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CISG CASE PRESENTATION

United States 21 July 1997 Federal District Court [New York] (Helen Kaminski v. Marketing Australian Products)
[Cite as: http://cisgw3.law.pace.edu/cases/970721u1.html]

Primary source(s) of information for case presentation: Case text

Case Table of Contents


Case identification

DATE OF DECISION: 19970721 (21 July 1997)

JURISDICTION: United States [federal court]

TRIBUNAL: U.S. District Court, Southern District of New York [federal court of 1st instance]

JUDGE: Cote

CASE NUMBER/DOCKET NUMBER: M-47 (DLC)

CASE NAME: Helen Kaminski Pty. Ltd. v. Marketing Australian Products, Inc. d/b/a Fiona Waterstreet Hats

CASE HISTORY: Case No. 96B46519, Adversary Proceeding No. 97-8072A

SELLER'S COUNTRY: Australia (plaintiff)

BUYER'S COUNTRY: U.S.A. (defendant)

GOODS INVOLVED: Fashion accessories (hats and bags)


Case abstract

UNITED STATES: Helen Kaminski v. Marketing Australia Products [21] July 1993 U.S. District Court

Case law on UNCITRAL texts (CLOUT) abstract no. 187

Reproduced with permission from UNCITRAL

An Australian manufacturer of fashion accessories entered into a "Distribution Agreement" with a U.S. distributor. The Agreement specified the terms on which the parties would do business, including methods of payment, delivery and warranties as to quality (article 14(1) CISG). The distributor agreed to purchase accessories totalling a specified amount during the year following the conclusion of the Agreement. Soon after entering into the Agreement, the parties amended it to transfer the manufacturer's accessories that were already in the United States to the distributor.

The distributor subsequently ordered additional accessories and the manufacturer sent notice that the accessories were ready for shipment. The distributor failed, however, to open a letter of credit before shipment as provided in the Distribution Agreement. The manufacturer thereupon sent notices to the distributor demanding that the distributor cure its default within a specified time (article 63 CISG). Before the time to cure expired, the distributor filed for bankruptcy in the United States. The bankruptcy court granted the distributor additional time to cure and ruled that the manufacturer was stayed from suing in an Australian court.

On appeal to the Federal District Court, the manufacturer argued that the CISG superseded the U.S. Bankruptcy Code and that consequently the bankruptcy court was not authorized to grant the distributor a "period of grace" (article 61(3) CISG). The Federal District Court affirmed the bankruptcy court's order, holding that the Distribution Agreement did not fall within the ambit of the CISG because the Agreement did not cover the subsequently-ordered accessories. Although the Agreement had been amended to cover some specified goods, the amended Agreement did not refer specifically to the accessories in dispute.

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Classification of issues present

APPLICATION OF CISG: No

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issues: Article 4 [Also cited: Article 61(3) ] [Also relevant: Articles 14 ; 63 ]

Classification of issues using UNCITRAL classification code numbers:

4B [Issues covered and excluded (issues excluded): frame agreement (distributor agreement)]

Descriptors: Scope of Convention ; Distributor agreements

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Editorial remarks

EDITOR: Albert H. Kritzer

The court held that at issue was a distributor agreement, not sales of goods pursuant to that agreement, and that the issues before the court were not covered by the CISG.

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Citations to other abstracts, case texts and commentaries

CITATIONS TO OTHER ABSTRACTS OF DECISION

English: Guide to the International Sale of Goods Convention, Business Laws, Inc. (44 Suppl. 11/September 1998) p. 101.067; Unilex databases <http://www.unilex.info/case.cfm?pid=1&do=case&id=325&step=Abstract>

CITATIONS TO TEXT OF DECISION

Original language (English): Text presented below; see also 1997 U.S. Dist. LEXIS 10603; Westlaw 414137 (1997); Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=325&step=FullText>

Translation: Unavailable

CITATIONS TO COMMENTS ON DECISION

English: Genys, 17 Journal of Law & Commerce (1998) 415-426; Bailey, 32 Cornell International Law Journal (1999) n.157; Harjani, 23 Houston Journal of International Law (2000) 85-88 [specific issues + implementation of Article 7]; Larry A. DiMatteo et al., 34 Northwestern Journal of International Law & Business (Winter 2004) 299-440 at nn.195, 507; Schwenzer & Fountoulakis ed., International Sales Law, Routledge-Cavendish (2007) at pp. 45, 448; Keith A. Rowley, "The Convention on the International Sale of Goods", in: Hunter ed., Modern Law of Contracts, Thomson/West (03/2007) § 23:3

French: Papandréou-Deterville, Recueil Dalloz (1998) 316-317

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Case text

Helen Kaminski Pty. Ltd., Appellant,
v.
Marketing Australian Products, Inc. d/b/a Fiona Waterstreet Hats, Appellee

M-47 (DLC)

United States District Court for the Southern District of New York

July 21, 1997, Decided

Memorandum Opinion and Order

Denise Cote, District Judge:

Appellant Helen Kaminski Pty. Ltd. ("Helen Kaminski") moves for leave to appeal an interlocutory order issued by the Bankruptcy Court for the Southern District of New York on March 3, 1997. Appellee Marketing Australian Products ("MAP") opposes this motion. For the reasons set forth below, the motion is denied.

