VLM Food Trading Int'l, Inc. v. Ill. Trading Co., 811 F.3d 247 (7th Cir. 2016)

Plaintiff (“VLM”) is a Canadian based agricultural supplier who contracted to send multiple agricultural shipments to Illinois Trading, an Illinois-based produce reseller.  The parties completed nine shipments of produce without incident; Illinois Trading then encountered financial difficulty and stopped paying VLM’s invoices. 

As recounted by the Seventh Circuit, the transactions took place in the following manner:

  1. Illinois Trading sent a purchase order specifying the item, quantity, price, and place of delivery for the potatoes. 
  2. VLM responded with an e-mail confirming the terms of the sale. 
  3. VLM shipped the order and Illinois Trading accepted it. 
  4. VLM followed up by mail with an invoice.

VLM’s “trailing invoices” included a provision purporting to make Illinois Trading liable for interest and collection-related attorney’s fees if Illinois Trading breached the contracts. 

The dispute centered on the enforceability of the prevailing-party provision in the trailing invoices.  The contract was governed by the U.N. Convention on Contracts for the International Sale of Goods (the “CISG”).

Unlike the Uniform Commercial Code, the CISG applies the common law “mirror image rule.”  Therefore, VLM’s reply to Illinois Trading’s acceptance—which added the term relating to attorney’s fees—did not control the contractual relationship.

VLM argued that the CISG “commands” courts to examine extrinsic evidence to determine the parties’ intent in contracting.  The court found, however, that VLM had presented no evidence of Illinois Trading’s subjective intent to be bound by the attorney’s fees provision in VLM’s trailing invoices.  The Seventh Circuit also rejected VLM’s argument that, under CISG Article 9(1), the parties had established a “practice” as to paying attorney’s fees in disputes over the shipments.