Case 24 25 26 - case brief PDF

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Case 24 Frigaliment Importing Co. v. B.N.S. International Sales Corp. 1960 Case brief Facts of the case The plaintiff Frialiment importing co. supported negotiations with the defendant B.N.S. International Sales Corp. The plaintiff used the word chicken to accurately define the product that they wished to get instead of a German word Huhn. When the initial shipment arrived in Switzerland, the products didn’t prepare the plaintiff’s requirement. From the circuit judge, the plaintiff defined chicken as suitable for boiling and frying. But from the defendant says chicken as a means any bird of the genus that meets contract specifications on weight and quality. The defendant relies on conduct by the plaintiff after the first shipment had been received. At trial, the plaintiff’s expert alleged that chicken meant retailers in the trade. But the defendant’s experts testified that in the trade, the term chicken includes broilers and fowl. The Department of Agriculture's grading regulations includes broilers and fowl in the definition of the term chicken. The court decided to dismiss the plaintiff's complaint. Rules of law To interpret a disputed term in a contract, the court will consider (in order of importance): (1) the language of the contract (2) the preliminary negotiations (3) trade usage (4) legal standard (5) course of performance and (6) maxims. Legal issue Whether the word chicken only mean a younger chicken or more? Holding No, the term chicken in the contract means not only young chicken but more. Rationale The defendant alleges that to sell younger chicken to Plaintiff at the contract price would result in a loss to the Defendant. Because under the Plaintiff’s construction the agreement would result in Defendant selling chicken at a loss, Defendant argues that Plaintiff’s definition of chicken is unreasonable. The Court holds that the because Defendant’s definition coincides with the objective meaning, one of the dictionary definitions, the Department of Agriculture’s regulations referenced in the contract, some trade usage, the realities of the market and statements by Plaintiff’s spokesperson, Plaintiff has not met its burden of showing that the narrower definition of the term applies. The defendant’s argument that it was impossible to get fryers for the price agreed in light of market rates was persuasive. Lastly, the plaintiff’s allowed the second shipment of chickens after getting the first batch of broilers. In light of all this, defendant’s interpretation of the word chicken was consistent with “an objective meaning” of the word, and the plaintiff has not satisfied its burden of persuading the court that its narrower interpretation should apply. The plaintiff’s accusation is dismissed.

Case 25 Delchi Carrier, S.P.A. v. Rotorex Corp. 1995 Case brief Facts of the case Rotorex Corp (defendant) agreed to sell 10,800 compressors for use in Delchi Carrier SpA (plaintiff) line of air conditioners. the defendant sent the plaintiff a sample compressor and written performance specifications. the defendant's shipped the first portion by sea on March 26 and a second portion on May 9. Before the second shipment arrived, the plaintiff determined that the compressors did not conform to the specifications. The plaintiff inquired the defendant to supply new compressors, but Rotorex refused. Delchi rescinded the contract and suffered a loss in sales volume. The plaintiff sued the defendant for breach of the agreement and the judge found in the plaintiff’s favor. The judge awarded harms to the plaintiff for lost profits, costs incurred in attempting to remedy the nonconformity, the cost of expediting shipment replacement compressors and costs of handling and storing the rejected compressors. The court denied the plaintiff's claim for damages based on other expenses including shipping and customs, the price of parts and tools purchased specifically for use in Rotorex compressors, and labor costs for four days when the plaintiff's production line was idle because it had no compressors to install. Rotorex appealed the judgment, and the plaintiff appealed the denial of damages. Rules of law If a breach is fundamental, the buyer may either involve delivery of substitute goods or declare the contract void under CISG. The party in breach did not foresee. A reasonable person of the same kind in the same circumstances would not have foreseen such a result. Legal issue Whether the defendant is responsible for the damage of the products and lost profit Holdings Yes, because the cooling power and energy consumption of an air conditioner compressor are important factors of the product’s value. The defendant is liable for the fundamental loss. Damages for breach of contract by one party consist of a sum equal to the loss, including loss of profit, suffered by the other party as a result of the breach. Rationale The goods supplied didn’t conform to the sample and requirements, as their output and effectiveness were unqualified, as conceded by the defendant. Further under the CISG, the seller must deliver goods which are of the standard, amount and description needed by the contract, and the products do not conform with the contract unless they possess the qualities of goods which the seller has held out to the buyer as a sample or model. Damages may not surpass the loss which the party in breach predicted or should have foreseen when the contract was made as possible consequences of its breach. Labor costs were also reasonably foreseeable but should be calculated by the trial court.

Case 26 T.J. Stevenson & Co. v. 81,193 Bags of flour 1980 Case brief Facts of the case The miller filled counterclaims against the Republic of Bolivia, the buyer and the carrier. Bolivia counterclaimed for breach of warranty. The contract for the acquisition of 26,618 metric tons of flour had a delivery term. Which stated that the “delivery of goods by the seller to the carrier at point of shipment constituted delivery to the buyer.” In addition, the contract had a warranty of merchantability “Seller warrants that the product sold shall obtain merchantable quality". Which also had a notice requirement “buyer hereby waive any claim based on the quality of the goods unless, within twenty days of the arrival of goods at the destination, the buyer sends the seller a letter by registered mail specifying the nature of the complaint". The flour included a substantial amount of infestation, and the case was taken into consideration before it arrived at the warehouse. Since it was materially nonconforming at the time delivery arrived in Bolivia. The contract added a requirement that the notice must be writing “within 20 days after the arrival of the products.” ADM received telex from Bolivia stated that there won’t be any further payments. Bolivia’s complaint didn’t fault them for refusing to comply with the contract’s notice requirements. The defendant was liable for breach of warranty, and its argument that doesn’t receive adequate notice is rejected. Rules of law Section 2-509 UCC If it doesn't require him to deliver at a particular destination, the risk of loss passes to the buyer when the goods are duly delivered to the carrier. Section 2-510 UCC Where a tender or delivery of goods so fails to conform to the contract as to give a right of rejection the risk of their loss remains on the seller until the cure or acceptance. Legal issue Whether the buyer possesses the right to reject the products with infestation or reduce the price of the goods Holding Yes, the buyer enforces the right to reject the goods under UCC. If the court decides that the nonconforming goods can be resold for another purpose, then the buyer claims no right to reject the

goods but could reduce the price of goods by the difference in value between the goods in their defective condition by the CISG. Rationale The seller and buyer counterclaimed for breach of warranty. The contract was to purchase tons of goods under the delivery term. But when the shipment arrived, some of the goods had an infestation, and the notice must be a writing sent within 20 days after the arrival. The defendant(seller) was liable for breach of warranty. Under the UCC the buyer has rights to reject the goods and the court stated that the goods were defective during the delivery, the risk is never passed to the buyer....