Background

Helen Kaminski is an Australian corporation with its principal place of business in Australia. It manufactures fashion accessories such as hats and bags. MAP is incorporated in Colorado, with its principal place of business in New York, and it distributes fashion accessories. Helen Kaminiski and MAP negotiated an agreement in Australia in January 1996 whereby MAP had the exclusive rights to distribute Helen Kaminski goods in North America (the "Distributor Agreement"). The Distributor Agreement specified the terms on which the parties would do business, including methods of payment, warranty, delivery, etc., and anticipated that MAP would purchase a total of U.S. $2 million worth of products from February 1, 1996 to January 31, 1997. The parties amended the Distributor Agreement in February 1996 to address the sale of specified goods already in the United States.

MAP issued purchase orders for additional products and Helen Kaminski sent notice in October and November 1996 to MAP that the products were ready for shipment. Pursuant to the Distributor Agreement, MAP was to open a letter of credit seven days prior to shipment. When MAP failed to do so, on November 1, 1996., Helen Kaminski sent a Notice to Rectify within thirty days. On November 22, 1996, Helen Kaminski sent a notice of default requiring MAP to cure the defects under the Distributor Agreement. When MAP still did not cure, Helen Kaminski sent a notice of termination dated December 2, 1996 and commenced an action in Australia seeking a declaration that the Distributor Agreement was invalid and terminated.

MAP filed for bankruptcy in the Southern District of New York on November 29, 1996. On January 28, 1997, MAP commenced an action against Helen Kaminski seeking a declaration that Helen Kaminski was subject to the automatic stay under Section 362, Title 11, United States Code, and an order extending MAP's time to cure the defaults under the Distributor Agreement, pursuant to Section 108(b), Title 11, United States Code. Helen Kaminski then moved to dismiss this Complaint contending, among other arguments, that (1) the Convention on the International Sale of Goods ("CISG") superseded the Bankruptcy Code and therefore MAP could not have additional time to cure under Section 108(b), and (2) the automatic stay under Section 362 should not have an extra-territorial effect.

On March 3, 1997, the Bankruptcy Court issued an Order ("March 3rd Order") which denied Helen Kaminski's motion to dismiss and determined that (1) Helen Kaminski was subject to the automatic stay and thus could not proceed with the action in Australia, and (2) extended MAP's time to cure the defaults pursuant to Section 108(b). Although the March 3rd Order does not state so explicitly, the parties agree that the bankruptcy court found that the CISG does not apply to the Distributor Agreement as it was not a contract for the sale of goods. Helen Kaminski now wishes to appeal this interlocutory order.

Standard

A party may appeal from an interlocutory order issued by a bankruptcy court pursuant to Section 158(c)(2), Title 28, United States Code, on the same basis as an appeal from a District Court to the Court of Appeals under Section 1292(b), Title 28, United States Code. Section 1292(b) states, in relevant part, that an interlocutory order may be taken on appeal when that order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation. 28 U.S.C. § 1292(b). . . . The Second Circuit has held that certification is a "rare exception to the final judgment rule that generally prohibits piecemeal appeals." Koehler v. Bank of Bermuda Ltd., 101 F.3d 863, 865-66 (2d Cir. 1996). See also Westwood Pharmaceuticals, Inc. v. National Fuel Gas Dist. Corp., 964 F.2d 85, 89 (2d Cir. 1992).

Discussion

Although Helen Kaminski presents four issues it wishes to appeal,[1] this Court will reformulate these questions into the questions it believes are presented in Helen Kaminiski's papers. Those questions are (1) whether the CISG applies to the Distributor Agreement, and if so, does the CISG supersede inconsistent provisions in the Bankruptcy Code, such that the bankruptcy court erred in giving MAP additional time to cure its default, and (2) if the CISG does not apply, whether the bankruptcy court erred in giving extra territorial effect to Section 362. I will discuss each issue in turn to ascertain whether either of these questions should be appealed on an interlocutory basis.

A. The CISG and the Distributor Agreement

The CISG is an international agreement that applies to sales of goods between parties in signatory nations, unless the parties expressly contract to be bound by another source of law. Delchi Carrier SpA v. Rotorex Corp., 71 F.3d 1024, 1027-28 n.1 (2d Cir. 1995). There is no dispute that both the United States and Australia are signatories to the CISG.

If the CISG applies to the Distributor Agreement, as soon as MAP was in fundamental breach of the contract -- and there does not appear to be a dispute that the failure to produce letters of credit was a fundamental breach -- Helen Kaminski could declare the contract void and after it started an action for a breach of the contract, no court could extend MAP's time to cure the defect. CISG, Article 61(3), reprinted in 15 U.S.C. Appendix.

Thus, the dispositive issue is whether the CISG applies to the Distributor Agreement. Helen Kaminski maintains that it does, since the agreement, in addition to laying out the terms for the parties' commercial relationship, also governed the disposition of identified goods. Although it does not say so explicitly, it appears that Helen Kaminski is referring to the amendment in February 1996 which addressed specified goods already in the United States. MAP maintains that the Distributor Agreement is merely a "framework agreement" and that such agreements are not covered by the CISG. The Distributor Agreement requires MAP to purchase a minimum quantity of total goods, but does not identify the goods to be sold by type, date or price. In contrast, the CISG requires an enforceable contract to have definite terms regarding quantity and price.

