International Trade Law: a Problem Question

Topics: Contract, Breach of contract, Contractual term Pages: 6 (2311 words) Published: April 9, 2012
In his letter dated 25th May 2008, Jack Williams stated that he believed Frank Wu to be in breach of several contracts, and that he would be pursuing this in the manner stipulated in the contract, that being Arbitration in accordance with the Swiss Rules of Arbitration. However, in the same letter Mr Williams stated that he would soon commence actions against Mr Wu in the Supreme Court of Victoria, thus leaving us with much ambiguity as to the applicable judiciary. However, regardless of where and before who the matter is heard, the substantive issues of law are still the same. Mr Williams is refusing to pay Mr Wu, as he is holding him to be in breach of several contractual obligations. Contractual Precedence

It seems as though Mr Williams believes that Mr Wu is in breach of contract due to the non-delivery of goods, as is stipulated in the United Nations Convention on the Contracts for the International Sale of Goods (CISG) . However, the contract between Mr Williams and Mr Wu states that the conditions as to delivery are ex-warehouse, meaning that by placing the goods in a warehouse accessible to Mr Williams, Mr Wu has completed his obligations as they pertain to delivery of the drill. And as a contractual clause will always take precedent over any relevant law expect in the case of mandatory law, the contractual clause as to the delivery conditions stands. Non – Delivery and Damages

On the 15th April, Mr Williams requested Mr Wu compensate him for the loss of the drilling machine, despite the fact that the ex-warehouse delivery clause in the contract automatically removes any liability for Mr Wu. However, the police have found the theft to be an inside job, thus carried out either by Mr Wu himself, or his employees. Whilst Mr Wu maintains he was not responsible for the theft, any criminal worth their salt would continue to maintain their innocence even in the case of guilt, and thus we cannot be sure. The issue of liability could be reopened if criminal charges were successfully brought against Mr Wu, as his conviction would negate the contractual clause, due to the nature of the mandatory law. Nevertheless, the issue of compensation for the drill is debatable. The CISG states that damages for breach of contract consist of a sum equal to the loss including loss of profit suffered as a result of the breach. As Mr Williams has yet to pay Mr Wu for the drill, he cannot claim any damages for the cost of the drill. As for loss of profit, in the same letter, Mr Williams stated, in relation to the spraying rig, that his customer was prepared to wait another 10 days. On the 25th of April, 10 Days later, Mr Wu offered Mr Williams an alternate drill, located in his factory. Assuming it takes approximately 10 days for shipping from Singapore (the assumed factory location), and Mr Williams estimated yearly profit is $400,000 , Mr Wu could be liable for 10 days lost profit, to the amount of $10,958.90. However, at this point in time, due to the contractual clause, Mr Wu was not liable for the drill at the time of theft, and therefore Mr Williams has not cause to claim compensation from him. Non-Conformity of Goods

Mr Williams has also demanded that Mr Wu repair or replace the Spraying Rig, as he claims it does not conform to his initial tests on the machine whilst it was in Wagga Wagga. In order to determine Mr Wu’s liability, we must look to the clauses in Articel 35(1) of the CISG which states: “(1) The seller must deliver goods which are of the quantity, quality and description required by the contract and which are contained or packaged in the manner required by the contract.” In his letter to Mr Wu on the 2nd Jan 2006, Mr Williams implied that he required the spraying rig to be able to operate under typical Victorian soil conditions, as he explicitly stated that as a stipulation for the drill, and also stated that he required the rig to run in tandem with the drill. In his letter to Mr Williams on the 3rd Jan 2008,...
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