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Matched Legal Cases: ['art. 11', 'art. 1', '§ 7', '§ 7', '§ 110', 'art. 11', '§ 2', '§ 110', '§ 107', 'art. 8', 'art. 50', 'art. 1', 'art. 8', '§ 2', '§ 107', 'art\n12', '§ 2', 'art. 11', '§ 7', '§ 1332', '§ 102', 'art. 1', 'art. 7']

United States 29 June 1998 Federal Appellate Court [11th Circuit] (MCC-Marble Ceramic Center v. Ceramica Nuova D'Agostino) [Cite as: http://cisgw3.law.pace.edu/cases/980629u1.html] Primary source(s) of information for case presentation: Case text
DATE OF DECISION: 19980629 (29 June 1998) JURISDICTION: United States [federal court] TRIBUNAL: U.S. Circuit Court of Appeals (11th Circuit) [federal appellate court] JUDGES: Edmunson, Birch, Fay (opinion by Birch) CASE NUMBER/DOCKET NUMBER: 97-4250 CASE NAME: MCC-Marble Ceramic Center, Inc. v. Ceramica Nuova D'Agostino S.p.A. CASE HISTORY: 1st instance District Court (S.D. Florida), 92-2108 CIV [reversed and remanded]; 3rd instance 26 April 1999 U.S. Supreme Court [certiorari denied] 526 U.S. 1087 SELLER'S COUNTRY: Italy (defendant) BUYER'S COUNTRY: U.S.A. (plaintiff) GOODS INVOLVED: Ceramic tiles Case abstract
The issue before the court was whether the parol evidence rule of domestic law applies to the interpretation of a contract
governed by CISG. The rule excludes evidence of an oral agreement which contradicts or varies the terms of a subsequent or
contemporaneous written contract.
A U.S. retailer, the buyer, agreed orally with the seller, an Italian manufacturer of ceramic tiles, on the basic terms for the
purchase of tiles. The parties then recorded these terms in the seller's standard, pre-printed order form and the president of the
buyer's company signed the form on behalf of the company. The form was printed in the Italian language and contained terms on
both the front and back. Immediately below the signature line on the front of the form was language, in Italian, stating that the
buyer was aware of the terms on the back of the form and agreed to them. Four months later the parties entered into a
requirements contract and pursuant to that contract the buyer ordered tiles on numerous occasions using the seller's order form.
The buyer brought a breach of contract action in the U.S. District Court for the Southern District of Florida against the seller for
failure to deliver the tiles ordered. In defense, the seller relied on a standard term on its order form which authorized it to suspend
deliveries if the buyer failed to pay and the seller brought a counterclaim for nonpayment. To buyer's response that the tiles were
nonconforming, the seller stated that the buyer had not given written notice of defects within ten days of receipt as required by a
term on the order form. The buyer presented affidavits from its president and two employees of the seller stating that the parties
did not intend to be bound by the standard terms on the order form. The court excluded this evidence on the basis of the domestic
parol evidence rule, gave effect to the standard terms and granted summary judgment to the seller.
The U.S. Court of Appeals for the Eleventh Circuit reversed the district court's grant of summary judgment. The court held that
article 8(3) CISG precludes the application of the parol evidence rule. The court expressly rejected a statement to the contrary in
Beijing Metals & Minerals Import/Export Corp. v. American Business Center [CLOUT case no. 24]. The court also rejected the
seller's argument that the parol evidence rule was a procedural rule outside the scope of CISG. Consequently, the appellate court
found that the affidavits of the subjective intent of both parties raised sufficient factual question as to the terms of the parties'
contract under article 8(1) CISG that summary judgment was inappropriate.
APPLICATION OF CISG: Yes [Article 1(1)(a)] APPLICABLE CISG PROVISIONS AND ISSUES Key CISG provisions at issues: Articles 7 ; 8 [Also cited: Articles 11 ; 39 ; 50 ] Classification of issues using UNCITRAL classification code
Descriptors: Intent ; Interpretation of Convention ; Parol evidence rule ; Procedural matters vs. substantive law ; Language issues Go to Case Table of Contents Editorial remarks
"We begin by observing that the parol evidence rule, contrary to its title, is a substantive rule of law, not a rule of evidence. . . . The rule does not purport to exclude a particular type of evidence as an 'untrustworthy or undesirable' way of proving a fact, but prevents a litigant from attempting to show 'the fact itself -- the fact that the terms of the agreement are other than those in the writing.'. . . As such, a federal district court cannot simply apply the parol evidence rule as a procedural matter -- as it might if excluding a particular type of evidence under the Federal Rules of Evidence, which apply in federal court regardless of the source of the substantive rule of decision. "An example demonstrates [the different approach to be applied to procedural matters]. The CISG provides that a contract for the sale of goods need not be in writing and that the parties may prove the contract 'by any means, including witnesses.' CISG, art. 11. Nevertheless, a party seeking to prove a contract in such a manner in federal court could not do so in a way that violated in the rule against hearsay. See Fed. R. Evid. 802 (barring hearsay evidence). A federal district court applies the Federal Rules of Evidence because these rules are considered procedural, regardless of the source of the law that governs the substantive decision. . . ." n. 13.
