International Sales

Author:International Law Group
SUMMARY

Ninth Circuit rules that, under international sales convention, sales contract between Canadian company on one side as buyer and French corporation and its wholly-owned American subsidiary on other side as sellers did not incorporate French forum selection clauses on sellers' invoices

 
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In February 2000, Chateau des Charmes Wines, Ltd., a Canadian wine company, agreed to buy a certain number of wine corks from Sabate U.S.A., Inc., a wholly-owned California subsidiary of Sabate France, S.A. The parties agreed on payment and shipping terms, but did not discuss other terms, and had no history of prior dealings.

Sabate France shipped the corks to Canada in eleven batches. With each shipment came an invoice specifying on its face in French that "[a]ny dispute arising under the present contract is under the sole jurisdiction of the Court of Commerce of the City of Perpignan." The reverse side bore a clause in French declaring that "any disputes arising out of this agreement shall be brought before the court with jurisdiction to try the matter in the judicial district where Seller's registered office is located."

In 2001, Chateau des Charmes began to notice undesirable cork flavors in the wines bottled with Sabate's corks. Alleging breach of contract, strict liability, breach of warranty, false advertising, and unfair competition, Chateau des Charmes sued Sabate France and Sabate USA in a California federal court.

Defendants moved to dismiss based on the forum selection clauses. The district court granted the motion, holding that the invoice clauses were valid and enforceable. Plaintiff then filed this appeal. In a per curiam opinion, the U.S. Court of Appeals for the Ninth Circuit reverses and remands.

The Court first decides whether the forum selection clauses were part of the sales agreement between plaintiff and defendants. The Court points out that the United Nations Convention on Contracts for the International Sale of Goods (in force, 1988) (CISG) governs the international sale of corks since the United States, Canada and France are all Contracting States. The Court reasons, therefore, that the CISG also governs the contract status of these forum selection clauses on the invoices.

The Court concludes that, under the CISG, the parties did not agree to incorporate the invoice clauses into the sales contract."The Convention sets out a clear regime for analyzing international contracts for the sale of goods: 'A contract of sale need not be concluded in, or evidenced by, writing and is not subject to any other requirement as to form.' CISG., art. 11. A proposal is an offer if it is sufficiently definite to 'indicate[ ] the goods and expressly or implicitly fix[ ] or make[ ] provision...

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