While both sides cite various secondary sources, there appears to be no judicial authority determining the reach of the CISG and, in particular, whether it applies to distributor agreements. The parties do agree, however, that whether or not the CISG applies turns on whether the Distributor Agreement can be characterized as a contract for the sale of goods -- that is, that it contained definite terms for specified goods. In this respect, the only contract for a specified set of goods to which Helen Kaminski points is the February 1996 amendment. As MAP correctly notes, however, these goods were not the subject of the breach. Rather, Helen Kaminski is claiming a breach for goods ordered but not shipped. Helen Kaminski makes no claim that these goods were identified in the Distributor Agreement.

For this reason, although I find that there is little to no case law on the CISG in general, and none determining whether a distributor agreement falls within the ambit of the CISG, Helen Kaminski's rationale for why the CISG applies to the debate about the breach for goods ordered but not shipped is not supported by the facts of the case. The identification in the Distributor Agreement of certain goods -- about which there is no claim of breach -- is insufficient to bring the Distributor Agreement within coverage of the CISG when the dispute concerns goods not specifically identified in the Distributor Agreement. Thus, while the question does present a controlling issue of law over which there may be substantial disagreement, it does not appear that a determination of the issue would materially advance the litigation as Helen Kaminski does not maintain that the general Distributor Agreement -- absent the February amendment which does not concern the goods at issue -- is definite enough to constitute a contract for the sale of goods.[2]

B. Extra-territorial Effect of Section 362

Helen Kaminski cites no authority for its contention that Section 362 of the Bankruptcy Code should not have extra-territorial effect, other than an argument that such a stay is superseded by the CISG. Since I have held that, in the circumstances of this case at least, the CISG does not apply, I need not reach this second issue. I note, however, that it is a general principle that all claims against a debtor should be handled in a single proceeding to insure equitable and orderly distribution of debtor's property. Allstate Life Insurance v. Linter Group Ltd., 994 F.2d 996 (2d Cir. 1993) (comity supported stay of U.S. litigation in favor of Australian bankruptcy proceeding); Victrix Steamship Co., S.A. v. Salen Dry Cargo A.B., 825 F.2d 709 (2d Cir. 1987).

Conclusion

For the reasons given above, it is hereby

ORDERED that Helen Kaminski's motion for leave to appeal the March 3rd Order of the Bankruptcy Court is denied.

SO ORDERED:

Denise Cote

United States District Judge

Dated: New York, New York

July 21, 1997


FOOTNOTES

1. As described by Helen Kaminski, the issues on appeal are as follows: (1) whether the CISG supersedes the Bankruptcy Code and thus the bankruptcy court did not have the authority to allow MAP an extension of time to cure its default under the Distributor Agreement; (2) whether the bankruptcy court erred in enjoining Helen Kaminski from proceeding with its action in Australia; (3) whether the bankruptcy court erred in giving extra-territorial effect to Section 362 and thus applying that automatic stay provision to Helen Kaminski, and (4) whether the bankruptcy court erred in finding that the Distributor Agreement is not a contract for the international sale of goods.

2. Since I find that Helen Kaminski may not appeal the question as to whether the CISG applies to the Distributor Agreement, I need not reach the second question of whether the CISG supersedes conflicting provisions of the Bankruptcy Code.

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Case commentary

Reproduced with permission of 17 Journal of Law and Commerce (1998) 415-426

Blazing a Trail in the "New Frontier" of the CISG:
Helen Kaminski v. Marketing Australian Products, Pty. Ltd. Inc.

Victoria M. Genys [*]

The United Nations Convention on Contracts for the International Sale of Goods [1] ("CISG" or "Convention") has been heralded as "a new frontier of international law."[2] The role of this international treaty is to establish "substantive rules which regulate contracts for the international sale of goods."[3] It is part of a progressive effort to harmonize distinct approaches to international commercial law.[4] To that end, the central premise of the CISG is to replace diverse domestic trade rules with uniform international trade law.[5] Thus, two of the basic goals in interpreting the CISG are promoting uniformity in its application [6] and appreciating its international character through the use of international authorities.[7] However, when a case that requires interpretation of the CISG is truncated and ignores the international spirit of the CISG, these goals are threatened. And just as in any new frontier, an opportunity to create a trail for those who follow is lost.[page 415]

In a recent United States District Court decision, Helen Kaminski Pty. Ltd. v. Marketing Australian Products,[8] the United States District Court for the Southern District of New York delivered such an abbreviated decision concerning the applicability of the CISG to an international contract dispute. In the spirit of promoting uniformity and understanding of the CISG, this case note attempts to more clearly blaze a trail in the new frontier of the CISG. To this end, it more fully discusses the issues and law involved in the case, with a particular focus on how the use of international and scholarly authorities would have strengthened the Court's analysis. Part I consists of a discussion of the importance of recognizing the international nature and goals of the CISG. Part II contains a discussion of the facts of Helen Kaminski Pty. Ltd. v. Marketing Australian Products, Inc. Part III provides an analysis of the applicability of the CISG to distributorship agreements. Part IV concludes with the proposition that clearer CISG case analysis in U.S. courts requires a willingness to embrace the international character of the CISG. Indeed, without the ability to look beyond our borders, our courts deprive practitioners of a pathway to that new and exciting international frontier.

