
In conformity with the answers provided by the Association of Danish Fish Processing Industries and Exporters, it is submitted that the Latin names are used in commercial transactions in fish as these clearly distinguish one species from another. Thereby misunderstandings that may occur as a result of imprecise designations, such as “mackerel”, can be avoided. The previous contract between the parties concerning fish was based on the Latin name.
It appears from the “Health Certificate” issued by the Dutch health authorities that the fish was called “mackerel”, and that the species was “trachurus symmetricus murphyi”. This leaves no room for doubt. The same procedure was used by the Dutch supplier, which called the fish “mackerel” but specified the species by using its Latin name. Furthermore, the Russian authorities and the firm of surveyors Vaara & Partners used the term “mackerel” at random in the report and appendices, but used the Latin name when the fish was identified in section 3 of the report.
Dr. Sergueev contacted DAT-SCHAUB, in German, concerning the delivery of a consignment of fish. Dr. Sergueev knew that DAT-SCHAUB acted as an intermediary, and Mr. Sørensen was unable to give a prompt reply but had to look further into the matter. In accordance with the wording of the Dutch offer, which specified the goods as “frozen mackerel”, Mr. Sørensen told Dr. Sergueev that DAT-SCHAUB was able to deliver mackerel. Dr. Sergueev needed a specification, which Mr. Sørensen appreciated. This was – in order to avoid misunderstandings – usual in dealings between the parties.
Mr. Lommer prepared the specification, which was faxed to both the Russian buyer and Dr. Sergueev in Germany. This specification is an essential document. Mr. Lommer had consulted a fish dictionary and written the German name “Bastardmakrele” as well as the Latin name “Trachurus symmetricus murphyi” in the specification. This description of the fish was sufficient and precise, and on the basis of this specification Dr. Sergueev accepted the offer. In other words, there is no doubt that Dr. Sergueev bought a consignment of the species “trachurus” and not “scomber”. Irrespective of the reasons for requesting a specification, Dr. Sergueev had to rely on the brief specification in order to get all the information about the goods.
The failure of either Dr. Sergueev or his Russian buyer to inquire into the meaning of the Latin name is not prejudicial to DAT-SCHAUB. If Dr. Sergueev, as he explained, neither knew the Latin nor the German name, and if he did not concern himself with their meaning, he should not have concluded the contract.
The wording of the order confirmation and the invoices is irrelevant as these documents were prepared after the time of conclusion of the contract. The order confirmation must be read in conjunction with the specification and did not add new or divergent details compared to the specification.
DAT-SCHAUB’s task as an intermediary is to match the buyer’s demand for particular goods. A “complete match” is only attained by being aware of possible misunderstandings and by being exact and precise when making the offer.
Dr. Sergueev knew that DAT-SCHAUB acted as an intermediary. Dr. Sergueev, who also acted as an intermediary, must be able to rely on his Russian buyer, who deals in fish commercially and ought to have known the Latin name.
The prices of mackerel and horse mackerel landed in Denmark are irrelevant. DAT-SCHAUB fixed their price on the basis of the price charged by de Poel plus carriage and a usual profit. Moreover the fish were from Peru and not Denmark. If the prices are considered, it turns out that in November the price of horse mackerel was higher than the price of mackerel. However, the prices generally fluctuate considerably and the catch is undisclosed.
The fish were in good condition and fit for human consumption at the time of arrival in St. Petersburg. The Vaara report did mention inadequacies, but 10 days before arrival in St. Petersburg, the fish had been examined an approved by an independent Dutch veterinary. Considerable importance must be given to the Dutch Health Certificate, in particular because the fish had been inadequately stored for nine months prior to the examination by Vaara & Partners. This is explicitly stated in the report. The goods were to be stored at a temperature of -20ºC, but this requirement was not met at any time as the evidence shows that the temperature was between -9ºC and -18ºC throughout the period. The photos accompanying the report were taken during the winter and show temperatures considerably above -20ºC. One can only guess at the temperature inside the wagons in the summer.
