Larry_A_DiMatteo_-_International_Sales_Law_A_Global_Challenge-Cambridge_University_Press_2014

failure to comply with the delivery schedule was a fundamental breach under Article 25.101 Furthermore, the buyer argued that its position was supported by Article 33’s delivery requirement.102 The court was not persuaded by the buyer’s contention that the CISG establishes a “lower threshold for the proof of fundamental breach than that required by the common law.”103 Nevertheless, the court found that the failure to deliver on time did constitute a fundamental breach even under common law, as the parties had made time of the essence in the contract’s performance.104

2. United States

In Magellan International v. Salzgitter Handel,105 the court explained that the “plain language” of Articles 25 and 72 indicate that a party claiming anticipatory repudiation “need simply allege that the defendant intended to breach the contract before the contract’s performance date and that such breach was fundamental.” In Magellan the buyer demanded an amendment to the bill of lading required in the contract. The seller took this unilateral demand as the buyer’s intent to breach the contract if the stipulated, nonamended bill of lading was delivered. The seller contended that the bill of lading was “an essential part of the parties’ bargain.”106 The court agreed, holding that the buyer’s insistence on the amendment constituted a fundamental breach.107

In Shuttle Packaging Systems v. Tsonakis,108 the buyer made numerous complaints about defects in the goods during delivery and training. The equipment eventually operated as promised by the seller. However, the court concluded that these complaints tended to be “opportunistic and not genuine in character.”109 Thus, any “non-conformities” with the equipment did not amount to a fundamental breach. Accordingly, it was the buyer’s failure to pay, in light of the nature of its complaints, that constituted a fundamental breach.

Doolim Corp. v. R. Doll, LLC110 involved a set of contracts for the sale of women’s clothing items made to the buyer’s specifications, including the branding of the buyer’s trademark. Although it had received several of the ordered garments, the buyer paid only a portion of the total amount due to the seller. The parties eventually agreed that the buyer would pay in installments and provide the seller with a letter of credit to secure the remaining shipments. When the buyer failed to meet the terms of this new agreement, the seller withheld shipment of the garments. Given the trademarked nature of the goods,

101Id., para. 27.

102Id.

103Id.

104Id., paras. 34–6.

105Magellan Int’l Corp. v. Salzgitter Handel GmbH, 76 F. Supp. 2d 919, 925–926 (N.D. Ill. 1999), available at http://cisgw3.law.pace.edu/cases/991207u1.html.

106Id.

107It should be noted that in a civil jury trial, as is found in the American legal system, the issue of fundamental breach may be an issue of fact to be decided by a jury. Such was the case in Miami Valley Paper, LLC v. Lebbing Engineering & Consulting GmbH.: Miami Valley Paper, LLC v. Lebbing Eng’g & Consulting GMBH, 2009 U.S. Dist. LEXIS 25201 (S.D. Ohio March 26, 2009), available at http://cisgw3.law.pace. edu/cases/090326u1.html.

108Shuttle Packaging Sys. v. Tsonakis, 2001 U.S. Dist. LEXIS 21630, at 28 (W.D. Mich. December 17, 2001), available at http://cisgw3.law.pace.edu/cases/011217u1.html.

109Id.

1102009 WL 1514913 (S.D.N.Y. May 29, 2009), available at http://cisgw3.law.pace.edu/cases/090529u1.html.

the seller was not able to resell the goods. The seller was thus liable for the full contract price.111

G. Price Reduction Remedy

If the goods received fail to conform to the contract specifications, CISG Article 50 allows the buyer to “reduce the price in the same proportion as the value that the goods actually delivered had at the time of the delivery bears to the value that conforming goods would have had at that time.” This is true regardless of whether the buyer has already paid for the goods. Importantly, however, the CISG also states that the buyer may not reduce the price for the goods if the seller remedies the goods or if he or she refuses to accept the seller’s remedy.

