Goodscan Contract Fact Pattern - Assignment Example

CISG Contract, Goodscan Contract Fact Pattern. PART 1. Offer and Acceptance An offer is mainly a suggestion initiated by one party to another regarding their willingness to do business based on given terms without further negotiation. The offer is made with core intentions in that, it will be binding once the addressee agrees to the set terms. Acceptance on the other hand refers to the indication by the offeree that he or she has accepted the set terms. According to Ramberg (4), an offer is considered effective after reaching the offeree. This is in accordance with Article 15, which also says that the offer can be withdrawn given that the withdrawal reaches the offeree even when it is irrevocable (Ramberg 4). This condition applies if offeree gets the withdrawal before the offer or at the same time like the offer. Goodson is the offeror, in the case being analyzed, while Hospitex is the offeree. There is an offer from Goodscan to sell Hospitex five X-ray machines. A negotiator from Goodscan travels to Toronto to make an offer to the CEO of Hospitex. Terms of the offer are two hundred thousand Canadian dollars for 5 x-ray machines. Hospitex (offeree) accepts the offer but on a condition that Goodscan includes a clause stating that incase of any conflicts in future the two parties will use Canadian law to resolve it. It is evident there is an offer and an acceptance from the offeree, but there are additions that constitutes to a counter offer according since the offeree agree to the offer on condition that the clause is included (Ramberg 5). 2. Mutual agreement A mutual agreement refers to a contract that is agreeable to both parties. Article 29 clarifies that a mere agreement of both parties can be initiated to either modify or terminate a contract (Ramberg 6). The two parties agreeing to enter into an agreement are capable of performing specific duties of the contract against each other. Ramberg (6) says each of the both parties may be precluded by each other’s conduct from asserting certain provisions to a point whereby the other party has respectively relied on the other’s conduct respectively. Any contract can be a mutual contract, as long as it binds two parties. In this case, the contract between the two parties is mutualistic in that Goodscan should deliver the goods and the offeree (Hospitex) should pay the agreed fee to Goodscan. Both parties, according to the contract, have something to benefit from each other. 3. Consideration Consideration is typically a concept of legal value in relation to contracts. It involves valuable goods promised to each other in a contract. It takes the form of physical objects, services, money, and promised actions among others. Essentially, consideration is the profit that each party gains or anticipates to get from the agreement. Consideration is often given to the relevant conditions of a given case (Ramberg 3). According to Ramberg (3), such considerations may include negotiations, possible practices established between the parties, usages, as well as the existence of subsequent conduct by both parties. Under the rules of basic law, consideration answers the questions of whether one is considering the agreement or what one is getting for being a party to the agreement. There are two considerations between Goodscan and Hospitex. These include five x-ray machines from Goodscan and CA$1,000,000 from Hospitex. 4. Competent parties Competent parties entail the legal ability of two parties to enter into an agreement. According to the united nation’s convention on contracts for the international sale of goods-the convention applies to contracts of sale between parties form two district states, when the states are contracting states, the policies of private global law lead to the application of the law of a contracting state. The two parties would depict competence if an offer is definite in that it indicates the willingness of the offeror to end up being bound if the offeree accepts the offer (Ramberg 4). Hospitex and Goodscan are from the states of Canada and France respectively. The two states conform to the aforementioned competent party qualification defined by CISG. Therefore, the two parties are competent parties. 5. Legality of purpose A contract is enforceable if it complies with the policies of a given land. According to CISG, the fact that the two entities have their places of trade in different countries, it is to be ignored whenever a point does not appear either from the agreement or from any transactions between, or from evidence disclosed by the parties at any of the contract proceedings (Ramberg 8). The element of legality of purpose is evident in the fact that Hospitex accepts the agreement on conditions that Canadian laws will be employed in case of any misunderstandings in future. 6. Proper form Proper form refers to the clauses indicated in contrasts to prevent future breach of the contract. It is typically required that an avoidance declaration of a given contract would only be effective when it is made through a notice to the second party as depicted in Article 26 (Ramberg 6). In the agreement between Hospitex and Goodscan, there are no such clauses included to prevent future breach. PART 2 1. The offeror (Goodscan) First, from the side of the offeror, it is important to consider the provisions in the CISG document. According to the provisions under Article 25, a breach of a given contract that is committed by a party is vital if it contributes to such harm to the other party as to deny him of what he is allowed to expect under the agreement. The only exception is when the entity in breach did not anticipate the same and that a sensible person of a similar kind within the same scenario would not have anticipated such a consequence (Ramberg 6). According to CISG under Article 27, it comes out that requests or any other communication that is provided or made by one party with respect to the Article part of the Convention as well as through the means that are appropriate within the circumstances, a delay or even an error in transmitting the communication or even it failure to arrive hardly deprives the party of its right of relying on such communication. The only exception is only when expressly provided in the same Part of the Convention given any notice (Ramberg 6). Finally, a description of sellers’ obligations is outlined in the CISG document under section 30. The seller must deliver the imports, hand over any booklets relating to them and then transfer the property in such goods, as required by the agreement and by this Convention (Ramberg 8). In this case, it is important also to note that the provisions of the CISG document indicates that if the seller, in harmony with the agreement or this Convention, hands the imports over to a carrier and the goods are not well labeled to the agreement by markings on the properties, by shipping documents, the seller should give the buyer notice of the batch specifying the imports (Ramberg 5). 