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| Abstract | ||||||||||||||||||
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| An Italian manufacturer (Plaintiff) concluded an exclusive distributorship agreement with a U.S. company (Defendant) for the sale and distribution of shoes in United States and Canada. After a third company placed an order for the shoes with the distributor, the manufacturer shipped the shoes to the distributor and sent an invoice directly to the third company buyer to obtain payment. The buyer executed a written purchase order with the distributor, to which the manufacturer was allegedly not a party. Upon delivery of the shoes to the buyer’s warehouse, the manufacturer sent the distributor instructions regarding where to pay the price. The distributor, however, did not transmit the instructions to the buyer but instructed the latter to make payment directly to the its own bank account. The buyer then paid the distributor for the goods. The manufacturer allegedly never received payment from either party. The manufacturer brought an action against both the distributor and the buyer claiming, inter alia, the purchase price for the shoes. The buyer claimed that it fulfilled its obligations by paying in accordance with the distributor's directives. The buyer never communicated directly with the manufacturer regarding the invoice or the order.
Citing U.S. case law, the Court found there was no contract between the buyer and the manufacturer under the U.C.C. Statute of Frauds, since the invoice sent to the buyer did not amount to a final expression of their intent to conclude a contract. Rather, the only binding contract was the one reached between the distributor and the buyer through the written order signed by both the parties. The Court held that CISG was not applicable to the transaction because no contract had been concluded as required by Art. 1(1). The Court reached its conclusion through the application of Art. 11, allowing the admission of parol evidence for the purpose of finding a contract. Although parol evidence is admissible under CISG, the Court noted, the undisputed facts were insufficient for the finding of a contract in this instance. The Court also pointed out that, even if the evidence were sufficient to support the conclusion of a contract between the manufacturer and the buyer, such a finding would require that the agent was acting with the authority of the manufacturer in the negotiation. If this were the case, the agent's instructions for a different method of payment would constitute a valid modification of the contract. The buyer performed its obligations under this scenario by making the payment. Therefore, the Court held that there was no breach of contract by the buyer. |