The court endorsed the position that "the parol evidence rule is not viable in CISG cases in light of article 8 of the Convention" [emphasis added]. The court further stated:
CITATIONS TO OTHER ABSTRACTS OF DECISION English: Guide to the International Sale of Goods Convention, Business Laws, Inc. (44 Suppl. 11/September 1998) p. 101.068-101.070; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=337&step=Abstract>
CITATIONS TO TEXTS OF THIS DECISION Original language (English): Text presented below; see also 144 F.3d 1384; 1998 U.S. App. LEXIS 14782; 1998 WL 343335 (11th Cir. (Fla.)); 37 International Legal Materials (1998) 1141; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=337&step=FullText> Translation: Unavailable CITATIONS TO COMMENTS ON DECISION English
For MCC-MARBLE, plaintiff-appellant: Roy D. Wasson, Miami, FL.
For CERAMICA NUOVA, defendant-appellee: Herbert Rubin, Herzfeld & Rubin, New York, NY
This case requires us to determine whether a court must
consider parol evidence in a contract dispute governed by the
Sale of Goods ("CISG").[1] The district court granted summary
judgment on behalf of the [seller], relying on certain
terms and provisions that appeared on the reverse of a pre-printed form contract for the sale of ceramic tiles. The [buyer] sought to rely on a number of affidavits that tended to
show both that the parties had arrived at an oral contract before
memorializing their agreement in writing and that they
subjectively intended not to apply the terms on the reverse of the
contract to their agreements. The magistrate judge held that the
affidavits did not raise an issue of material fact and
recommended that the district court grant summary judgment
based on the terms of the contract. The district court agreed
with the magistrate judge's reasoning and entered summary
judgment in the [seller's] favor. We REVERSE.
The plaintiff-appellant, MCC-Marble Ceramic, Inc. [buyer],
is a Florida corporation engaged in the retail sale of tiles, and the
defendant-appellee, Ceramica Nuova S.p.A.
[seller] is an Italian corporation engaged in the
manufacture of ceramic tiles. In October 1990, [buyer's]
president, Juan Carlos Mo[n]zon, met representatives of [seller]
at a trade fair in Bologna, Italy and negotiated an agreement to
purchase ceramic tiles from [seller] based on samples he
examined at the trade fair. Monzon, who spoke no Italian,
communicated with Gianni Silingardi, then [seller's]
commercial director, through a translator, Gianfranco Copelli,
who was himself an agent of [seller].[2] The parties
apparently arrived at an oral agreement on the crucial terms of
price, quality, quantity, delivery and payment. The parties then
recorded these terms on one of [seller's] standard, pre-printed order forms and Monzon signed the contract on [buyer's]
behalf. According to [buyer], the parties also entered into a
requirements contract in February 1991, subject to which
[seller] agreed to supply [buyer] with high grade ceramic tile
at specific discounts as long as [buyer] purchased sufficient
quantities of tile. [Buyer] completed a number of additional order
forms requesting tile deliveries pursuant to that agreement.
[Buyer] brought suit against [seller] claiming a breach of
the February 1991 requirements contract when [seller] failed
to satisfy orders in April, May, and August of 1991. In addition
to other defenses, [seller] responded that it was under no
obligation to fill [buyer's] orders because [buyer] had defaulted on
payment for previous shipments. In support of its position,
[seller] relied on the pre-printed terms of the contracts that
[buyer] had executed. The executed forms were printed in Italian
and contained terms and conditions on both the front and
reverse. According to an English translation of the October
1990 contract,[3] the front of the order form contained the
following language directly beneath Monzon's signature:
"[T]he buyer hereby states that he is aware of the sales
conditions stated on the reverse and that he expressly
approves of them with special reference to those
numbered 1-2-3-4-5-6-7-8."
R2-126, Exh. 3 ¶ 5 ("Maselli Aff."). Clause 6(b), printed on the
back of the form states:
"[D]efault or delay in payment within the time agreed
upon gives [seller] the right to . . . suspend or
cancel the contract itself and to cancel possible other
pending contracts and the buyer does not have the
right to indemnification or damages."
