Source: http://cisgw3.law.pace.edu/cases/070928u1.html
Timestamp: 2019-04-21 04:57:48+00:00

Document:
CASE NAME: Easom Automation Systems, Inc. v. Thyssenkrupp Fabco, Corp.
"1. Parties must expressly opt out of applying the CISG to their agreement to derogate it.
"2. Reference to the national law of a member state of the CISG indicates that the CISG is to apply."
A seller located in the United States agreed to sell machinery to a buyer located in Canada. The seller delivered the goods but the buyer failed to pay part of the purchase price. The seller sued for breach of contract and brought a motion for immediate recovery of the goods under a U.S. domestic (Michigan) statute that, the seller alleged, gave it a lien on the machinery sold to the buyer.
The court applied the CISG to the contract of sale between the parties, even though a written purchase order issued by the buyer contained a choice-of-law clause designating Canadian law. The buyer's purchase order was sent six weeks after the seller had given the buyer oral "quotes" on the machinery, which the buyer had allegedly "accepted" (orally) the same day. The court held that the seller's quotes (which presumably did not contain a choice-of-law clause) could constitute an offer to sell under CISG Article 14 because they were "sufficiently definite" and indicated "the intention of the offeror to be bound in case of acceptance." The court then found that the buyer's alleged oral acceptance, if in fact given, would be valid under Article 18. Thus, the court reasoned, the contract might have been concluded without a choice-of-law clause, and the CISG would be applicable under Article 1(1) (a) because each party was located in a different Contracting State. Even if the buyer's choice-of-law clause was a term of the contract, the court stated, the CISG would remain applicable: "Courts that have reviewed [CISG Article 6] have held that the parties must expressly opt out of applying the CISG to their agreement" (citing U.S. decisions). The buyer's choice-of-law clause, the court asserted, did not "expressly indicate that the CISG did not apply" because the law of Canada designated in the clause includes the CISG.
Although it held the CISG applicable to the parties' sales contract, the court found that, pursuant to the limitations on the scope of the CISG stated in Article 4, the Convention did not pre-empt the Michigan statute on which the seller based its claim to a lien on the goods. The court concluded, however, that it could not determine whether that statute applied and whether its requirements for a valid lien had been satisfied by the seller without further evidence; it therefore denied the seller's motion for immediate recovery of the goods.
Easom Automation Systems, Inc. v. Thyssenkrupp Fabco, Corp.
This matter is before the Court on Plaintiff Easom Automation Systems, Inc.'s Motion for Immediate Possession, filed on January 30, 2007. Defendant ThyssenKrupp Fabco, Corp. filed its Response to Plaintiff's Motion for Immediate Possession on March 2, 2007.
On October 17, 2006, Plaintiff filed the instant action pursuant to 28 U.S.C. � 1332 alleging the following against Defendant: Count I, Breach of Contract; Count II, Breach of Implied Contract; Count III, Unjust Enrichment; and Count IV, Enforcement of Michigan Special Tool Lien.
Plaintiff is a Michigan Corporation with its principal place of business in Madison Heights, Michigan. (Pl.'s Compl., � 1) Plaintiff designs, builds, integrates and installs automation equipment and systems for the auto industry. (Pl.'s Compl., � 5) Defendant is a Nova Scotia Corporation headquartered in Ontario, and it is in the business of supplying medium and heavy metal stampings and systems to automotive customers. (Def.'s Mot. to Dismiss, p. 1, 2) The present matter arises out of an "agreement" between the parties where Plaintiff was to design, fabricate and install the Sport Bar Assembly System (SBA)  for Defendant.
On December 29, 2006, Defendant filed a Motion to Dismiss on Grounds of Forum Non Conveniens, asserting, among other things, that the Choice of Law/Forum Selection Clause governs the agreement between the parties. On August 1, 2007, this Court denied Defendant's Motions to Dismiss on Grounds of Forum Non Conveniens, holding, without definitively answering the question of what law governs this action, that Defendant's failure to demonstrate that the "balance of hardships" or trial of this matter in this Court would be "oppressive and vexatious" to Defendant.
Plaintiff argues that pursuant to Michigan's Special Tools Lien Act, MICH. COMP. LAWS � 570.563 et seq., it is entitled to immediate possession of the SBA, currently in Defendant's possession in Canada. Plaintiff asserts that because it complied with the requirements of the Act to perfect the lien on the SBA, specifically affixed its name and address to the SBA, filed a financing statement with the Province of Ontario, sent notification and a demand for payment letter to Defendant, and waited ninety days without receiving payment, Plaintiff is entitled to immediate possession of the SBA.
Defendant's argument mainly rests upon the assumption that the purchase orders it issued to Plaintiff constituted Defendant's offer, not the quote issued by Plaintiff. By accepting Defendant's offer to build the SBA pursuant to the terms and conditions set forth in the purchase orders, specifically the Choice of Law/Forum Selection Clause, Defendant claims Plaintiff agreed the contract was governed by Ontario law. Defendant argues that since the parties expressly agreed that Ontario law would govern their agreement, the Michigan Special Tools Lien Act is inapplicable, and Plaintiff has no right to immediate possession. Alternatively, Defendant argues that if the Act does apply to this action, Plaintiff expressly waived its right to enforce the lien, and, in any event, Plaintiff did not comply with the financing statement filing requirements, as such, the lien is invalid.
