## Facts

- An Austrian seller contracted in November and December 2000 to supply specified quantities of tantalum carbide to a U.S. manufacturer for delivery “on consignment” to the buyer’s Alabama facility.
- After accepting some product under the first contract, the buyer refused to take the remaining quantities under both contracts and later asserted it had no obligation to accept or pay for material it did not use.
- The seller was unaware the buyer had obtained the material it needed from another vendor at lower prices.
- The seller resold the refused material at prices lower than the contract prices and sought damages for the difference.
- The key factual dispute was the meaning of “on consignment”: the buyer claimed a trade meaning that payment was owed only if the buyer used the goods; the seller claimed the parties’ seven-year course of dealing showed a fixed purchase obligation with billing deferred until use.
- After summary judgment eliminated most claims, the case proceeded to a bench trial on the CISG breach claim and a state-law misrepresentation claim; the court entered judgment for the seller and awarded over $5 million in damages.

## Issues

1. Under the CISG, whether “on consignment” should be interpreted primarily by industry usage or by the parties’ established practices and course of dealing.
2. Whether the trial court clearly erred in finding the seller reasonably mitigated damages after the buyer’s refusal to take delivery.

## Decision

- The Eleventh Circuit affirmed the judgment for the seller.
- The court held that the contracts were properly interpreted under the CISG by relying on the parties’ established practices and course of dealing, rather than adopting the buyer’s asserted industry usage as controlling.
- The court held there was no clear error in the finding that the seller reasonably mitigated damages by reselling the goods.

## Legal Principles

- Under CISG Articles 8 and 9, contract terms are interpreted in light of intent and the understanding of a reasonable person, considering all relevant circumstances, including negotiations, established practices between the parties, usages, and subsequent conduct.
- CISG Article 9 binds parties to practices established between themselves and to agreed usages; widely known trade usages may apply by implication unless displaced by the parties’ agreement or demonstrated practice.
- A buyer cannot defeat a seller’s CISG breach claim by invoking a general trade usage where the parties’ history shows a different shared meaning for the disputed term.
- The CISG mitigation requirement turns on reasonableness; appellate review of mitigation findings following a bench trial is for clear error, and the breaching party bears the burden to show the seller acted unreasonably.

## Conclusion

The court upheld liability and damages under the CISG, ruling that “on consignment” was properly construed according to the parties’ established practice requiring purchase of the full contractual quantities with deferred invoicing, and that the seller’s resale efforts constituted reasonable mitigation.


Treibacher Industrie A.G. v. Allegheny Techs., Inc., 464 F.3d 1235 (11th Cir. 2006)