Delli Compagni LorenzaIovine AntonioSusi Antonio Alessandro

INTERNATIONAL BUSINESS

LAW

THE ESTOPPEL

CLAUSEUniversità degli studi di Pavia

MIBE a.y. 2015/2016

European Union Sources of Law

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Estoppelset of doctrines of common law through which is strongly forbidden take advantage through contradictory declarations that may have created some expectations. The Estoppel clause refers to the normative about the direct effect of the European Directives.

The principle of estoppel was introduced at European community level with Ratti’s judgement:

THE ESTOPPEL CLAUSE

“The member state which has not adopted the measures required by the directive within the prescribed period, cannot rely on the failure that comes from the directive”

The implementation of the two directives in the Italian normative: The directive 73/173 CEE was not implemented within the deadline The deadline the directive 77/728 was not expired but at the same time was not

harmonized with the Italian LawDirectives task make uniform the discipline among the MSs and facilitate the traffic of goods.

RATTI CASE 148/785th April 1979, case 148/78, Court of Milan

Tullio Ratti, seller of solvents and varnishes, followed two European directives (in packaging and labeling activities), instead of the Italian law 245/163 where there was established how to classify and label the products.

WHAT IS THE PROBLEM?

Ratti appealed to the possibility to conform to the European law rather than the Italian law. BUT there were some contrasts whit the two legislations

Two different decision: Ratti could not be prosecuted for the directive 73 the State that didn’t

respect the terms, cannot prosecuted the individual that confirmed to the European directive (vertical effect). After the deadline a MS cannot enforces their nationally law: It is only after the deadline has passed that the directive becomes unconditional

The deadline of the directive 77 was not over the directive couldn’t product any kind of effect on the individual that confirmed before the end of the terms: national legislation results in force

WHICH ONE SHOULD BE CHOSEN?

“A Member State should not be able to rely on — and take advantage of — its failure to fulfil binding obligations as against individuals.”

The general principle of the estoppel is:

BECKER CASE 8/81Case 8/81 reference to the Court under article 177 of the EEC treaty by the Finance Court of Munster for a preliminary ruling in the case between Ursula Becker, a self-employed credit negotiator residing in Munster, and Finanzamt Munster-Innenstadt (the tax office of Munster central) on the interpretation of article 13 b (d) of the sixth Council directive 77/388 EEC of 17 may 1977.

In the Federal Republic of Germany turnover tax was charged on any supplies or other services effected within the territory of the country by a person acting in the course of his business.

Article 4 of the Law on turnover tax exempted from turnover tax inter alia the granting of credit, the negotiation of transactions involving securities and legal tender, and the management of credit; it did not grant exemption in respect of credit negotiation.

Ursula Becker resides in Munster, carries on the business of a self-employed credit negotiator. She was liable in 1979, under the legislation in force at that time, to pay turnover tax on the income which she received in the form of commissions for her activity as a credit negotiator.

In her preliminary returns in respect of turnover tax for the months March to June 1979, Mrs Becker requested exemptions from tax from the Finanzamt Munster-Innenstadt for her credit negotiation transactions. She based the claim on Article 13 B (d) of the Sixth Council Directive 77/388/EEC of 1977 on the harmonization of the laws of the Member States relating to turnover taxes for a Common system of value-added tax: uniform basis of assessment.

That provision, which falls under Title X of the directive, dealing with exemptions, provides :

"Without prejudice to other Community provisions, Member States shall exempt the following under conditions, preventing any possible evasion, avoidance or abuse: (d) ... 1. The granting and the negotiation of credit and the management of credit by the person granting it"

Mrs Becker informed the tax office of the amount of her turnover and of the input tax which she had paid, but at the same time claimed that she was entitled to the exemption provided for by article 13 b(d).

She submits that the obligation thus imposed on the MSs by that provision to exempt inter alia credit negotiation transactions from turnover tax, was incorporated in German law as from 1979, as the final date for the actual implementation of Directive 77/388 in all the MSs.