In section 7 of the report, Vaara & Partners merely state that they found no evidence of cargo defrost, which only occurs at a temperature close to 0ºC. The conclusions of the Vaara report were influenced by the SGS report, commissioned unilaterally by Dr. Sergueev. It was also a mistake when Dr. Sergueev’s Russian buyer, FINTRADE, was present during the examination. This appears from an appendix to the report but, more significantly, this fact is not mentioned in the report itself. In a case like this where so much depends on the report, the impartiality of the firm of surveyors should be beyond any doubt. DAT-SCHAUB had asked Dr. Sergueev to arrange for an expert opinion to be prepared, which was refused. The court must assess the Vaara report on this basis. DAT-SCHAUB is not prevented from contesting the probative value of the report merely on the ground that they had suggested the firm of Vaara & Partners.
In conclusion, Dr. Sergueev failed to discharge the burden to prove that the fish did not conform to the contract at the time of delivery.
As to the date of catch, the Peruvian supplier explained that the fish were caught as stated. The reason why the production dates on the boxes were wrong is that they used to have boxes with pre-stamped production dates. This information should be taken into account, which is also in keeping with the fact that the fish of the poorest quality were found in the boxes with the oldest dates.
In these circumstances it is submitted that, apart from the question of species, Dr. Sergueev did not give his notice within the time allowed for giving notice of lack of conformity.
Articles 38 and 39 of the CISG must be considered together.
By merely storing the goods after having determined that they were of a species other than that expected, Dr. Sergueev did not comply with his obligation to examine the goods under Article 38 of the CISG. An early notice that the goods did not conform to the species required by the contract is ineffective as regards any other lack of conformity discovered by the buyer at a later date.
The notice that the date of catch did not conform to the date required by contract was given in September 1997, i.e. seven months after delivery, and cannot be considered to have been given with effect as from the notice of wrong species given in January. Merely by looking at the boxes Dr. Sergueev could have seen that more than half were stamped with a date. It is quite unlikely that Dr. Sergueev did not notice the dates. The boxes were also stowed in the wagons, where they were rotated to different wagons from time to time according to the Vaara report. The dates stamped on the boxes should have caused Dr. Sergueev to make further inquiries. A few fish could have been defrosted for examination with very little difficulty. A notice given seven months after delivery, when the buyer could have discovered any lack of conformity with the contract by a simple examination of the goods, cannot be considered to have been given within a reasonable time, see Article 39 of the CISG. It is particularly important that the buyer examines perishable goods immediately, and it is immaterial that they are frozen. Authority for this is found in the Dutch judgment of 19 December 1991, Rechtbank Roermond in the case Fallini Stefano & Co. S.N.C. v. Fordic B.V. concerning a consignment of frozen cheese, in which the court considered Articles 38 and 39, and the judgment of 5 March 1997 (HA ZA 95-640) by Rechtbank Zwolle concerning a consignment of fish, in which the court also considered Articles 38 and 39 of the CISG. In the latter judgment the court stated that “the buyer should have discovered the defects by examining all the goods as soon as practicable which under the circumstances was at the time of delivery or shortly afterwards.”
If the notice of lack of conformity had been given within a few days, it would have been given within a reasonable time. In some situations reference is made to “the noble month”, but a notice given after seven months would never have been timely. In its judgment of 29 June 1998 the Swiss Tribunal Cantonal du Valias (Cl 97 288) the court makes the following observation concerning Article 39 of the CISG: “…notification…given…seven to eight months after delivery was by far too late.”
Dr. Sergueev explained that no further examination of the fish was made after the discovery that the fish was of the wrong species and a notice to that effect had been given. It is submitted that this is not a reasonable excuse and that Dr. Sergueev may not successfully rely on Article 44 of the CISG.
It is irrelevant to the question of Dr. Sergueev’s obligation to examine the goods that DAT-SCHAUB promised to help him to find another buyer.
As to the alternative claim, it was argued that DAT-SCHAUB could not be charged with some of the expenses in Dr. Sergueev’s particulars of loss and damage.
This includes the expenses of the SGS report, which the parties agree was commissioned unilaterally by Dr. Sergueev.
The expenses of the Vaara report are to be paid by Dr. Sergueev and may only partly be of the concern of DAT-SCHAUB. As already indicated, the report cannot be considered to be independent.
Dr. Sergueev should have sold the goods at an earlier date and at a higher price. This would have reduced storage costs. A sale in April/May would have been possible, considerably mitigating the loss. The fact that Trachurus had been delivered had never been in dispute. The claim of interest made in the letter of 29 May 1997 does not comply with the requirements provided in section 3(2) of the Danish Interest on Overdue Payments Act. Moreover, the claim was made at a time when a notice concerning solely the lack of conformity as to species had been given If the court finds that the fish delivered was that required by the contract, the claim of interest is without substance because no claim would have been due for payment at that time.
