Law School Case Brief
Roser Techs., Inc. v. Carl Schreiber GmbH - No. 11cv302 ERIE, 2013 U.S. Dist. LEXIS 129242 (W.D. Pa. Sep. 10, 2013)
United Nations Convention on Contracts for the International Sale of Goods art. 71, Apr. 11, 1980, S. Treaty Doc. No. 98-9 (1983), U.N. Doc. No. A/CONF. 97/19 (1981), 19 I.L.M. 671 (1980) (reprinted at 15 U.S.C.S. app.), provides that a party may suspend the performance of his obligations if, after the conclusion of the contract, it becomes apparent that the other party will not perform a substantial part of his obligations as a result of his conduct in preparing to perform or in performing the contract.
On August 11, 2011, defendant Carl Schreiber GmbH d/b/a CSN Metals ("CSN") provided two price quotes for copper-molding plates. The quotations referred to CSN’s standard quotations of sale to be found under CSN’s website. Furthermore, the quotations stated that plaintiff Roser Technologies, Inc. (“RTI”) should provide advanced payment or equivalent guarantees if CSN could not obtain sufficient coverage by its credit insurance company for RTI’s orders. Consequently, RTI sent CSN purchase orders. Thereafter, on October 4, 2011, CSN informed RTI that its credit insurance company cut the credit line complete, and hence, RTI should make an advanced payment or secure a letter of credit, or alternatively, for CSN to change the delivery to partial shipments. RTI sent CSN a letter advising the latter that it would procure the requested copper from an alternate supplier because of CSN’s refusal to perform. CSN then sent a letter informing RTI that the cancellation of the order was not accepted by CSN. Subsequently, RTI filed a complaint alleging that CSN breached its supply contract when the latter insisted that RTI expedite payment or secure a letter of credit. CSN filed a Second Amended Counterclaim alleging that RTI breached the contract by repudiation, and therefore was in material breach.
Did RTI breach the contract by repudiation?
The court first noted that the applicable law was the United Nations Convention for the International Sale of Goods (“CISG”). According to Article 71 of the CISG, a party may suspend the performance of his obligations if, after the conclusion of the contract, it became apparent that the other party will not perform a substantial part of his obligations as a result of his conduct in preparing to perform or in performing the contract. The court noted that CSN included a term relating to payment if CSN’s insurer refused to cover the transaction, and it properly invoked that term under the circumstances. The court found that RTI breached its contractual obligations by repudiating the contract when it sent a letter to CSN, stating that it would procure the requested copper from an alternate supplier. Furthermore, RTI breached its contractual obligation when it sent a letter stating that it would not follow through with its obligations relating to advance payment or other forms of guarantee.
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