The term was postponed for Germany and six other MSs, until 1 January 1979 by the 9° Council Directive of 26 June 1978 on the harmonization of the laws of the MSs relating to turnover taxes.

The Finanzamt did not accept that argument and in the notice of assessment to advance payment of turnover tax, it charged turnover tax amounting to a total of almost 10000 Deutsch Mark on Mrs Becker's credit negotiation transactions, in accordance with the national legislation which had not yet been amended.

Following the dismissal of her objection, Mrs Becker appealed against those assessments of the Finanzamt, instituted proceedings before the Finanzgericht, relying upon the provision of the directive .

DEFENCE Finanzamt contended that during the period the sixth directive had not yet been implemented in Germany. It maintained that the view shared by all the MSs was that article 13 could not be considered to be a provision creating directly applicable law, in view of the fact that that provision reserved a margin of discretion to the MSs.

III paragraph of article 189 of the treaty: "a directive shall be binding, as to the result to be achieved, upon each member state to which it is addressed, but shall leave to the national authorities the choice of form and methods"

Problems arise where a MSs has failed to implement a directive and where the provisions of the this have not been implemented by the end of the deadline.

In order to resolve that issue the Finanzgericht referred to the Court, question about the directly effect at the final date expected in Germany of the exemption from turnover tax of transactions consisting of the negotiation of credit, included in the mentioned directive.

The result follows well-established case-law of the court and from the judgment

Case 148/78 Pubblico Ministero vs Ratti

The reply given by the Court was that from 1 January 1979 it was possible for the provision concerning the exemption from turnover tax of transactions consisting of the negotiation of credit contained in Article 13 B(d) of the Sixth Council Directive basis of assessment to be relied upon, in the absence of the implementation of thatdirective, by a credit negotiator where he had refrained from passing that tax on to persons following him in the chain of supply, and the State could not claim, as against him, that it had failed to implement the directive.

DECISION: The Court to the Finanzgericht Muster

Sullivan v. PorterReal property purchaser (Ps) v. Real property seller (D)

Nature of the caseAppeal from order of specific performance in action for breach of oral contract for the sale of real estate and promissory estoppel.Breach of contract: Unlaw failure by a party to perform its obligations pursuant to contractPromissory estoppel: A promise that is enforceable if the promisor should reasonably expect that it will induce action on the part of the promise, and does in fact cause such an action, and it is the only means of avoiding injustice.

FactsPorter (D) offered to sell his property to Sullivan and Andrews (Ps) for $350,000 with a $20,000 down payment and Sullivan accepted orally. Porter said that he would have his attorney prepare the paperwork. Sullivan took possession of the property and began improving the stable and trails. This continued until when Porter arrived at the farm with a real estate agent. Porter told Sullivan that another buyer was interested but he told Sullivan that he would honour their agreement.

The next day, Porter accepted a $3000 down payment from Sullivan. Sullivan and Andrews began renovations and improvements on the property, started their new business, placed advertisements in the local newspaper, and paid for an appraisal of the property. Porter regularly visited the property and received updates about the renovations but did not produce the paperwork necessary to complete the transaction. Porter then offered to sell the property for $450,000 with a $50,000 down payment.

Fact summaryPorter, who orally agreed to sell his property to Sullivan, contended that: There was insufficient evidence for a jury to find that an oral contract for the sale of

a real property had been created There was insufficient evidence of Part Performance and Reasonable Reliance to

remove the contract from the Statute of Frauds Specific Performance was an inappropriate remedy

 

Conclusion

Sullivan(P) brought suit, asserting the existence of an oral contract and promissory estoppel, and requesting specific performance. A jury found for Sullivan on all of these, and the trial court ordered Porter to sell the property on terms agreed to. The state’s highest court granted review.

A specific performance order to sell real property is within the bounds of a court’s discretion where the terms of the contract for the sale of the property are reasonably certain, the party seeking specific performance has made a significant investment in improving the property, and the property is unique.

Delli Compagni LorenzaIovine AntonioSusi Antonio Alessandro

THANK YOU FOR THE

ATTENTION!