Equapack, Inc. v. Medi-Machines S.A. Memorandum for Medi ...

5. The original contract was never modified to require machines with the ability to process salt.
20. “A contract may be modified or terminated by the mere agreement of the parties.” [Art.
29(1) CISG]. “Modification or termination of the contract is governed by CISG rules on
formation of contract (Arts. 14 and seq. CISG).” [T. S.A. v. R. Établissement (Switzerland)].
However, a party must have sufficient notice of a proposal to modify in order for that proposal to
be valid. [Supermicro Computer v. Digitechnic (U.S.A.) (applying CISG)]. In the instant case,
RESPONDENT did not have sufficient notice of any intention by CLAIMANT to modify the
contract to require the machines to process salt. The purpose of CLAIMANT’s call on 23 July
2002 was to check on the status of the order, not to propose a modification. [Notice of
Arbitration 6]. As the transcript of the telephone call shows, CLAIMANT embedded the word
“salt” between the words “large beans” and “fine products.” [Statement of Defense 6]. Taken
together, and especially considering that in a typical telephone call it is common to not “hear”
every word that is spoken, it is understandable how RESPONDENT’s Mr. Drake may not have
actually heard the word “salt”.
21. Even if CLAIMANT’s actions were held to be adequate notice of a proposal to modify, the
proposal was not sufficiently definite. Under the CISG, “a proposal is sufficiently definite if it
indicates the goods and expressly or implicitly fixes or makes provision for determining the
quantity and the price.” [Art. 14(1) CISG]. CLAIMANT never stated that it planned to use
RESPONDENT’s machines to package salt. CLAIMANT simply said that it would be using our
machines to “help” in the fulfillment of a customer order. [Statement of Defense 6 (emphasis
added)]. CLAIMANT never gave RESPONDENT reason to assume that it was largely
inexperienced in the industry, nor did it give RESPONDENT reason to assume specifically that
it had never packaged salt. CLAIMANT mentioned three products that encompassed the range
of products that it was to pack in the fulfillment of a customer order. Within this range,
CLAIMANT mentioned that “some of this is stuff we’ve never handled before.” [Id.]. Since the
range mentioned in the 23 July 2002 call was so broad, it was understandable that CLAIMANT
may not have had experience with all the products within the range. As this range was entirely
different from the range CLAIMANT specified in the Invitation, it was reasonable for
RESPONDENT to conclude that CLAIMANT knew of the inherently corrosive qualities of salt
and that CLAIMANT would not intend to use machines for that purpose unless they were
specifically designed and ordered for such purpose.
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