CISG Goals

The CISG was signed and opened for the signatures of contracting countries in 1980.[9] It became effective in the United States on January 1, 1988.[10] As of June 1997, fifty-one contracting parties have signed on to the CISG.[11] The CISG is the first sales law treaty to win such global acceptance.[12]

However, since the Convention took effect in the United States, there have been only two U.S. decisions interpreting the CISG.[13] This lack of interpretation hinders the development of a very useful mechanism for uniformity because wary practitioners may hesitate to apply a [page 416] convention with unknown parameters.[14] It further accentuates the loss suffered by practitioners through the failure of U.S. courts to adequately address CISG issues when given the opportunity.

Before the creation of the CISG, it was very difficult to predict the outcome of international sales disputes. Most courts confronted with an international sales dispute were obliged to resolve conflicts by application of the domestic sales laws of one of the respective parties.[15] Thus, what law applied to such important issues as contract formation, obligations, risk of loss, and remedies for breach was left contingent on the uncertain outcome of the forum court's choice-of-law analysis. [16] The CISG clears up this uncertainty with its gap-filling provisions.[17] Unfortunately, however, it also creates interpretive problems of its own.

Interpretive challenges are created by the CISG as it Seeks to "secure uniform applications in tribunals that are accustomed to applying domestic law."[18] Thus, important factors to consider wben interpreting the CISG are the need to put aside one's domestic orientation and to respect the CISG's international character. Two important ways to respond to the international character of the CISG are (1) "to use the legislative history of the CISG to escape preconceptions derived from domestic laws" [19] and (2) "to disseminate and use international case law and scholarly critique that will develop under the convention."[20] Thus, the CISG relies on courts of various countries to act prudently and to apply these heretofore unused legal sources in order to fully develop ClSG jurisprudence. However, without application of these two important sources of authority for the CISG by United States courts, these goals are threatened.[21] [page 417]

Facts of Helen Kaminski Pty. Ltd. v. Marketing Australian Products Inc.

The dispute in Helen Karninski Pty. Ltd. v. Marketing Australian Products, Inc., centered on a contract for the distribution of Australian fashion articles in the United States, and thus provided the U.S. court with an opportunity to elucidate a CISG analysis for future cases.[22] The plaintiff, Helen Kaminski (hereinafter "Kaminski"), a corporation with its principal place of business in Australia, manufactured fashion accessories.[23] The defendant, Marketing Australian Products, Inc. (hereinafter "MAP"), an American corporation with its principal place of business in New York, was a fashion accessory distributor before filing for bankruptcy on November 29, 1996.[24]

In January 1996, the two corporations negotiated a distributorship agreement in Australia (hereinafer "distributorship agreement").[25] This distributorship agreement gave MAP the exclusive rights to market and distribute Kaminski's goods in North America.[26] The terms of this agreement included the methods of payment, warranty, delivery and anticipated purchases by MAP.[27] In February 1996, the distributorship agreement was amended to cover the sale of identified goods that were already located in the U.S.[28]

Problems between the two companies began when MAP issued purchase orders for additional products.[29] In response to these orders, in October and November 1996, Kaminski sent notice that the products were ready for shipment to the U.S.[30] However, MAP failed to produce letters of credit.[31] Therefore, on November 1, 1996, Kaminski sent MAP a notice to rectify within thirty days.[32] Kaminski then sent a notice of default to MAP on November 22,1996.[33] The notice of default [page 418] required MAP to cure the defects under the distributorship agreement.[34]

In the meantime, on November 29, 1996, MAP filed for bankruptcy in the Southern District of New York.[35] When MAP did not cure the defects, Kaminski sent a notice of termination dated December 2, l996.[36] Soon after, Kaminski brought an action in Australia.[37] Pursuant to this action, Kaminski sought an order declaring the distributorship agreement invalid and terminated.[38]

In the U.S. Bankruptcy Court proceeding, Kaminski filed a motion to dismiss.[39] However, the court denied this motion on March 3, 1997.[40] Kaminski then appealed this decision to the United States District Court for the Southern District of New York.[41] The court, however, denied the appeal, holding that the CISG does not apply to distributorship agreements.[42] However, in so deciding, the court merely provided a truncated decision, inadequate as guidance for future courts. This case note will expand upon the court's decision by using scholarly authorities and international cases to address the applicability of the CISG to the transaction at issue.[page 419]

Scope of the Convention: Application of the CISG to Distributorship Agreements

The most important trail to clear in the CISG frontier is whether the CISG applies to the agreement at issue in the Kaminski case. Both of the American courts decided, either implicitly or explicitly, that the CISG did not apply to the contract at hand. Because it did not apply the CISG, the Bankruptcy Court's decision of March 3, 1997 amounts to a fmding that the CISG did not apply to the transaction.[43]Furthermore, the United States District Court for the Southern District of New York found that, although there is "little to no case law on the CISG in general, and none determining whether a distributor agreement falls within the ambit of the CISG . . .," [44] the CISG did not apply to the distributorship agreement.