A reason for a seller to reject a buyer’s price reduction is that the documents were nonconforming but the goods received and accepted were conforming. One U.S. court reasoned that “[t]he Vienna Convention may permit a proportionate reduction in price for non-conforming goods, but [seller] stipulated here that the goods delivered to [buyer] were conforming. Accordingly, [buyer] had no legal justification for withholding payment.”112 As to the amount of the buyer’s unilateral price reduction, another U.S. court held that the resale price of nonconforming goods was probative evidence of the reasonableness of the price reduction.113 In that regard, the court held that “it is well settled that the price obtained for defective goods on resale is probative of the value of the goods as actually received.”114

H. Remedies: Avoidance and Damages

Taking account of many of the usual issues involved with contract disputes, the CISG provides some guidance for analyzing avoidance and damages claims. In particular, Article 49 provides a buyer with a right to avoid a contract if the seller fundamentally breaches the agreement.115 The buyer may also avoid the contract if the seller fails to deliver the goods in accordance with Article 47. Notably, Article 49 limits the buyer’s right of avoidance if the goods have already been delivered unless he or she does so within a reasonable amount of time. Article 64 provides the seller with an opportunity

111Id., 6. The fundamental nature of the breach in other cases may not be so clear. So, in Banks Hardwoods Florida LLC v. Maderas Iglesias, S.A., No. 08–23497-CIV, 2009 U.S. Dist. LEXIS 101452 (S.D. Fla. October 29, 2009), available at http://cisgw3.law.pace.edu/cases/091029u1.html, the court denied summary judgment due to issues of fact surrounding whether the nonconformity of the Spanish seller’s lumber was “slight” or whether it was sufficiently fundamental to allow the buyer to avoid the contract. Id., 4–5.

112S.V. Braun, Inc. v. Alitalia-Linee Aeree Italiane, S.p.A, 1994 U.S. Dist. LEXIS 4114, at 1, 1–2 (S.D.N.Y. April 6, 1994), available at http://cisgw3.law.pace.edu/cases/940406u1.html.

113Interag Co. v. Stafford Phase Corp., 1990 U.S. Dist. LEXIS 6134 (S.D.N.Y. May 22, 1990), available at http://cisgw3.law.pace.edu/cases/900522u1.html.

114Id., 12 (citing Lackawanna Leather Co. v. Martin & Stewart, Ltd., 730 F.2d 1197, 1203 (8th Cir. 1984), available at http://openjurist.org/730/f2d/1197/lackawanna-leather-company-v-martin-and-stewart-ltd.).

115CISG, Article 49(1)(a); Article 49 is generally analyzed in conjunction with CISG, Article 25, which defines “fundamental breach.” See, e.g., Miami Valley Paper, LLC v. Lebbing Eng’g & Consulting GmbH, 2009 U.S. Dist. LEXIS 25201, at 16–17 (S.D. Ohio Mar. 26, 2009), available at http://cisgw3

.law.pace.edu/cases/090326u1.html; Medical Mktg. Int’l, Inc. v. Internazionale Medico Scientifica, S.R.L., 1999 U.S. Dist. LEXIS 7380, at 5–7 (E.D. La. May 17, 1999), available at http://cisgw3.law.pace.edu/ cases/990517u1.html (upholding an arbitral decision that avoidance of the contract was proper due to a fundamental breach).

to avoid the contract if the buyer fails to perform its obligations. Additionally, Article 72 allows for avoidance based on anticipatory breach of contract. Finally, as one court put it, Articles 71 through 73 “afford both buyer and seller the right to suspend or avoid an installment contract due to fundamental breach.”116

Article 74 sets forth the foreseeability standard for calculating damages.117 Article 74 states that: “Such damages may not exceed the loss which the party in breach foresaw or ought to have foreseen at the time of the conclusion of the contract, in the light of the facts and matters of which he then knew or ought to have known, as a possible consequence of the breach of contract.” Article 74 “is ‘designed to place the aggrieved party in as good a position as if the other party had properly performed the contract.’”118

The 1995 case Delchi Carrier Spa v. Rotorex Corporation119 remains the clearest statement of the scope of damages under the CISG, viewed from a U.S. perspective. There, the buyer complained of defects with the first of three scheduled shipments of air conditioning compressors. Specifically, the buyer notified the seller that a majority of the compressors from the first shipment did not comply with the sample compressor and specifications. After the seller declined to replace the goods, the buyer terminated the agreement. The seller disputed the buyer’s claim for lost profits and contended that its own acts did not constitute a breach of the contract. The court found that the defects in the compressors constituted a fundamental breach under the CISG. The court awarded lost profits because the nonconformity forced the buyer to shut down its plant, which resulted in the loss of existing sales contracts. Finally, reasoning that lost profits would not make the buyer whole for all expenses incurred, the court found that the additional costs for expedited shipping of replacement goods, for customs, and for labor to repair the nonconforming goods were all recoverable.120

116Shuttle Packaging Sys. v. Tsonakis, 2001 U.S. Dist. LEXIS 21630, at 27 (W.D. Mich. December 17, 2001), available at http://cisgw3.law.pace.edu/cases/011217u1.html.

