Analysis of International Business Law Cases - Assignment Example

Question The contracting parties, Mellow Wine Company and Tippler Distributing Company agreed that Mellow, an exporter, will sell 245 cases of wine to Tippler, the importer. During the course of their transaction, an unforeseen risk, in the form of a storm, caused the vessel containing the shipment to be lost at sea. As a result, Tippler refused to pay for the cost of the goods, arguing that the risk for the casualty rests on Mellow, leading Mellow to file a lawsuit against Tippler in Mellow's home country. Thus, the following legal issues arise: (1) whether or not the risk has passed from the seller Mellow to the buyer Tippler, and (2) whether Grape Country has jurisdiction over the case. With regard to the first legal issue, because no agreement was made between the parties either as prior verbal agreements in interpreting the contract and upon writing of the contract, and on the use of any trade terms regarding the delivery of goods and on the passage of risk, Articles 31, 32 and 67of the United Nations Convention on Contracts for the International Sale of Goods (CISG) applies. According to Article 31, which outlines the obligations of the seller: If the seller is not bound to deliver the goods at any particular place, his obligation to deliver consists: (a) If the contract of sale involves carriage of the goods - in handing the goods over to the first carrier for transmission to the buyer. (Article 31) Thus, Mellow, upon delivering the wine to S.S. Minnow for delivery to Ambrosia and identifying it as belonging to Tippler with the appropriate shipping documents and markings has concluded his end of the transaction and the risk, as outlined in Article 67 stating that: (1) If the contract of sale involves carriage of the goods and the seller is not bound to hand them over at a particular place, the risk passes to the buyer when the goods are handed over to the first carrier for transmission to the buyer in accordance with the contract of sale. (Article 67), has passed to Tippler. Furthermore, Tippler's argument regarding the lack of prompt notice coming from Mellow regarding the shipment may be deemed void by courts because as further outlined by Article 32(3), if the seller is only bound to give notice regarding the shipment if notice was requested by the buyer. Thus, the lack of terms of trade in the contract makes Tippler's defence, stating that the risk has not passed, to have little chance for success because Mellow concluded his obligations to the contract upon delivering the shipment to S.S. Minnow in Small Port. Furthermore, the fact that the goods were lost at sea indicates that the damage occurred after the risk was passed, strengthening Mellow's case. However, even though Tippler's defence is weak with little chance for success, Grape, the country where Mellow filed the lawsuit, has no jurisdiction over the case. While the contract between the two parties was not clear in identifying the terms of trade for the transaction, it was clear in stating that disputes regarding the transaction will be heard in the courts of Ambrosia designating the CISG as its governing law. This accords the jurisdiction for the case to courts in Ambrosia and not Grape. Furthermore, since no place of delivery was properly ascertained, there is no definite place of performance that can be identified, aside from the one mentioned in the contract to choose the appropriate court. Mellow's action of filing a suit in Grape instead of Ambrosia can then be considered as a substantial breach of contract due to the fact that although the contract was meant to guide the parties' actions relating to the transaction, it, at the time of signing, ended up being less of a contract for a transaction regarding sales, and more of one regarding dispute settlement. Thus, Tippler can then use this to avoid the contract on the basis of a breach of contract on the part of Mellow. Thus, it is advisable for Tippler to withdraw from the litigation and disregard Mellow's lawsuit by virtue of the fact that Grape, the country where Mellow filed the lawsuit has no jurisdiction over the case and Tippler. Furthermore, Tippler can also sue Mellow for its action of filing a case in Grape instead of Ambrosia to be relieved of the contract. This will save Tippler from facing the same charges it is facing now Grape, if Mellow sues in Ambrosia in the future. Question 2 During the events surrounding their transaction, Consumer Company agreed to purchase 10,000 jars of wattle jam for $100,000 from Wattle Corporation, to be shipped using CIF through the Happy Traveller carrier in Petal Port, under Incoterms2000. Upon obtaining the shipment, however, Consumer discovered that not only were 1,000 bottles of jam destroyed during transportation, but Wattle, instead of sending 1,000 bottles of wattle jam as previously agreed upon, sent only 8,000 bottles of wattle jam and replaced the remaining 2,000 bottles with strawberry jam. Under these circumstances, the following legal issues arise: (1) whether a clean bill of lading was issued, and (2) the enforceability of the irrevocable letter of credit issued by Consumer's bank Food Bank, naming Wattle as the beneficiary. Based on the legal issues presented, the following rules apply: (1) Incoterms2000, 19; (2) Incoterms2000 on CIF, Seller's Obligations; and (3) Hague-Visby Rules Article 3 (5). With regard to the first legal issue, it was clear in the contract that Wattle agreed to sell to Consumer 10,000 jars of wattle jam. Thus, the contract stated not only the amount of jars to be purchased, but also the specific type of jam. According to Incoterms2000, under CIF terms, it is the seller's main obligation to provide the goods in conformity with the contract. By sending 8,000 bottles of wattle jam and 2,000 bottles of strawberry jam, Wattle did not conform to the