However, contrary to the court's assertion, authority exists which allows a more substantial analysis of the applicability of the CISG to distributorship agreements. Both scholarly analysis and international cases suggest that the court should shift from its myopic focus on U.S. case law as the only sources for interpretation of the CISG.[45] By broadening their focus to include international case law, the court could have honored the unique international character of the CISG and furthered its goal of uniform application. Additionally, the court could have shown that U.S. courts are willing to look beyond their borders. A more thorough analysis of the CISG creates a clearer path for future decisions applying the CISG.

The CISG's sphere of application is articulated in Article 1 of the Convention.[46] Article 1 states that the CISG applies to "contracts of sale of goods between parties whose places of business are in different States (a) When the States are Contracting States; or (b) When the rules of private international law lead to the application of the law of a Contracting State."[47]Thus, the CISG will apply unless the parties have exercised their right to contract out of it.[48] Therefore, Article 1 addresses two issues [page 420] that control the applicability of the Convention: (1) when is a sale "international" [49] and (2) what contracts will invoke the CISG.[50]

The international quality of the contract is easily determined in the present case. The contract in Kaminski is between parties from different Contracting States, both of which have ratified the CISG.[51] Thus, the "international" prong of the analysis is readily satisfied.

However, the application of the CISG also depends on whether the subject matter of the contract warrants use of the CISG, that is, whether it is a contract for the sale of goods. The CISG does not contain a section on the definition of terms such as "contracts of sales;"[52] thus, scholarly analysis should have augmented the court's analysis in the present case. Some commentators state that Articles 30 and 53, which identify the elements of a sale as including delivery of goods, handing over documents and making payment, constitute a definition of a contract for sale in the CISG.[53] However, CISG Article 14, concerning the prerequisites for finding an offer, is also illuminating as to the requirements of the eventual contract for sale. It states that to be sufficiently binding as an offer, a final proposal must have a certain amount of definiteness, that is, it should indicate the goods and it should make provisions, expressly or implicitly, for determining the quantity and price of the goods.[54]

In the current case, Kaminski and MAP negotiated a distributorship agreement in January 1996 and an amendment concerning specific goods in February l996.[55] Kaminski argued that the CISG applied since the [page 421] agreement, "in addition to laying out the terms for the parties' commercial relationship, also governed the disposition of identified goods."[56] Although the distributorship agreement dealt primarily with disposition of identified goods, and required MAP to purchase a minimum quantity of goods to be sold, it failed to identify the type, delivery date or price of the goods.[57] If Articles 30 and 53, which focus on the payment and delivery aspects of a contract, were applied to the distributorship agreement, then a contract for sale would be found because Kaminski clearly delivered the goods and transferred them to MAP.[58] Furthermore, MAP, at least originally, paid for the goods and took delivery of them.[59] Thus, according to this limited view of a contract for sale, it appears at first blush that the CISG would apply.

However, the indefiniteness of the contract and the nature of the parties' business leads to another conclusion. Without citing any authority, the Court in Kaminski stated, "the CISG requires an enforceable contract to have definite terms regarding quantity and price."[60] Thus, because the only contract Kaminski could show was the amendment of February, which consisted of a specified set of goods, and because these goods were not the subject of the breach, the Court found the dispute focused on a distributorship agreement only, to which the CISG does not apply.[61] Although the court did not cite any authority, the above scholarly analysis of CISG Article 14 should have guided the court's decision. Furthermore, an examination of the very nature of distributorship agreements may lead to a similar conclusion.

The role of the parties in a distributorship agreement and the attributes of the agreement are different from those ordinarily involved in a contract for the sale of goods. In contrast to a purchaser of goods, "[a] distributor buys goods and resells them in his/her own name and on his/her own behalf, and is more than just a middleman between the manufacturer and the buyer."[62] Thus, the distributor takes responsibility not only for the sale of goods but for organizing and implementing "the distribution of products within his/her own territory, in a country or countries [page 422] where the manufacturer is not established."[63] Distributorship agreements, in addition to specifying the terms and conditions applicable to contracts of sale pursuant to the distributorship relationship, also address issues which are outside the scope of the CISG. For example, these agreements control issues associated with restrictions upon resale, if any, and rights and obligations of the parties upon termination of the distributor relationship, to which the CISG does not apply.[64]

Furthermore, scholarly authorities on the CISG have stated that distributorship agreements can be thought of as simply a "framework agreement."[65] An agreement between the seller and a distributor acts as a mere "framework" when it governs orders and deliveries, but fails to require the distributor to deliver any specified quantity of goods.[66] Framework agreements, without more, do not constitute "contracts of sale of goods" under Article 1; and therefore, are not governed by the Convention because they lack the definiteness requirement of offers under Article 14.[67] In the present case, MAP argued that the distributorship agreement was merely a "framework agreement" to which the CISG does not apply.[68] Although the United States District Court in Kaminski did not cite any section of the CISG, interpretive case or scholarly authority, it did stress the lack of definiteness in the agreement as a reason to find that the CISG did not apply to the transaction.[69]