117CISG, Article 74. Courts have also stressed the importance of a party demonstrating the foreseeability of damages. See, e.g., Al Hewar Environmental & Public Health Establishment v. Southeast Ranch LLC, No. 10–80851-CV-Hurley/Hopkins, 2011 U.S. Dist. LEXIS 128723 (S.D. Fla. Nov. 7, 2011), available at http://cisgw3.law.pace.edu/cases/111107u1.html; Ajax Tool Works v. Can-Eng Mfg., 2003 U.S. Dist. LEXIS 1306 (N.D. Ill. Jan. 29, 2003), available at http://cisgw3.law.pace.edu/cases/030129u1.html. As the Ajax court stated: “It is undisputed that the parties’ agreement states that ‘CAN-ENG shall not be liable for consequential damages.’ As discussed above, such limited liability provision is enforceable under the CISG. Further, although Article 74 of the CISG provides for consequential damages, ‘such damages may not exceed the loss which the party in breach foresaw or ought to have foreseen at the time of the conclusion of the contract, in the light of the facts and matters of which he then knew or ought to have known, as a possible consequence of the breach of contract . . . Because Ajax did not address this point in its response memorandum, as best this court can tell, Ajax has not introduced any evidence that the consequential damages sought were foreseeable to Can-Eng. For these reasons and because there are no facts disputed, summary judgment is granted as to consequential damages.” Id., 19–20 (internal citations omitted).

118Delchi Carrier Spa v. Rotorex Corp., 71 F.3d 1024, 1029 (2d Cir. 1995), available at http://cisgw3.law.pace. edu/cases/951206u1.html (quoting Uniform Law for International Sales under the 1980 United Nations Convention, 2nd ed. (ed. John Honnold) (Deventer and Boston: Kluwer, 1991), 503).

119Delchi Carrier Spa, 71 F.3d at 1026–7.

120Id., 1030–1. The court, however, remanded for further proceedings in the lower court the question of whether or not the labor costs were variable or fixed. Id., 1031. For another recent judicial discussion of damages under the CISG, see TeeVee Toons, Inc. v. Gerhard Schubert GmbH, 00Civ. 5189, 2006 U.S. Dist. LEXIS 59455, at *32 (S.D. N.Y. August 22, 2006), available at http://cisgw3.law.pace.edu/cases/ 020329u1.html (granting summary judgment on various claims for damages).

In a related vein, several courts have reviewed the issue of whether or not attorneys’ fees for a breach of contract claim are allowable in damage claims governed by the CISG. In the case of Chicago Prime Packers, Inc. v. Northam Food Trading Co.,121 the prevailing party requested an award of attorneys’ fees in addition to damages for breach of contract. The court denied the request because such fees do not constitute a “loss” in the context of Article 74.122 Additionally, the court explained that “A claim for attorney’s fees is a procedural matter governed by the law of the forum” rather than by the CISG.123

In the area of avoidance, nonpayment and nondelivery are quintessential cases of fundamental breach. In Shuttle Packaging Systems v. Tsonakis,124 the court found that the buyer’s failure to pay – despite its complaints of nonconformity, which the court found to be not genuine – constituted a fundamental breach. More particularly, the court stated that Article 64 indicates that a failure to pay is “the most significant form of a fundamental breach by a buyer,” and, as a result, it demands “no additional notifications . . . for avoidance of the contract.”125 In Doolim Corp. v. R Doll LLC,126 the seller canceled the contract because of the buyer’s persistent failure, in respect of previous installments, to pay the agreed-upon price. As stated in CISG Article 72, “If prior to the date for performance of the contract it is clear that one of the parties will commit a fundamental breach of contract, the other party may declare the contract avoided.” In Doolim Corp., the buyer failed to secure a required letter of credit for subsequent shipments. Consequently, the court held that the seller was entitled to choose one of two remedies under CISG Articles 75–76: (1) resell the goods within a reasonable time and in a reasonable manner and recover the difference between the resale price and the contract price (in addition to any foreseeable consequential losses) or (2) recover the difference between the current price and the contract price as damages, with the current price defined as the price at

