The Plight (and Promise) of the CISG in Canada

Two recent Canadian cases highlight the plight and promise of the CISG in Canada.

The CISG Scoreboard: Quebec: 1: 0 Saskatchewan

The first is a decision from the Saskatchewan Queen’s Bench in Houweling Nurseries Oxnard, Inc. v. Saskatoon Boiler Mfg. Co. Ltd., 2011 SKQB 112 (CanLII). The plaintiff (defendant by counterclaim), Houweling Nurseries, a California based company operates a commercial greenhouse facility near the town of Oxnard, California. It purchased four boilers from the defendant (plaintiff by counterclaim), Saskatoon Boiler, a Saskatchewan company, as part of the necessary equipment for its business. The plaintiff claimed the boilers have not performed as contracted or as represented by the defendant and as a result it has suffered “grievous financial damage” during the time period January 1, 1996 to December 31, 2001. According to the trial judge, R.S. Smith, J.:

 The contracts between the parties provided that the laws of the Province of Saskatchewan would govern any dispute. As a result, the parties bring this litigation in the Queen’s Bench Court of Saskatchewan. Operationally, the plaintiff primarily deals in US dollars but has, for the purpose of this action, converted its claim to Canadian dollars.

While it appears that the parties did not expressly exclude the CISG under Article 6, such that the CISG applied by default, the trial judge resorted to domestic sales law instead of a wealth of CISG jurisprudence and scholarly commentaries:

91)              The plaintiff alleges that the defendant is subject to the implied obligations contained in The Sale of Goods Act, R.S.S. 1978, c. S-1 (“The Sale of Goods Act”). The debate over The Sale of Goods Act was engaged in the pleadings. The defendant’s amended statement of defence and counterclaim sets out:

16. Saskatoon Boiler denies that there were any express or implied terms, warranties or conditions as alleged in paragraph 11 of the Amended Statement of Claim.

17. Saskatoon Boiler denies that The Sale of Goods Act or The International Sale of Goods Act has any application to the sale and purchase of the Boilers.

18. The only warranty provided by Saskatoon Boiler is the one set out in paragraph 4 of the terms and conditions attached to each proposal. That warranty provides as follows:

‘SASKATOON BOILER MFG. CO. LTD., agrees to repair or replace f.o.b. Saskatoon, Saskatchewan any workmanship or materials, which, within one (1) year from date of startup on site, shall prove to have been defective in material or workmanship, provided it is given prompt notification of the discovery of any such defects. SASKATOON BOILER MFG. CO. LTD. will not be responsible for repairs made without its consent nor shall it be held liable for damage or delays arising out of the repair or replacement of any such defective materials. This express warranty is in lieu of any implied warranties.’

92)     I take the defendant’s pleading as asserting that para. 4 of the defendant’s terms and conditions exclude the implied conditions of fitness for purpose and merchantable quality found in The Sale of Goods Act.

93)     I regard the law is well settled that in order to exclude the implied conditions of The Sale of Goods Act, the exclusion clause must expressly do so. (See: Marshall v. Ryan Motors Ltd. (1922), 15 Sask. L.R. 118 (C.A.); Gregorio v. Intrans-Corp. 1994 CanLII 2241 (ON C.A.), (1994), 18 O.R. (3d) 527 (C.A.); and Hunter Engineering Co. v. Syncrude Canada Ltd., 1989 CanLII 129 (S.C.C.), [1989] 1 S.C.R. 426). The wording of paragraph 4 is equivocal. As a result, I find  The Sale of Goods Act, and its implied conditions, is applicable.

The second is a promising decision of the Quebec Court of Appeal in Mazzetta Company, l.l.c. c. Dégust-Mer inc., 2011 QCCA 717 (CanLII)(judgment is in French) which involved an appeal by the defendant/appellant, Mazetti Company LLC, an American company with no office in Quebec. The plaintiff/respondent, Dégust-Mer Inc. operates a processing plant of seafood in the Gaspé.  In 2008, Dégust-Mer sold  frozen lobsters to Mazetti. When Mazetti failed to pay for the frozen lobsters, the Dégust-Mer sued in Quebec. Mazetti then brought a motion challenging the jurisdiction of the Quebec court based upon a declinatory exception. The Quebec Court dismissed the motion. The Quebec Court of Appeal affirmed.

Jusice Vezina for the panel noted that there was a verbal contract between the parties. The only evidence in writing was an invoice cited by  Dégust-Mer indicating a description of goods sold: “Raw Frozen Lobster Tails IQF”, various sizes and quantities, the “Sale price” and “Total sales”.

Vezina J.A. cites Article 8 of the CISG which reads:

Article 8

(1) For the purposes of this Convention statements made by and other conduct of a party are to be interpreted according to his intent where the other party knew or could not have been unaware what that intent was.

(2) If the preceding paragraph is not applicable, statements made by and other conduct of a party are to be interpreted according to the understanding that a reasonable person of the same kind as the other party would have had in the same circumstances.

(3) In determining the intent of a party or the understanding a reasonable person would have had, due consideration is to be given to all relevant circumstances of the case including the negotiations, any practices which the parties have established between themselves, usages and any subsequent conduct of the parties. (emphasis added)

The Quebec appeal court noted that the parties had established a “practice” between themselves by virtue of Mazetti’s previous sales payment having been made in the Gaspé.

Justice Vezina also relies on Article 57 which reads:

Article 57

(1) If the buyer is not bound to pay the price at any other particular place, he must pay it to the seller:

(a) at the seller’s place of business; or

(b) if the payment is to be made against the handing over of the goods or of documents, at the place where the handing over takes place.

(2) The seller must bear any increases in the expenses incidental to payment which is caused by a change in his place of business subsequent to the conclusion of the contract.

The Quebec Court of Appeal concludes:

[24]           Ici, manifestement le prix n’était pas payable sur livraison et aucun lieu pour le paiement n’avait été fixé par les parties, si ce n’est par le comportement de l’acheteur, à la connaissance évidente du vendeur, qui avait établi une habitude, tel qu’exposé ci-dessus.

[25]           Force est de conclure que selon le droit applicable, la CVIM, le paiement devait être fait à l’établissement de l’Intimée, en Gaspésie.

[26]           Par voie de conséquence, l’une des obligations de l’acheteur devait être exécutée au Québec (C.c.Q., art. 3148, 3o ). Ce qui confère compétence aux autorités québécoises.

[27]           Pour ces motifs, je suis d’avis de rejeter l’appel. Sans frais puisque la CVIM n’a pas été invoquée par les parties.

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2 Responses to “The Plight (and Promise) of the CISG in Canada”

  1. Peter Mazzacano Says:

    The Saskatchewan decision is yet another example of the plight of the CISG in Canada! This is, indeed, perplexing. The judge notes that “I regard the law is well settled that in order to exclude the implied conditions of The Sale of Goods Act, the exclusion clause must expressly do so” but then, in the same paragraph, “find[s] [Ontario’s domestic] Sale of Goods Act, and its implied conditions, is applicable”. This exclusion appears to have been based on a warranty clause that made no reference to the choice of law–thus, the CISG should have applied. Will Canadian courts ever get it (the application and interpretation of the CISG) right?! C’est-la-vie (for the CISG in Canada, especially, more recently, in Saskatchewan)

    At least the Quebec decision is more in harmony with international jurisprudence on the CISG. Vive le Québec!

  2. Antonin I. Pribetic Says:

    Thanks for your comment, Peter. Your tireless efforts in teaching the CISG to law students- the next generation, of Canadian lawyers- certainly will make a difference in developing CISG jurisprudence in Canada.

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