Id. ¶ 6. [Seller] also brought a number of counterclaims against
[buyer], seeking damages for [buyer's] alleged nonpayment for
deliveries of tile that [seller] had made between February 28,
1991 and July 4, 1991. [Buyer] responded that the tile it had
received was of a lower quality than contracted for, and that,
pursuant to the CISG, [buyer] was entitled to reduce payment in
proportion to the defects.[4] [Seller], however, noted that
clause 4 on the reverse of the contract states, in pertinent part:
"Possible complaints for defects of the merchandise
must be made in writing by means of a certified letter
within and not later than 10 days after receipt of the
merchandise. . . . Maselli Aff. ¶ 6. Although there is evidence to support [buyer's]
claims that it complained about the quality of the deliveries it
received, [buyer] never submitted any written complaints.
[Buyer] did not dispute these underlying facts before the
district court, but argued that the parties never intended the
terms and conditions printed on the reverse of the order form to
apply to their agreements. As evidence for this assertion, [buyer]
submitted Monzon's affidavit, which claims that [buyer] had no
subjective intent to be bound by those terms and that
[seller] was aware of this intent. [Buyer] also filed affidavits
from Silingardi and Copelli, [seller's] representatives at the
trade fair, which support Monzon's claim that the parties
subjectively intended not to be bound by the terms on the
reverse of the order form. The magistrate judge held that the
affidavits, even if true, did not raise an issue of material fact
regarding the interpretation or applicability of the terms of the
written contracts and the district court accepted his
recommendation to award summary judgment in [seller's]
favor. [Buyer] then filed this timely appeal.
novo and apply the same standards as the district court. See
Harris v. H&W Contracting Co., 102 F.3d 516, 518 (11th Cir.
1996). Summary judgment is appropriate when the pleadings,
depositions, and affidavits reveal that no genuine issue of
material fact exists and the moving party is entitled to judgment
as a matter of law. See Fed. R. Civ. P. 56(c).
The parties to this case agree that the CISG governs their
dispute because the United States, where [buyer] has its place of
business, and Italy, where [seller] has its place of business,
are both States Party to the Convention.[5] See CISG, art. 1.[6]
Article 8 of the CISG governs the interpretation of international
contracts for the sale of goods and forms the basis of [buyer's]
appeal from the district court's grant of summary judgment in
[seller's] favor.[7] [Buyer] argues that the magistrate judge and
the district court improperly ignored evidence that [buyer]
submitted regarding the parties' subjective intent when they
memorialized the terms of their agreement on [seller's] pre-printed form contract, and that the magistrate judge erred by
applying the parol evidence rule in derogation of the CISG.
Contrary to what is familiar practice in United States courts,
the CISG appears to permit a substantial inquiry into the parties'
subjective intent, even if the parties did not engage in any
objectively ascertainable means of registering this intent.[8] Article
8(1) of the CISG instructs courts to interpret the "statements .
. . and other conduct of a party . . . according to his intent" as
long as the other party "knew or could not have been unaware"
of that intent. The plain language of the Convention, therefore,
requires an inquiry into a party's subjective intent as long as the
other party to the contract was aware of that intent.
In this case, [buyer] has submitted three affidavits that
discuss the purported subjective intent of the parties to the initial
agreement concluded between [buyer] and [seller] in October
1990. All three affidavits discuss the preliminary negotiations
and report that the parties arrived at an oral agreement for
[seller] to supply quantities of a specific grade of ceramic tile
to [buyer] at an agreed upon price. The affidavits state that the "oral agreement established the essential terms of quality,
quantity, description of goods, delivery, price and payment." See R3-133 ¶ 9 ("Silingardi Aff."); R1-51 ¶ 7 ("Copelli Aff.");
R1- 47 ¶ 7 ("Monzon Aff."). The affidavits also note that the
parties memorialized the terms of their oral agreement on a
standard [seller] order form, but all three affiants contend
that the parties subjectively intended not to be bound by the
terms on the reverse of that form despite a provision directly
below the signature line that expressly and specifically
incorporated those terms.[9]
The terms on the reverse of the contract give [seller]
the right to suspend or cancel all contracts in the event of a
buyer's non-payment and require a buyer to make a written
report of all defects within ten days. As the magistrate judge's
report and recommendation makes clear, if these terms applied
to the agreements between [buyer] and [seller], summary
judgment would be appropriate because [buyer] failed to make any
written complaints about the quality of tile it received and
[seller] has established [buyer's] non-payment of a number of
invoices amounting to $108,389.40 and 102,053,846.00 Italian lira.