Adding to the confusion on the applicability of the CISG to such framework agreements is the fact that if more definite orders are thereafter made and accepted, the framework agreement can "supply the detailed terms of the transaction to supplement or modify the provisions of the CISG."[70] Separate contracts made pursuant to the distributorship agreement would Seem to be "contracts for sale" as the term is used in the Convention.[71] Therefore, the CISG would apply to these separate contracts, whereas the issues of the distributorship agreement would be subject [page 423] to other applicable laws.[72]

In addition to scholarly authority, international case law also has addressed the issue of the CISG's applicability to distributorship agreements. In July of 1996, the Provincial Court of Appeal (OLG) of Düsseldorf Germany decided a case which is relevant to the Court's analysis.[73] In that case, a German seller which produced engines for lawn-mowers negotiated an exclusive distributorship agreement with an Italian buyer.[74] The seller requested payment for the engines that had been delivered.[75] Instead of paying for the delivered engines, the buyer set-off a claim for damages.[76] The buyer alleged the seller's refusal to provide further engines caused a breach of the distributorship agreement for which damages were suffered.[77] In response to these allegations, the appellate court held that the seller could demand payment under CISG Article 53.[78] However, the court did not permit the set-off.[79]

Most importantly to our issue, the German appellate court distinguished between the separate "sales contracts" for delivery of engines and the distributorship agreement as a "framework contract."[80] The court found that the CISG governed the separate contracts,[81] but not the distributorship agreement. Instead, the distributorship agreement was controlled by the applicable law under conflicts-of-law rules.[82] Thus, the court determined that under German conflict-of-law rules, the distributorship agreement was governed by Italian domestic law, not the CISG.[83]

Another case, involving a French seller and a German buyer, provides further insight into the issue of distributorship agreements as "framework agreements."[84] In this case, an agreement was made for the [page 424] exclusive delivery and distribution of printers in Germany.[85] Without giving proof or notice of nonconformity, the German distributor refused to pay for a computer chip delivered by the French seller.[86] The seller brought an action against the distributor for the price of the chip.[87] Correspondingly, the German distributor requested a set-off for the standing credit between the parties.[88] Furthermore, the distributor argued the sale of the chip was concluded under a "contract of sale" and not under the distributorship contract.[89]

The German court held that the CISG is not applicable to a distributorship agreement.[90] However, it did find the case applicable to each separate contract of sale of goods under the agreement.[91] Thus, under the CISG, the French seller was entitled to the payment of the price of the chip under CISG Article 53.[92]

The fact that the CISG does not apply to distributorship agreements has been fully addressed in both scholarly writing and international case law. However, the United States District Court did not use these interpretive authorities in its analysis of whether the CISG applies to a distributorship agreement in the Kaminski case. The Court reaches the same conclusion; however, by not citing any authority, it maintains its "legal ethnocentricity" [93] despite this genuine opportunity to expand the CISG's imperative of promoting its international character and uniformity in application.

Conclusion

The CISG's capacity to be used as a vehicle into the new frontier of international sales law is dependent on international courts' proper application and use of the myriad of interpretive sources available. However, courts in the United States have continued to cling to their legal ethnocentricity. A prime example of this is the United States District Court's analysis in Kaminski v. Marketing Australian Products.[94] Although [page 425] the court reaches a conclusion that is in sync with the CISG authorities regarding the applicability of the CISG to distributorship agreements, it misses the opportunity to fully analyze and apply these authorities to U.S. jurisprudence. In fact, the court exhibits an extreme ethnocentricity by preferring to cite no interpretive sources in its decision rather than cite to secondary sources or international cases on point. The result is that practitioners and courts in future cases cannot benefit from prior authorities or thoroughly analyzed cases.

The ability of the CISG to flourish and grow in the international arena depends on its proper and full analysis. Otherwise, without direction, wary practitioners will hesitate to apply it. It is hoped that U.S. courts in the future will not forgo an opportunity to clear a path for travelers on the new frontier of international sales law.[page 426]


FOOTNOTES

* Victoria M. Genys is a law student at the University of Pittsburgh School of Law. She would like to thank her husband, Mark Moir, for his support and patience throughout the writing of this article and all of law school. She would also like to thank her family: John, Zenia and Ruta Genys for their support.

The bracket phrase page followed by a number is used to identify the page number of the original publication.

1. See United Nations Convention on Contracts for the International Sale of Goods, April 11, 1980, S. Treaty Doc. No. 98-9 (1983), 19 I.L.M. 668 (1980) [hereinafter "CISG" or "Convention"] (entered into force on Jan. 1, 1988); also available in 15 U.S.C.A. app. at 49 (West Supp. 1996), Public Notice 1004, 52 Fed. Reg. 6262-80, 7737 (1987), U.N. Doc. A/Conf. 97/18 (1980).

2. Albert H. Kritzer, Guide to Practical Applications of the United Nations Convention on Contracts for the International Sale of Goods 1 (1989).

3. Joseph Lookofsky, Understanding the CISG in the USA 1 (1995).

4. See, Anita C. Esslinger, Contracting in the Global Marketplace: The UN Conventions on Contracts for the International Sale of Goods and the Limitation Period in the International Sale of Goods, SB04 ALI-ABA 37, 39 (1996).

