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| Abstract | ||||||||||||||||||
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| In 1995 the plaintiff, an American company (hereinafter "the buyer") contracted to provide logistical support for the U.S. military in the Hungary/Bosnia region. A component of the contract required tents, appropriately heated, for the purpose of housing troops on their way to Bosnia. The buyer acquired the heaters for the tents from the defendant, a Canadian company (hereinafter "the seller"). The buyer brought an action against the seller and its sole officer and director, with respect to the purchase of the heaters and related goods and services. It alleged that the seller fraudulently misrepresented that the heaters were new, and in doing so, the seller fundamentally breached its agreement by materially misrepresenting the true condition of the equipment.
The buyer sought reimbursement for the cost of the heaters and other related equipment. It further sought reimbursement of the costs for the shipment of the goods, as well as punitive damages for fraud. The seller counterclaimed for losses relating to the cost of sending technicians to Hungary, excess baggage charges, and vehicle rental. It contended that the buyer received what it bargained for and accepted the goods. Furthermore, the seller argued that the buyer failed to supply adequate power generators necessary to operate the equipment supplied. It also maintained it was willing to honor the warranty on the product in respect of any valid complaints. As to the applicable law, the trial court acknowledged that this was a transaction for the sale of goods between a U.S. buyer and a Canadian seller in which the buyer’s standard purchase order terms and conditions applied. These terms and conditions formed the basis of the contract. The sole reference to the CISG in the trial court’s opinion is found at para. 95. The seller maintained that fundamental breach should not be considered given the fact that the buyer received what it had bargained for. The seller argued for the application of Arts. 38 and 49 CISG, in that the buyer took too long in order to assert a fundamental breach and termination of the contract. However, the court observed that the buyer terminated the contract within a reasonable time. Thereafter, the court refers only to Canadian sales law and cases, and a number of common law principles. As to the merits, the trial judge found that the buyer expected the heaters to be new product in keeping with the terms of the contract, and that there was an obvious intention to mislead on the part of the seller. It ruled in favour of the U.S. buyer. This case was appealed. See the Appellate decision of the Court of Appeal of Manitoba of 04-05-2005, Abstract and Fulltext in UNILEX. |