contract. Thus, should this event affect the bill of lading According to Incoterms2000 the bill of lading under CIF terms must fulfill three functions: proof of delivery of the goods on board the vessel, evidence of the contract of carriage, and a means of transferring rights to the goods in transit to another party by the transfer of paper documents to him." In this sense, although Wattle did not ship 10,000 jars of wattle jam, he did, however, ship 8,000 jars, which sufficed the three functions that a bill of lading must perform under Incoterms2000. However, Wattle violated Article 3(5) of the Hague-Visby Rules stating: The shipper shall be deemed to have guaranteed to the carrier the accuracy at the time of the shipment of the marks, number, quantity, and weight as furnished by him, and the shipper shall indemnify the carrier against all loss Thus, by allowing the carrier to issue a bill of lading stating that 10,000 wattle jams were in the crates instead of 8,000 wattle jams and 2,000 strawberry jams, the bill of lading should either be invalidated or revised to state the correct shipment. Thus, in either sense, Wattle should not be considered as having completed concluded his obligations in the contract. Furthermore, depending on the agreed shipment date, if the date has passed, Wattle could be considered to be in breach of contract because of his failure to conclude his obligations under CIF terms. Can consumer, therefore, prevent payment to Wattle through the letter of credit Wattle can only receive payment if it succeeds in presenting a clean bill of lading. Thus, even though the letter of credit is irrevocable, it is only irrevocable insofar as Wattle presents the proper documents to Food Bank. Consumer can therefore prevent payment by having the clean bill of lading revoked due to its inaccuracy. If Consumer proves that Wattle is in breach of contract because Consumer only received 8,000 jars of wattle jam, even with consideration to the goods damaged, Consumer, based on the terms of their agreement can actually avoid the contract and sue Wattle. This, however, is only possible if the two parties agreed on a date of shipment Wattle is unable to complete the remaining shipment of 2,000 jars on time. Consumer can have the bill of lading revoked, and prevent paying Wattle because the latter will not have the necessary documents to secure the payment. However, if based on the contract, there is still time for Wattle to make another shipment for the 2,000 jars of wattle jam and decides to send them to Consumer and receive a clean bill of lading, at the same time allow the previous bill of lading to be revised to read 8,000 jars, then Consumer may not be able to prevent Food Bank from paying Wattle. Thus, based on the given case, Consumer can only prevent Wattle from receiving the payment if it can have the bill of lading revoked and prevent Wattle from making the rest of the shipment by avoiding the contract by virtue of Wattle's initial breach of contract. Question 3 The case between Big Brother Company and Leatherette Company with regard to the actions of KopyKat Company, KopyKat, a new company that identifies Big Brother as its guarantor in several loans, allegedly copied a distinctive handbag design by Leatherette. However, upon being liquidated, Leatherette, instead of suing KopyKat sued Big Brother instead, given its apparent relation with the latter. Thus, as a result, the following legal issues arise: (1) whether copyright infringement resulted from KopyKat's production of the Twin bag, (2) whether Big Brother should be liable for the actions of KopyKat, and (3) whether State A, the location of Big Brother and Leatherette has jurisdiction over the case. In order to assess the given cases, the following rules apply: (1) Article 2 of the Berne Convention for the Protection of Literary and Artistic Works, (2) Effects Test, (3) Jurisdictional Rule of Reason Test, and (4) Touche Ross and Company v Bank Intercontinental, Ltd. Since both States A and B, the states involved in the case, both incorporated the WIPO Copyright Treaty and consequently utilizes the Berne Convention for the Protection of Literary and Artistic Works in elucidating such treaty, then the question of defining what type of products are to be protected by copyright laws, are therefore in question. In order to claim copyright infringement, Leatherette must prove that the "Duo" bag, which they produce, must be protected by copyright. According to Article 2(1) of the Berne Convention for the Protection of Literary and Artistic Works, "'literary and artistic works' shall include every production in the literary, scientific and artistic domain" or other forms analogous to it. Since handbags are not expressly mentioned in the article, it must be considered as a work analogous to any of the mentioned products to be given copyright protection. The nearest product that it can be compared to, are therefore works of applied art. Such consideration, however, is up for interpretation. Thus, it can be argued that handbags are not applied art in the sense that it is not considered nor bought by consumers to be treated as such, but as a practical item. Furthermore, since the WIPO Copyright Treaty states that "[c]opyright protection extends to expressions", the only way Big Brother or KopyKat can be relieved of copyright infringement is if they argue that the product, even though it was copied, is not included in the scope of protection. On the basis of whether Big Brother should assume responsibility for the actions of KopyKat, by virtue of Touche Ross and Company v Bank Intercontinental, Ltd., Big Brother should be liable for KopyKat because even though the latter was incorporated as a separate company in a different country, the two companies can be considered as functioning as a common enterprise where Big Brother is distributor to the products that KopyKat