5. See John Honnold, Uniform Law for International Sales 20 (2d ed. 1991). This feature of the CISG is perhaps its greatest contribution to international sales law. It not only strengthens the international trading system by making the parties' rights and obligations more certain, but it illustrates that individuals from different legal traditions and training can create a unified instrument to facilitate international transactions.

6. See CISG, supra note 1, art. 7.

7. See Honnold, supra note 5, at 20.

8. See Helen Kaminsky Pty. Ltd. v. Marketing Australian Products, Inc., No. 97-8072A, 1997 WL 414137 (S.D.N.Y. July 23, 1997).

9. See Lookofsky, supra note 3, at 1 (stating that ratifying countries are called "Contracting States").

10. See CISG Contracting States and Declarations Table, 17 J.L. & Com. 449 (1998).

11. See id.

12. See Lookofsky, supra note 3, at 1. Sixty-two countries participated in the drafting of the CISG. See Alejandro M. Garro, Reconciliation of Legal Traditions in the U.N. Convention on Contracts for the International Sale of Goods, 23 Int'l Law 443, 444 (1989).

13. See V. Susanne Cook, The U.N. Convention on Contracts for the International Sale of Goods: A Mandate to Abandon Legal Ethnocentricity, 16 J.L. & Com. 257, 257 (1997) (citing Delchi Carrier S.p.A. v. Rotorex Corp., 71 F.3d 1024 (2d Cir. 1995); Filanto, S.p.A. v. Chilewich Int'l Corp., 789 F. Supp. 1229 (S.D.N.Y. 1992)).

14. The CISG will automatically apply to contracts for the sale of goods between parties with places of business in two different ratifying countries. See CISG, supra note 1, art. 1. However, the parties can exclude the application of the CISG to the contract. See CISG, supra note 1, art. 6. Thus, it is very easy for practitioners to contract in a way to avoid application of the CISG.

15. See Lookofsky, supra note 3, at 2.

16. See id. at 3.

17. See, e.g., CISG, supra note 1, art. 45 (gap-filling provision for breach of contract remedies).

18. Honnold, supra note 5, at 38. See also Vivian Grosswald Curran, The Interpretive Challenge to Uniformity, 15 J.L. & Com. 175, 176 (1995) (reviewing Claude Witz, Les Premières Applications Jurisprudentielles de la Droit Uniforme Vente Internationale (1995)) ("Many conundrums are associated with the goal of interpreting the CISG uniformly, including what constitutes the appropriate source of legal authority to which a court should look when applying the CISG. United States judges will tend to Seek authoritative guidance from the texts of prior judicial or arbitral decisions, whereas European judges will be inclined to rely far more on academic commentary.").

19. Honnold, supra note 5, at 20.

20. Id.

21. See Cook, supra note 13, at 263 ("In this critical phase, U.S. courts are in a position to develop a method of interpretation under the Convention that provides predictable results to the international business community.").

22. Helen Kaminski Pty. Ltd. v. Marketing Australian Products, Inc., No. 97-8072A, 1997 WL 414137 (S.D.N.Y. July 23, 1997).

23. See id. at *1. The corporation created such accessories as hats and bags. See id.

24. See id.

25. See id.

26. See id.

27. See Helen Kaminski Pty. Ltd. v. Marketing Australian Products, Inc., No. 97-8072A, 1997 WL 414137, at *1 (S.D.N.Y. July 23, 1997). The distributorship agreement anticipated that MAP would purchase a total of $2 million U.S. worth of products from February 1, 1996 to January 31, 1997. See id. at *2.

28. See id. at *1.

29. See id.

30. See id.

31. See id. at *2.

32. See Helen Kaminski Pty. Ltd. v. Marketing Australian Products, Inc., No. 97-8072A, 1997 WL 414137, at *1 (S.D.N.Y. July 23, 1997).

33. See id.

34. See id.

35. See id.

36. See id.

37. See Helen Kaminski Pty. Ltd. v. Marketing Australian Products, Inc., No. 97-8072A, 1997 WL 414137, at *1 (S.D.N.Y. July 23, 1997).

38. See id. The remaining issues of this case involve whether Kaminski was subject to the automatic stay provisions under Section 362, Title 11, United States Code. See id. Furthermore, MAP argued that according to Section 108(b) Title 11, United States Code, it had an extended time to cure the defects under the distributorship agreement. See id.

39. See id. In response to MAP's bankruptcy related claims, Kaminski moved to dismiss the complaint claiming, inter alia, that the CISG supercedes the Bankruptcy Code and therefore MAP did not have additional time to cure its defects. See id. Furthermore, Kaminski argued that the automatic stay provisions of United States bankruptcy law should not have an extra-territorial effect. See id. Although, these claims concern interesting issues of CISG jurisprudence, they are beyond the scope of this article which focuses on the initial determination of whether the CISG applies to distributorship agreements.

40. See id.

41. See id.

42. See Helen Kaminski Pty. Ltd. v. Marketing Australian Products, Inc., No. 97-8072A, 1997 WL 4141237, at *1 (S.D.N.Y. July 23, 1997). Also, the U.S. District Court stated, in its decision, that this finding is also implicit in the Bankruptcy court's decision. See id.

