Treibacher of Austria sells hard metal powders. TDY, a subsidiary of Allegheny, ordered certain quantities of tantalum

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Treibacher of Austria sells hard metal powders. TDY, a subsidiary of Allegheny, ordered certain quantities of tantalum carbide (TaC) for delivery "on consignment" to be used at a plant in Alabama to make tungsten-graded carbide powders.
After TDY received the first of several shipments due, it cancelled the order, as it found a cheaper source of TaC. Treibacher had to sell the powder at a lower price; it sued TDY for damages. At trial, TDY argued that "on consignment" meant the common usage of the term-no sale occurred unless and until TDY actually used the TaC.
Treibacher argued that over seven years of previous dealings, the parties understood the term to mean that TDY had an obligation to pay for all TaC ordered, but Treibacher delayed billing until TDY actually used the powder. The trial court held that under the CISG, evidence of the parties' interpretation of the term in their dealings trumped evidence of the term's customary use. Hence, a sale had occurred, and TDY was liable for the $5 million plus loss suffered by Treibacher.
TDY appealed.

1. The appeals court affirmed that the buyer was liable for damages due to breach as their previous dealings established the terms of their relationship. Is this CISG case more like the common law of contracts or the UCC?
2. If TaC could be found on the market so much cheaper than Treibacher was selling it to TDY, why does TDY not have the right to demand the lower price?

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The Legal Environment of Business

ISBN: 978-0538473996

11th Edition

Authors: Roger E Meiners, Al H. Ringleb, Frances L. Edwards

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