121Chi. Prime Packers, Inc. v. Northam Food Trading Co., 320 F. Supp. 2d 702, 715 (N.D. Ill. 2004), available at http://www.cisg.law.pace.edu/cases/040521u1.html, aff’d, 408 F.3d 894 (7th Cir. 2005).

122Id., 716–17 (citing Zapata Hermanos Sucesores, S.A. v. Hearthside Baking Co., Inc., 313 F.3d 385, 389 (7th Cir. 2002), available at http://cisgw3.law.pace.edu/cases/021119u1.html).

123Id., 717 (citing Ajax Tool Works v. Can-Eng Mfg., 2003 U.S. Dist. LEXIS 1306, at 20–21 (N.D. Ill. Jan. 29, 2003), available at http://cisgw3.law.pace.edu/cases/030129u1.html). See also In re San Lucio, 2009 U.S. Dist. LEXIS 31681, at 4, 10–11 (D.N.J. April 15, 2009), available at http://cisgw3.law.pace.edu/cases/ 090415u1.html (applying U.S. law to the issue of attorneys’ fees because the CISG is “silent” about them);

ECEM European Chemical Mktg. B.V. v. Purolite Co., No. 05–3078, 2010 U.S. Dist. LEXIS 109893 (E.D. Pa. October 14, 2010), available at http://cisgw3.law.pace.edu/cases/100129u1.html (holding that an award of attorneys’ fees, in a dispute governed by the CISG, was proper where called for by a written agreement of the parties).

U.S. courts have similarly awarded prejudgment interest to the prevailing party in CISG-governed disputes, using a variety of rationales. See Zeeco, Inc. v. Sivec SRL, No. 10-CV-143-JHP, 2012 U.S. Dist. LEXIS 2557 5–6 (E.D. Okla. January 12, 2012), available at http://cisgw3.law.pace.edu/cases/120109u1. html (awarding prejudgment interest under the auspices of CISG, Article 78); ECEM European Chemical Mktg. B.V. v. Purolite Co., 451 Fed. Appx. 73 (3d Cir. 2011), available at http://cisgw3.law.pace.edu/cases/ 111109u1.html (affirming award of prejudgment interest and finding, alternatively, that if Pennsylvania law applies award was mandatory or that if CISG applies the award was within the trial court’s broad discretion); Waterside Ocean Navigation Co., Inc. v. Int’l Navigation Ltd., 737 F.2d 150, 153–4 (2d Cir. 1984) (confirming award of prejudgment interest on arbitration award in case governed by the CISG, noting inter alia that the CISG is silent on the issue).

124Shuttle Packaging Sys. v. Tsonakis, 2001 U.S. Dist. LEXIS 21630, at 27–28 (W.D. Mich. December 17, 2001), available at http://cisgw3.law.pace.edu/cases/011217u1.html.

125Id.

1262009 WL 1514913 (S.D.N.Y. May 29, 2009), available at http://cisgw3.law.pace.edu/cases/090529u1.html.

the place of delivery. An interesting sidebar is that the court allowed the seller to sell the goods in its possession even though they included the buyer’s trademark.

The case of Usinor Industeel v. Leeco Steel Products127 broached the issue of third-party rights. The seller sold steel to a buyer, which in turn resold the steel to other parties. The parties’ contract stipulated that the seller retained rights to the goods until it received complete payment from the buyer. When the buyer failed to remit full payment, the seller sought replevin or, in the alternative, avoidance of the contract. Reasoning that the CISG applies only to the buyer and seller of the contract, the court denied the seller’s motion.128 More particularly, the court stated that, “The Convention will not override the rights of creditors, purchasers and other third persons granted by domestic law; under Article 4.”129 Thus, because the third-party bank retained a valid interest in the steel, the seller could not recover the goods.

