An U.S. company involved in the construction of a multi-purpose center located in Denver, Colorado, ordered from a Canadian seller reinforcing mesh. The reverse side of the purchase order sent by the buyer to the seller contained its own general terms and conditions of purchase. In response to the order, the seller shipped the goods to the buyer and, the same day, sent an invoice that included its general terms and conditions of sale. After the construction of the multi-purpose center had been completed, some portions of it broke off from the structure, necessitating repairs. Then, the liability insurer of the company which had been appointed as general contractor for the project, the prime sub-contractor and two other companies (in charge of providing design-related services, the exterior insulation and the finish system ("EIFS") to the center's exterior walls) brought an action (on their own behalf and as assignees of the buyer's claims) against the seller for damages, alleging that the mesh seller had supplied was defective and caused the collapse of part of the center.
By rejecting the seller’s argument that the parties had excluded the application of CISG because the buyer’s purchase order contained a choice of law clause in favour of the laws of the State of Minnesota, the Court held that CISG was applicable since both parties had their places of business in different contracting States (Art. (1(1)(a) CISG) and had not expressly excluded its application according to Art. 6 CISG.
As to the merits, the Court, in response to the plaintiffs' argument that compensation for damage was due on the basis of the indemnity and warranties clauses contained in the buyer’s standard terms – which in its opinion formed part of the contract, since the seller sent its invoice including general conditions of sale after the seller had accepted the buyer’s standard terms by shipping the mesh, and CISG follows the “last shot” rule (Arts. 18 and 19) - found that there were material factual issues regarding formation of the parties’ contract which precluded a partial summary judgment for the plaintiffs. In the opinion of the Court, although the parties seemed to rely only on their writings as to the contract formation, it could not be excluded that an oral contract had already been concluded before any purchase orders and invoices had been exchanged between the parties according to Arts. 11 and 14 CISG. Nevertheless, the Court held that it was prevented from deciding whether the terms of the buyer’s purchase order had become part of the contract since the parties had failed to provide evidence as to the timing of the exchange of their forms.
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