Article 8(1) of the CISG requires a court to consider this
evidence of the parties' subjective intent. Contrary to the
magistrate judge's report, which the district court endorsed and
adopted, article 8(1) does not focus on interpreting the parties'
statements alone. Although we agree with the magistrate
judge's conclusion that no "interpretation" of the contract's
terms could support [buyer's] position,[10] article 8(1) also requires
a court to consider subjective intent while interpreting the
conduct of the parties. The CISG's language, therefore, requires
courts to consider evidence of a party's subjective intent when
signing a contract if the other party to the contract was aware
of that intent at the time. This is precisely the type of evidence
that [buyer] has provided through the Silingardi, Copelli, and
Monzon affidavits, which discuss not only Monzon's intent as
[buyer's] representative but also discuss the intent of [seller's]
representatives and their knowledge that Monzon did not intend
to agree to the terms on the reverse of the form contract. This
acknowledgment that [seller's] representatives were aware
of Monzon's subjective intent puts this case squarely within
article 8(1) of the CISG, and therefore requires the court to
consider [buyer's] evidence as it interprets the parties' conduct.[11]
Given our determination that the magistrate judge and the
district court should have considered [buyer's] affidavits regarding
the parties' subjective intentions, we must address a question of
first impression in this circuit: whether the parol evidence rule,
which bars evidence of an earlier oral contract that contradicts
or varies the terms of a subsequent or contemporaneous written
contract,[12] plays any role in cases involving the CISG. We begin
by observing that the parol evidence rule, contrary to its title, is
a substantive rule of law, not a rule of evidence. See II E. Allen
Farnsworth, Farnsworth on Contracts, § 7.2 at 194 (1990). The
rule does not purport to exclude a particular type of evidence as
an "untrustworthy or undesirable" way of proving a fact, but
prevents a litigant from attempting to show "the fact itself -- the
fact that the terms of the agreement are other than those in the
writing." Id. As such, a federal district court cannot simply
apply the parol evidence rule as a procedural matter -- as it might
if excluding a particular type of evidence under the Federal Rules
of Evidence, which apply in federal court regardless of the source
of the substantive rule of decision. Cf. id. § 7.2 at 196.[13]
The CISG itself contains no express statement on the role
of parol evidence. See Honnold, Uniform Law § 110 at 170. It
is clear, however, that the drafters of the CISG were comfortable
with the concept of permitting parties to rely on oral contracts
because they eschewed any statutes of fraud provision and
expressly provided for the enforcement of oral contracts. Compare CISG, art. 11 (a contract of sale need not be concluded
or evidenced in writing) with U.C.C. § 2-201 (precluding the
enforcement of oral contracts for the sale of goods involving
more than $500). Moreover, article 8(3) of the CISG expressly
directs courts to give "due consideration . . . to all relevant
circumstances of the case including the negotiations . . ." to
determine the intent of the parties. Given article 8(1)'s directive
to use the intent of the parties to interpret their statements and
conduct, article 8(3) is a clear instruction to admit and consider
parol evidence regarding the negotiations to the extent they
reveal the parties' subjective intent. Despite the CISG's broad scope, surprisingly few cases
have applied the Convention in the United States,[14] see Delchi
Carrier SpA v. Rotorex Corp., 71 F.3d 1024, 1027-28 (2d Cir.
1995) (observing that "there is virtually no case law under the
Convention"), and only two reported decisions touch upon the
parol evidence rule, both in dicta. One court has concluded,
much as we have above, that the parol evidence rule is not
viable in CISG cases in light of article 8 of the Convention. In
Filanto, a district court addressed the differences between the
UCC and the CISG on the issues of offer and acceptance and the
battle of the forms. See 789 F. Supp. at 1238. After engaging
in a thorough analysis of how the CISG applied to the dispute
before it, the district court tangentially observed that article 8(3)
"essentially rejects . . . the parol evidence rule." Id. at 1238
n.7. Another court, however, appears to have arrived at a
contrary conclusion. In Beijing Metals & Minerals Import/Export
Corp. v. American Bus. Ctr., Inc., 993 F.2d 1178 (5th Cir.
1993), a defendant sought to avoid summary judgment on a
contract claim by relying on evidence of contemporaneously
negotiated oral terms that the parties had not included in their
written agreement. The plaintiff, a Chinese corporation, relied on
Texas law in its complaint while the defendant, apparently a
Texas corporation,[15] asserted that the CISG governed the
dispute. Id. at 1183 n.9. Without resolving the choice of law
question,[16] the Fifth Circuit cited Filanto for the proposition that
there have been very few reported cases applying the CISG in
the United States, and stated that the parol evidence rule would
apply regardless of whether Texas law or the CISG governed the
dispute. Beijing Metals, 993 F.2d at 1183 n.9. The opinion
does not acknowledge Filanto's more applicable dictum that the
parol evidence rule does not apply to CISG cases nor does it
conduct any analysis of the Convention to support its
conclusion. In fact, the Fifth Circuit did not undertake to
interpret the CISG in a manner that would arrive at a result
consistent with the parol evidence rule but instead explained that
it would apply the rule as developed at Texas common law. See
id. at 1183 n.10. As persuasive authority for this court, the
Beijing Metals opinion is not particularly persuasive on this point.