I. Mitigation

When a buyer rejects goods on the basis of lack of conformity or for other reasons, the CISG requires the buyer to take steps to limit its losses and to preserve any goods in its possession.130 If a rejecting buyer fails to mitigate its damages, the nonbreaching seller may reduce the damages owed by the amount of damages that could have been mitigated by the buyer.131 Thus, where a buyer repaired a defective mold, the Canadian court held it to be a proper act of mitigation in light of the seller’s inability to keep the production on schedule and numerous problems with two of the seller’s molds.132 A U.S. court also deemed the use of the nonconforming goods for other purposes a proper act of mitigation in a case involving breach of the warranty of fitness for a particular purpose.133

The reselling of goods either by the buyer (nonconformity) or by seller (failure to pay) is generally considered a reasonable act of mitigation. However, the means or process of the resale may be scrutinized by the courts. In one case, a buyer challenged the appropriateness of the seller’s resale of goods after the buyer breached the contract.134 The court determined that the mitigation efforts were reasonable because the seller sold the goods for the “highest possible prices” only seventeen days after receiving notice of

127Usinor Industeel v. Leeco Steel Prods., 209 F. Supp. 2d 880, 881–82 (N.D. Ill. 2002), available at http:// cisgw3.law.pace.edu/cases/020328u1.html.

128Id., 885–6, 889. Where third party rights are involved, the CISG may not even apply. See Cedar Petrochemical v. Dongbu Hannong Chemical Co. Ltd., No. 06 Civ. 3972, 2007 U.S. Dist. LEXIS 51802 (S.D.N.Y. July 19, 2007), available at http://cisgw3.law.pace.edu/cases/070719u1.html, in which the court held the CISG inapplicable to determination of the rights of a Spanish buyer of phenol, despite the fact the CISG governed the underlying breach of contract claim between the U.S. seller and its supplier in South Korea.

129Usinor Steel, 209 F. Supp. 2d. at 885.

130CISG, Articles 77, 86–7.

131CISG, Article 77.

132Nova Tool & Mold Inc. v. London Indus. Inc., 1998 O.T.C. LEXIS 2176 (O.T.C. 1998), available at http:// cisgw3.law.pace.edu/cases/981216c4.html; see also supra Part I.D.1. Please note that the court opinions only mention the CISG with respect to the sections cited by the buyer. The opinions cite only Canadian cases and doctrine.

133Schmitz-Werke GmbH & Co. v. Rockland Indus., Inc., 37 Fed. Appx. 687 (4th Cir. 2002), available at http://cisgw3.law.pace.edu/cases/020621u1.html; see also discussion at Part I.D.2.

134Treibacher Industrie, A.G. v. Allegheny Technologies, Inc., 464 F.3d 1235, 1236 (11th Cir. 2006), available at http://cisgw3.law.pace.edu/cases/060912u1.html.

avoidance from the buyer.135 Furthermore, the buyer did not prove that the seller’s acts were unreasonable.

J. Excuse (Impediment)

CISG Article 79 excuses a party from liability if he or she provides the other party timely notice136 of his or her inability to perform, and if he or she proves the failure to perform “was due to an impediment beyond his control and that he could not reasonably been expected to have taken into account at the time of the conclusion of the contract or to have avoided or overcome it, or its consequences.”137 There is no existing case law in Canada applying Article 79, but there are a number of cases from the United States. In Macromex Srl. v. Globex International, Inc.,138 the court found that the alleged impediment actually could have been reasonably avoided or overcome. In that case, which involved an installment contract, the seller was notified that the goods could not be imported into the buyer’s country without certification from the buyer’s government as of a certain date. When installments remained undelivered after the effective date of the new certification requirements, the seller claimed the new certification requirements were an impediment that excused it from the contract. In arbitration, the seller argued that its delays in shipment were within the industry’s informal standard of flexibility, and that the government’s ban was a force majeure event. The arbitrator found that the delay in shipment itself was not a fundamental breach, but he did rule that the ban on shipment of forty-two containers could have been overcome by a substituted performance (delivery to a bordering country) as had been requested by the buyer. The arbitrator noted that other U.S. suppliers had done exactly that to avoid the import ban and also that the seller’s refusal to do so enabled it to take advantage of a contemporaneous jump in the market price of the goods. Thus, the seller’s claim of excuse was rejected.

