Frigaliment Importing Co., Ltd. v. BNS International Sales Corp.
, 190 F. Supp. 116 (S.D.N.Y. 1960
), is arguably the best-known case in American contract law
. It appears in just about every casebook
used to teach contracts
in law school
, thanks in large part to its in-depth treatment of several contractual issues, and thanks in equally large part to its laughable subject matter.
The subject of the case was the definition of the word "chicken." As a result, most lawyers and law students know the case as "The Chicken Case."
Facts of the case
In 1957, representatives of Frigaliment and BNS met at the World Trade Fair in New York City. Frigaliment, based in Switzerland, was interested in importing chickens from the United States. On April 26, Frigaliment sent a cable to its representative in New York, stating that they wished to buy 25,000 pounds of chickens between 2.5 and 3 pounds each, at a price of up to 33 cents per pound. The cable was written in German, but used the English word "chicken" in place of the German word "Huhn." BNS asked Frigaliment what kind of chickens they wanted; Frigaliment responded that they would take any kind; BNS then asked whether they meant "Huhn" and Frigaliment responded "yes."
On May 2, after further negotiations, BNS accepted the offer and confirmed the sale of:
US Fresh Frozen Chicken, Grade A, Government Inspected, Eviscerated 2 1/2-3 lbs. and 1 1/2-2 lbs. each all chicken individually wrapped in cryovac, packed in secured fiber cartons or wooden boxes, suitable for export:
75,000 lbs. 2 1/2-3 lbs @ $33.00
25,000 lbs. 1 1/2-2 lbs @ $36.50
per 100 lbs. FAS New York
Another contract was made on the same day, identical to the first, except calling for 50,000 pounds of the larger chickens at 37 cents a pound, and shipment on May 30.
The first shipment of chickens left New York on May 17 and arrived in Switzerland on May 28. When Frigaliment took a look at the larger birds, they immediately cried "fowl!" They had wanted broilers, young chickens that were good for frying, rather than fowl, older chickens that were good for stewing. They sent their protests to BNS, which ignored the objection and asked whether Frigaliment still wanted to take delivery on the second shipment of "50,000 lbs. chicken (and) 25,000 lbs. broilers." Frigaliment agreed to take delivery, but warned that they wanted the right goods, and that they would make BNS responsible for costs if the contract was not pursued. The second shipment, containing larger fowl and smaller broilers, left New York on May 29. Rather than take delivery, Frigaliment stopped the shipment at the port of Rotterdam.
Frigaliment sued BNS in a New York district court, claiming breach of warranty—namely, breach of warranty that the chickens supplied would be suitable for broiling and frying. (The reason the case was tried in New York, as opposed to Switzerland or elsewhere, was because the events in dispute primarily took place in New York. The contracts originally carried an arbitration clause stating that disputes would be settled out of court, but neither party seemed to pay attention to that part.)
The judge deciding the Chicken Case was Henry Friendly, who had been appointed to the United States Court of Appeals for the Second Circuit less than a year before. Friendly had previously worked as a commercial lawyer in New York City, and had served as general counsel for Pan American World Airways for several years. He had no judicial experience prior to his appointment, so he made it a point to hear cases in lower courts on a regular basis, so as not to forget the demands of hearing a case at trial. The Chicken Case was the first case Friendly heard as a trial judge. (He went on to become chief judge of the Second Circuit in 1971.)
"What is chicken?" Friendly asked. Frigaliment, having started the lawsuit, carried the burden of proof, and had to prove by preponderance of the evidence that their definition was the correct one. Friendly went through the available evidence, piece by piece.
The text of the contract
The contract did not specify "broilers" or "fryers." It only expressly specified "chicken." Frigaliment claimed that the smaller chickens had to be young, because older chickens were never that size. By a monumental logical leap, Frigaliment argued that the larger chickens had to be young, too. Friendly dismissed this claim: "a contract for 'apples' of two different sizes could be filled with different kinds of apples even though only one species came in both sizes."
BNS pointed out the reference to "US fresh frozen chicken, grade A." The USDA defined the term "chicken" as subsuming different grades of chicken, including broilers and fowl, as well as other types such as capons, stags, and roosters. Frigaliment protested this definition, stating that it was not expressly assumed by the contract's terms. Friendly gave greater weight to BNS's argument, since the reference to government grading was clearly in the deal.
The usage of trade
"Usage of trade" refers to the customs and practices common to an entire industry. While usage of trade is often a useful tool in determining the meaning of a contract's terms, it can never supersede the express terms of a written contract, and its usefulness relies on the assumption that both parties to the deal are experienced enough to recognize what the usage of trade is.
Frigaliment and BNS both produced expert witnesses from different segments of the poultry industry. Frigaliment's witnesses claimed that "chicken," when used in the poultry trade, referred to broilers but not to fowl. BNS's witnesses claimed a broader definition: in the words of one, "chicken is everything except a goose, a duck, and a turkey." Friendly concluded there was no convincing evidence that either definition was common within the poultry trade.
BNS attemped to keep trade usage out of the argument altogether by claiming that its sale to Frigaliment was its first foray into the chicken business. Friendly accepted this argument, and stated that there was little evidence to indicate that BNS knew about the conflicting definitions of "chicken" in the first place.
BNS supported its definition of "chicken" by showing that the market price for broilers in the 2.5-3 pound range was two to four cents higher, per pound, than the price agreed to in the contract. "Plaintiff must have expected defendant to make some profit," Friendly wrote. "Certainly it could not have expected defendant deliberately to incur a loss."
Conduct of the parties
Frigaliment and BNS both made arguments based on the cablegrams through which they negotiated the deal. Frigaliment claimed that it used the English word "chicken" in place of the German word "Huhn" because "Huhn" could refer to either broilers or fowl ("Brathuhn" and "Suppenhuhn" respectively). BNS contested this claim, since Frigaliment's representative explicitly stated that "Huhn" was meant by "chicken," and that any kind of "chicken" would do. Friendly concluded that Frigaliment's linguistic argument was not persuasive.
BNS then brought up the negotiations that took place between the first delivery and the second delivery. Frigaliment knew that it was getting "chickens and broilers" in the second delivery, and agreed to take delivery of those "chickens and broilers" anyway. Frigaliment responded that it told BNS it wanted nothing but broilers, and that BNS shipped the second round of fowl "at its own peril."
BNS also claimed that Frigaliment was unaware of the distinction between fowl and broilers until it found itself unable to sell the fowl on the European market. Friendly rejected this argument, since it was contradicted by the protests of Frigaliment at the time of delivery.
Clearly, there was no preponderance of the evidence showing that the contract was supposed to call for broilers. Friendly dismissed Frigaliment's claim against BNS, leaving a large quantity of frozen chicken in Europe for Frigaliment to deal with as it wished.