Our reading of article 8(3) as a rejection of the parol
evidence rule, however, is in accordance with the great weight
of academic commentary on the issue. As one scholar has
"[T]he language of Article 8(3) that 'due consideration
is to be given to all relevant circumstances of the
case' seems adequate to override any domestic rule
that would bar a tribunal from considering the
relevance of other agreements. . . . Article 8(3)
relieves tribunals from domestic rules that might bar
them from 'considering' any evidence between the
parties that is relevant. This added flexibility for
interpretation is consistent with a growing body of
opinion that the 'parol evidence rule' has been an
embarrassment for the administration of modern
Honnnold, Uniform Law § 110 at 170-71.[17] Indeed, only one
commentator has made any serious attempt to reconcile the
parol evidence rule with the CISG. See David H. Moore, Note, The Parol Evidence Rule and the United Nations Convention on
Contracts for the International Sale of Goods: Justifying Beijing
Metals & Minerals Import/Export Corp. v. American Business
Center, Inc., 1995 BYU L. Rev. 1347. Moore argues that the
parol evidence rule often permits the admission of evidence
discussed in article 8(3), and that the rule could be an
appropriate way to discern what consideration is "due" under
article 8(3) to evidence of a parol nature. Id. at 1361-63. He
also argues that the parol evidence rule, by limiting the incentive
for perjury and pleading prior understandings in bad faith,
promotes good faith and uniformity in the interpretation of
contracts and therefore is in harmony with the principles of the
CISG, as expressed in article 7.[18] Id. at 1366-70. The answer
to both these arguments, however, is the same: although
jurisdictions in the United States have found the parol evidence
rule helpful to promote good faith and uniformity in contract, as
well as an appropriate answer to the question of how much
consideration to give parol evidence, a wide number of other
States Party to the CISG have rejected the rule in their domestic
jurisdictions. One of the primary factors motivating the
negotiation and adoption of the CISG was to provide parties to
international contracts for the sale of goods with some degree of
certainty as to the principles of law that would govern potential
disputes and remove the previous doubt regarding which party's
legal system might otherwise apply. See Letter of Transmittal
from Ronald Reagan, President of the United States, to the
United States Senate, reprinted at 15 U.S.C. app. 70, 71
(1997). Courts applying the CISG cannot, therefore, upset the
parties' reliance on the Convention by substituting familiar
principles of domestic law when the Convention requires a
different result. We may only achieve the directives of good
faith and uniformity in contracts under the CISG by interpreting
and applying the plain language of article 8(3) as written and
obeying its directive to consider this type of parol evidence. This is not to say that parties to an international contract for
the sale of goods cannot depend on written contracts or that
parol evidence regarding subjective contractual intent need
always prevent a party relying on a written agreement from
securing summary judgment. To the contrary, most cases will
not present a situation (as exists in this case) in which both
parties to the contract acknowledge a subjective intent not to be
bound by the terms of a pre-printed writing. In most cases,
therefore, article 8(2) of the CISG will apply, and objective
evidence will provide the basis for the court's decision. See
Honnold, Uniform Law § 107 at 164-65. Consequently, a party
to a contract governed by the CISG will not be able to avoid the
terms of a contract and force a jury trial simply by submitting an
affidavit which states that he or she did not have the subjective
intent to be bound by the contract's terms. Cf. Klopfenstein v.
