International Business Agreements - Case Study Example

The American shipped pork livers to a German importer after ensuring that the shipment meets all the requisite standards of liver quality for an American. While the shipment is received by the German, he observes that the shipment consists of 40% of livers that do not meet his description. Consequently, he sought to let the American understand that in Germany, the livers not meeting such specifications can fetch a lower price, and thus needs to be compensated for the price reduction. On his side, the American believes that his shipment has met the required standards and therefore, cannot compensate for the loss incurred by the German (Cornell, 2001).

This conflict call for arbitration.At this point, the grounds for ruling should emanate from the analysis of who breached the agreement, and then, he is required to take the responsibility. The fact that the German importer stated that the liver shipment should be of customary merchantable quality, does not indicate whether he explained the requirements for a customary merchantable quality of liver, in terms of the sex of the animal from which the livers should be obtained (Frank, 2009). Since customary merchantable quality may refer to the conditions of the liver without entailing the description of the animal from which they were obtained, then the arbiter has two considerations to make.

If the German had included the information to the effect that animal sex of the animal is a consideration to make in shipping the livers, then the American would have been on the wrong. On the other hand, having been told to provide customary merchantable quality livers to a foreign country, then the Americans had the responsibility of studying the customary requirements of Germans before deciding to ship pork livers of both sexes. Therefore, owing to the fact that both of the traders could have subscribed to the current breach of business agreement, then, the arbiter should seek a common ground, where both of the traders share the losses incurred.

As such, the American should give the German a reasonable price allowance to guard against the sole incurrence of losses by the German (Frank, 2009). The most relevant factors of the case are that such a business transaction is subject to both home country and host country laws (Cornell, 2001). Thus, the ruling given should fit into the legal requirements of both countries.