International Commercial Law - Case Study Example

Title: International Commercial Law Customer Inserts His/her Name Customer Inserts Name of Tutor Customer Inserts Grade/Course (Date) Introduction Nader Kamal El-Hadidi Ltd (NKEH) and Egyptian company entered into contract with Big Buck Metals Pty Ltd (BBM). NKEH ordered 7000 tons of scrap lead from BBM. This was confirmed through a fax that stated that they needed 2,000 tons of mixed scrap metal which were to be delivered to the port of Alexandria on or about 10th January 2012. Additionally, there was 2,000 tons of battery plate’s lead which were to be delivered before 20th January 2012. The remaining 3,000 tons were to consist of a mixer of scrap lead which was to be in equal parts made up of mixed scrap and battery plates which were to be delivered to the same port on 3rd march 2012. On arrival of all the requested goods, NKEH had organized re-shipping to Dubai with a vessel that was only to be in the port of Alexandria on two days, leaving on 4th march 2012. BBM confirm to deliver the goods will be delivered through a fax. NKEH paid for the initial two deliveries in advance but the first delivery of mixed scrap lead never arrived. Later 4,000 tons of scrap lead arrived on 19th January 2012. In this delivery, the package did not meet the requirement of the buyer for 300 tons consisted of battery plates and large quantity of alloys. On 2nd February 2012, NKEH contacted BBM about the delivery and demanded a prompt delivery of 2000 tons of mixed scrap lead which were to be delivered by 10th January 2012. In the same fax, they explained their desire to keep the delivery of 4000 tons of scrap lead despite their poor quality. NKEH also they also stated that they are cancelling the remaining order for they have for they had lost confidence on BBM’s ability to deliver goods on time. There were anomalies which occurred in this case, the contract was not honored at all. Contract Law There is a clear indication of a contract for sale. The contract of supply of goods to be produced is considered a sale when a party who ordered the goods undertakes to supply a substantial part of the materials necessary for their production. In this case, NKEH contracted BBM to supply mixed scrap lead on specific dates and therefore there was a contract for sale that they entered. Both confirmed the same through fax. In accordance to the Sales of Goods Act allow for written or even oral contracts and this was clearly addressed in this case through fax (Peter 1995). There was a fundamental breach in this case. Borrowing from chapter 25, a breach of contract committed by “one of the parties is fundamental if it results in such detriment to the other party as substantially deprive him of what he is entitled to expect under contract”. BBM was supposed to supply 2,000 tons of mixed scrap metal which were to be delivered to the port of Alexandria on or about 10th January 2012 and 2,000 tons of battery plate’s lead which were supposed to be delivered on 20th January 2012. This never happened and the expectations of NKEH were cut off. Under the UCC NKEH is entitled to rejecting the goods that fail in any respect to conform to the contract. According to the contract, BBM was supposed to deliver 2000 tons of mixed scrap mental and the same amount of battery plate leads. However, the supply was not in accordance to the contract. This therefore means that, the seller violated the perfect tender rule. A buyer may reject goods or cancel the contract, even if the defect in the tendered goods is not serious and the buyer would have received the goods as he had bargained. The seller must deliver the goods on the date fixed in the contract. This is well elaborated in the Article 33 CISG. In case the seller disobeys this, then the buyer cannot fulfill his obligation and thus has the right to avoid the contract. Under Article 8 1(2), NKEH is entitled to claiming what they paid under the contract (Djakhongir 2002). In the same scenario, after the avoidance of the contract, the seller is entitled to damages which suffered. In the event of compromised quality for which the seller is liable and which amounts to or exceeds ten percent of the contract price buyer may either take the goods with the allowance or even reject them without prejudice in his rights (John 2005). This being the case, NKEH could either accept the goods delivered irrespective of their quality, more alloys, or reject them. BBM never honored the contract at all, in the deliveries made; none met the requirements of the contracts as was agreed in the first place. If a party deliver the products as not speculated in the contract, or the products are rejected by the other party, or contract terminated, then the company in accordance to the law entitled to its accrued rights against the other party (John 2005) who in this case happens to be BBM, of or late delivery, to obtain the same products from another party in such event to reject late delivery in favor of another company and all the costs incurred in doing so from alternative sources, including the administrative costs and any positive price differential for the products, should be borne by the selling company (Djakhongir 2002). This being the case, NKEH can opt to have the products sought from another source and all the cost incurred in the same charged to the account of BBM. In article 74 of the CISG, the damages for breach of contract by one party consist of a sum equal to the loss, including loss of profit suffered by the other part as a result of the breach (Eric 2002). However the law is clear on the same issue that, it does not cover any the loss which the party in breach foresaw or was supposed to have overseen at the time the contract was concluded. This being the case, the aggrieved party which happens to be NKEH, was supposed to be in the position that could have if the contract was performed. Additionally, under article 50, NKEH is entitles to reduce the price of the products delivered. In this case, BBM delivered 4000 tons of scrap lead which arrived on 19 January 2012 did not meet the quantity and the quality specified in the contract. Thus, the reduction of price in the same proportion as the value of the goods actually delivered bears to the value that the conforming goods would have at that time (Djakhongir 2002). NKEH can also claim a refund of the price paid with interest. In the presence of a breach to contract, the buyer can claim a refund of the price incurred and Art. 84 states that, the seller should pay the same with interest on it from the time the buyer paid the price (John 2005). This there means that NKEH is supposed to be refunded the money paid for the goods which were never delivered and BBM ought to pay the same with the interest accrued. Non conformity of goods is well elaborated in this case. The breach of contract not only arises when goods are defective but also even when they are packed in defective quantity or are not conforming to their description (Djakhongir 2002). NKEH can also avoid the contract because the seller did not deliver the goods in time. Even though the seller knew that there were prior plans for the goods to be re-shipped to Dubai, he did not follow the requirements of the contract by making sure that all the goods are available to the buyer in time and in the quality and quantity declared in the contract. Conclusion NKEH suffered detrimental damages when BBM failed to comply with the contract they entered in earlier on. When the buyer communicated to the seller through fax and they both agreed on the transaction, a contract was enacted and ought to be obeyed. However, BBM breached the contract when they failed to deliver the goods in time and at the same time, delivered goods which did not conform to the dictated quality. This being the case, NKEM has a right to reject the goods for they did not comply with his declared quality. In the same case, the buyer ought to be compensated on the loss of profit he incurred through the breach bearing in mind that, the seller never communicated to the buyer explaining the reason of the failure and avoidance of the contract. BBM ought to pay NKEM all the damaged incurred due to this breach. First, they ought to pay the price paid by the buyer plus the interest gained from the time of payment. This is due to the fact that, the buyer never benefited from the contract due to a breaching that occurred on the side of the seller. The breach of contract not only arises when goods are defective but also even when they are packed in defective quantity or are not conforming to their description, this therefore entails that, BBM breached the contract by not even delivering the goods in time. References Gotanda, John Y., 2005. Awarding Damages under the United Nations Convention on the International Sale of Goods: A Matter of Interpretation, Georgetown Journal of International Law, Vol. 37, Issue 1, , pp. 95-140 Schneider, Eric C., 2002. Measuring Damages under the CISG - Article 74 of the United Nations Convention on Contracts for the International Sale of Goods, Pace International Law Review, Vol. 9,2001 , pp. 223-238 Saidov, Djakhongir.2002. Methods of Limiting Damages under the Vienna Convention on Contracts for the International Sale of Goods, 14 Pace Int'l L. Rev. p 307 Winship , Peter. 1995. Changing Contract Practices in the Light of the Convention: A Guide For Practitioners, 29 Int'l Law 525, 528 Read More