Pargeter, 597 F.2d 150, 152 (9th Cir. 1979) (affirming summary
judgment despite the appellant's submission of his own affidavit
regarding his subjective intent: "Undisclosed, subjective
intentions are immaterial in [a] commercial transaction, especially
when contradicted by objective conduct. Thus, the affidavit has
no legal effect even if its averments are accepted as wholly
truthful."). Moreover, to the extent parties wish to avoid parol
evidence problems they can do so by including a merger clause
in their agreement that extinguishes any and all prior agreements
and understandings not expressed in the writing.[19]
Considering [buyer's] affidavits in this case, however, we
conclude that the magistrate judge and the district court
improperly granted summary judgment in favor of [seller]. Although the affidavits are, as [seller] observes, relatively
conclusory and unsupported by facts that would objectively establish [buyer's] intent not to be bound by the conditions on the
reverse of the form, article 8(1) requires a court to consider
evidence of a party's subjective intent when the other party was
aware of it, and the Silingardi and Copelli affidavits provide that
evidence. This is not to say that the affidavits are conclusive
proof of what the parties intended. A reasonable finder of fact,
for example, could disregard testimony that purportedly
sophisticated international merchants signed a contract without
intending to be bound as simply too incredible to believe and
hold [buyer] to the conditions printed on the reverse of the
contract.[20] Nevertheless, the affidavits raise an issue of material
fact regarding the parties' intent to incorporate the provisions on
the reverse of the form contract. If the finder of fact determines
that the parties did not intend to rely on those provisions, then
the more general provisions of the CISG will govern the outcome
of the dispute.[21]
[Buyer's] affidavits, however, do not discuss all of the
transactions and orders that [buyer] placed with [seller]. Each
of the affidavits discusses the parties' subjective intent
surrounding the initial order [buyer] placed with [seller] in
October 1990. The Copelli affidavit also discusses a February
1991 requirements contract between the parties and reports that the parties subjectively did not intend the terms on the reverse
of the [seller] order form to apply to that contract either. See Copelli Aff. ¶ 12. [Seller], however, submitted the
affidavit of its chairman, Vincenzo Maselli, which describes at
least three other orders from [buyer] on form contracts dated
January 15, 1991, April 27, 1991, and May 4, 1991, in addition
to the October 1990 contract. See Maselli Aff. ¶ 2, 25. [Buyer's]
affidavits do not discuss the subjective intent of the parties to be
bound by language in those contracts, and [seller],
therefore, argues that we should affirm summary judgment to
the extent damages can be traced to those order forms. It is
unclear from the record, however, whether all of these contracts
contained the terms that appeared in the October 1990
contract.[22] Moreover, because article 8 requires a court to
consider any "practices which the parties have established
between themselves, usages and any subsequent conduct of the
parties" in interpreting contracts, CISG, art. 8(3), whether the
parties intended to adhere to the ten day limit for complaints, as
stated on the reverse of the initial contract, will have an impact
on whether [buyer] was bound to adhere to the limit on
subsequent deliveries. Since material issues of fact remain
regarding the interpretation of the remaining contracts between
[buyer] and [seller], we cannot affirm any portion of the
district court's summary judgment in [seller]'s favor.
[Buyer] asks us to reverse the district court's grant of
summary judgment in favor of [seller]. The district court's
decision rests on pre-printed contractual terms and conditions
incorporated on the reverse of a standard order form that [buyer's]
president signed on the company's behalf. Nevertheless, we
conclude that the CISG, which governs international contracts
for the sale of goods, precludes summary judgment in this case
because [buyer] has raised an issue of material fact concerning the
parties' subjective intent to be bound by the terms on the
reverse of the pre-printed contract. The CISG also precludes the
application of the parol evidence rule, which would otherwise bar
the consideration of evidence concerning a prior or
contemporaneously negotiated oral agreement. Accordingly, we
REVERSE the district court's grant of summary judgment and
International Sale of Goods, opened for signature April 11, 1980,
S. Treaty Doc. No. 9, 98th Cong., 1st Sess. 22 (1983), 19 I.L.M.
671, reprinted at, 15 U.S.C. app. 52 (1997).
2. Since this case is before us on summary judgment, we
consider the facts in the light most favorable to [buyer], the non-moving party, and grant [buyer] the benefit of every factual inference. See Welch v. Celotex Corp., 951 F.2d 1235, 1237 (11th Cir. 1992).
3. [Seller] provided the translation of the contract. [Buyer]
has never contested its accuracy.
4. Article 50 of the CISG permits a buyer to reduce payment
for nonconforming goods in proportion to the nonconformity under
certain conditions. See CISG, art. 50.
5. The United States Senate ratified the CISG in 1986, and the
United States deposited its instrument of ratification at the
United Nations Headquarters in New York on December 11, 1986. See
Preface to Convention, reprinted at 15 U.S.C. app. 52 (1997). The
Convention entered into force between the United States and the
other States Parties, including Italy, on January 1, 1988. See
id.; Filanto S.p.A. v. Chilewich Int'l Corp., 789 F. Supp. 1229,
1237 (S.D.N.Y. 1992).
"(1) This Convention applies to contracts of sale of goods
(a) When the States are Contracting States . . . "
CISG, art. 1.
"(1) For the purposes of this Convention statements made
by and other conduct of a party are to be interpreted
according to his intent where the other party knew or
could not have been unaware what that intent was.
"(2) If the preceding paragraph is not applicable,
statements made by and conduct of a party are to be
interpreted according to the understanding a reasonable
person of the same kind as the other party would have had
"(3) In determining the intent of a party or the
understanding a reasonable person would have had, due
consideration is to be given to all relevant
circumstances of the case including the negotiations, any
practices which the parties have established between
themselves, usages and any subsequent conduct of the
parties." CISG, art. 8.
