1. What evidence does the court cite that tends to show that a contract existed?

2. Do the advantages of a statute of frauds rule (e.g., certainty) outweigh the advantages of a no writing requirement (e.g., flow of commerce)?

3. After reading this case, do you think that the United States should opt for an Article 96 declaration? Why or why not?

Forestal Guarani S.A. is an Argentina-based manufacturer of various lumber products, including wood finger joints. Daros International, Inc., is a New Jersey–based import-export corporation. In 1999, Forestal and Daros entered into an oral agreement for Daros to sell Forestal’s wood finger joints to third parties in the United States. Pursuant to that agreement, Forestal sent Daros the finger joints along with an invoice for $1.86 million. However, Daros paid Forestal a total of only $1.46 million. When Forestal sued to recover the amount owed, Daros admitted that it had paid Forestal $1.46 million in exchange for the finger joints but denied that it owed Forestal any additional money. Daros argued that under the CISG, which governed its relationship with Forestal, there was no liability because the absence of any written contract precluded Forestal’s claims since Argentina had exercised its rights in an Article 96 declaration. The trial court granted a summary judgment claim in favor of Daros, finding that Argentina’s declaration was sufficient to extinguish Forestal’s claim.

U.S. Court of Appeals for the Third Circuit reversed the decision of the trial court and ruled in favor of Forestal. Although the court acknowledged that the issue of whether a contract must be in writing under these circumstances was a case of first impression, it rejected the trial court’s conclusion that Forestal’s claim was extinguished by virtue of the Article 96 declaration. The court held that when one country has adopted an Article 96 declaration and the other country has not, choice of law principles must be considered and the trial court should have taken the course of past conduct into account before granting a summary judgment motion.

“Daros contended that Forestal had submitted no ‘credible evidence’ of a contract with Daros. The [trial court] agreed with that contention, concluding that there was no evidence that the parties ever had any contract at all. It is undisputed, however, that Forestal sold wooden finger-joints to Daros and that Daros gave Forestal money in exchange. Indeed, Daros nowhere denies that the parties at the very least had a verbal contract for those sales. “Furthermore, Forestal submitted an accountant’s certification, with supporting documentation, as well as invoices in an effort to substantiate its claim that it is owed money. There is also deposition testimony indicating that the parties had a contract. The [trial court] did not expressly refer to some of these materials in its opinion, and we do not know why it evidently disregarded them. In short, we cannot say at this stage that there is no genuine question of material fact as to whether the parties had or did not have some sort of contractual relationship and whether Forestal can prove as much under whatever law actually controls this case.”