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The present dispute arose out of the sale of a significant cargo (718 pallets) of explosive boosters by a Chinese manufacturer to a U.S. buyer. Under the contract, the delivery was to occur „CIF Berwick, Louisiana”. Given the explosive nature of the goods, the U.S. buyer was very concerned about the correct packaging and storage of the goods during the shipping from China to the U.S. port of destination - not only because of the risk of the goods being damaged during the sea voyage, but also because it feared to lose its authorization granted by the U.S. Coast Guard to receive explosive cargo in U.S. ports in case this cargo would arrive in an incorrect state. Accordingly, the buyer had sent numerous messages to the seller prior to the cargo being shipped, giving detailed instructions concerning loading and storage of the goods and asking the buyer to make sure these were observed.

After the goods has been loaded and the ship had departed, it hit stormy weather, and it became apparent that the explosive goods had in fact not been correctly stowed. They arrived in a damaged state in the U.S., and the buyer refused to pay.

The District Court primarily had to determine whether the effect of the CIF Incoterm had impliedly been modified by the parties by the Chinese seller implicitly taking on a duty to make sure that the goods would be stored on the ship in accordance with the buyer’s instructions. In deciding the matter, the District Court held that the INCOTERMS constitute a usage under Art. 9(2) CISG, and are therefore „incorporated into the CISG“ through Art. 9(2). (No further application of the CISG is made in the decision.)

The Court eventually held that the buyer‘s numerous messages sent to the seller before the loading of the goods had not resulted in an obligation of the seller to arrange or control the storage, and that under the (thus unmodified) CIF term the seller had fulfilled its delivery obligations when the goods passed the ship‘s rail in the port of Xingang (China).