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| Abstract | ||||||||||||||||||
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| An American buyer (the plaintiff) concluded a contract with an American seller (first defendant) for the purchase of music board systems, electronic displays and software. According to the agreement between the parties, any legal disputes arising out of the contract should be settled by binding arbitration in Washington State. The seller itself contracted with a Canadian corporation (second defendant) to purchase the requested goods. The Canadian corporation delivered the merchandise to the buyer at the seller's request and at the seller's cost. The buyer was unsatisfied with the performance of the billboards, and therefore the Canadian corporation tried to repair the keyboards in Minnesota and furthermore sent some spareparts and diagrams to the buyer. As the keyboards still did not perform properly, the buyer commenced an arbitral proceeding against the seller and civil litigation against the Canadian corporation.
The Canadian corporation asserted that the court in Minnesota lacked personal jurisdiction over the corporation. Secondly, it asserted that the buyer's complaint failed to state a claim upon which relief could be granted, as the CISG is controlling, not the Minnesota Uniform Commercial Code (UCC) as alleged by the buyer, and that, under the CISG, the required privity between the buyer and the Canadian corporation was lacking. As to the Canadian corporations notion, the court noted first of all, that the exercise of personal jurisdiction over the corporation would be violative of due process. Secondly the court stated that even though the court would have had jurisdiction, the buyer's claim against the Canadian corporation failed to state a claim upon which relief can be granted pursuant to Minnesota Rules of Civil Procedure 12.02. The court stated that the applicable law was CISG, since the buyer was located in the United States, and the Canadian Corporation in Canada, both of which were contracting states to CISG and because there was no evidence that the parties had excluded the applicability of the CISG. The court further stated that in Minnesota the UCC expressly allows certain parties the right to sue for breach of implied warranties in the absense of contractual privity. However, the court noted the CISG makes no such express provision, and all buyer's remedies and seller's obligations under the convention fail to mention the rights of those lacking contractual privity, Art. 30-52 CISG. As the buyer never contracted with the Canadian corporation, and as the CISG does not contain an express provision allowing a party to sue absent a showing of privity, the buyer lacked contractual privity with the Canadian Corporation. The State of Minnesota, Court of Appeals affirmed the District Courts decision stating, that "a foreign corporation did not have sufficient minimum contacts with Minnesota to satisfy due proces requirements and permit the exercise of personal jurisdiction where contacts consisted of (1) an isolated shipment, but not sale, of goods, and (2) subsequent efforts to resolve problems associated with those particular goods". |