II. Summary

The relative paucity of CISG case law in the Canada and the United States,139 together with a reluctance to look outside national jurisprudence, often makes it difficult to predict a court’s particular interpretation of the CISG. Combined there were only six cases referencing the principle of good faith (all from the United States); four cases on

135Id., 1239–40.

136CISG, Article 79(4).

137CISG, Article 79(1).

13808 Civ. 114, 2008 WL 1752530 (S.D.N.Y., April 16, 2008), available at http://cisgw3.law.pace.edu/cases/ 080416u1.html. See also Hilaturas Miel, S.L. v. Republic of Iraq, 573 F. Supp. 2d 781 (S.D.N.Y. 2008), available at http://cisgw3.law.pace.edu/cases/080820u1.html (a contract between a Spanish seller and the Iraqi government as a buyer of 500,000 metric tons of acrylic yarn; finding an excuse when the contract required inspections of the goods, and that became impossible due to the outbreak of war in Iraq in March 2003); Raw Materials Inc. v. Manfred Forberich GmbH & Co., KG, No. 03 C 1154 (N.D. Ill. July 6, 2004), available at http://cisgw3.law.pace.edu/cases/040706u1.html (ruling that in a dispute concerning the freezing over of the St. Petersburg, Russia, port from which a German firm was to deliver 15,000– 18,000 metric tons of used railroad rail, factual issues as to the German firm’s defense of force majeure were presented, so the Illinois purchaser’s summary judgment motion for a finding of breach of contract was denied).

139As of October 5, 2013, there were 161 cases for the United States and 20 for Canada in the CISG Pace database, available at http://www.cisg.law.pace.edu/cisg/text/casecit.html.

impediment (all from the United States); and two cases on mitigation and preservation. The areas where there is a larger body of case law include contract formation (23 U.S., 2 Canada); battle of the forms (21 U.S., 3 Canada); conformity of goods, inspection, and notice under CISG Articles 38–40 (12 U.S., 3 Canada); fundamental breach and Nachfrist notice (16 U.S., 3 Canada); damages and remedies (40 U.S., 5 Canada); and avoidance (13 U.S., 3 Canada). In Canada, more cases may be proceeding to litigation, but perhaps not: the numbers are too small to be at all certain. From one CISG case reaching its final, reported court opinion in 1999, to two in 2000, and to one each in 2001 and 2002, the numbers rose to three cases in 2003, four each in 2004 and 2005, and then down to just one in 2007, one in 2009, and two in 2011. If one allows for a time lag in cases getting into the Pace database, perhaps the downturn after 2005 is not remarkable.

To generalize about the particulars of CISG jurisprudence in these countries is difficult because the number of cases on any topic remains small. At some point U.S. courts will need to stop simply relying on provisions of the Uniform Commercial Code by analogy instead of the CISG case law.140 And notably, the U.S. courts have routinely failed to study or apply precedents in other countries interpreting the CISG. So, for instance, the court in Raw Materials Inc. v. Manfred Forberich GmbH & Co., KG141 stated that “no American court has specifically interpreted or applied Article 79 of the CISG” and ignored the case law on CISG Article 79 created by the courts of Austria, Belgium, Bulgaria, China, Finland, France, Germany, Hungary, Israel, Italy, Netherlands, Russia, and Switzerland, as well as by International Chamber of Commerce arbitrators.142

There is still hope that the Canada and the United States will move away from homeward trend-biased decisions and embrace CISG Article 7’s call for autonomous interpretations based on the international character of the convention and the need for uniformity of application. There have been a number of well-reasoned Canadian and American cases that followed that path. For example, in MCC-Marble Ceramic Center Inc. v. Ceramica Nuova D’Agostino Spa,143 a U.S. federal appeals court set aside the domestic law application of the parol evidence rule in favor of the CISG’s lack of a such a rule. Going forward, familiarity with the CISG – in the courts and for the bar – is on the rise. That, in turn, should lead to increased confidence about the CISG and its contribution to unifying international sales law.

