Opinion ID: 765616
Heading Depth: 3
Heading Rank: 1

Heading: The Terms of The Consignment Agreement

Text: 34 The Windsor Defendants first argue that sales made pursuant to the Consignment Agreement were, in fact, true sales. Specifically, the Windsor Defendants contend that under the terms of the Consignment Agreement they were obligated to pay HED-France for a specified amount of product regardless of whether the product was resold to the Windsor Defendants' customers. As a result, the argument continues, the Defendants made no material misrepresentations when they led Cofacredit to believe that the invoices represented sales with firm payment terms. The Windsor Defendants contend that the district court's finding to the contrary is unsupported by the evidence. 35 The Windsor Defendants' argument is based solely on Section 5(a) of the Consignment Agreement, which provides: 36 During the term of this Agreement,[HED-US] shall: Purchase from [HED-France] that quantity of Products as follows: 1988 - $400,000, 1989 - $1,000,000, 1990 - $1,500,000, 1991 - $1,800,000, 1992 - $2,000,000. In any event this will be cumulative so that the total amount at the end of 1992 is equal to the sum of $6,700,000 regardless of the yearly individual sums. 37 Read alone, this section appears to obligate HED-US to purchase, and presumably to pay for, $6.7 million of HED-France merchandise. However, as correctly noted in the district court's findings of fact, Section 3 of the same Consignment Agreement makes clear that the purchases outlined in Section 5(a) are not true sales, but consignments: Section 3 governs payment for any Products purchased by [HED-US] hereunder, and goes on to explicitly state that there is no obligation on the part of [HED-US] to make any payment until after the sale of the products by [HED-US] has been consummated. Thus, the purchases made mandatory by Section 5 were not purchases at all, but were, instead, consignments. This conclusion is reinforced, and the Windsor Defendants' argument foreclosed, by the fact that Windsor ultimately refused to pay Cofacredit, citing the contingent nature of the sales evidenced by the invoices. Any representation that the invoices evidenced firm sales was, therefore, a misrepresentation. 38