The random issues we may face and responses to them
Robert A. Garda
Angie hit us with many random issues teams may raise. I’ve looked into them and identified the relevant arguments/CISG articles below. I think Jessica is the most likely person to have to respond to these off the wall arguments, but want everyone (mostly Evan) to be aware of them:
1) The CISG does not apply because this is not a sale of goods
-CISG Article 3(2) says that if the “preponderant part” of a mixed service/goods K is goods then the CISG applies. The contract (p9) says the control system (the “good”) is $650,000 and installation/configuration (the “service”) is $49,450. Obviously the preponderant part is the good not the service. In addition, the claimant has admitted that the CISG applies (paragraph 20 of the Application for Arbitration (p7)) and the respondent has implicitly consented to the applicability of the CISG by arguing that Article 79 governs the impediment defense (paragraph 7 of the Statement of Defense (pp37-38)). This is a slam dunk.
2) The contract was not in fact breached by late delivery. Because there was a 10 week window built in for testing, and respondent delivered only 8 weeks late, the control system could have been completed within the 10 week window with a herculean effort had it been made known to respondent that the boat could still be completed on time even though delivery was made.
Key dates:
-K due date: 11/12
-delivery made 1/14
-installation complete 3/11
Arguments:
-The express terms of the K call for installation and configuration by 11/12. There is no mention of a 10 week testing period in the K. Installation was not completed until 3/11 which is obviously a breach of the express due date.
-delivery was made on 1/14, but nothing in the record indicates that installation and configuration could be completed within 2 weeks (thus falling in the 10 week testing window) even if respondent was made aware that timely completion could still occur. Considering it took respondent an additional 8 weeks to complete installation and configuration after delivery, it is stretching the record beyond reason to assume it could have been done in only 2 weeks.
-the argument misses the point. Claimant needed full completion so it could test all systems for 10 weeks. Even if respondent could have undergone incredible effort and fully installed the system by the end of January, claimant would still need to test the control system – one of the most important systems in the boat – for 10 weeks. Put another way, the 10 week testing period was not an additional window for delivery and installation, the week testing period was for the benefit of claimant to ensure operability before the yacht went to sea.
-Can EVAN use this 10 week testing period to argue that damages were not foreseeable from late delivery? If it is standard to test yacht systems before sending the boat to sea – that seems reasonable - then respondent would know that K date is not hard and fast but has significant testing cushion built in before the yacht will be used. Respondent knows there is a cushion, but not how long the cushion is, so it is not foreseeable that late delivery would lead claimant to lease another yacht. Consider this Evan.
3) The Contract was modified by claimant’s silence in the face of the letter stating delivery would be late and by making payment after the late delivery
-Blake is looking into this on the law side, but here is how the arg will go. A modification can be made by “agreement of the parties” (Art. 29(1)) meaning there must be an offer to modify and an acceptance of that offer. Neither exists here:
(1) the letter stating delivery would be late (p10) was not an offer to modify the K:
-it asked for forgiveness not modification. It never asks that its obligation be modified, it merely states it will deliver late and calls the matter “unfortunate.”
-the letter was not “sufficiently definite” to be considered an offer (CISG article 14(1)) because it never set a date certain for delivery. It only stated that installation “cannot be expected before the middle of January 2011.” If this is a valid offer of modification then the modified contract means that the control system could be delivered 10 years from now and still fall within the offer – that’s utterly ridiculous and shows no modification was requested.
(2) even if an offer was made, it was never accepted.
-silence is not acceptance. Art 18(1)
-The act of paying the full K price even though delivery was made does not show acceptance bc:
-payment was made from a letter of credit (p9). It was entirely out of claimaint’s control that payment was made even though delivery was late. Claimant must have created a letter of credit with Mediteraneo National Bank shortly after execution of the contract (that’s how it works) at which point it no longer controlled whether payment was made. The fact that Technical Accurate Consultants certified to the bank that the K was completed cannot in any be used to show claimant’s assent to any request to modify the K.
-conduct alone can establish assent only if the offer states conduct means assent (not the case here) or “as a result of practices which the parties have established between themselves or of usage . . .” Art 18(3). These parties have never dealt with each other and have no established practice of accepting offers through mere conduct. (art 18(1) says conduct can indicate assent, but art 18(3) tells us precisely when conduct can indicate assent and we do not have those circumstances here)
4) Someone acted in bad faith when not settling the matter. I don’t even know the factual basis for this argument, or the legal hook. I think the argument is that claimant said it would split damages and respondent in bad faith c-offered with 20% discount on future servicing of the control system (pp12-13). I don’t get it.
Professor Robert Garda
Loyola University New Orleans College of Law
7214 St. Charles Ave., Campus Box 901
New Orleans, LA 70118
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