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| Abstract | ||||||||||||||||||
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| In March 2003, a Delaware company having its principal place of business in Ohio entered into negotiations with a German company with a view to purchasing a paper-winding machine. The seller recommended the buyer to buy a model called 'Cameron Winder', which was assured to be shafted and duplex. In June 2003, the buyer issued a purchase order in which it asked for a winder featuring a 'shaftless' design. The seller sent confirmation repeating the same “shaftless” language. A few days later the buyer sent the seller a modified purchase order that reiterated the 'shaftless' specifications requested for the winder. Upon receipt the seller sent the buyer a document entitled 'order confirmation' containing payment instructions, which once again repeated the 'shaftless' specifications. Before delivering the winder to the buyer’s facility, the seller sent a packing list and shipping documents to the buyer which indicated that the machine included shafts. At the winder’s arrival at destination, the buyer inspected it and afterwards paid the second of three installment. In October 2003, the buyer contacted the seller notifying that the winder did not conform to the contract because it was a duplex and shafted winder. From October 2003 until April 2004, the buyer unsuccessfully attempted to sell the winder which was ultimately resold at auction for $1,000.00. In October 2005 the buyer filed a complaint against the seller, alleging, inter alia, breach of contract, mutual mistake and breach of warranties. The U.S. District Court considered the buyer’s motion for partial summary judgment, as well as the seller’s motion for summary judgment for the dismissal of each of the buyer’s claims.
The pleadings of the parties were based upon CISG, which was the applicable law according to Art. 1(1)(a). After examining the parties’ arguments, the Court found that there was a genuine issue of material facts which precluded summary judgment on the parties’ breach of contract claims. In fact, although both parties admitted that they had entered into a contract, a dispute of fact as to when the contract was formed and as to the terms of the contract (art. 19 CISG) remained. The Court also found that the two issues as to whether the buyer’s notice of non-conformity nearly two months after discovery was timely (Art. 39 CISG) and whether delivery of the shafted winder actually amounted to a fundamental breach of contract (Art. 25 CISG) had to be decided by a jury. Moreover, with respect to the issue as to whether the contract between the parties had been the result of a unilateral or a mutual mistake, the Court pointed out that, although the case law relating to CISG is sparse, at least one federal case has acknowledged that CISG recognizes the doctrine of mistake (see Mitchell Aircraft Spares, Inc. v. European Aircraft Service, abstract and fulltext in Unilex). The Court noted that in that case a summary judgment on the question of whether a unilateral or bilateral mistake was involved in a contract dispute was denied. Applying the same standard, the Court admitted that in the present case there were valid arguments by both parties, and therefore held that summary judgment was inappropriate. Furthermore, as to the buyer’s allegation against the seller of breach of warranty for particular purpose, the Court found that the claim was governed by Art. 35(3) CISG. The seller, relying on the testimony of one of the buyer’s employees, argued that the buyer’s claim that the winder did not conform to the contractual specifications had to be dismissed because the buyer was aware of the alleged non-conformity at the time the contract was concluded. After reviewing both parties’ arguments the Court, because there were genuine issues of material fact as to whether the delivery of the shafted winder constituted a breach of warranty and the buyer’s knowledge of non-conformity, denied the seller’s motion for summary judgment. |