Case: Telecommunications Products Case , Cour de Cassation (France), 2 April 2008
Outcome: cited
The oral character of the contract(s) apart, two further factors have complicated the resolution of this matter. The first is the real uncertainty as to the legal context in which the question of characterisation of the parties' relationship is to be addressed. If the matter is properly to be regarded as one of sale and resale, the vendor-purchaser relationship between TVO and Farmlink would be subject to the Sale of Goods Act 1895 (SA) and the resale relationship between Farmlink and Freshmart, but not Mak, probably to the Sale of Goods (Vienna Convention) Act 1986 (SA). This latter matter, though, has not been addressed by the parties and has not been the subject of evidence to the extent that it might raise questions as to the law of Singapore and Hong Kong respectively: see United Nations Convention on Contracts for the International Sale of Goods , Art 1 ("CISG"). Singapore has ratified the CISG and it is in force in that country. Though the CISG was in force in China, but not in Hong Kong, at the time of the "hand over" to China, China has apparently not taken the necessary steps to have the CISG apply to Hong Kong. The Cour de Cassation in France has, in consequence, recently concluded that the CISG was not applicable to Hong Kong: see Telecommunications Products Case , Cour de Cassation, 2 April 2008; and see generally Schroeter UG, "The Status of Hong Kong and Macao under the United Nations Convention on Contracts for the International Sale of Goods" (2004) 16 Pace International Law Review 307. If, on the other hand, the relationship of TVO and Farmlink is that of principal and agent, TVO's relationship with Freshmart, but not with Mak, was subject probably to the provisions of the Sale of Goods (Vienna Convention) Act . I mention this for the following reason. The CISG, but not the domestic Sale of Goods Act , has a developed regime for a buyer (i) to notify a seller of lack of conformity with the quality required by the contract: see CISG Arts 35, 39 and 44 and see Schlechtriem and Schwenzer (eds), Commentary on the UN Convention on International Sale of Goods at 411 ff and 460 ff (2 nd English ed, 2005); and (ii) to effect a price reduction for non-conformity: CISG Art 50 and Schlechtriem and Schwenger at 596 ff. I note this because both Farmlink and Mak effected price reductions. The evidence on whether they were negotiated or not is controversial. 6 The second complicating factor relates to those price reductions. It is clear from the evidence that, at presently relevant times, quality problems of varying severity were prevalent in both the domestic and overseas sales of cherries generally and that, in respect of overseas sales, exporters routinely passed on price reductions to Australian suppliers in response to this phenomenon. The evidence both of TVO's dealings with other exporters, and of its dealings with Farmlink since the 2000/2001 cherry season, illustrate this practice. The significance, if any, of it in the characterisation of the parties' relationship and in the terms of it has been vigorously debated before me. 7 I have in the event concluded that Farmlink was not TVO's agent. It was a purchaser for resale. The individual purchases in respect of each consignment to Singapore and Hong Kong were for agreed prices. Because quality defects were a recurrent concern and because Freshmart and Mak effected price reductions (whether or not, at least in Freshmart's case, in reliance upon Art 50 of the CISG), the individual sales by TVO took place in a context in which reductions in the "purchase price" payable by Freshmart and Mak were to be anticipated in some degree for quality defects. I am not satisfied, though, that in passing on price reductions Farmlink had any contractual right so to do. Formally it may have had rights against TVO under the Sale of Goods Act (eg s 14 and s 52) for which it may have been entitled to claim damages for breach of warranty in respect of particular individual contracts or to set off such a breach in diminution or extinction of the price.