Frigaliment Importing Co. v. BNS International Sales Corp. Report (Assessment)

The title to the case Smith vs. Jones

Frigaliment Importing Co. v. B.N.S. International Sales Corp., 190 F.Supp. 116 (SDNY 1960)

The parties/people involved in the case

Also known as the “Chicken Case,” the Frigaliment Importing Co. v. BNS. International Sales Corp., 190 F.Supp. 116 (SDNY 1960) involved two companies, Frigaliment Importing Co, the plaintiff, and BNS International Sales corporation, the defendant. The two parties had entered into a contract in which BNS International Sales corporation was to supply Frigaliment Importing Corporation. BNS international sent chicken to the plaintiff based on compliance with the weight measures of the contract between them. However, Frigaliment Importing Corporation was dissatisfied, arguing that the chicken received from the defendant failed to comply with the terms of the contract, citing that the term “chicken” was only used to mean “young chicken.” On the other hand, the defendant argues that the term “chicken” means all types of birds of that species that meet the specifications of the contract in terms of quantity and weight, including those meant for stewing. Fragaliment believed that BNS’s action had breached the contract because the goods received had not met the specifications.

The court in which this case decided

After the case was filed, the United States District Court for the Southern District of New York heard the case and made the ruling on December 27, 1960.

The number of judges decided on the case

The decision was made by the district court, Friendly, Circuit Judge, who dismissed the complaint. Riggs, Ferris & Geer, and John P. Hale, both of New York City, represented the plaintiff while Sereni, Herzfeld & Rubin of New York City represented the defendant.

The facts of the case

Frigaliment Importing Corporation (here called Frigaliment or the plaintiff), a Swiss company, entered into a contract with the American company BNS International Sales Corporation (here called BNS or the defendant). In this contract, Frigaliment offered to buy chicken from BNS for $0.33/lb. The two organizations primarily used the German language in negotiating. However, the plaintiff used the term “chicken,” an English word, in reference to young chickens rather than using the term “huhn,” the German name that includes fowl (stewing chickens). The company wanted the supplier to deliver young broilers and fryers. However, the language used in the contract was interpreted differently. BNS’s interpretation was based on American English, where the term “chicken” was interpreted as “all types of chicken.” At the time, fowls fetched about $0.30/lb while broilers fetched between $0.35 and $0.37/lb. At the time of signing the contract, BNS was new to the chicken business. It was shipping fowl to Switzerland. After the first shipment reached Switzerland, the Swiss company felt dissatisfied with the quality of the products. However, it allowed the American supplier to make the second shipment. After getting the same product in the second shipment, the Swiss company foiled a case in the US accusing BNS of breaching the contract. The plaintiff argued that the shipped supplies failed to comply with the descriptions within the contract. During the hearing, a plaintiff’s expert in the trade stated that the term “chicken” was commonly used in reference to the word “broilers” in the market. Nevertheless, the same expert contradicted his testimony because he also specified the term “broilers” as used in other contracts. On their part, BNS brought one of their suppliers as an expert. The supplier argued that fowls were not included in the word “chicken.”However, the supplier admitted that the defendant had been asked whether the wanted products were fowls or frying chickens during their contract for products meant for export to Switzerland. On its part, Frigaliment provided evidence from some journals as well as suppliers, which attempted to differentiate between fowls and chickens. However, experts from BNS indicated that the term chicken encompassed both types of chickens in the trade. In addition, BNS indicated that the grading regulations of the Department for Agriculture included fowls and broilers within the definition of the term “chicken.”The US district for the Southern District of New York considered this question in its ruling.

Legal questions presented in the case

The issue was to determine whether the term “chicken” included both fowls and broilers.

The legal issues, as indicated in the court case, were:

1. Does a party who seeks to interpret a contract’s ordinary terms in a narrower sense than is used in everyday trade have the burden of proof to establish that meaning?
2. Is parol evidence admissible to show the meaning of an ambiguous term and its usage in a contract?

The decision of the court

The court agreed that parol evidence is acceptable and admissible in a legal court as a way of describing the meaning of some ambiguous words or terms as well as their usage of business contracts.

Therefore, the court held that in one intention, the process of establishing a business contract must depend on the minds of the involved parties. However, the court also ruled that the process of making a business contract must depend on the agreement of two issues. First, the involved parties must have said the same thing. Secondly, it is not necessary that the two parties use the same word to mean the same thing. The court ruled that the word “chicken” is ambiguous when standing alone, which means that the court first turned to determine whether the contract had any indications of the interpretation of the term.

The court reasoned that the term chicken, as applied in day-to-day business language and English, is a general term used in reference to various types of chickens, including broilers/fryers, roaster, capon, cock, old rooster, hen, stewing chicken, fowls, and stag. Thus, the court rejected the plaintiff’s argument and ruled in favor of BNS because the plaintiff had failed to meet its burden of proof in establishing the meaning of an ambiguous word.

Dissenting opinions and legal reasoning

There were no dissenting opinions since one judge presided over the case

The reaction to the case

I agree with the court’s decision about the use of ambiguous terms and phrases in a contract, especially in business, because it shows the need for parties in a contract to ensure that they have a common knowledge and interpretation of words and terms used in reference to certain objects, populations, verbs, and other things.

The most important thing learned from reading the case

The most important thing I learned from reading the case is that a good understanding of the language used in making a contract is important for both parties, especially when they belong to different backgrounds. The overall lesson learned here is to develop a good and common understanding of the language of a contract to avoid diversity in meanings.