A Korean seller and a US buyer entered into a contract for the sale of a certain quantity of liquid phenol which was to meet certain specifications for color and to be resold to a third party (a Spanish company). Pursuant to the agreement, the phenol would be inspected by a “mutually acceptable independent surveyor whose findings as to quantity/quality …are final and binding on both parties.” The phenol was transferred to the vessel designated by the buyer in Korea and tested before departure. As the tests had established that the phenol met the specifications required, the buyer paid the seller and delivered the goods to the final destination indicated by the third party. When the ship arrived at its final destination in Europe the phenol was again tested and found to be off specification. As a result, the US buyer brought an action against the seller and, during proceedings, it asked the Court to be allowed to amend its pleading in order to provide evidence of the seller's liability for breach of contract under CISG and to include the third party as plaintiff in the proceedings.
The Court found that the CISG was applicable as buyer and seller have their places of business in different Contracting States (Art. 1(1)(a) CISG). The Court additionally found that there was no indication that the parties had opted out of CISG pursuant to its Art. 6.
Whereas the Court found that the plaintiff's pleading could be amended in order to make it possible to demonstrate whether the seller was liable for breach of contract under CISG, it denied the same result with respect to the buyer's claim to include the third party as plaintiff in the proceedings. In reaching this conclusion, the Court pointed out that CISG addresses only rights of buyer and seller in a transaction and does not cover any right or claim by a third party.
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