produces. The existence of common staff and workers and the role of Big Brother as guarantor to KopyKat's loans only strengthen Big Brother's relation to KopyKat. Furthermore, as distributor to KopyKat, Big Brother, even if it is considered as a separate enterprise and not as 'parent' company to KopyKat, will still be liable for the copyright infringement, perhaps not on the basis of its reproduction but on its distribution. Lastly, State A will have jurisdiction because the products are exported and sold in State A, by virtue of the Effects Test; and since Big Brother and Leatherette (the plaintiff and defendant) are both located in State A, by virtue of the Jurisdictional rule of Reason Test. Based on the aforementioned issues, Leatherette was correct in suing Big Brother in State A because Big Brother is liable of copyright infringement either as 'parent company' to KopyKat or as an accomplice to the copyright infringement by distributing the products in State A. Furthermore, it is only correct to sue in State A because the distribution of the products and the effects of the copyright infringement took place there, as well. With regard to Big Brother's defense, it will be difficult to defend itself on the claim that copyright infringement did not take place, nor on the claim that it has no connection with KopyKat. Its best defense, therefore, would be to argue that even though the Duo bag was copied through the Twin bag, copyright infringement did not take place because handbags are not and should not be protected by copyright laws because it not a work of art or applied art, but a practical item, which does not merit protection. Question 4 The case of Angie Happy and her passport being revoked by State V illustrates an incident where the lines between travelling domestically and internationally, at least within the context of the European Community, have been blurred. Angie, who is a citizen of State V and travels often as an employed actor and student in State U, which are both members of the European Community, had her passport revoked by virtue of a promissory note that she did not honour. Under this case, several legal issues arise: (1) the validity of promissory notes, (2) the right to travel, and (3) controls for passports. With regard to the legal issues, Articles 75 and 76 of the Convention Providing Uniform Law for Bills and Promissory Notes, European Parliament and Council Directive 2004/38/EC, Article 13(2) of the Universal Declaration of Human Rights, and Directive 64/221/EEC applies. First, under Articles 75 and 76 of the Convention Providing Uniform Law for Bills and Promissory Notes, promissory notes are not valid unless the signature of the drawer, in this case Angie, is present in the note. As was presented in the case, the promissory note she gave to the President of State V did not include her signature, thus relieving her of liabilities from the note. Even though she did say that she gave the President the promissory note, its lack of her signature, and the President's insistence on the promissory note despite such, may even implicate bad faith in the part of the President. Second, regarding her ability to travel, while she cannot leave the European Community without her passport, Angie, being a national of State V can freely move between States V and U to finish her movie and attend her graduation. According to Directive 2004/38/EC: All Union citizens have the right to enter another Member State by virtue of having an identity card or valid passport. Under no circumstances can an entry or exit visa be required. Where the citizens concerned do not have travel documents, the host Member State must afford them every facility in obtaining the requisite documents or having them sent. (European Parliament and Council Directive 2004/38/EC of 29 April 2004) Unlike the case of State vs. Nagami, regional travel within the most European communities, including States U and V, is a right for nationals of Member States in the European Community by virtue of the Treaty Establishing the European Community, especially for Angie's case where she is employed and studies at State U. All she needs to travel is a valid identification card. Furthermore, even if she does not have travel documents, she can simply ask for State U's assistance in allowing her to re-enter State U, which the latter is required to give her on the basis that there are no substantial grounds for her to be disallowed from entry. This right stands even with the revocation of her passport. Furthermore, Angie's case does not satisfy any of the conditions identified within Directive 64/221/EEC of 25 February 1964, which outlines the exceptions to the freedom of movement accorded to Union nationals; her ability to travel within the region is not affected. The Directive states: Measures taken on grounds of public policy or public security must be based exclusively on the personal conduct of the individual concerned. Previous criminal convictions do not in themselves constitute grounds for the taking of such measures and expiry of the identity card used by the person concerned does not justify expulsion from the territory. Council Directive 64/221/EEC of 25 February 1964 With regard to the reinstatement of Angie's passport, she must first settle the issue regarding the promissory note either in courts and argue the invalidity of the promissory note due to the absence of her signature in the note. Upon clearing her name regarding the promissory note, she must then re-apply for her passport and argue that State V was not within their rights to cancel her passport because she did not violate any domestic laws. The aforementioned situation, however, should not affect her ability to travel within the European Community, especially State U where she has valid reasons for travel. Thus, she should still be able to attend her graduation and finish her movie. Read More