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Case:
BGH NJW 1974, 991 VIII. Civil Senate
Date:
20 March 1974
Note:
Translated German Cases and Materials under the direction of Professors P. Schlechtriem, B. Markesinis and S. Lorenz
Translated by:
Mr Tony Weir
Copyright:
Professor B.S. Markesinis

The plaintiff manufactures French fried potatoes which he sells to wholesalers such as the defendant. On 19 August 1970 the defendant telephoned the plaintiff to ask him for his prices. The rest of the telephone conversation is in dispute. After the telephone call the plaintiff sent the defendant a ‘confirmation of order’ for a specific quantity of French fries. The defendant did not reply to this document, but obtained French fries from another firm and accepted none from the plaintiff.

The plaintiff claims damages for non-acceptance in a partial amount of 10,000 DM plus interest. The Landgericht dismissed the claim, but the Court of Appeal allowed it. The defendant’s appeal was unsuccessful.

Reasons

I. The Court of Appeal found that no contract of sale was concluded on the telephone on 19 August, but that because the ‘confirmation of order’ was accepted without protest, the plaintiff’s contractual claim was nevertheless well grounded. This document was in law a commercial letter of confirmation, and the defendant had failed to prove, the burden being on his, that its terms differed substantially from those of the telephone conversation or that the plaintiff had deliberately ‘confirmed’ something he knew to be incorrect.

II. The appellant’s objections to the finding that the confirmation of order of 19 August was a commercial letter of confirmation are without merit. This court has only a limited power to review the construction of such an individual and atypical declaration as this document; we can only ask whether the Court of Appeal infringed any principles of logic, rules of construction or canons of procedure, or whether it misconceived the nature of a commercial letter of confirmation. This is not the case.

1. The fact that a document is described as a confirmation of order is no obstacle to its being treated as a commercial letter of confirmation. It is established law that the description which a party gives to his document is not conclusive. Frequently tradesmen pay little attention to this matter (reference omitted). It is also immaterial that the document neither mentions nor refers to a previous telephonic agreement (BGHZ 54, 236, 249), but since there had only been one telephone conversation between the parties, on the very day on which the letter was sent, it is clear that this letter could only refer to the telephone conversation of 19 August. The external appearance of the document was also consistent with its being intended to reflect the essentials of the telephone conversation.

2. A further requirement for a commercial letter of confirmation is that it be preceded by contractual negotiations (BGH NJW 1963, 1922, 1925; other reference omitted).

(a) It is essential to the concept of a commercial letter of confirmation that it reflect the real or supposed outcome of prior contractual negotiations. This is what distinguishes it from a confirmation of order which, instead of communicating the result of previous contractual negotiations, constitutes the acceptance of an offer in the form of a confirmation, or sometimes even an offer in itself (BGHZ 18, 212, 214). Since on general principles of proof the plaintiff must establish the salient elements of a commercial letter of confirmation, it is for him to prove that contractual negotiations preceded the ‘confirmation of order’.

(b) We do not agree with the appellant that the Court of Appeal was wrong in law to find this proved. The court left it an open question whether the parties actually came to an agreement on the telephone about the purchase of French fries, or whether the defendant simply wanted a quotation and made it clear that he did not want to buy, but it did find that there was no disagreement over the details of the quantity to be supplied, the price or the method of payment, and that at the end of the conversation there was talk of a confirmation of order. Given these facts, the Court of Appeal was entitled to conclude that contractual dealings had taken place, for the plaintiff had made a precise offer and the defendant had concerned himself with its terms. It is immaterial whether or not a contract was actually formed on the telephone, because a document may be a commercial letter of confirmation even though no contract was formed in the prior contractual negotiations (reference omitted).

III. If the ‘confirmation of order’ of 19 August is a commercial letter of confirmation, the defendant was bound to object to it if h e objected to being bound by it.

1. The reason is that one tradesman who sends a letter of confirmation to another so as to fix and record the result of antecedent contractual negotiations assumes that the recipient will forthwith check the document to see whether it correctly reflects his view of the content of the negotiated agreement. If he makes no protest, the sender is in principle entitled to rely on the transaction proceeding in the form in which he confirmed it (BGH NJW 1972, 45).

2. but this does not apply when the terms of the confirmatory document deviate so widely from the terms of the discussions that the person sending it could not reasonably count on the recipient’s agreeing to is or when the person sending it knew that it was inaccurate and so infringed the principles of good faith (BGHZ 40, 42, 44-5).

IV. The Court of Appeal was right in holding that the burden of proof of these matters is on the recipient of the letter of confirmation.

1. On general principles of proof the person who sends a ‘confirmation of order’ must prove all that is necessary for the application of the rule which justifies his claim. This means that he must prove that his letter is a commercial letter of confirmation and that it reached the other party. If the recipient asserts that no obligation resulted on him because the document deviated seriously from the content of the prior negotiations or intentionally misrecorded them, it is for him to prove all that is necessary for this defence to apply. Since as a general rule a failure to object to a commercial letter of confirmation has binding results, a person who claims that exceptionally this binding result did not ensue must prove why the rule does not apply (reference omitted).

2. It must be added that it is mercantile practice to expect the recipient of a commercial letter of confirmation which does not reflect the prior dealings or what was agreed to make an immediate protest (reference omitted); thus if a commercial letter of confirmation does not agree with the prior negotiations, the recipient who fails to protest has not behaved in the manner required of businessmen. He must therefore demonstrate that he was not required to behave in the normal and indicated manner, and that no protest against the letter of confirmation was called for because it deliberately or seriously misrepresented the prior negotiations.

3. Even under the Reichsgericht, therefore, the recipient of a letter of confirmation had the burden of proving that the person who sent it had infringed the principles of good faith by intentionally making it reflect something other than had been expressed in the prior negotiations.

4. It might possibly be different where the person sending the letter of confirmation had the intention of trapping the recipient or of taking him unaware, but the facts of the present case to not raise that question in any way.