Term Paper on "International Sale of Goods"

Term Paper 7 pages (2072 words) Sources: 1+ Style: MLA

[EXCERPT] . . . .

International Sale of Goods

The Munching Mooters et al. -- International Sales of Goods:

This study explores legal recourse for the unacceptable conclusion of a purchase and sale transaction. Specifically, the Munching Mooters ("The Mooters") of Britain contracted with a French supplier for the purchase and delivery of specialty cheeses ("goods"). The Specialist Cheesemakers' Association (SCA) "code of best practices" for shipment packaging was specified as part of the sales contract. However, the goods were damaged in transit and were unusable upon delivery. Product damage was not apparent until Geraldine, a representative of the Mooters, inspected the goods after their arrival at the Mooters location in London. Payment had already been made.

The Mooters now seek compensation for the losses they incurred; however, several issues pertaining to the purchase, transport, and ownership of goods, introduces some significant questions regarding the assignment of responsibility for damages. The Mooters have requested an independent assessment of the entire transaction from a legal recourse perspective. The Mooters documented their concerns and requested recommendations for obtaining restitution for damages suffered.

Issues: The following issues should be addressed before recommendations are made:

1. Is there a copy of the written sales contract available for review?

2. Was product insurance required as part of the sales contract?

3. Is there independent confirmation that shipment packaging complied with the Code of Best Practice as defined by the SCA?

<br />4. Was "Governing Law" defined as part of the sales contract?

a. The sale occurred in Britain but damage occurred in France;

b. France has ratified the United Nations Convention on Contracts for the International Sale of Goods (CISG);

c. Britain has not ratified the CISG and relies on the applicable British commercial law, Sale and Supply of Goods Act of 1994 (UN Convention on Contracts for the International Sales of Goods, 1980).

5. Were FOB terms clearly defined as part of the sales contract?

6. Neither "FOB Origin" nor "FOB Destination" is identified in the documentation provided to date.

7. Did the supplier's delivery to the carrier's loading dock represent full compliance with the sales contract's FOB terms?

8. Did Mouldy, a private carrier contracted directly by the Mooters, assume custody for the goods once dockside delivery was made?

Issues to be Considered.

1. What position are the Mooters in as regards suing for the loss and damage to the cheeses?

The Mooters can make a strong case for restitution. Acceptance and payment for goods does not eliminate the "Duty of Care" responsibility expected of providing parties (supplier and/or carrier). Furthermore, recovery for "undisclosed damage" is provided by most uniform commercial laws.

The trendy cheese supplier has said that its obligation was to deliver the goods to the vessel and that thereafter any loss and damage is not its liability. Is this correct?

The supplier's assertion is, as yet, unproven. The sales contract must be examined to define the actual FOB terms and conditions. Furthermore, it should be independently confirmed that the supplier complied with the "Code of Best Practice" for packaging as defined by the SCA. Failure to comply with either of these terms as stipulated in the sales contract can be the basis for holding the supplier liable for the losses incurred.

Who would you advise the Mooters to sue, and what are the various merits of any such claims?

The Mooters should sue if an insurance claim and recovery cannot be made. It is reasonably expected that the purchased product will be delivered in a usable condition. It was not. The intent of the sales contract was breached. At issue is the assignment of responsibility for the breach of contract. The details provided to date are insufficient to clearly assign responsibility; however, it appears that the carrier, Mouldy, is likely responsible for the damage and the resulting total loss of the goods. The basis for this is the consensus that the goods were delivered in good condition to the carrier's loading dock. It is believed that Mouldy's malfunctioning loading gear allowed the product shipment to be dropped resulting in a weakening of the product's packaging. It is believed the weakened packaging is the causative factor leading to the total loss of usability of the goods.

