A US company (Plaintiff) and a Canadian company (Defendant) entered into an agreement purporting to regulate their relationship in the event that the latter subsequently purchased goods (i.e., women’s and children’s garments) from the former. A dispute arose when the Canada Border Services Agency (CBSA) ruled that the agreement between the parties already existed at the time when the Plaintiff purchased goods from its overseas suppliers, with the consequence that it could not be held as “a purchaser in Canada” under the terms of the Customs Act and the Valuation for Duty Regulations. It followed that the value for duty had to be calculated not on the basis of the price paid by the Plaintiff to the overseas suppliers as provided by the Customs Act and the Valuation for Duty Regulations, but on the basis of the sales price charged by the Plaintiff to its Canadian customer. The US company appealed against the CBSA’s decision.
In order to assess whether an agreement had in fact been concluded with a Canadian counterparty prior to when the Plaintiff purchased the goods from its overseas supplier, it was necessary to ascertain when the Plaintiff could be held as having purchased the goods from abroad. Since the term “purchase” is not defined in the Customs Act or in the Regulations, the Court referred to the general contract law. In doing so, it pointed out that under the common law, an offer is a definite promise to be legally bound once its terms are accepted and acceptance is valid when the addressee communicates to the offeror its intention to be bound by the contractual terms. The Court further stated that the same is true under the CISG, which “…accord[s] with the generally accepted contract principles”, since an offer needs to be sufficiently definite and to show the offeror’s intention to be bound in case of acceptance (Art. 14 CISG), while acceptance becomes effective when it reaches the offeror (Arts. 18 and 23 CISG).
Having found that there was already a valid agreement between the parties at the time when the Plaintiff purchased the goods from its overseas suppliers, the Court dismissed the appeal.
|