Chateau Des Charmes Wines Ltd. v. Sabate USA Inc., Sabate S.A.
2003 Daily Journal DAR 4894, 2003 U.S. App. LEXIS 8478, 328 F. 3d 528 (2003)
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Rule of Law:
Under the U.N. Convention on Contracts for the International Sale of Goods (C.I.S.G.), a forum selection clause included for the first time in an invoice after an oral contract has been formed constitutes a material alteration of the contract. This new term does not become part of the agreement unless the other party expressly assents to it.
Facts:
- Sabaté France, a French company, manufactures wine corks and sells them through its California subsidiary, Sabaté USA.
- In February 2000, Chateau des Charmes, a Canadian winery, agreed by telephone with Sabaté USA to purchase a specific number of corks at a specific price, with agreed-upon payment and shipping terms.
- No other terms were discussed during the telephone call, and the parties had no prior history of dealings.
- Later that year, Chateau des Charmes placed a second, similar telephone order, bringing the total order to 1.2 million corks.
- Sabaté France delivered the corks in eleven separate shipments, and for each shipment, it sent an invoice.
- Each invoice contained a forum selection clause in French stating that any dispute would be under the sole jurisdiction of a court in Perpignan, France.
- Chateau des Charmes accepted and paid for each shipment of corks.
- In 2001, Chateau des Charmes discovered that wine bottled with Sabaté's corks was tainted by cork flavors.
Procedural Posture:
- Chateau des Charmes filed suit against Sabaté France and Sabaté USA in the United States District Court for the Northern District of California.
- Sabaté France and Sabaté USA filed a motion to dismiss the action, arguing that the forum selection clauses in their invoices were contractually binding.
- The district court granted the defendants' motion, holding that the forum selection clauses were valid and enforceable, and dismissed the case.
- Chateau des Charmes (appellant) appealed the district court's dismissal to the United States Court of Appeals for the Ninth Circuit.
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Issue:
Does a forum selection clause, unilaterally introduced in invoices sent after an oral contract for the sale of goods is formed, become part of that contract under the U.N. Convention on Contracts for the International Sale of Goods (C.I.S.G.)?
Opinions:
Majority - Per Curiam
No. A forum selection clause unilaterally introduced in invoices after a contract has already been formed does not become part of the agreement under the C.I.S.G. The court determined that the C.I.S.G. governs this international sale of goods between parties in Canada, France, and the United States. Under C.I.S.G. Articles 14 and 23, a complete and binding oral contract was formed during the telephone calls when the parties agreed on the goods, quantity, and price. The forum selection clause in the subsequent invoices was an attempt to modify the contract. Pursuant to C.I.S.G. Article 19(3), a term relating to the 'settlement of disputes' is a material alteration. A contract modification requires agreement of the parties under Article 29, and Chateau des Charmes never affirmatively assented to this new term. Its silence and performance of the original oral contract (accepting and paying for the corks) did not constitute agreement to the material alteration.
Analysis:
This case is significant for its clear application of the C.I.S.G. to determine contract formation issues, particularly regarding the 'battle of the forms' in an international context. It establishes that under the C.I.S.G.'s framework, a party cannot unilaterally add material terms, such as a forum selection clause, to an already concluded agreement through subsequent documents like invoices. This decision provides critical guidance for international commercial transactions, emphasizing that material modifications require explicit agreement and that a party's silence or inaction does not constitute acceptance. The ruling highlights the C.I.S.G.'s departure from certain domestic law principles, like some interpretations of the U.C.C., reinforcing the need to analyze international contracts under their own distinct legal regime.
