Santi Lara
Staff Editor, Delaware Journal of Corporate Law, Volume 50
Abstract
This post summarizes a prime example of a case where it dealt with airfreight and importation of articles for sale in the United States, but hinged on contract law, and not trade law.
Introduction
On November 25, 2024, then President-elect Trump kicked off the current trade war by announcing additional duties on articles imported from Mexico, Canada, and China. Since January 20, 2025, the United States has imposed additional duties on imports from other counties on articles like steel, copper, and aluminum, which have kept global trade attorneys on the frontlines of the trade war. However, attorneys who may not specialize in international trade still have opportunities to meaningfully contribute to trade-related matters because many disputes stem from fundamental contract issues. This blog examines a case that demonstrates how pivotal contract law is to navigating international trade and the importance of understanding the interplay of contracts and trade
Incoterms and the Critical Role They Play
In Tian Long Fashion Co. v. Fashion Avenue Sweater Knits, the Court was asked to decide whether the U.S. buyer, Fashion Avenue (defendant), was liable for unpaid airfreight costs from their former Chinese manufacturer, Tian Long (plaintiff).[1] Fashion Avenue produced sweaters for various seasons and contracted Tian Long to manufacture and deliver the sweaters produced.[2] After negotiating the terms of a particular sale, Tian Long would receive a purchase order from Fashion Avenue “memorializing the parties’ agreement.”[3] Importantly, each purchase order listed the incoterms as “DDP”, which stands for “Delivered Duty Paid”.[4] Tian Long claims that there were instances where the parties continued negotiations after the acceptance of the purchase order, and in some cases, there were modifications to the purchase order by Fashion Avenue where Fashion Avenue agreed to pay for some portion of the airfreight.[5]
The court found that Tian Long was liable for the airfreight costs basing their findings on New York’s Uniform Commercial Code, and the unambiguous allocation of responsibility to the shipper, Tian Long, to bear the costs under DDP terms.[6] First, the Court engaged in defining the “DDP” incoterm and the allocation of responsibilities to each party.[7] Incoterms are a widely used set of commercial terms that are published by the International Chamber of Commerce and are adopted across the trade industry to “clearly define the parties’ respective obligations regarding topics such as risk, cost, and arrangement of transport and customs clearance[.]”[8] In this instance, DDP terms required Tian Long as the seller to bear the costs and risks of transporting the goods to destination, including the various customs formalities and customs duties and taxes.[9]
Second, the Court examined whether the purchase orders constituted a complete agreement between Fashion Avenue and Tian Long.[10] Because both Fashion Avenue and Tian Long were deemed merchants under UCC §2-104, the purchase order served as a written confirmation of an oral agreement under UCC §2-207.[11] Furthermore, the terms within the purchase orders could not be contradicted by written or oral communications made prior to the issuance of the purchase order.[12] Thus, each purchase order sent by Fashion Avenue was deemed a confirmatory document that stated DDP as the incoterm that could not be invalidated by “emails, phone calls, or other contradictory evidence….”[13]
Finally, the Court considered Tian Long’s request to “consider course of dealing to explain or supplement the terms” of the purchase order.[14] Tian Long argued that it was typical for both parties to engage in negotiations after the acceptance of the purchase order, including the sharing of costs for airfreight when required thus allowing supplemental terms.[15] The Court explained that Tian Long’s acceptance of the purchase orders, whose terms Tian Long never rejected while in their possession, were binding under §2-207.[16] Additionally, the Court dismissed the claims that the terms were ambiguous on the purchase orders that incorporated the DDP terms.[17] Therefore, the Court could not engage in allowing extrinsic evidence or course of dealing to determine the intent and terms governing the parties. Ultimately, the Court found that the seller, Tian Long, was responsible for shipping costs totaling over seven hundred thousand dollars.[18]
Conclusion
The Tian Long case offers a clear example of the importance of contracts in international trade. The Court’s analysis demonstrates the importance non-trade attorneys can add by applying fundamental contract principles to disputes. The Court’s approach to examining contract formation under New York’s Uniform Commercial Code, including analyzing the integration of standard terms via the purchase order and determining the application of course of dealing, shows how traditional contract analysis for international transactions is still applicable. As businesses navigate increasingly complex international landscapes, a properly constructed contract is still essential in mitigating exposure to risks.
About the Author
Santi Lara is a 4L evening division student, at Widener University Delaware School of Law and is a Staff Editor for Volume 50 of the Delaware Journal of Corporate Law. While in law school, Santi works as the Senior Program Manager of Trade Strategy for Mechatronics & Sustainable Packaging at Amazon. Santi has a robust career in trade compliance and strategy at previous companies such as Bloom Energy, Heraeus, and Haleon. After graduating from law school, Santi hopes to further develop his career in global trade as a trade compliance attorney.
[1] Tian Long Fashion Co. v. Fashion Ave. Sweater Knits, LLC, 13 Civ. 8258, 2016 WL 4097801, at *1 (S.D.N.Y. July 21, 2016).
[2] Id.
[3] Id. at *2–3
[4] Id.
[5] Tian Long Fashion Co., 2016 WL 4097801, at *1
[6] Id. at *3–4
[7] Id. at *3
[8] John W.H. Denton, Foreword to Int’l Chamber of Com., Incoterms 2020 (2019).
[9] Id. at 86–87
[10] Tian Long Fashion Co., 2016 WL 4097801, at *3
[11] Id.
[12] Id. at *3–4
[13] Id. at *4–5
[14] Tian Long Fashion Co., 2016 WL 4097801, at *4
[15] Id.
[16] Id.
[17] Tian Long Fashion Co., 2016 WL 4097801, at *5 (finding that unambiguous contracts do not allow extrinsic evidence including the course of dealing).
[18] Id. at *1, *5 (granting defendant Fashion Avenue’s motion for partial summary judgement in part, holding Tian Long is responsible for the shipping costs).
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