The claim of interest made on 9 February 1998 should be accepted.
If DAT-SCHAUB’s motion for dismissal is successful, DAT-SCHAUB may claim payment of the balance of the price and the court is therefore asked to give judgment in favour of the seller concerning the separate claim made by DAT-SCHAUB.
Grounds of the Judgment
Species of fish
As a preliminary point, it should be made clear that within both families “scumbridae” and “carangidae” several fish in Danish, English and German are called “makrel”, “mackerel” and “Makrele” or contain this word as part of their names. The only way in which to precisely identify a species is to use its Latin name. According to the statement by the Association of Danish Fish Processing Industries and Exporters and the evidence given by Mr. Sørensen of DAT-SCHAUB, the court finds that the Latin names are used in dealings in fish. In his evidence Dr. Sergueev stated that the only previous contract for the sale of fish between the parties had been based on the Latin name of the species concerned.
At the end of January 1997 Dr. Sergueev telephoned DAT-SCHAUB concerning a delivery of mackerel and in a subsequent telephone conversation with Mr. Sørensen, who confirmed that DAT-SCHAUB was able to deliver the goods, Dr. Sergueev asked for a specification. On the basis of Mr. Sørensen’s evidence the court is satisfied that the parties usually exchange specifications when they do business together in those cases where – as in the present case – they are not familiar with the goods.
Mr. Lommer of DAT-SCHAUB prepared the specification and also faxed it to Dr. Sergueev as well as his Russian buyer. In addition to the information about the time of production, size, packing and description, “Tiefgefrorene Makrele”, the specification included the Latin name of the species, “Trachurus Symmetricus Murphyi” and a German translation, “Bastardmakrele”, in the subject heading.
On the basis of this specification Dr. Sergueev placed his order after having familiarised himself with the contents of the specification, to which he did not object. That DAT-SCHAUB then delivered “Trachurus Symmetricus Murphyi” is undisputed.
Upon hearing the evidence and because the contents of subsequent documents do not change the assessment, the court rejects Dr. Sergueev’s claim that the goods delivered by DAT-SCHAUB did not conform to the species required by the contract.
Time of catch and quality
Dr. Sergueev’s notice of lack of conformity and his claim that DAT-SCHAUB had delivered the wrong species must be deemed based on an immediate visual identification of the species made when the Russian buyer received the goods on 19 February 1997. This notice was unfounded.
A superficial examination of the boxes containing the fish could have directed Dr. Sergueev’s attention to the production dates stamped on the boxes, and on which Dr. Sergueev’s notice given on 19 September 1997 was based.
Dr. Sergueev could have discovered any lack of conformity with the contract regarding the condition of the fish, provided such lack of conformity existed, on the arrival of the goods by defrosting samples from the consignment in order to determine their quality, something which should have been done at that time, considering the nature of the goods.
Upon hearing the evidence and because the statements of Dr. Sergueev in general do not indicate otherwise, the court finds that Dr. Sergueev cannot be deemed to have examined the goods within as short a period as practicable in the circumstances, see Article 38(1) of the CISG.
Apart from the notice that the goods did not conform to the species required by the contract, Dr. Sergueev did not give notice of lack of conformity until 11 September 1997, approximately seven months after delivery. Consequently the court finds that, according to the facts of the case, Dr. Sergueev has lost his right to rely on a lack of conformity of the goods, see Article 39(1) of the CISG.
The court is not satisfied that Dr. Sergueev had a “reasonable excuse”, see Article 44 of the CISG.
It follows that the court finds in favour of the seller DAT-SCHAUB and that the separate claim for the payment of the balance of the price is allowed, noting that the question of the correctness of the non-conformities relied upon is not subject to these proceedings.
On those grounds the court hereby rules:
The court finds for the seller DAT-SCHAUB International A/S and dismisses the claim made by Dr. S. Sergueev Handelsagentur.
The buyer is ordered to pay US$ 5,822.75 plus interest thereon as from 23 July 1997 to the seller within two weeks.
The buyer is ordered to pay the costs, an amount of Danish kroner 45,000, to the seller within two weeks.
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