## Facts

- TeeVee Toons, Inc. (TVT), a New York company, sought to mass-produce a patented biodegradable cassette package known as the “Biobox.”
- TVT contracted with Gerhard Schubert GmbH (Schubert), a German manufacturer of packaging machinery, to design, build, and deliver an automated Biobox production system.
- In February 1995, the parties executed a written quotation contract for the production system, with attached standard “Terms and Conditions” containing broad warranty disclaimers and a merger clause.
- TVT alleged Schubert’s representative stated the boilerplate “Terms and Conditions” did not apply to the Biobox deal and instructed TVT to disregard them.
- Schubert allegedly delayed delivery for nearly two years; when the system was delivered to a third-party facility in Indiana in 1997, it allegedly malfunctioned frequently and severely.
- TVT and an affiliate, Steve Gottlieb, Inc. (SGI), claimed they incurred payments to Schubert, additional repair and replacement costs, facility-related expenses, and lost profits.
- TVT and SGI sued in 2000 asserting CISG breach of contract, common-law fraud, and negligence; Schubert moved for summary judgment on all claims.

## Issues

1. Whether SGI had standing to sue on contract and related tort theories when it was not a signatory to the February 1995 contract.
2. Whether the CISG governed the parties’ transaction and, if so, whether plaintiffs’ nonconformity theories under CISG Articles 35 and 36 could proceed.
3. Whether Schubert’s attached “Terms and Conditions” were incorporated into the contract and effectively disclaimed warranties or limited liability under the CISG.
4. Whether plaintiffs’ fraud claim stated a triable theory distinct from mere nonperformance and supported justifiable reliance despite the written merger and disclaimer clauses.
5. Whether negligence claims seeking only economic damages were barred by New York’s economic-loss doctrine.
6. Whether particular categories of claimed damages were unrecoverable as a matter of law (including remoteness, speculation, causation, and foreseeability limits).

## Decision

- The court granted Schubert’s summary-judgment motion in part and denied it in part.
- SGI’s contract-based claims were dismissed for lack of standing because SGI was not a party to the February 1995 contract and was not shown to be an intended third-party beneficiary on the pleaded record.
- The court held the CISG governed the U.S.–German contract absent an effective exclusion.
- Summary judgment was denied on TVT’s core CISG breach claims because material factual disputes existed concerning incorporation and effect of the boilerplate “Terms and Conditions,” including whether the parties agreed to disregard them.
- The court denied summary judgment in part on fraud, finding triable issues as to misrepresentations collateral to performance (including statements about the applicability of the boilerplate and the system’s capabilities), while limiting fraud to the extent it duplicated the contract claim.
- Negligence claims were dismissed to the extent they sought purely economic losses without an independent duty beyond the contract.
- The court narrowed damages in part (excluding certain items deemed too speculative or legally unrecoverable) but allowed other damage categories to proceed where foreseeability and causation presented factual questions.

## Legal Principles

- The CISG applies to contracts for the sale of goods between parties with places of business in different Contracting States unless the parties effectively exclude it.
- Under the CISG, contract terms and disclaimers may depend on the parties’ negotiations, practices, and conduct; incorporation and effectiveness of standard-form terms can present fact questions precluding summary judgment.
- A non-signatory generally lacks standing to enforce a contract absent proof of intended third-party beneficiary status or another pleaded contractual basis.
- A fraud claim may proceed when based on misrepresentations collateral to the contract (including inducement or statements about the effect of integration/disclaimer terms), but cannot rest solely on alleged failure to perform contractual promises.
- Under New York law, negligence claims seeking only economic loss from defective performance are generally barred absent a duty independent of the contract.
- Consequential damages may be limited where they are speculative, insufficiently caused by the alleged breach, or not reasonably foreseeable; such determinations may be resolved in part as a matter of law and in part by factfinding.

## Conclusion

The court applied the CISG to the international equipment-supply contract and allowed TVT’s principal nonconformity-based contract claims, along with a narrowed fraud theory and portions of the damages case, to proceed to trial, while dismissing SGI for lack of standing and barring negligence-based recovery for purely economic loss absent an independent duty.


TeeVee Toons, Inc. v. Gerhard Schubert GmbH, No. 00 Civ. 5189 (RCC) (S.D.N.Y. Aug. 22, 2006)