Must The Importer Pay If He Received Damaged Goods? The Court Gives its Verdict.

View PDF | Print View
by: gill@nadel-law.co.il
Word Count: 1346
Date: Mon, 28 Nov 2011 Time: 3:29 AM

The facts of the case:
An American exporter dealing with international trade of agricultural produce signed agreements under the terms of CFR with Israeli companies, according to which 40 tons of sunflower seeds will be imported to Israel. At the same time the contract was signed a payment of 30% of the agreed (payment) was transferred and it was agreed that the rest of the payment was to be transmitted when the merchandise arrived in Israel. The merchandise arrived in Israel via marine shipment, was released from customs by the Israeli companies and transferred by them to the customer in Gaza, who wished to purchase the shipment. The rest of the payment (70%) was not transferred by the Israeli companies which led the sides to settle the matter in court.

The claims of the American exporter:

The American exporter claimed that at the time the merchandise arrived to Haifa port, the Israeli companies refused to pay the remains of the agreed sum claiming that the merchandise was of low quality. The manager of the American exporter came to Israel especially to examine the goods but according to the manager, the Israeli companies refused to release a sample to be examined in the lab. Later, the American exporter claimed that only when his manager left the country the goods were released and sold to the customer from Gaza. The American exporter, in response to the Israeli companies claims regarding the delay was that the merchandise was not delayed and it was shipped to Israel from his factory on time, as agreed. 

The claims of the Israeli companies:

The companies' primal claim was that the export deal was signed by the American exporter and the Gazan customer, who acted on behalf of a company which is an agent of the American exporter, leaving the Israeli companies as a funding side and not a side to the actual deal.  

The companies further claimed that the Gazan customer cancelled the deal and agreed to take back this step only after the American exporter promised him a substantial discount. Furthermore, the companies claimed that it was the Gazan customer, and not the American manage, that requested to send a sample of the merchandise, after finding out that the American exporter deceived several customers in Israel by selling them low quality goods. It was also claimed that the shipment arrived substantially late, while violating the commitment of the American exporter to the time schedule. This matter is of high importance, as during this time local, high-quality produce appeared in the market. According to the companies, the American exporter knew that the future shipment was to be late and did not warn them of that, and according to the CFR terms of the contract, the relevant time to distinguish the delay is the loading time of the produce to the vessels in the exporter's dock, rather then the time the produce left the exporter's factory.

The Court’s Verdict:

The court first discussed the foundations of the deal and its parties, and stated that it appears that the parties to the written agreement are the parties appearing on the sales agreement. In other words, the American exporter and the Israeli companies, and not the Gazan customer. On the other hand, it was proved that the Israeli company did not export seeds, but only funded (activities), whereas the Gazan customer did deal in such. Therefore, in spite of everything, the evidence may indicate that the deal was with the Gazan customer. 

Nevertheless, the court decided that the core of the dispute is the quality of the merchandise and not the deal itself or the sides involved, therefore the court did not give its verdict regarding the foundations of the deal.

Different evidence was presented to the court, and among others, expert opinions on behalf of the parties, along with testimonies of different merchants in the food industry, who testified to the quality of the merchandise which sold to them too by the American exporter on different occasions.

After examining the evidence, the court decided that the goods that reached Israel can not be sold and it would not be profitable to mend their condition due to high costs. In addition, the court determined that the American exporter was late in supplying the merchandise to its destination, since it was indeed proven that the contract was a CFR contract and the “date” on which the merchandise was loaded to the export dock in the USA was later than agreed. 

In the end, the court rejected the claim of the American exporter and charged him with the court expenses in addition to charging him with 20,000 as lawyers' fees.

(C.F. (civil file) (Tel Aviv Magistrate court) 37518-05  International  CALDAK Vs. Picadily Engineering Ltd. Et al. Judge Ronit Pinchuk- Alt, Verdict from 28.12.10. Representatives of the parties – for the foreign exporter – Adv. A Meirovitz, for the importer –Adv. Rivkin )

About the Author

Gill Nadel - Born in Israel in 1969, graduated from Bar Ilan University`s Faculty of Law (cum laude) and from the Department of Musicology. He also has a master`s degree in law from the same institution. Member of the Israel Bar since 1999. Speaks Hebrew, English and Polish. Fields of expertise: Commercial and Business Law, International Trade Law, Import and Export Law, Intellectual Property Law, Maritime and International Forwarding Law, Litigation and Court Representation. Adv. Nadel provides lectures on international trade law and import and export law to in courses organized by the Bar Ilan University Center for Commercial Law, Israel Bar, Israel Chambers of Commerce, Manufacturers Association of Israel, Israel Export Institute, Customs Brokers Association, International Forwarders, and more.

Comments