OneLBriefs

Frigaliment Importing Co. v. BNS International Sales

D, a NY sales corporation, entered into contracts with P, a Swiss corporation, to sell P certain amounts of chicken at certain prices.
P sent D stewing chickens ("fowl") instead of young chickens suitable for broiling and frying as D expected.
The negotiations did not mention what kind of chicken would be used.
The cable messages that were used to form the contracts were mostly in German, but they used the English word "chicken".
P sued D for breach of contract because they didn't deliver the kind of chicken D thought it was supposed to get.

District Court found for D, term "chicken" in trade usage meant any kind of chicken, not just young chicken.

Can a court use parol evidence to determine the meaning of an ambiguous term and its usage in the contract?

A court may use parol evidence to determine the meaning of an ambiguous term and its usage in the contract.

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.
P asked D what kind of chickens they wanted and received the answer, "any kind of chickens".
When one of the parties is not a member of the trade circle, his acceptance of the standard must be made to appear by proving either that he had actual knowledge of the usage or that the usage is so generally known in the community that his actual individual knowledge of it may be inferred.
NY demands a showing that the usage is of so long continuance, so well established, so notorious, so universal, and so reasonable in itself, as that the presumption is violent that the parties contracted with reference to it, and made it a part of the their agreement.
D offered evidence that USDA regulations refer to chickens as all types of chickens; also, many people in the industry see chickens as a general category of poultry, not as a young chicken.
D's objective meaning of chicken coincided with one of the dictionary meanings, with the definition in the Dept of Agriculture Regulations, with at least some usage in the trade, with realities of the market, and with what P's spokesman had said.
P has the burden of showing that chicken was used in the narrower rather than in the broader sense and did not do so.

The question is a pure issue of interpretation, has nothing to do with parol evidence rule.
In interpretation cases, the P has the burden of proof as to its interpretation.
This is different from the Peerless case because there is one side who has more knowledge than the other.