It is Plaintiff's contention that the United Nations Convention on Contracts for the InternationalSale of Goods, or the CISG, May 1980, S. Treaty. No. 9, 98th Cong., 1st Sess. 22 (1983), 19 I.L.M. 671 (reprinted at U.S.C.S. Int.'l Sale Goods) controls this matter based upon the fact that on July 19, 2005, Plaintiff sent Defendant a series of quotes, which constitutes Plaintiff's offer to manufacture and assemble the SBA. (See Pl.'s Resp. to Defendant's Mot. to Dismiss, Pl.'s Ex. 2) According to Plaintiff, Defendant verbally accepted this offer on July 19, 2005 (the very same day), and Plaintiff began work on the SBA shortly thereafter.
The CISG governs only the formation of the contract of sale, and the rights and obligations of the seller and the buyer arising from such a contract. See CISG, Art. 4. The CISG governs contracts for the sale of goods between parties whose places of business are in different nations, if the nations are Contracting States, unless the subject contract contains a choice-of-law provision. See CISG, Art. 1, 6; See also American Biophysics Corp. v. DuBois Marine Specialities, 411 F.Supp.2d 61, 63-64 (D.R.I.2006); See also BP Oil Int'l, Ltd. v. Empresa Estatal Petroleos de Ecuador, 332 F.3d 333, 337 (5th Cir.2003). Both the United States and Canada are signatory nations.
Under the CISG, the July 19, 2005 quote issued by Plaintiff could constitute Plaintiff's offer because the quote was "sufficiently definite and indicate[d] the intention of the offeror to be bound in case of acceptance."SeeCISG, Art. 14. Article 14 indicates that "[a] proposal is sufficiently definite if it indicates the goods and expressly or implicitly fixes or makes provisions for determining the quantity and the price."Id. Plaintiff's quote specifically indicates that Plaintiff would design and build the SBA in the amount of $5,400,000.00.
Defendant's oral acceptance of the quote is recognized as a valid form of acceptance under the CISG. See CISG, Art. 18. The CISG specifically states that "[a] statement made by or other conduct of the offerree indicating assent to an offer is acceptance."See CISG, Art. 18(1). Additionally, "[a]n acceptance of an offer becomes effective at the moment the indication of assent reaches the offeror...."See CISG, Art. 18(2).
The CISG makes provision for the parties to a contract to opt out of the CISG as the governing law and agree that their contract be governed by another law. See CISG, Art. 6. "The parties may exclude the application of this Convention, or ... derogate from or vary the effect of any of its provisions."CISG, Art. 6. Courts that have reviewed this provision have held that the parties must expressly opt out of applying the CISG to their agreement. See BP Oil Int'l, 332 F.3d at 337;Asante Techs., Inc. v. PMC-Sierra, Inc., 164 F.Supp.2d 1142, 1150 (N.D.Cal.2001) ("A signatory's assent to the CISG necessarily incorporates the treaty as part of that nation's domestic law."); See also Ajax Tools Works, Inc. v. Can-Eng Manu. Ltd., 2003 U.S. Dist. LEXIS 1306, at *8 (holding that since Germany is a contracting state, "the CISG is an integral part of German law. Where parties designate a choice of law clause in their contract, selecting the law of a contracting state without expressly excluding application of the CISG-German courts uphold application of the Convention as the law of the designated Contracting state. To hold otherwise would undermine the objectives of the Convention which Germany has agreed to uphold").
Under either the Plaintiff's quote or Defendant's purchase orders, the CISG applies as neither the quote nor the purchase orders expressly indicated that the CISG did not apply. Further, stating that the law of Canada applied to the agreement indicates that the CISG applied as well, as the Convention is the law of Canada.
The CISG governs only the formation of the contract of sale, and the rights and obligations of the seller and the buyer arising from such a contract. As such, if the Plaintiff's quote constitutes the contract in this case, as opposed to Defendant's purchase orders, the Michigan Special Tools Lien Act may apply to the parties' agreement.
(a) The office designated for the filing or recording of a record of a mortgage on the related real property, if the collateral is as-extracted collateral or timber to be cut, or the financing statement is filed as a fixture filing and the collateral is goods that are or are to become fixtures.
(b) The office of secretary of state in all other cases, including a case in which the collateral is goods that are or are to become fixtures and the financing statement is not filed as a fixture filing.
(2) The office in which to file a financing statement to perfect a security interest in collateral, including fixtures, of a transmitting utility is the office of the secretary of state. The financing statement also constitutes a fixture filing as to the collateral indicated in the financing statement which is or is to become fixtures." MICH. COMP. LAWS � 440.9501(1) (italics added).
At this juncture, there remain issues of fact as to which document constitutes the contract in this case-the quotes prepared by Plaintiff or the purchase orders prepared by Defendant. Until this issue is resolved, the Court is unable to determine whether Michigan law applies and whether the Michigan's Special Tools Lien Act applies. Plaintiff is correct that under M.C.L.A. � 570.567(a), a special tool builder may take possession without judicial process if it can be done without breach of the peace. However, Plaintiff has not chosen this alternative since Plaintiff involved the judiciary by filing the instant action in this Court.
IT IS ORDERED that Plaintiff Easom Automation System, Inc.'s Motion for Immediate Possession [Docket No. 11, filed on January 30, 2007] is DENIED without prejudice.
4. Plaintiff submits the opinion written by the Oakland County Circuit Court but the Court is not bound by the opinion. In any event, since questions of fact remain regarding what document governs the parties in this case, the Court need not address whether Plaintiff is entitled to "immediate" possession of the SBA.

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