Frigaliment Importing Co. v. B.N.S. International Sales Corp.

United States District Court for the Southern District of New York · 1960 · Contracts

Contractsinterpretationambiguitytrade usagecourse of dealingambiguous termchickenobjective meaning

Facts

The parties entered into two May 2, 1957 contracts for "US Fresh Frozen Chicken, Grade A, Government Inspected, Eviscerated" in two weight ranges, including 2 1/2-3 lb. birds. After shipment to Switzerland, plaintiff discovered that the 2 1/2-3 lb. birds were stewing chicken or fowl rather than young broilers or fryers and protested. Plaintiff argued that "chicken" meant young chicken, while defendant contended that "chicken" included any bird of that genus meeting the contract's weight and quality specifications. The parties offered evidence from contract language, pre-contract cablegrams, trade witnesses, Department of Agriculture regulations, and market prices to support their competing interpretations.

Issue

In these sales contracts, did the word "chicken" mean only young chicken suitable for broiling and frying, or did it include stewing chicken or fowl that otherwise met the stated specifications? More specifically, did plaintiff prove that the contracts used the term in the narrower sense?

Rule

If a contract term standing alone is ambiguous, the court determines its objective meaning from the contract language and admissible surrounding evidence, including negotiations, trade usage, incorporated standards, and market circumstances. A party seeking to enforce a narrower meaning bears the burden of persuading the court that the parties used the term in that narrower sense. As to trade usage, when one party is not a member of the trade, the usage binds that party only if actual knowledge is shown or the usage is so long continued, well established, notorious, universal, and reasonable that knowledge may be inferred.

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A food distributor in Zurich, Alpen Table Foods, contracts with a seller in Newark, Harbor Crest Provisions, for "U.S. Fresh Frozen Turkey, Grade A, Government Inspected," in two weight ranges at stated prices. After delivery, Alpen complains that the heavier birds are mature stewing turkeys rather than young roasting turkeys, even though the term "turkey" can refer either broadly to the species or more narrowly in some contexts.

If Alpen sues for breach of the description warranty, who has the better argument under the governing interpretive rule?

Explanation. When a term standing alone is ambiguous, the court looks to objective evidence to determine meaning. The party asserting the narrower meaning bears the burden of persuading the court that the contract used the term in that narrower sense. Thus Alpen does not win merely by showing its preferred meaning is plausible; it must prove that narrower meaning objectively. (Derived from Frigaliment Importing Co. v. B.N.S. International Sales Corp. (1960).)