Transcript Treibacher Industrie, A.G. v. Allegheny Technologies, Inc.

International Business Law, 2010-2
Case Study
Treibacher Industrie, A.G. v.
Allegheny Technologies, Inc.
Da-yea Kwon 0969007
Hye-jung Min 0969020
Herim Ahn 0969046
Youmee Lee 0969058
Facts
Issue
I3: R&A
I2: R&A
I1: R&A
Conclusion
Background & Facts
November and December of 2000 contract
Treibacher
Industrie
(Treibacher)
Tantalum carbid (TaC)
Price : at prices specified in
the contract
Quantity : specified
quantities in the contract
Time : at time specified in the
contract
REFUSED
Consignment(PAY)
TDY
Industries Inc
(TDY)
Facts
Issue
I3: R&A
I2: R&A
I1: R&A
Conclusion
Issue
1.
Whether TDY has obligation to take delivery of or pay for
TDY’s Obligation of payment
any TaC that it did not wish to use
2.
Whether the term “consignment” should be construed
“Consignment” = customary usage
according to it s customary usage in the industry.
3.
Whether CISG article 9 (2) should be read to mean that,
of CISG
article agree
9(2) to meaning of
unless parties to Meaning
a contract
expressly
no express agreement on a term -> Customary trade usage
a term,
the customary trade usage applies
Facts
Issue
I3: R&A
I2: R&A
Issue #3
Issue
I1: R&A
Rule
Conclusion
Analysis
Whether CISG article 9 (2) should be read to mean that,
unless parties to a contract expressly agree to meaning
of a term, the customary trade usage applies
CISG
article 9(2)
Meaning of term
Customary trade
usage
AGREE
Article
Article 9(2)
9(2) : Parties are considered, unless otherwise agreed, to have impliedly
made applicable to their contract … a usage of which the parties knew or ought
to have known and which in international trade is widely known to … parties to
contracts of the type involved in the particular trade concerned.
Facts
Issue
I3: R&A
I2: R&A
Rule #3
Issue
I1: R&A
Rule
Conclusion
Analysis
A statue should be construed so that effect is given
to all its provisions, so that no part of it will be
inoperative or superfluous, void or insignificant
Inoperative
Superfluous
Void
Insignificant
Effect
=>provision
Facts
Issue
I3: R&A
Analysis #3
TDY’s Argument
CISG article 9 (2) should be
read to mean that, unless
parties to a contract
expressly agree to meaning
of a term, the customary
trade usage applies.
• Expressly
unless expressly Customary
agreed,
customary
usage applies
Agreed
Usage
• customary usage takes
precedence over Customary
the
Understanding
parties’
Of termunderstanding
Usageof
the term
I2: R&A
Issue
I1: R&A
Rule
Conclusion
Analysis
Counter - Argument
TDY’s argument renders
article 8(3) superfluous and
the latter portion of article
9(1) a nullity
• 8(3)
8(3) – “any practices which
the parties have
established between
themselves”
• 9(1)
9(1) - “bound by any
practices which they
have established between
themselves”
Facts
Issue
I3: R&A
Issue #2
I2: R&A
Issue
I1: R&A
Rule
Conclusion
Analysis
• whether the term “consignment” should be
construed according to its customary usage in
the industry.
Consignment
Customary Usage
Facts
Issue
I3: R&A
I2: R&A
Rule #2
Issue
I1: R&A
Conclusion
Rule
Analysis
Article 9 (1) “ parties are bound by any usage to
which they have agreed and by any practices
which they have established between themselves”
USAGE
PRACTICE
BOUND
Facts
Issue
I3: R&A
I2: R&A
Analysis #2
Issue
TDY’s Argument
• Unless otherwise agreed,
a contract term should be
interpreted as its
customer
Contract
Customary
usage
term
Usage
• And the customary usage
of the term “consignment”
in the metal field, as
Actual use
of TaC
experts say, means
that
no sale occurred unless
“Consignment”
and until TDY actually used
Sale occurs
the TaC
I1: R&A
Rule
Conclusion
Analysis
Counter - Argument
According to article 9 (1)
if there is an established practice
between the parties involved in
Customary
theEstablished
contract it takes precedence
Usage
overPractice
customer usage.
•
•
•
And there was an established practice
between TDY and Treibacher.
For 7 years, TDY has been executing
contracts which agreed to buy and sell
all TaC from Treibacher on consignment.
Also, in 1999, an empirical evidence
shows that TDY agreed that it was
contractually obligated to purchase all
materials delivered from Treibacher
Facts
Issue
I3: R&A
I2: R&A
Issue #1
Issue
I1: R&A
Rule
Conclusion
Analysis
• Whether TDY has obligation to take delivery of
or pay for any TaC that it did not wish to use
TDY Obligation
TaC
Delivery
Payment
Facts
Issue
I3: R&A
I2: R&A
Rule #1
Issue
I1: R&A
Rule
Conclusion
Analysis
• One of the general principles of CISG –
parties have the obligation to mitigate
damages resulting from a breach
Parties Obligation
Mitigate damages
Facts
Issue
I3: R&A
Analysis #1
TDY’s Argument
• Applying the customary
usage to interpret the term
“consignment,” the obligation
of TDY to purchase and
payment has not occurred,
and thus TDY did not breach.
• Therefore, TDY does not have
the obligation to compensate
for any damage that
Treibacher insists.
I2: R&A
Issue
I1: R&A
Rule
Conclusion
Analysis
Counter - Argument
• since the use of the term
"consignment" means that
TDY has the responsibility
to buy what has been
delivered,
which TDY did not put into
action,
TDY has the obligation to
mitigate the damages
caused by refusing to
purchase TaC delivered
from Treibacher
Facts
Issue
I3: R&A
I2: R&A
I1: R&A
Conclusion
Conclusion
• Issue
Issue33. whether CISG article 9 (2) should be read to mean that, unless
parties to a contract expressly agree to meaning of a term, the customary
trade usage applies
No, it should be read to mean that customary trade usage applies
unless there is an established practice
• Issue
Issue22. whether the term “consignment” should be construed according to
its customary usage in the industry.
No, the term should be interpreted through subjective approach
(i.e. by any practices which they have established between themselves)
• Issue
Issue11. whether TDY has obligation to take delivery of or pay for any TaC
that it did not wish to use
Yes,
TDY has obligation to purchase all of the TaC specified in the
contract and that Treibacher took reasonable measure to mitigate its
losses after TDY breaches