8. In the United States, the legislatures, courts, and the
legal academy have voiced a preference for relying on objective
manifestations of the parties' intentions. For example, Article
Two of the Uniform Commercial Code, which most states have enacted
in some form or another to govern contracts for the sale of goods,
is replete with references to standards of commercial
reasonableness. See e.g., U.C.C. § 2-206 (referring to reasonable
means of accepting an offer); see also Lucy v. Zehmer, 196 Va. 493,
503, 84 S.E.2d 516, 522 (1954) ("Whether the writing signed . . .
was the result of a serious offer . . . and a serious acceptance .
. . , or was a serious offer . . . and an acceptance in secret jest
. . . , in either event it constituted a binding contract of sale
between the parties."). Justice Holmes expressed the philosophy
behind this focus on the objective in forceful terms: "The law has
nothing to do with the actual state of the parties' minds. In
contract, as elsewhere, it must go by externals, and judge parties
by their conduct." Oliver W. Holmes, The Common Law 242 (Howe ed.
1963) quoted in John O. Honnold, Uniform Law for International
Sales under the 1980 United Nations Convention § 107 at 164 (2d ed.
1991) (hereinafter Honnold, Uniform Law).
9. [Buyer] makes much of the fact that the written order form is
entirely in Italian and that Monzon, who signed the contract on
[buyer's] behalf directly below this provision incorporating the terms
on the reverse of the form, neither spoke nor read Italian. This
fact is of no assistance to [buyer's] position. We find it nothing
short of astounding that an individual, purportedly experienced in
commercial matters, would sign a contract in a foreign language and
expect not to be bound simply because he could not comprehend its
terms. We find nothing in the CISG that might counsel this type of
reckless behavior and nothing that signals any retreat from the
proposition that parties who sign contracts will be bound by them
regardless of whether they have read them or understood them. See
e.g., Samson Plastic Conduit and Pipe Corp. v. Battenfeld
Extrusionstechnik GMBH, 718 F. Supp. 886, 890 (M.D. Ala. 1989) ("A
good and recurring illustration of the problem . . . involves a
person who is . . . unfamiliar with the language in which a
contract is written and who has signed a document which was not
read to him. There is all but unanimous agreement that he is bound. . . . ")
10. The magistrate judge's report correctly notes that [buyer] has
not sought an interpretation of those terms, but rather to exclude
them altogether. We agree that such an approach "would render
terms of written contracts virtually meaningless and severely
diminish the reliability of commercial contracts." R2-102 at 5-6.
11. Without this crucial acknowledgment, we would interpret the
contract and the parties' actions according to article 8(2), which
directs courts to rely on objective evidence of the parties'
intent. On the facts of this case it seems readily apparent that
[buyer's] affidavits provide no evidence that Monzon's actions would
have made his alleged subjective intent not to be bound by the
terms of the contract known to "the understanding that a reasonable
person . . . would have had in the same circumstances." CISG, art
12. The Uniform Commercial Code includes a version of the parol
evidence rule applicable to contracts for the sale of goods in most
"Terms with respect to which the confirmatory memoranda of
the parties agree or which are otherwise set forth in a
writing intended by the parties as a final expression of
their agreement with respect to such terms as are
included therein may not be contradicted by evidence of
any prior agreement or of a contemporaneous oral
agreement but may be explained or supplemented
"(a) by course of dealing or usage of trade . . . or
by course of performance . . . ; and "(b) by evidence of consistent additional terms
unless the court finds the writing to have been
intended also as a complete and exclusive statement
of the terms of the agreement." U.C.C. § 2-202.
13. An example demonstrates this point. The CISG provides that
a contract for the sale of goods need not be in writing and that
the parties may prove the contract "by any means, including
witnesses." CISG, art. 11. Nevertheless, a party seeking to prove
a contract in such a manner in federal court could not do so in a
way that violated in the rule against hearsay. See Fed. R. Evid.
802 (barring hearsay evidence). A federal district court applies
the Federal Rules of Evidence because these rules are considered
procedural, regardless of the source of the law that governs the
substantive decision. Cf. Farnsworth on Contracts § 7.2 at 196 &
n. 16 (citing cases).
14. Moreover, the parties have not cited us to any persuasive
authority from the courts of other States Party to the CISG. Our
own research uncovered a promising source for such decisions at
<http://www.cisg.law.pace.edu>, but produced no cases that address
the issue of parol evidence.
