Instruction:
· Short answers only.
· Related your answers to the course work
· Demonstrate you have understand the core of course
Q1:
Unique Designs is starting a new business, with plans to distribute furniture items to specialist retail outlets. It enters into a contract with Only Bamboo, the seller, to buy 1 container of outdoor furniture. Unique Designs was formed by two ex-marketing experts, both with experience in the furniture industry in Australia. However, they have little knowledge of arrangements for the carriage of goods and insurance requirements. The goods are to be sent from Bangladesh by sea to Australia.
What Incoterm from the Incoterms 2010 Rules would you recommend might best be used in this case? Explain the reasons for your recommendation. 200 words
Q2:
The UN Convention on Contracts for the International Sale of Goods (CISG) applies to the following matter.
A buyer based in Italy who sources high quality materials for use in garment manufacture entered into a contract to buy dyed cotton from an Indian seller.
The cotton was sent to a third party for washing prior to allocation to seamstresses for cutting and sewing. Due to the Easter holiday period, the washing service provider was not able to perform its service until 13 days after it received the product (20 days after the goods were received by the Italian buyer).
The third party noticed that the colour of the cotton was not consistent across all of the product. When the third party washer advised the buyer, the buyer immediately contacted the seller and sought to avoid the contract. The buyer had existing contracts for the sale of its garments which would be impacted by delay in sourcing appropriate alternative materials and it advised the seller it would also be seeking damages in this regard. In response, the seller argued that the buyer had failed to give timely notice of the non-conformity and therefore was required to pay the contract price.
Outline the advice you would provide to the buyer in this case.
Q3:
Assume the UCP 600 applies to the following transaction.
In November 2020, Stanthorpe Apples Inc in Australia entered into a contract with Friends of Farmers in New Zealand to import a second hand Applater2000, which is a specialist machine for apple picking. The agreed price was $30,000 (US currency). Payment was to be by way of an irrevocable documentary credit (letter of credit) to be opened by CitiBank and confirmed by IBC Bank in New Zealand, providing for sixty (60) day bills of exchange to be accepted against an ‘on board’ bill of lading, commercial invoices (3).
On receipt, Stanthorpe Apples arranged for the machine to be serviced, to ensure there were no issues arising from the movement/shipping of the machine. During the service, it was identified that the machine was in good working order, however it was not an Applater2000, but rather the original Applater. Outwardly, the machines looked the same, however the production capacity of the Applater2000 was significantly higher than the original (the original could harvest 200 trees per hour, whereas the Applater2000 could harvest 350 trees per hour).
Stanthorpe Apples contact IBC Bank and advise the wrong machine has been shipped and does not match the commercial invoice and demands that IBC refuse to pay on the letter of credit.
IBC Bank contacts you for advice. Confining your advice to the law concerning letters of credit (documentary credits), advise what is the legal position.
Q4:
Parties proceeded to arbitration following a dispute in relation to a contract for the manufacture and sale of goods. The parties were located in two different countries. The contract required the goods to be shipped FOB. Only three quarters of the consignment were delivered on time. One quarter of the goods were delivered separately three weeks after the delivery date. The buyer had arranged to on-sell the whole consignment, however the subsequent sale fell through because all of the goods were not available on time.
In attempting to mitigate its losses, the buyer then tried to sell the goods to another buyer. Following the sub-sale to the second buyer, it became apparent that the goods did not meet the technical specifications under the original contract.
The parties’ contract included an arbitration agreement which provided that an arbitrator would have jurisdiction over “non-technical disputes”. The agreement included provision for the use of an expert to make a binding decision in relation to any matters requiring technical expertise.
The buyer commenced arbitration proceedings, in accordance with the arbitration agreement set out in the contract, seeking damages for late delivery and failure to deliver goods in accordance with the technical specifications. The buyer also sought interest calculated from the date the second shipment of goods arrived.
The arbitrator determined that the goods did not comply with the technical specifications and accepted they were not delivered on time. The arbitrator awarded the buyer damages plus interest calculated from the original delivery date.
On an application for enforcement of the award, the seller tried to challenge the enforcement, claiming that under Art. V(1)(c) of the New York Convention, the arbitrator:
- acted outside of the matters covered by the arbitration agreement, and
- awarded more interest that the buyer had claimed.
Advise whether these are sufficient grounds for refusing to enforce the award. You can assume the UNCITRAL Arbitration Rules were applicable under the parties’ arbitration agreement.