MCC-Marble Ceramic Center, Inc. v. Ceramica Nuova D’Agostino, S.p.A.

Nature of the Case

MCC-Marble Ceramic Center (P) appealed a judgment that granted summary judgment in favor of Ceramica Nuova D’Agostino (D). MCC argued that the court below improperly ignored evidence that it submitted regarding the parties’ subjective intent at the time of contracting, and that the parol evidence rule was erroneously applied contrary to controlling law.

Facts

MCC is a Florida corporation engaged in the sale of tiles. Ceramica is an Italian corporation engaged in the manufacture of ceramic tiles.

In October 1990, MCC met with Ceramica and negotiated an agreement to purchase tiles based on samples that were examined at a trade fair. An oral agreement was arrived at for price, quality, quantity, delivery and payment. The parties then recorded this agreement on Ceramica’s standard printed order forms. The person who signed the contract on MCC’s behalf neither spoke nor read Italian.

MCC also claims that it entered into a requirements contract in February 1991 in which Ceramica agreed to supply a high grade tile at discount as long as MCC agreed to purchase sufficient quantities. MCC completed a number of order forms requesting tile deliveries pursuant to that agreement.

MCC sued Ceramica claiming breach of contract in February 1992. Ceramica claimed there was no obligation to fill the orders because MCC had defaulted on payment terms for previous shipments. Ceramica relied on its preprinted forms. Those forms were printed in Italian and contained terms and conditions on the front and back. The English translation of the forms gave Ceramica the right to suspend or cancel the contract and other contracts upon default in payment and MCC had no right to indemnification or damages.

Ceramica counterclaimed against MCC seeking damages for nonpayment of deliveries. MCC claimed that the tile it had not paid for was of a lower quality and pursuant to CISG it was entitled to reduce payment in proportion to the defects. Ceramica defended this claim by pointing to the contract which called for complaints to be made in writing by certified letter within 10 days of receipt of the merchandise.

The physical evidence supported MCC’s quality claims but the company never submitted any written complaints to the defendant. MCC argued before the court that the parties never intended the terms and conditions on the reverse side of the order form claiming that Ceramica was aware of such intent. Affidavits of Ceramica’s representatives and MCC’s employee at the trade show supported MCC’s evidence in this regard. The trial court awarded Ceramica summary judgment based on parol evidence and MCC appealed.

Issues

  1. Does the parol evidence rule apply to CISG contracts?
  2. Is the fact that a person signs a contract in a commercial transaction knowing he is ignorant of its terms an act that will excuse a party from obligation to perform the terms of that contract?

Holding and Rule of Law

  1. No. The fact that a person signs a contract in a commercial transaction knowing he is ignorant of its terms is not an act that will excuse a party from obligation to perform the terms of that contract.
  2. No. The parol evidence rule does not apply to CISG contracts.

The parties agree that the CISG governs this dispute. MCC contends that the judge improperly disregarded the subjective intentions of the parties in awarding summary judgment and that it was error to apply the parol evidence rule in derogation of the CISG.

CISG instructs courts to consider the subjective intentions of the parties as long as the other party knew or could not have been unaware of that intent. This requires an inquiry into subjective intent.

MCC submitted three affidavits that discussed the subjective intent of the parties. All three affidavits state that MCC and Ceramica never intended to be bound by the terms on the reverse side of the form despite provisions directly below the signature line that expressly and specifically incorporated those terms. There is not doubt that if those terms applied to this contract the magistrate’s report and recommendation would be upheld.

CISG requires courts to consider the subjective intent of the parties while interpreting the conduct of the parties and requires the court to consider MCC’s evidence at is interprets the parties’ conduct.

We next consider the parol evidence rule in application to CISG contracts. CISG has no statute of frauds provision and expressly allows enforcement of oral contracts. The court will consider parol evidence regarding the negotiations to the extent they reveal the parties’ subjective intent.

Courts applying CISG cannot upset the parties’ reliance on that agreement by substituting familiar principles of domestic law when the Convention requires a different choice. Undisclosed subjective intentions are immaterial in a commercial transaction especially when contradicted by objective conduct.

This is not to say that parties to an international contract for the sale of goods cannot depend on written contracts or that parol evidence regarding subjective contractual intent need always prevent a party relying on a written agreement from securing summary judgment. To the contrary, most cases will not present a situation (as exists in this case) in which both parties to the contract acknowledge a subjective intent not to be bound by the terms of a pre-printed writing. In most cases objective evidence will provide the basis for the court’s decision. If the parties wish to avoid parol evidence problems they need only include a merger clause.

Disposition

Judgment for plaintiff MCC.


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