43. See id.

44. Id. at *3.

45. The court's ethnocentric focus on judicial authorities is very apparent in this case. The court comments, "[w]hile both sides site various secondary sources, there appears to be no judicial authority determining the reach of the CISG and, in particular, whether it applies to distributor agreements." Id. at *2. Thus, instead of applying authorities that the court knew existed, the court chose to interpret the CISG without citations to authorities. Therefore, there is a clear message that in the United States a ruling on the interpretation of the CISG using no authorities at all is preferred to citing scholarly sources or international case law.

46. See CISG, supra note 1, art. 1.

47. Id. (emphasis added).

48. See CISG, supra note 1, art. 6.

49. See Honnold, supra note 5, at 39.

50. See Robert S. Rendell, The New U.N. Convention on International Sales Contracts: An Overview, 15 Brook J. Int'l. L. 23, 24 (1989) ("The Convention only applies to sales transactions."); see also Lookofsky, supra note 3, at 9 ("To determine whether the CISG applies in a given situation . . . we ask the . . . question [,] . . . [i]s this a 'sale of goods?'").

51. Australia has been a Contracting State since 1987 and the United States has been a Contracting State since 1981. See CISG Contracting States and Declaration Table, 17 J.L. & Com. 449 (1998).

52. See Kritzer, supra note 2, at 15. The author notes that under American law, UCC Section 2-106(1) clearly states that a "sale" consists of "passing title from the seller to the buyer for a price." Id. See also U.C.C. § 2-106(1); see also Lookofsky, supra note 3, at 12 ("the CISG does not provide a positive definition of the phrase [sale of goods] . . . ").

53. See Kritzer, supra note 2, at 15 (citing Bianca & Bonell Commentary on International Sales Law: The 1980 Vienna Sales Convention, 383 (1987)). Article 30 states: "The seller must deliver the goods, hand over any documents relating to them and transfer the property in the goods, as required by the contract and this Convention" CISG, supra note 1, art. 30. Article 53 states: "The buyer must pay the price for the goods and take delivery of them as required by the contract and this Convention." CISG, supra note 1, art. 53.

54. See CISG, supra note 1, art. 14.

55. See Helen Kaminski Pty. Ltd. v. Marketing Australian Products, Inc., No. 97-8072A, 1997 WL 414137, at *1 (S.D.N.Y. July 23, 1997).

56. Id. at *2.

57. See id.

58. See CISG, supra note 1, art. 30.

59. See CISG, supra note 1, art. 53.

60. Helen Kaminski Pty. Ltd. v. Marketing Australian Products, Inc., No. 97-8072A, 1997 WL 414137, at *2 (S.D.N.Y. July 23, 1997).

61. See id.

62. Carolita Oliveros, International Distribution Issues: Distribution Agreement, SB75 ALI-ABA 739, 742 (1997).

63. Id.

64. See Kritzer, supra note 2, at 18 ("If . . . the dealership contract itself has been breached, we can assume that this is no longer a matter of sales law and that damages claims are subjects to domestic law applicable to the frame agreement.") (citations omitted) (quote located in unnumbered footnote).

65. Honnold, supra note 5, at 103.

66. See id. at 103.

67. See id. See also CISG, supra note 1, art. 14.

68. See Halen Kaminski Pty. Ltd v. Marketing Australian Products, Inc., No. 97-8072A, 1997 WL 414137, at *2 (S.D.N.Y. July 23, 1997).

69. See id.

70. Honnold, supra note 5, at 103 (citing CISG, supra note 1, art.6).

71. See Kritzer, supra note 2, at 18.

72. See id.; See also Harry M. Flechtner, More U.S. Decisions on the U.N. Sales Convention: Scope, Parol, Evidence, "Validity" and Reduction of Price under Article 50, 14 J.L. & Com. 153, 164-65 (1995) (stating that the "parties" plans called for in the framework agreements to be incorporated into future sales . . . will likely be subject to CISG"").

73. See OLG Düsseldorf, UNILEX, No. 6 U 152/95 (July 11, 1996).

74. See id..

75. See id.

76. See id.

77. See id.

78. See OLG Düsseldorf, UNILEX, No. 6 U 152/95 (July 11, 1996).

79. See id.; See also CISG, supra note 1, art. 53.

80. OLG Düsseldorf , UNILEX, No. 6 U 152/95 (July 11, 1996), "http://cisgw3.law.pace.edu/cases/930917gl.html" (visited September 25, 1997).

81. See id.

82. See id.

83. See id.; (citing CISG, supra note 1, art. 7(2)).

84. See OLG Koblenz, UNILEX, No. 2 U 1230/91 (Sept. 17, 1993) [http://cisgw3.law.pace.edu/cases/960711gl.html].

85. See id.

86. See id.

87. See id.

88. See id.

89. OLG Koblenz, UNILEX, No. 2 U 1230/91 (Sept. 17, 1993).

90. See id.

91. See id.

92. See id.

93. See Cook, supra note 13, at 258.

94. See Helen Kaminski Pty. Ltd. v. Marketing Australian Products, Inc., No. 97-8072A, 1997 WL 414137, (S.D.N.Y. July 23, 1997).

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