Therefore, if Moldy is uninsured, it is recommended a suit be pursued on the basis of breach of contract for their improper conveyance of goods. Specifically, Mouldy failed to properly exercise "duty of care" for the shipment entrusted to its care. The faulty loading gear maintenance is not germane to the loss suffered by the Mooters. Mouldy can pursue separate recovery against their sub-contractor for their loss (if applicable).

A b) the carriers, Mouldy, have been contacted by the trendy cheese supplier who has made it clear that it intends to recoup any damages claimed from it by the Mooters. Mouldy are of the view that they have no relationship with the cheese supplier and that they cannot, therefore, be held responsible by it for such losses. Are they correct in this view?

The supplier's stated intent to Moldy is irrelevant to the concerns of the Mooters. The key issue remains one of proper custodianship. Mouldy was contracted to transport the goods to the destination in good keeping. Mouldy accepted the goods as delivered at dockside. The key point is when and in which party's custody did the damage occur? Given the information provided, it appears the damage occurred during Mouldy's transport. Accordingly, Mouldy will need to defend itself against this assertion.

Critically analyze the extent to which a standard form sales contract would have facilitated the Mooters' relationship with their sellers.

Well-written sales contracts minimize the potential for difficulties between sellers and buyers. Essentially, the sales contract should be a written agreement that documents the rights, obligations, recourse, and recoveries should a one party perceive itself to be disadvantaged by contractual non-compliance on the part of the other party.

Following are basic components of a sales contract that the Mooters should have used. Within each component is a description of intent and, the beneficial impact the component would have had on the Mooters' purchase and sale.

Identities - defines the identity and responsibility of each party participating in the purchase and sale.

The Mooters' interest - this contract component would have identified the role and responsibilities of: buyer, seller, and carrier.

Its inclusion would have minimized the confusion that Mouldy's loading gear failure created in the product's custodial chain.

Goods - defines what is product is being bought and sold.

Note: It is recommended that this definition be increasingly more detailed as the unit cost increases.

Price - defines what is the unit cost, extended cost, taxes, and other costs considered standard with similar transactions. This definition should include any unusual fees associated with completing the transaction such as; research fees, stamps, inspections, audit, expert opinion, and the like.

3. Terms - defines the anticipated payment date (for example "net 30"), method of payment (for example cashier's check, direct deposit, escrow) and also late payment penalties (for example a fixed charge or interest penalty percentage added to the original payment due)

4. Standards of Performance - defines transaction dates, completion dates, packaging requirements

The Mooters interest - this contract component would contain the stipulation for compliance with SCA's "code of best practice" relative to the packaging of goods for shipment.

Its inclusion, with a requirement for confirmation of compliance, would be confirmed, would help ascertain the fundamental cause of product spoilage: the loading gear's malfunction or, non-SCA-compliant packaging.

5. Rights and Obligations - defines for all parties the product warranty and any other material representations made during the negotiation process prior to final agreement for the sale. The Mooters interest - this contract component would have defined the seller's and carrier's warranty for the delivered product.

6. Free on Board Terms (FOB) - defines the shipping obligations ofall parties. Specifically, it defines the location at which responsibility for "duty of care" transfers from seller to carrier to buyer. The Mooters interest - this contract component would have facilitated the compliance with "duty of care" responsibilities expected in commercial codes of conduct.

7. Insurance - defines the buyer's requirements of the seller and carrier to evidence insurability for the value of the goods during the conveyance of ownership. In sales contracts involving material sums of money, it is appropriate to document the requirements for insurance and the associated coverage limits for both seller and carrier. Additionally, it is appropriate in some instances to require a certificate of insurance in advance of the conduct of the sales transaction. The Mooters' interest with this contract component would have made minimized the potential need for legal recourse and recovery for the loss of product.

8. Product Acceptance - defines the procedures by which the parties (or their agents) will accept the delivered product. This may include independent inspection requirements and/or a provision for "undisclosed damage." The Mooters' interest with this contract component would have defined the responsibilities of the carriers (Mouldy and the vessel's… READ MORE

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