It’s Intoxicating Inc., is a Pennsylvania corporation that manufactures and distributes cosmetic products to various retailers. Maritim is a German company that owns and operates hotels throughout Germany. In October 2007, a representative of Maritim contacted It’s Intoxicating, expressing interest in purchasing beauty products for sale in its hotels. It’s Intoxicating sent Maritim a proposed contract entitled “Conditions of Sale” which provided, in part, that the parties’
agreement was to be interpreted in accordance with Pennsylvania state law. Maritim sent It’s Intoxicating a purchase order in January 2008, and, in response, It’s Intoxicating shipped 441 cartons of beauty products to Maritim in March 2008 at a price of $181,547.80. Maritim accepted the products but failed to remit payment in full. It’s Intoxicating subsequently sued Maritim for breach of contract. 

Maritim moved to dismiss the claim and contended that the parties had never formed a written contract as required by applicable Pennsylvania law.
MANNION, DISTRICT COURT JUDGE The CISG is a “self-executing treaty with the preemptive force of federal law,” which “applies to contracts for the sale of goods between parties whose places of business are in different States … when the States are contracting States.” American Mint LLC v. GOSoftware, Inc., 05-CV-650, 2005 U.S. Dist. LEXIS 45003 (M.D. Pa. 2005). The parties to a contract may agree to apply a signatory’s domestic law, but only by affirmatively opting-out of the CISG. Therefore, a choice of law provision, to be effective, must not only select the law that will apply but affirmatively state that the CISG will not apply to the contract.
Here, defendants’ place of business is Germany and plaintiff’s is the United States, both countries that are signatories of the CISG. Therefore, on its face, it appears that the CISG governs this contract dispute. Nevertheless, the parties point out that the agreement contained a choice of law clause which states in part, “[t]his agreement will be governed by and construed in accordance with the laws of the state of Pennsylvania.”
As noted by the Middle District of Pennsylvania in 2005, a choice of law provision is not effective unless it expressly rejects the application of the CISG.
Here, the parties did not affirmatively state that the CISG does not apply to this contract, so international law applies.
To plead a contract under the CISG, a party must allege an offer and an acceptance of the essential terms of a sale, including the goods, quantity, and price. An offer must be sufficiently definite and indicate the intention of the offeror to be bound in case of acceptance. Acceptance can be made by any statement or conduct indicating assent to an offer. The CISG provides that the offeree may indicate assent by performing an act, such as one relating to the dispatch of the goods or payment of the price, without notice to the offeror, and the acceptance is effective at the moment the act is performed. As such, while silence or inactivity cannot constitute an acceptance under Article 18, an affirmative action that “indicates assent to an offer” will suffice. Finally, the CISG contains no statute of frauds requirement, so “a contract of sale need not be concluded in or evidenced by writing and is not subject to any other requirement as to form.”
Defendant Maritim seeks dismissal of Plaintiff’s breach of contract claim on statute of frauds grounds, arguing, “an oral contract for the sale of goods in excess of $500 cannot be enforced unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought.” This argument is easily repudiated as the court has determined that the CISG applies to the contract dispute in this case. Because the CISG contains no statute of frauds requirement, Defendant’s argument fails.
The allegations as a whole allow the court to make the plausible inference that the parties entered into a binding contract under the CISG. Therefore, Maritim’s motion to dismiss Plaintiff’s breach of contract claim will be denied.
DEFENDANT’S MOTION TO DISMISS IS DENIED.
CRITICAL THINKING:
What was the legal reasoning underlying the court’s interpretation of the parties’ choice of law clause? Do you believe the parties intended for the CISG to apply to this transaction? Why or why not? Was the court justified in ignoring this intent? How could the parties have better expressed their intent and avoided the court’s subsequent interpretation?
ETHICAL DECISION MAKING:
The result of this case requires the parties to proceed utilizing the CISG rather than Pennsylvania contract law. Does this result strike you as fair and reasonable?
Should Maritim have been excused from paying for the cosmetics based upon the absence of a writing required by the law selected by the parties in their contract but not applied by the court? It may be contended that the imprecise drafting of the conditions of sale allowed It’s Intoxicating to proceed on a claim which would otherwise have been denied. Should It’s Intoxicating have been permitted to utilize its own imprecise drafting to recover on its claim?