Frigaliment Importing Co. v. B.N.S. International Sales Corp. – Case Brief
Summary of Frigaliment Importing Co. v. B.N.S. International Sales Corp., 190 F.Supp. 116 (S.D.N.Y. 1960).
BNS International Sales Corp. (D) entered into two contracts to sell chicken to Frigaliment (P). When the initial shipment arrived in Switzerland, Frigaliment found that the heavier birds were stewing chickens or fowl, not young chickens suitable for broiling and frying. BNS International believed that any type of chicken would meet the contract specifications regarding weight and quantity, including “stewing chickens”. Frigaliment on the other hand believed that “chicken” meant a young chicken. Frigaliment brought this lawsuit for breach of warranty on the grounds that BNS International delivered goods that did not meet the specifications of the contract.
- 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?
- Is parol evidence admissible to show the meaning of an ambiguous term and its usage in a contract?
Holding and Rule (Friendly)
- Yes. A party who seeks to interpret a contract’s ordinary terms in a narrower sense than is used in everyday trade has the burden of proof to establish that meaning.
- Yes. Parol evidence is admissible to show the meaning of an ambiguous term and its usage in a contract.
The court held that the making of a contract depends not on the agreement of two minds in one intention, but on the agreement of two sets of external signs – not on the parties’ having meant the same thing but on their having said the same thing. The word chicken standing alone is an ambiguous word. The court must first turn to whether the contract itself offers any aid to its interpretation.
BNS International notes that the contract called not simply for chicken but for US Fresh Frozen Chicken, Grade A, Government Inspected. It contends therefore that the contract incorporated by reference the Department of Agriculture’s regulations, which favor its interpretation.
Regarding the parol evidence issue, the court first examined the negotiations. The communications between Frigaliment and BNS International were in German but they used the English word for chicken. When asked what kind of chickens it wanted, BNS International replied “any chickens”. Frigaliment claimed that this was done because it understood chicken to mean young chicken whereas the German word Huhn included both broilers and stewing chicken, and that BNS International would have understood the distinction because its officers were thoroughly conversant with German.
The court rejected this argument and held that Frigaliment failed to meet its burden of proof on the meaning of the word “chicken”.
See Raffles v. Wichelhaus for a classic contract law opinion in which the parties contracted for the sale of cotton on the ship “Peerless” but did not realize that there were two ships with the same name. The court held that there is no mutual assent to contract if a latent ambiguity arises showing that there was no meeting of the minds.