A US manufacturer and two Ukrainian corporations concluded a joint venture agreement for the production and sale of gas meters and related piping in the former Soviet Union. The joint venture agreement specified, among other things, that the manufacturer would deliver 90% completed products that the distributors would exclusively complete, distribute and install in the former Soviet Union. The distributors submitted orders to the manufacturer but the latter terminated the agreement by stopping delivery and refusing to extend credit. The distributors sued the manufacturer for breach of contract, while the manufacturer counterclaimed the invalidity of the joint venture agreement under CISG.
After citing both US and foreign case law on CISG, the Court denied that the Convention was applicable in the case at hand. In doing so, it pointed out that, although the CISG may have governed distinct contracts for the sale of goods entered into by the parties pursuant to the joint venture agreement, it could not be applied to the joint venture agreement itself (the breach of which the distributors aimed at demonstrating), as such an agreement is not within the scope of CISG.
The Court then found that Pennsylvania law governed the contracts and denied motions for summary judgment. The case was then left for further discovery before trial.
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