140See, e.g., Raw Materials Inc. v. Manfred Forberich GmbH & Co., KG, No. 03 C 1154, 2004 U.S. Dist. LEXIS 12510 (N.D. Ill. July 6, 2004), available at http://cisgw3.law.pace.edu/cases/040706u1.html (finding no U.S. precedent on CISG Article 79 and turning then to case law interpreting the UCC’s provision on excuse, UCC §2–615).

141No. 03 C 1154 (N.D. Ill. July 6, 2004), available at http://cisgw3.law.pace.edu/cases/040706u1.html.

142See http://cisgw3.law.pace.edu/cisg/text/anno-art-79.html; see also Albert H. Kritzer, Comments on Raw Materials Inc. v. Manfred Forberich, U.S. District Court [Illinois], July 6, 2004 (2005), available at http:// www.cisg.law.pace.edu/cisg/biblio/kritzer3.html (February 2005) (“Relevant to such case law is the rule recited by the Solicitor General of the United States. He quotes the U.S. Supreme Court as follows in his brief in the case of Zapata Hermanos v. Hearthside Baking, available at http://cisgw3.law.pace.edu/cisg/ biblio/zapata4.html (‘[J]udicial decisions from other countries interpreting a treaty term are “entitled to considerable weight.”’ El Al Israel Airlines Ltd. v. Tsui Yan Tseng, 525 U.S. 155, 176 (1999) (quoting Air France v. Saks, 470 U.S. 392, 404 (1985))”.

143144 F.3d 1384, 1389 (11th Cir. 1998), available at http://cisgw3.law.pace.edu/cases/980629u1.html.

Article 4.5 In the Elastar Sacifia v. Bettcher Industries,6 the court used domestic gap filling under Article 7(2)7 and the application of trade usage under Article 9(1)8 to uphold the seller’s right to payment of interest. Again, in Aguila Refractarios v. Conc. Preventivo,9 the court used international trade usage pursuant to Article 9(1) to fill in a gap in the contract.10

A. Contract Formation

In Quilmes Combustibles S.A. v. Vigan S.A. (Quilmes)11 and Inta v. Officina Meccanica

(Inta),12 the courts addressed the issue of the enforceability of forum selection clauses. More specifically, the issue was whether the clause was incorporated into the contract as a standard term. In Quilmes, an Argentine buyer claimed damages against a French seller because the goods were delayed and nonconforming. On the back of its invoice form, the French seller included a choice of forum clause specifying jurisdiction of French courts. The Argentine buyer sought to void the clause under Argentine law. The court held that the buyer’s acceptance of the seller’s standard form was the basis of the contract. The buyer also argued that for the clause to be enforceable, the buyer had to agree specifically, in writing, to the incorporation of the forum selection clause into the contract. The court disagreed and dismissed the case due to lack of jurisdiction.13

In Inta, the choice of forum clause arose again in the context of an Argentine buyer and an Italian seller, which had included in its invoice a choice of forum clause specifying the court of Bergamo, Italy. On appeal, the buyer raised, for the first time, the applicability of the CISG. The court accepted that the CISG was inapplicable on the issue the validity of the contract. Nonetheless, the buyer’s endorsement of the invoice, made to

5October 20, 1989, Juzgado Nacional de Primera Instancia en lo Commercial Buenos Aires, Quilmes Combustibles v. Vigan, available at http://cisgw3.law.pace.edu/cases/89102a1.html; March 15, 1991, Appellate Court, available at http://cisgw3.law.pace.edu/cases/910315a1.html. See Larry A. DiMatteo et al., “The Interpretive Turn in International Sales Law: An Analysis of Fifteen Years of CISG Jurisprudence,” 34

Northwestern J. of Int’l L. & Business 229–440, n. 295.

6May 20, 1991, Juzgado Nacional de Primera Instancia en lo Commercial, available at http://cisgw3.law. pace.edu/cases/910520a1.html.

7Article 7(2) states: “Questions concerning matters governed by this Convention which are not expressly settled in it are to be settled in conformity with the general principles on which it is based or, in the absence of such principles, in conformity with the law applicable by virtue of the rules of private international law.”

8Article 9 states: “(1) The parties are bound by any usage to which they have agreed and by any practices which they have established between themselves; (2) The parties are considered, under otherwise agreed, to have impliedly made applicable to their contract or its formation a usage of which the parties knew or ought to have known and which in international trade is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade concerned.”