15. The Beijing Metals opinion does not state the place of the
defendant's incorporation, but the defendant must have been a
United States corporation because the court noted that the case was
a "diversity action." Beijing Metals, 993 F.2d at 1183 n.9. Cf. 28 U.S.C. § 1332 (providing no statutory grant for suits between
aliens unless a citizen of a State is present); 15 James W. Moore,
Moore's Federal Practice § 102.77 (3d ed. 1998) (observing that
diversity jurisdiction is not present in suits between two foreign
16. The Fifth Circuit unwittingly may have solved the problem
in the very next footnote, where it observed that the agreement
between the parties, which attempted to settle a dispute regarding
an earlier sales contract, was not itself a contract for the sale
of goods and therefore fell outside the Uniform Commercial Code. Beijing Metals, 993 F.2d at 1183 n.10. See CISG, art. 1(1) ("This Convention applies to contracts of sale of goods . . . .") (emphasis added).
17. See also Louis F. Del Duca, et al., Sales Under the Uniform Commercial Code and the Convention on International Sale of Goods, 173-74 (1993); Henry D. Gabriel, A Primer on the United Nations Convention on the International Sale of Goods: From the Perspective of the Uniform Commercial Code, 7 Ind. Int'l & Comp. L. Rev. 279, 281 (1997) ("Subjective intent is given primary consideration . . . . [Article 8] allows open-ended reliance on parol evidence . . . ."); Herbert Berstein & Joseph Lookofsky, Understanding the CISG in Europe 29 (1997) ("[T]he CISG has dispensed with the parol evidence rule which might otherwise operate to exclude extrinsic evidence under the law of certain Common Law countries."); Harry M. Fletchner, Recent Developments: CISG, 14 J.L. & Com. 153, 157 (1995) (criticizing the Beijing Metals opinion and noting that "[c]ommentators generally agree that article 8(3) rejects the approach to the parol evidence questions taken by U.S. domestic law.") (collecting authority); John E. Murray, Jr., An Essay on the Formation of Contracts and Related Matters Under the United Nations Convention on Contracts for the International Sale of Goods, 8 J.L. & Com. 11, 12 (1988) ("We are struck by a new world where there is . . . no parol evidence rule, among other differences."); Peter Winship, Domesticating International Commercial Law: Revising U.C.C. Article 2 in Light of the United Nations Sales Convention, 37 Loy. L. Rev. 43, 57 (1991). 18. Article 7 of the CISG provides in pertinent part:
"(1) In the interpretation of this Convention, regard is
to be had to its international character and to the need
to promote uniformity in its application and the
observance of good faith in international trade.
"(2) Questions concerning matters governed by this
Convention which are not expressly settled in it are to
be settled in conformity with the general principles on
which it is based . . ." CISG, art. 7.
19. See Ronald A. Brand & Harry M. Fletchner, Arbitration and Contract Formation in International Trade: First Interpretations of the U.N. Sales Convention, 12 J.L. & Com. 239, 252 (1993) (arguing that article 8(3) of the CISG will not permit the consideration of parol evidence when the parties have expressly excluded oral modifications of the contract pursuant to article 29); see also I
Albert Kritzer, Guide to Practical Applications of the United
125 (1989) (counseling the use of a merger clause to compensate for
the absence of a parol evidence rule in the CISG).
20. [Seller] attempts to explain and undermine the affidavit of its representatives during the transaction, by calling
Silingardi a "disgruntled" former employee. Appellee's Br. at 11,
39. Silingardi's alleged feelings towards his former employer may
indeed be relevant to undermine the credibility of his assertions,
but that is a matter for the finder of fact, not for this court on
21. Article 50, which permits a buyer to reduce payment to a
seller who delivers nonconforming goods, and article 39, which
deprives the buyer of that right if the buyer fails to give the
seller notice specifying the defect in the goods delivered within
a reasonable time, will be of primary importance. Although we may
affirm a district court's grant of summary judgment if it is
correct for any reason, even if not relied upon below, see United
States v. $121,100.00 in United States Currency, 999 F.2d 1503,
1507 (11th Cir. 1993), and the parties have touched upon these
articles in their briefs, they have not provided us with sufficient
information to resolve their dispute under the CISG. [Buyer's]
affidavits indicate that [buyer] may have complained about the quality
of the tile [seller] delivered, but they have provided no
authority regarding what constitutes a reasonable time for such a
complaint in this context. Accordingly, we decline to affirm the
district court's grant of summary judgment on this basis.
22. The Maselli affidavit claims that at the February 4, 1991 contract contained the terms in question, see Maselli Aff. ¶¶ 5-6, but [buyer] argues that at least some of the forms were never translated into English and, therefore, the record does not reveal whether the terms appear in all the contracts. We leave the resolution of these matters to the district court on remand. Go to Case Table of Contents Case commentaries
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