Please chose true or false and provide an explanation as to why

Case 8: St. Paul Guardian Insurance Co. v. Meuromed Medical Systems & Support, GmbH, 2002 WL 465312 (S.D. NY 2002), affd, 53 Fed.Appx 173 (2d Cir. 2002).

Plaintiffs St. Paul Guardian Insurance Company and Travelers Property Casualty Insurance Company have brought this action as subrogrees of Shared Imaging, Inc., to recover $285,000 they paid to Shared Imaging for damage to a mobile magnetic resonance imaging system ("MRI") purchased by Shared Imaging from defendant Neuromed Medical Systems & Support GmbH ("Neuromed"). Neuromed has moved to dismiss the complaint for failure to state a claim for relief. In an Order dated December 3, 2001, this Court held the motion to dismiss in abeyance pending submissions by the parties on German law, which, pursuant to the underlying contract, is the applicable law. The parties have now submitted affidavits from German legal experts.

The crux of Neuromed's argument is that it had no further obligations regarding the risk of loss once it delivered the MRI to the vessel at the port of shipment due to a "CIF" clause included in the underlying contract. Plaintiffs respond that (1) the generally understood definition of the "CIF" term as defined by the International Chamber of Commerce's publication, Incoterms 1990, is inapplicable here, and (2) the "CIF" term was effectively superceded by other contract terms such that the risk of loss remained on Neuromed.

Pursuant to the applicable German law -- the U.N. Convention on Contracts for the International Sale of Goods -- the "CIF" term in the contract operated to pass the risk of loss to Shared Imaging at the port of shipment, at which time, the parties agree, the MRI was undamaged and in good working order. Accordingly, Neuromed's motion to dismiss the complaint should be granted and the complaint dismissed.

Shared Imaging, an American corporation, and Neuromed, a German corporation, entered into a contract of sale for a Siemens Harmony 1.0 Tesla mobile MRI. Thereafter, both parties engaged various entities to transport, insure and provide customs entry service for the MRI. Plaintiffs originally named those entities as defendants, but the action has been discontinued against them by agreement of the parties. Neuromed is the sole remaining defendant.

According to the complaint, the MRI was loaded aboard the vessel "Atlantic Carrier" undamaged and in good working order. When it reached its destination of Calmut City, Illinois, it had been damaged and was in need of extensive repair, which led plaintiffs to conclude that the MRI had been damaged in transit. The one page contract of sale contains nine headings, including: "Product;" "Delivery Terms;" "Payment Terms;" "Disclaimer;" and "Applicable Law." Under "Product" the contract provides, the "system will be delivered cold and fully functional." Under "Delivery Terms" it provides, "CIF New York Seaport, the buyer will arrange and pay for customs clearance as well as transport to Calmut City.

Under "Payment Terms" it states, "By money transfer to one of our accounts, with following payment terms: US $ 93,000 - downpayment to secure the system; US $ 744,000 - prior to shipping; US $ 93,000 - upon acceptance by Siemens of the MRI system within 3 business days after arrival in Calmut City." In addition, under "Disclaimer" it states, "system including all accessories and options remain the property of Neuromed till complete payment has been received." Preceding this clause is a handwritten note, allegedly initialed by Raymond Stachowiak of Shared Imaging, stating, "Acceptance subject to Inspection."

Neuromed contends that because the delivery terms were CIF New York Seaport, its contractual obligation, with regard to risk of loss or damage, ended when it delivered the MRI to the vessel at the port of shipment and therefore the action must be dismissed because plaintiffs have failed to state a claim for which relief can be granted. Plaintiffs respond that the generally accepted definition of the CIF term as defined in Incoterms 1990, is inapplicable. Moreover, plaintiffs suggest that other provisions of the contract are inconsistent with the CIF term because Neuromed, pursuant to the contract, retained title subsequent to delivery to the vessel at the port of shipment and thus, Neuromed manifestly retained the risk of loss.

1. Plaintiffs complaint should be dismissed because, employing the definition of the INCO term CIF, risk of loss passed to Shared Imaging, Inc., the purchaser, when the mobile magnetic resonance imaging system (MRI) was delivered to the carrier at the port of shipment.
2. Because both the buyer and seller do business in countries (U.S. and Germany) which are signatories to the CISG, the contract dispute between the parties must be resolved by employing CISG principles.
3. The agreement between the buyer (Shared Imaging, Inc.) and the seller (Neuromed) must be in writing, because the purchase price for the MRI is $5,580,000.

4. If the MRI was sold by Neuromed to Shared Imaging, Inc. with the term EXW, the risk of loss passes to Shared Imaging, Inc. when they are unloaded from the carrier at the port of delivery.
5. If Neuromed sold the MRI to Shared Imaging, Inc., using the term and FOB New York City, the sellers expense and risk of loss end when the freighter carrying the MRI arrives at the destination dock in New York City.