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| Abstract | ||||||||||||||||||
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| A Canadian buyer and a French seller concluded a contract for the sale of wine corks, produced by the latter. The buyer contracted via telephone with a US Company based in California - a wholly owned subsidiary of the seller - for the total delivery of 1.2 million corks, agreeing on payment and shipping terms. The seller delivered the goods in eleven shipments to the buyer and for each delivery it sent an invoice with a choice of forum clause in favour of a French court written in French on its face, and further clauses in French written on the verso, among which another jurisdiction clause. After taking delivery, paying for each of them and using the corks for its wine bottles, the buyer noticed that the wine bottles with the seller's corks had their flavour tainted by the corks. The buyer filed an action against both the French and the US seller in the federal district court in California to claim damages. The sellers, in response, filed a motion to dismiss based on the forum selection clauses.
The first instance court held that the forum selection clauses were valid and enforceable. It considered them to be included in the agreement and therefore dismissed the buyer's action. The buyer appealed. The Appellate Court reversed the decision of the first instance court. Firstly, it held that the United Nations Convention on Contracts for the International Sale of Goods [CISG] was applicable in this case since the parties have their place of business in different states and each of their respective countries (i.e. Canada, US and France) have ratified CISG (Art. 1(1)(a) CISG). Secondly, it invoked Arts. 11, 14, 18 and 23 CISG and concluded that the oral agreements between the buyer and the sellers were sufficient to create complete and binding contracts, since a contract of sale under CISG need not be concluded or evidenced by writing nor is subject to any other formal requirement, and the parties had agreed on the kind of goods, their quantity and their price. Thirdly, it rejected the view that the invoices sent by the seller had become part of such contracts. It is true that under CISG, a contract may be modified or terminated by the mere agreement of the parties (Art. 29(1) CISG). However, additional or different terms relating, inter alia, to the settlement of disputes are expressly considered to alter the terms of the offer materially (Art. 19(3) CISG). In the case at hand, there was no indication that the buyer agreed, expressly or by conduct (Art. 8(3) CISG), to the forum selection clauses. Nothing in CISG suggests that the failure to object to a party's unilateral attempt to alter materially the terms of an otherwise valid agreement is an "agreement" under Art. 29 CISG. Consequently, the forum selection clauses were not valid. The Appellate Court reversed and remanded the case, reinstating the buyer´s action. |