Question

13. Treibacher, an Austrian vendor of hard-metal powders, agreed to two contracts with the defendant TDY to sell specified quantities of tantalum carbide (TaC), a hard-metal powder, to TDY Industries, Inc., for delivery to consignment. TDY planned to use the TaC in manufacturing tungsten-graded carbide powders at its plant in Gurney, Alabama. After it had received some of the amount of TaC specified in the November 2000 contract, TDY refused to take delivery of the balance of the TaC specified in both contracts and, in a letter to Treibacher dated August 23, 2001, denied that it had a binding obligation to take delivery of or pay for any TaC that it did not want to use. Unbeknownst to Treibacher, TDY had purchased the TaC it needed from another vendor at lower prices than those specified in its contracts with Treibacher. Treibacher eventually sold the quantities of TaC that TDY had refused to take delivery of, but at lower prices than those specified in its contracts with TDY. Treibacher then filed suit against TDY, seeking to recover the balance of the amount Treibacher would have received if TDY had paid for all of the TaC specified in the November and December 2000 contracts. What is the appropriate remedy here for Treibacher if TDY is in breach? Does this case fall under the CISG or the UCC? Is there any significance to applying the CISG rather than the UCC? [Treibacher Industrie, A.G., Plaintiff-Appellee, v. Allegheny Technologies, Inc., a Pennsylvania Corporation et al., Defendants, TDY Industries, Inc., Defendant-Appellant,464 F.3d 1235 (11th Cir. 2006); 2006 U.S. App. LEXIS 23252; 19 Fla. L. Weekly Fed. C 1046 (2006).]

Answer 1

Appropriate remedy for Treibacher if TDY is in breach would be awarding compensatory damages which would include the actual damages sustained by Treibacher by selling the quantities of TaC refused by TDY at a lower price to another vendor. It may include the difference in price paid by the other vendor and the price agreed by TDY under the contract plus its interest.

This case falls under CISG because Treibacher is an Austrian vendor and TDY’s operation is located in Alabama. The contract involves international sales of a hard-metal powder TaC. International sales contract between firms located in different countries are governed by the 1980 United Nations Convention on Contracts for the International Sale of Goods or CISG. UCC is applied to the domestic sales contracts.

There is significance in applying CISG rather than UCC because in CISG , if the additional terms are related to payment, quality, quantity, price, time and place of delivery, extent of one party’s liability to the other or settlement of disputes, CISG considers the additional term as a material alteration. Hence CISG requires that the terms of the acceptances mirror those of the offer. But UCC does not require the acceptance to be mirror image of the offer and allows to add the terms later or interpret intend of the parties based on what is reasonable under the circumstances. When two parties from different countries contract, it may be difficult to interpret the terms properly using UCC. Use of CISG helps to avoid the problems that may arise from the use of language in the contract by interpreting the terms based on CISG. Hence application of CISG would help to provide justice to Treibacher without allowing TDY to misinterpret the terms of the contract.