18 CISG

[Facts]

The [seller], a company under Italian law, is suing the [buyer] for payment of the purchase price for two deliveries of shoes at an overall price of Italian Lira [It£] 144,148,790. In the proceedings before the Court of First Instance, the [buyer] argued that the delivered shoes were defective. The [buyer] further pleaded that the [seller]’s delivery was 540 pairs of shoes short, and that the [buyer] had suffered a loss of profit in the (converted) amount of It£ 8,100,000 for that reason. Moreover, Mr. […], who in the meantime was appointed as the [buyer]’s manager, allegedly assigned to the [buyer] a claim against the [seller] for compensation arising out of a commercial agency. The [buyer] declared a set-off with this claim.

For the details of the pleadings before the Court of First Instance, the Appellate Court refers to the statements of facts in the appealed decision.

[Judgment]

The [buyer]’s appeal is admissible, but unsuccessful.

[…]

2. [Buyer’s claim for damages is dismissed]

The [buyer] is further unable to set-off against the [seller]’s claims a claim for damages in the amount of It£ 8,100,000. This amount constitutes the alleged loss of profit—converted into It£—which the [buyer] supposedly would have been able to make from 540 pairs of shoes not delivered. The prerequisites of Art 74 CISG are not met. The [buyer] alleges that she ordered 3,240 pairs of the shoes (item no. 643). It is undisputed that [buyer] received 2,700 pairs. The [seller] denies that the [buyer] made an order for the alleged quantity. During the proceedings before the Court of First Instance, the [buyer] initially relied on the ‘presentation of the sales contract’ and subsequently on a submission of the written order. The Court of First Instance considered the [buyer]’s contention as unfounded as the [buyer] produced neither of those two documents. During the appellate proceedings, the [buyer] relies for proof of the order on the testimony of her manager as well as the written order, which—while described as attachment B1 to [buyer]’s brief—has not been submitted. The [buyer] has failed to make sufficient submissions regarding her alleged claim in a way that would lead the Appellate Court to conclude that the [seller] was obliged to deliver more than 2,700 pair of shoes. It can only be gathered from the [buyer]’s pleadings that she allegedly placed an order for 3,240 pairs of shoes. It does not follow from [buyer]’s submissions how the [seller] is supposed to have accepted this order. The [buyer]’s alleged order would constitute an offer in the meaning of Arts 14 and 15 CISG. The [seller]’s delivery of 2,700 pairs of shoes would then indicate an assent to the offer in the meaning of Art 18(3) CISG. As the delivery did not relate to the entire quantity allegedly ordered, it would have constituted a material modification of the offer. Therefore, the [buyer]’s offer would have to be considered rejected and the [seller]’s delivery seen as a counter-offer. Even if the [buyer] had then complained about the missing 540 pairs of shoes—a fact that is disputed between the parties—a sales contract was not formed and an obligation of the [seller] to deliver more shoes did not exist. After all, the [seller]’s acceptance regarding the disputed quantity was still missing. Independent of this matter, the [buyer]’s claim for damages also fails because the [seller] denies that a loss of profit in the amount of 8,100 DM, (respectively, It£ 8,100,000) was incurred. Again, the [buyer]’s manager cannot be heard as a witness for the amount of damage incurred.

[Facts]

A German buyer, who had established a business relationship with a French seller, ordered doors to be produced by the seller in order to resell them to its customers. The seller sent to the buyer a letter of confirmation containing (printed on the back page) its standard terms according to which ‘Notice of defects is valid only if made within 8 days after the date of delivery’. The buyer refused to pay alleging, inter alia, non conformity of the goods. The seller commenced an action requiring full payment of the price. It assumed that the buyer did not have the right to rely on a lack of conformity of the goods since it had not examined them and given notice of their non-conformity in compliance with Arts 38(1) and 39(1) CISG.

