Judgments in Civil and Commercial Matters - Case Study Example

INTERNATIONAL LAW OF CONTRACTS Relevant legal issues On the issue of the contract with a Mexican based company, Segal Corp (Segal), for the sale of 3,000 brushed steel rods of the best quality, the agreement stated that Segal Corp agree to ship the 3,000 brushed steel rods from Tampico, Mexico to Southampton no later than 15th September 2008 and that Segal will make all necessary shipping arrangements, pay the carrier, insurance and agree to tender the bill of lading and all other required documentation to TradeProm via its Bank in England (Leman Sisters Ltd). The rods were indeed shipped on 10th September 2008 on board The Samba Carnival a ship chartered by Amazona Ltd from the shipowner, Pacific Liners Inc. and Segal had prepared a bill of lading for the Master of the Samba Carnival to sign but unfortunately the date was incorrectly recorded as 11th September 2008. The bill of lading stipulated that the goods were "received in apparent good order and condition" and compliant with the commercial invoice. The condition of the goods was further confirmed by the certificate of inspection issued on loading. Private international law often varies according to the type of parties involved in the contractual arrangement. Most times, consumers are protected by rules that aim to make sure that the law is applied as far as reasonably possible for the consumer. The location of the parties in the contract is also an element that is often used by international laws. These laws refer to places like the domicile or habitual residence of natural persons, or the principal address or place of business of a given company. A news report in the financial section of the Broadcasting Finance Corporation (BFC) by Chief Economist Roberto Preztono has sparked a rumour that a well established bank in the UK is experiencing severe cash flow problems, and the informed opinion in the finance sector seem to suggest that the bank in question might be Leman Sisters. The Samba Carnival arrived in Southampton at the end of October and on inspection there appeared to be some concerns about the condition of the consignment of steel rods. A significant portion of the consignment was discovered to be rusty and there was some doubt as to whether the goods would match the specifications required under the agreement. Although the ship's manifesto records that the ship encountered a heavy storm during the voyage and water entered into the hold, it is hard to determine the real cause of the damage. A consignment of timber stowed above the steel, was reported as being water logged. It was also reported that there had been a significant breakdown in the communication and management of the ship during the course of the voyage. Apparently 8 of the 16 crew members (including the new trainee cook) were suffering from food poisoning. Of the remaining 8 crew members who did not sample the cook's culinary debut was the First Lieutenant who categorically refused to leave his cabin. It has since transpired that the First Lieutenant was in fact an undercover investigative journalist trying to expose harsh working conditions on merchant ships. It appears that his CV and references were not checked by Amazona Ltd before confirmation of employment. In this instance, a party can be excused from liability to a claim of damages when there is a failure to perform, that can be attributed to an impediment that is beyond the control of the party's, or a third party sub-contractor Such an extraneous event might elsewhere be referred to as force majeure, and frustration of the contract. The place of performance of a contract also plays an important role in some private international law rules. When the performance of the transaction involves some physical contact with a given jurisdiction, e.g. delivery of the goods ordered, the fact that the contract was concluded on line does not as such raise any problems. The problems arise when the contract is not only concluded but also performed on line. The place of performance then becomes much more difficult to identify. The same holds true for the place of conclusion of a contract, an element which still plays a role in some private international law rules (http://www.lib.purdue.edu/govdocs/intrade.html) There was also an agreement that Segal will take out marine insurance (Institute Cargo clauses A, B, C) for the steel rods and to tender the relevant insurance policy to TradeProm.and that TradeProm agree to pay a lump sum to Segal Corp on tender of the documents for the arrangements made by Segal. The letter of credit was opened by Leman Sisters, confirmed by C'Ash Bank. Although Segal Corp contacted the Master of the Samba Carnival asking him to change the date on the bill of lading to the 10th September which was done and Segal consequently re-tendered all relevant documents including the second bill of lading. On receipt of the second tender, Leman Sisters Bank has insisted that it will require 6-8 working days to inspect the documents. Further the bank contacted TradeProm requesting instruction as it suspects fraudulent activity with regard to the changed date on the bill of lading An issue of international character of a transaction also arises here. Private international laws would usually only be applied when the underlying transaction is of an international nature, although this might not be explicitly formulated. Another issue that arises is whether all the transactions concluded and/or performed can deemed to be international. Generally, the goods have to be of the quantity, quality and description required by the contract, and must be suitably packaged and fit for purpose. The sender is obliged to deliver goods that are not subject to claims from a third party for infringement of industrial or intellectual property rights in the State where the goods are to be sold. "The buyer is obliged to promptly examine the goods and, subject to some qualifications, must advise the seller of any lack of conformity within 'a reasonable time' and no later than within two years of receipt." (http://intlaw.univie.ac.at/uploads/media/D_164n.doc) As long as the breach is not fundamental, the contract is not voided and it is possible to seek for remedies, including specific performance, claiming of damages, or price adjustment. Any Damages awarded must conform to the common law rules, as was the case in Hadley v Blaxendale, but the test of foreseeability is arguably substantially broader, and may be more generous to the aggrieved party as a result. Segal Corp checked the document to confirm the amount of the credit but did not check anything else. The required documents were delivered by Segal to Leman Sisters Bank in London; however the documents were rejected on the basis of the discrepancy between the date on the bill of lading and the shipment period. Accordingly the insurance certificate was also rejected as unacceptable. Both Parties were also supposed to agree to a method of dispute resolution and Property in the goods was to pass on tender of documents. Also, Applicable conflict of laws rules on jurisdiction and choice of law to be agreed by the parties. Once the applicable law for the contract has been ascertained, the questions that arise as a result of this law must be defined. In this respect, there will be a question of whether if and how the Codes of Conduct and guidelines are the product of self-regulation can be part of the contract. International trade affects our lives every day when we buy goods and services imported from other countries or when goods and services produced by companies in our community are exported to other countries. Trends and developments in international trade affect the prices we pay for various goods and services as well as local, state, national, foreign, and international economic conditions. Governments publish tremendous amounts of statistics and analysis on international trade and many government agencies produce international trade information (http://intlaw.univie.ac.at/uploads/media/D_164n.doc) If at any time during or after the currency of this Concession any difference or dispute shall arise between the parties about the interpretation or performance hereof, or anything contained herein, or concerning the liabilities and rights of either of the parties, and if the parties should fail to come to an agreement on the dispute, then the parties shall, be referred to two Arbitrators, one of whom shall be appointed by each such party, and an Umpire who will be appointed by the Arbitrators after having being appointed by the parties in dispute. Interpretation of the prevalent laws should also take account of international character, and the need for uniform application and the need for good faith in international trade. Disputes over interpretation of laws should be resolved by application of general principles, and applying the rules of international law. References Lugano (1988) Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters Hague Convention on International Jurisdiction and the Effects of Foreign Judgments in Civil and Commercial Matters http://www.lib.purdue.edu/govdocs/intrade.html http://cuiwww.unige.ch/'billard/ipilec/com1ques.doc. http://www.jus.uio.no/lm/ec.efta.jurisdiction.enforcement.judgments.civil.commercial.matters.convention.lugano.1988/doc.html (Consolidated version published in OJ C-27/1, January 26, 1998) http://intlaw.univie.ac.at/uploads/media/D_164n.doc Read More