Treibacher Industrie, A.G. v. Allegheny Technologies, Inc. Da-yea Kwon Hye-jung Min Herim Ahn Youmee Lee International Business Law, Case Study

IssueFactsI3: R&AI2: R&AI1: R&AConclusion Background & Facts Treibacher Industrie (Treibacher) Treibacher Industrie (Treibacher) TDY Industries Inc (TDY) TDY Industries Inc (TDY) November and December of 2000 contract Price : at prices specified in the contract Quantity : specified quantities in the contract Time : at time specified in the contract Tantalum carbid (TaC) Consignment(PAY)

FactsIssueI3: R&AI2: R&AI1: R&AConclusion Issue 1.Whether TDY has obligation to take delivery of or pay for any TaC that it did not wish to use 2.Whether the term “consignment” should be construed according to it s customary usage in the industry. 3.Whether CISG article 9 (2) should be read to mean that, unless parties to a contract expressly agree to meaning of a term, the customary trade usage applies TDY’s Obligation of payment “Consignment” = customary usage Meaning of CISG article 9(2) no express agreement on a term -> Customary trade usage Meaning of CISG article 9(2) no express agreement on a term -> Customary trade usage

FactsIssueI3: R&AI2: R&AI1: R&AConclusion Issue #3 Whether CISG article 9 (2) should be read to mean that, unless parties to a contract expressly agree to meaning of a term, the customary trade usage applies IssueRuleAnalysis CISG article 9(2) Meaning of term AGREE Customary trade usage Article 9(2) : Parties are considered, unless otherwise agreed, to have impliedly made applicable to their contract … a usage of which the parties knew or ought to have known and which in international trade is widely known to … parties to contracts of the type involved in the particular trade concerned. Article 9(2)

FactsIssueI3: R&AI2: R&AI1: R&AConclusion Rule #3 A statue should be construed so that effect is given to all its provisions, so that no part of it will be inoperative or superfluous, void or insignificant Effect =>provision Effect =>provision InoperativeSuperfluous IssueRuleAnalysis VoidInsignificant

FactsIssueI3: R&AI2: R&AI1: R&AConclusion Analysis #3 IssueRuleAnalysis TDY’s Argument CISG article 9 (2) should be read to mean that, unless parties to a contract expressly agree to meaning of a term, the customary trade usage applies. unless expressly agreed, customary usage applies customary usage takes precedence over the parties’ understanding of the term TDY’s argument renders article 8(3) superfluous and the latter portion of article 9(1) a nullity 8(3) – “any practices which the parties have established between themselves” 9(1) - “bound by any practices which they have established between themselves” Counter - Argument Expressly Agreed Customary Usage 8(3) 9(1) Customary Usage Understanding Of term

FactsIssueI2: R&AI3: R&AI1: R&AConclusion Issue #2 whether the term “consignment” should be construed according to its customary usage in the industry. IssueRuleAnalysis Consignment Customary Usage

FactsIssueI1: R&AConclusion Rule #2 Article 9 (1) “ parties are bound by any usage to which they have agreed and by any practices which they have established between themselves” BOUND IssueRuleAnalysis USAGEPRACTICE I2: R&AI3: R&A Agreed Established

FactsIssueI1: R&AConclusion Analysis #2 IssueRuleAnalysis Unless otherwise agreed, a contract term should be interpreted as its customer usage And the customary usage of the term “consignment” in the metal field, as experts say, means that no sale occurred unless and until TDY actually used the TaC According to article 9 (1) if there is an established practice between the parties involved in the contract it takes precedence over customer usage. And there was an established practice between TDY and Treibacher. For 7 years, TDY has been executing contracts which agreed to buy and sell all TaC from Treibacher on consignment. Also, in 1999, an empirical evidence shows that TDY agreed that it was contractually obligated to purchase all materials delivered from Treibacher I2: R&AI3: R&A TDY’s Argument Counter - Argument Customary Usage Contract term Sale occurs “Consignment” Actual use of TaC Customary Usage Established Practice

FactsIssueI1: R&AI2: R&AI3: R&AConclusion Issue #1 Whether TDY has obligation to take delivery of or pay for any TaC that it did not wish to use IssueRuleAnalysis TDY Obligation TaC Delivery Payment

FactsIssueConclusion Rule #1 Parties Obligation Mitigate damages IssueRuleAnalysis One of the general principles of CISG – parties have the obligation to mitigate damages resulting from a breach I1: R&AI2: R&AI3: R&A

FactsIssueConclusion Analysis #1 IssueRuleAnalysis Applying the customary usage to interpret the term “consignment,” the obligation of TDY to purchase and payment has not occurred, and thus TDY did not breach. Therefore, TDY does not have the obligation to compensate for any damage that Treibacher insists. since the use of the term "consignment" means that TDY has the responsibility to buy what has been delivered, which TDY did not put into action, TDY has the obligation to mitigate the damages caused by refusing to purchase TaC delivered from Treibacher I1: R&AI2: R&AI3: R&A TDY’s Argument Counter - Argument

FactsIssueI3: R&AI2: R&AI1: R&AConclusion Issue 3. whether CISG article 9 (2) should be read to mean that, unless parties to a contract expressly agree to meaning of a term, the customary trade usage applies Issue 2. whether the term “consignment” should be construed according to its customary usage in the industry. Issue 1. whether TDY has obligation to take delivery of or pay for any TaC that it did not wish to use Issue 3 Issue 2 Issue 1 No, it should be read to mean that customary trade usage applies unless there is an established practice No, the term should be interpreted through subjective approach (i.e. by any practices which they have established between themselves) Yes, TDY has obligation to purchase all of the TaC specified in the contract and that Treibacher took reasonable measure to mitigate its losses after TDY breaches