Fried Krupp Huttenwerke A.G. v Quitmann Products Ltd and Fitzgerald

• Jurisdiction: Ireland
• Judge: Mr. Justice Gannon
• Judgment Date: 14 July 1982
• Neutral Citation: [1982] IEHC 2
• Date: 14 July 1982
• Court: High Court
• Docket Number: No.5033 P./1979

[1982] IEHC 2

THE HIGH COURT

No.5033 P./1979

KRUPPSTAHL A. G. v. QUTTMANN PRODUCTS

BETWEEN:

FRIED KRUPP HUTTENWERKE A.G.

And as amended

KRUPPSTAHL A.G.

Plaintiff

and

QUITMANN PRODUCTS LIMITED AND DERMOT FITZGERALD

Defendants

1 Judgment of Mr. Justice Gannon delivered the 14th day of July, 1982.

2 This is a claim for goods sold and delivered brought by a German company, hereinafter referred to as "Krupps" against a company in Ireland, hereafter referred to as "Quitmann", whose business and affairs have been taken over by a receiver who is the second named defendant. The receiver was appointed on the 20th July, 1979 pursuant to the power reserved by a debenture granted by Quitmann to another creditor in Ireland. The assets of Quitmann have been realised but, by reason of the terms as alleged of the contracts between Krupps and Quitmann, Krupps seek declaratory orders which, if made, would determine whether, and if so to what extent, Krupp" claim has priority over the claims of the debenture holder. It has been agreed that the sterling value of the amount unpaid by Quitmann for goods sold and delivered prior to the 20th July, 1979 is £82,194.09. Krupps seek to rely upon what has been called a "retention of title clause" set out in German on confirmation of orders documents which also provide for payment of interest on overdue payments and that the contracts are governed by German law. Quitmanns contest the claim on the grounds that such documents were not contract documents, and the terms thereof, in particular the interest clause and the "retention of title clause", were not terms of contract,and that if the retention of title clause was applicable it is unenforceable for want of registration as a charge pursuant to Sections 99 and 100 of the Companies Act 1963.

3 The first issue to be resolved is whether or not the conditions of trading set out in German on the back of the documents sent by Krupps to Quitmann as confirmations of orders were conditions of contract binding on both parties.

4 The facts relating to the trading between the two companies as disclosed by the evidence are as follows. Gregory Marcar Ireland Limited is a company which acts as marketing agents for steel and the principal in Ireland is Mr. Terry Stewart, the other two directors being members of a corresponding English company. Mr. Stewart was engaged by Krupps, who are steel manufacturers in Germany, to find a market in Ireland for their products. Quitmann had a factory in Portumna at which they manufactured goods made from steel and in particular pedal bins and bread bins for which they required stainless steel. The chairman and managing director of Quitmann was Herr H. Harding a German, and the company described itself as a member of the Quitmann group. It is of significance that Herr Gunther Ehring, the export sales manager of Krupps, had done business in 1976 in Germany with a company of which Herr Harding was managing director and which was engaged in the manufacture of the same sort of products out of the same sort of materials as Quitmann in Portumna. Mr. Stewart made contact with Quitmann through a Mr. Fox of Quitmann in August or September 1977 and Herr Ehring came to Ireland and with Mr. Stewart met Mr. Eox at Portumna but did not then meet Herr Harding.

5 Mr. Stewart conducted all the business of Gregory Marcar Limited from his own home from which he made enquiries and conducted negotiations and placed orders by phone calls and did his own typing and posting and he personally called upon clients to collect accounts and to get renewal of orders. He acted as an agent only and transmitted documents but did not have nor exercise any authority in relation to terms of contracts. After initial contact was made negotiations took place with a view to orders for the supplying of stainless steel and price, quality, quantities and terms for payment were discussed. The goods required by Quitmann from Krupps consisted of quantities of stainless steel in sheet form of weight, quality and dimensions convenient for use in the manufacture by machine in conjunction with other components of finished articles such as bread bins and pedal bins which could be supplied in quantities to wholesale market outlets. Quitmann expected to receive regular monthly deliveries but the quantities would vary according to the rate of output. For the purpose of making grading and preparing for transport and delivering the goods requested Krupps required a reasonable period of notice and some latitude of time. As the materials were produced to order their delivery was subject to fluctuations. For both parties the interval between the placing of an order and the delivery at Portumna would be significant and would require reasonable estimation.