2. The offeree (Hospitex) It is vital, in this case for the offeree to understand which provisions of the contract between him and the seller affect him as an individual. The two parties (Hospitex and Goodscan) agree to adopt the provisions of CISG document. In the document the buyer in this case should understand that under the obligations of the buyer in the convention- first, it is mandatory that the buyer pays for the goods and take delivery responsibility as required by the convention (Ramberg 15). Secondly, where a contract has been legally finished but does not implicitly or expressly solve or make recommendations for evaluating the worth of goods, the parties are considered, in the absenteeism of any sign to the disagreeing, to have made reference to the cost generally incurred at the time of finalizing the agreement for such items sold under comparable conditions in the trade in question according to Ramberg (11). 3. Both Sides of the Argument Regarding the two sides, it can be argued that both Hospitex and Goodscan are justified in their actions in the dealings. The two parties agreed to adopt the CISG in which clear provisions are provided on the issues in this case. It can also be concluded that at some point both parties have breached the provisions of the contract. This happens in terms of both their agreement and the convention. In this regard, it is important for both Hospitex and Goodscan to reach into a solution. Both are parties are at fault in various circumstances. While Goodscan has increased the price of the goods from the amount agreed at the time of the contract, Hospitex agrees to pay the new amount especially because of a clause they had included to solve any arising dispute. Regarding the delayed payment, Goodscan is at fault while Hospitex is right because Goodscan is responsible for the wrongly written name. Goodscan seems to be causing all the problems leading to the breach of the contract. The same happens when one unit is badly damaged during the shipment. Goodscan should thus pay the damages since Article 37 offers Hospitex the right to claim damages. Article 37 claims that the seller has not right to cause unreasonable expenses to the buyer, and that during the contract, the buyer retains any right of claiming damages as provided for in the Convention (Ramberg 8). There are several remedies in the situation that either parties can seek as provided for in the CISG. These remedies can provide a meaningful to the breach of contract by either of both parties. In one instance, Hospitex can upon breach of contract, exercise the rights provided for in the Convention to claim damages as provided for in articles74 to 77 of the convention (Ramberg 17). Article 37 of the Convention further provides that the seller (in this case, Goodscan) can only deliver any missing part or even make up any realized deficiency in the goods delivered only if the goods were delivered before the agreed delivery date (Ramberg 8). Hospitex is not supposed to incur any unreasonable inconveniences or even unreasonable expenses, such as having to repair or replace the damaged unit at own cost. Hospitex is mostly right, but it is provided in Article 45 that no grace period can be granted to Goodscan by any court in case the buyer resorts to a remedy in case of a breach. On the other hand and according to Article 45 of the Convention, Hospitex can seek remedy in case of breach of contract. Hospitex can exercise the rights provided in articles 46 to 52 and at the same time claim damage as provided for in articles 74 to 77 (Ramberg 10). Typically, the use of CISG as well as the use of a letter of international sales is highly advantageous to both parties. One of the major advantages is that CISG proclaims a practical approach in which freedom of contract is recognized. In this case a contract of sale can be proved by any other means, but not by writing only. This means that a breach of the contract can be resolved based on a broad range of proof (Cook). CISG also does not stick to any formalistic rules that are based on disclaimers of warranties. This aspect could be disadvantageous in case one of the parties needs the other to adhere to certain formalities. Nevertheless, a warranty disclaimer of merchantability is only effective when it is deemed to be conspicuous if in writing. The CISG promote fair and honorable contracts because it does not any hidden advantages to either party. The CISG also helps in defining the formed contract and the final terms. However, it is disadvantageous in that it provides little guidance on the exact terms of agreement. The use of CISG for international sales is further disadvantageous because undesirable outcomes may arise due to the lack of predictability (Cook). Using letter of credit for international sales is also advantageous in various ways. The buyer’s bank is obligated to pay for the goods and hence the seller is assured of being paid. The production risk is reduced in case the buyer cancels the order. The seller can also know the exact data for receiving the payment (Tutuncuoglu). The buyer can control the shipping time period, which is a disadvantage to the seller. This technique is a bit difficult due to the procedural requirement involved. Besides, the buyer has to pay even if he raises a complaint about the shipped good (Tutuncuoglu). The use of CISG seems to be a good option for both Goodscan and Hospitex, although there are varying benefits attributed to each party for either the two methods. In case of a breach of contractual agreement, the parties can seek justice from an international court of justice such as The Hague. The main reason for this is that the parties agreed to protect their contract using international contract laws and in particular the UN Convention for Contracts for the International Sale of Goods (CISG). Their case may not be solved fairly by local courts within their respective courts. However, Hospitex will be disadvantaged because of the rights protecting each party from their respective local laws would not apply. Nevertheless, an international court is important because it would ensure fairness in reaching a resolution. Works Cited Cook, V. Susanne. CISG: From the Perspective of the Practitioner. 28 Feb. 2001. Web. 8 Oct. 2014. Ramberg, Joseph. Understanding the CISG in the USA: a compact guide to the 1980 United Nations Convention on Contracts for the International Sale of Goods. 2nd ed. The Hague: Kluwer Law International, 2004. Print. Tutuncuoglu, Ömer Faruk. Turkey: Advantages of Using Letter of Credit in International Transactions. 3 Jul. 2010. Web. 8 Oct. 2014. Read More