9October 23, 1991, Juzgado Comercial de Primera Instancia en lo Comercial, Aguila Refractarios v. Conc. Preventivo, available at http://cisgw3.law.pace.edu/cases/911023a1.html.

10See also October 6, 1994, Juzgado Comercial de Primera Instancia en lo Comercial, Bermatex v. Valentin Rius, available at http://cisgw3.law.pace.edu/cases/941006a1.html (same).

11March 15, 1991, Camara Nacional de Apelaciones en lo Comercial, Division C, Quilmes Combustibles S.A. v. Vigan S.A., available at http://cisgw3.law.pace.edu/cases/910315a1.html.

1214–15 October 1993, Camara Nacional de Apelaciones en lo Comercial, Inta v. Officina Meccanica, available at http://cisgw3.law.pace.edu/cases/931014a1.html.

13A more complete and nuanced analysis was made by Professor Alejandro M. Garro, “The U.N. Sales Convention in the Americas: Recent Developments,” 17 J. L. & Commerce 219, 222–34 (1998).

obtain financing of the transaction, together with it having paid for the goods, constituted performance of an act sufficient to signify acceptance, which would have been the case under CISG Article 18(3). The court upheld the lower court ruling and dismissed the case for lack of jurisdiction.14

B. Conformity of Goods: Inspection and Notice

In 2007, the Court of Commercial Appeals heard an appeal from the buyer seeking to avoid paying for goods on the ground of nonconformity.15 The Chilean seller shipped almonds to the Argentine buyer through a third party carrier. The buyer claimed that the almonds were not of the size required by the contract. The buyer resold the almonds without notifying the seller of the nonconformity and then refused to pay for the almonds. The seller brought suit in Argentina. The lower court incorrectly reasoned that because the CISG did not provide criteria for determining conformity, rules of private international law, pursuant to Article 7(2), controlled. The court resorted to Argentine sales law, which requires a buyer to make a timely objection to the goods. The court held that the buyer did not meet its obligation under CISG Articles 38 and 39 to examine the goods and notify the seller of nonconformity within a reasonable time.

C. Cases Involving Other CISG Articles

Despite the CISG not being in effect, an Argentine appellate relied heavily upon the CISG in rendering a decision involving a documentary transaction.16 The goods involved dried mushrooms that arrived in such condition that they were deemed as unfit for human consumption by Argentine health authorities. The Argentinian buyer had paid for the goods by letter of credit. Buyer then sued to recover the price of the goods. Because the buyer did not challenge the seller’s certificates of quality at the time the goods were delivered to the carrier, and because there was no evidence of an act or omission of the seller, the buyer was unable to establish nonconformity under CISG Article 36. Thus, the damage to the goods was deemed to have occurred after the risk of loss passed to the buyer pursuant to both Article 36 and local law.17

In a series of cases beginning in 2003 with Arbatax S.A. Reorganization Proceeding,18 the commercial court of Buenos Aires applied Article 9(1) to resolve questions of trade usage necessary to resolve a claim filed by a Uruguayan creditor in bankruptcy court. In the contract the parties specified the shipping term “FOB Montevideo Clause,” which included the rules for interpretation of trade terms of the Paris International Chamber of Commerce (INCOTERMS). The court observed that CISG Article 9 establishes the parties’ obligations under terms and usage to which they have agreed or have established between themselves. Similarly, in Wacker-Polymer Systems GmbH v. Quiesbra v. Glaube

14Id., 234–7. See also DiMatteo et al., “The Interpretive Turn in International Sales Law,” 295.

15May 31, 2007, Camara Nacional de Apelaciones en lo Comercial de Buenos Aires, Sr. Carlos Manuel del Corazon de Jesus Bravo Barros v. Salvador Martinez Gares, available at http://cisgw3/law.pace.edu/cases/ 070531a1.html.

16October 31, 1995, Camara Nacional de Apelaciones en lo Comercial, Bedial v. Muggenburg, available at http://cisgw3.law.pace.edu/cases/940318a1.html.

17See Alejandro Garro, “The U.N. Sales Convention,” 237–43.

18July 2, 2003, Juzgado Comercial de Primera Instancia Buenos Aires, available at http://cisgw3.law.pace. edu/cases/030702a1.html.