[Judgment]

In the Court’s opinion, a sales contract had been validly concluded between the parties. The Court noted that the buyer’s taking delivery of the goods constituted conduct indicating assent to the offer and amounted therefore to an implied acceptance of the standard terms contained in the letter of confirmation sent by the seller (Art 18(1) CISG).

[…]

FACTUAL OVERVIEW

This dispute arises from a contractual agreement between plaintiff Golden Valley Grape Juice and Wine, LLC (‘Golden Valley’) and defendant Centrisys Corporation (‘Centrisys’). On April 2, 2008, Golden Valley (a California LLC) purchased a STS200 centrifuge (the ‘centrifuge’) from Centrisys, a Wisconsin Corporation, for use in Golden Valley’s grape juice applications. (Doc. 1, Amended Complaint P5.) STS (an Australian business entity) manufactured the centrifuge and sold it under a separate agreement to its then distributor,

Centrisys. STS, generally, builds centrifuges and then sells the centrifuges to other businesses for eventual sale in the stream of commerce to end users. (Doc. 16, Whittington Decl. P2.)

After installation of the centrifuge and startup in September 2008, the centrifuge did not perform to specifications. (Doc. 1, Amended Complaint P7.) Golden Valley notified Centrisys of the non-conformity. According to the amended complaint, ‘[d]efendant and the manufacturer repeatedly assured Plaintiff that the problems would be cured.’ (Doc. 1-2, Amended Complaint P8.) Golden Valley eventually filed this action against Centrisys. Centrisys then filed a third party complaint against STS. Centrisys alleges claims against STS for: (1) indemnity, (2) contribution, and (3) declaratory relief.

STS argues that pursuant to the parties’ contract, STS and Centrisys agreed to resolve any disputes in Australia. STS submits the ‘General Conditions’ to the STS/Centrisys contract. STS argues that when STS and Centrisys entered into their contract, the ‘General Conditions’ were part of the contract. In pertinent part, the ‘General Conditions’ provide for forum selection in Victoria, Australia. The forum selection clause states in its entirety: ‘Any dispute between the parties shall be finally settled in accordance with laws of Victoria (the jurisdiction shall be the State of Victoria) or through arbitration at STS P/L’s option.’ (Doc. 23, Whittington Decl. Exh. 1, P14.) Centrisys, however, disputes that the ‘General Conditions’ was part of the parties’ contract.[1] Centrisys offers evidence that the ‘General Conditions’ was neither attached to any correspondence nor agreed to be part of the contract. Thus, Centrisys’ position is that it never agreed to the General Conditions and thereby never agreed to the forum selection clause. In short, Centrisys disputes the validity of the contract’s clause naming Australia as the forum.

ANALYSIS AND DISCUSSION

…

B. United Nations Convention on Contracts for the International Sale of Goods

The disputes in this case arise out of an agreement for a sale of goods from an Australian party to a United States party. Such international sales contracts are ordinarily governed by a multilateral treaty, the United Nations Convention on Contracts for the International Sale of Goods (‘CISG’). …

The CISG also addresses contract offer and acceptance. A proposal is an offer if it is sufficiently definite to ‘indicate [ ] the goods and expressly or implicitly fix [ ] or make [ ] provision for determining the quantity and the price,’ CISG, Art 14. An offer is accepted if the offeree makes a ‘statement … or other conduct … indicating assent to an offer.’ CISG, Art 18.‘A contract is concluded at the moment when an acceptance of an offer becomes effective.’ CISG, Art 23.

Here, STS and Centrisys acknowledge that the United States and Australia are signatories to the CISG. They agree that their contract is governed by the CISG. Thus, the CISG governs the substantive question of contract formation, including whether the forum selection clause was part of the parties’ agreement.

C. The Forum Selection Clause is Part of the Parties’ Agreement

The Court must first determine whether the forum selection clause was part of the contract, pursuant to the CISG, taking into account its articles and any pertinent precedent.