Big CISG Case in Florida Involving Formation via WhatsApp
Fertilizantes Toncantins (FTO) is a Brazilian importer and distributor, specializing in fertilizer. TGO Agriculture (TGO) is a commodities trader, specializing in ammonium sulphate and other chemicals used in agriculture. The parties entered into three contracts for the sale of ammonium sulphate in 2017 prior to entering into the September 2020 contract at issue in the case.
In each of these prior contracts, the parties first negotiated the terms via calls, e-mails and WhatsApp, then drafted informal memoranda, and finally TGO issued a proposed written contract. While FTO claimed that the final written agreements merely memorialized terms already agreed upon, they actually contained many provisions and details not previously discussed. In each case, the shipment of the goods pre-dated the parties’ signing of the contracts, but the goods, which had to be shipped from China to Brazil, arrived later.
There was a discrepancy between the bills of lading and invoices for the ammonium nitrate shipped, on the one hand, and the contracts. The former said that the shipments contained 21% nitrogen; the contract said 20,5%. FTO asked for a change in the contract to 21%, but TGO refused, saying that 20.5% was the best that the producer could guarantee. Ammonium sulfate that tis 20.5% nitrogen is called “steel grade”; ammonium sulfate that is 21% nitrogen is called “capro grade” and is significantly more expensive.
The September 2020 contract was for 20,000 metric tons of ammonium nitrate, later amended to 45,000 metric tons at a price of $145/metric ton. All of the negotiations were conducted, as before, via e-mail and text, and internal communications evidence TGO’s knowledge of the terms of the transaction. However, this time, TGO never sent the final contract. TGO then refused to deliver the ammonium sulfate, claiming that the parties had never finalized the deal.
Two developments may explain TGO’s unwillingness to deliver on the September 2020 contract. First, FTO complained about the quality of a shipment that it received in December 2020. TGO’s agent sent pictures of the delivery to FTO, characterizing it as a “shit show.” Second the price of ammonium nitrate rose dramatically. As a result, when FTO made cover purchases to make up for the 45,000 metric tons it did not receive from TGO, the cost over contracts price was more than $6.5 million.
The case is procedurally strange, but it’s Florida, so . . . . The court held a bench trial in July 2023. There was then extensive post-trial briefing. The court then issued its finding of facts and conclusions of law in Fertilizantes Tocantins S.A. v. TGO Agriculture (USA) Inc. in March 2024. It found that the CISG applied and that, under the CISG, the WhatsApp messages sufficed to form a contract, even if a later written document was contemplated.
Based on the parties’ prior dealings, the court found that there was a sufficiently definite offer followed by a clear acceptance of the offer. Yes, there were open terms, but those terms could be implied through prior dealings and industry custom. The CISG requires only price, product, and quantity as essential terms. All were specified in the parties’ WhatsApp messages.
The court allowed FTO to recover all of its cover costs. It also allowed for the recovery of incidental damages. Finally, the court allowed for the recovery of pre-judgment interest, for a grand total of over $7.7 million, with post-judgment interest accruing as the case steams its way towards appeal.