6 Mr Stewart had discussions from time to time with Herr Harding by whom the first order was given in the course of verbal discussions on the 21st April, 1978. Following this conversation Mr Stewart wrote on that date to Herr Harding and informed him of enquiries made about production and the expected time of delivery and asking for confirmation of an order for the goods of the nature and quantities discussed. Herr Harding replied by letter of the 27th April, 1978 stating his requirements including delivery in June and invited further arrangements for a delivery order for July. Mr. Stewart dispatched the order to Krupps in Germany having previously conveyed the order by phone. Krupps sent a confirmation of order document to Mr. Stewart for transmission to Quitmann which was dated 22.5.78 and, for some reason not adverted to in the evidence,was remitted to the English Marcar Limited agency. It reached Mr. Stewart who sent it on to Portumna addressed to Herr Harding who could not have received it before sending his letter dated 23rd May, 1978.

7 When Herr Harding wrote in his letter dated 23rd May, 1978 "I would appreciate if you would please confirm this order" he had not then received Krupps" confirmation of his order given by letter of 27th April, 1978 but expected to receive such. It did reach him before delivery and was expressed entirely in the German language save for some minor particulars typed into prepared blanks. The confirmation of order document which relates to the order by letter dated 23rd May, 1978 is dated 7.6.78 and most probably was received by Herr Harding before delivery had been taken of the goods the subject of the first order of the 21st April, 1978. According to Mr. Stewart confirmation documents generally arrived within two weeks or up to eight weeks after order placed, and might arrive one or two weeks before shipment or up to two or three months before actual delivery of goods depending on when delivery was required. Delivery of the goods was within two or three weeks of leaving the works. These and all subsequent confirmation of orders documents which followed each order notifying expected dispatch and delivery dates were expressed in the German language and had set out on them what are described in English as General Conditions of Sale and Payment. On the top of the page setting out the requested details of goods quantities, qualities, prices and expected dates of delivery there appeared in red print a notice drawing attention to the conditions on the reverse side of the page.

8 The staff of Quitmann at Portumna included Herr Harding who was German, a Mr. Fox production manager who left in late summer 1978, a Mr. Cleak who was the factory manager, a Mr. Sparks who was financial controller, a Mrs Mitchell who was secretary and bookkeeper and a stock control clerk who was not named. Of these the only one who gave evidence was Mr. Gregory Sparks who had no knowledge of German and who said he did not know what the confirmation of order document was, and that the invoices which he recognised as such did not have terms or conditions on them. No documents which could be described as invoices were put in evidence. I infer from Mr. Sparks" evidence that none of the staff other than Herr Harding knew German, and neither did Mr. Terry Stewart of Gregory Marcar Limited the agent for Krupps. According to Mr. Sparks meetings were regularly held in Portumna by Quitmann for the purpose of planning and laying out production schedules at which Herr Harding attended and for which it would be necessary to know times of expected shipments and delivery of raw materials and quantities and prices, and for these he would have all documents relating to orders and deliveries. He did not recall having had any discussions with Herr Harding about terms and conditions save on two matters. He said he discussed with Herr Harding whether or not Quitmann would pay Krupps by bill of exchange and that it was decided not to pay by bill of exchange at the commencement of business with Krupps although this is inconsistent with what Herr Harding actually did according to the orders signed by him. He also recalled that a question arose of interest being charged on overdue payments when debit notes for interest had come in and that Herr Harding had said it was normal in Germany to which Mr. Sparks replied "this is Ireland" Herr Ehring from Krupps came to Ireland early in 1979 and met Herr Harding in Portumna and had discussions with him in the German language. This was shortly after Krupps had raised the first debit notes for late payments and the conversation was mostly about financial matters and Krupps" claim for interest under the conditions which were mentioned and quoted.

9 Having regard to the evidence it seems to me to be the necessary and correct conclusion that Quitmann was aware of the terms set out as general terms and conditions on the back of the confirmation of orders documents received from Krupps and understood their meaning. I also consider that on the balance of probabilities Quitmann expected to find such or the like general terms and conditions on the...