Case Study Questions – Answer these questions [total 40 marks]
Your task is to research more information and documentation on the selected case (attached separately) and use the relevant material, including other similar cases and answer the following questions:
- What are the key facts, legal issues, rules, and outcomes of the case? Make sure to critically discuss the actual resolution of this dispute. Would you have reached a different conclusion? (5 marks)
The main issue that the court examined was whether Northam (the buyer) did an examination of the goods within the short stipulated period and if it gave notice on the lack of conformity with the agreed terms of sales to the supplier with the needed time after realizing the lack of conformity. The legal issue was a breach of contract; it was committed by one party, and it led to detrimental results to the other party as it hindered them from realizing the full package as required from the purchase of pork ribs. Hence the parties entered into a contract that was valid for the sale and purchase of pork ribs. The suppliers transferred pork shipment to a trucking company hired by the buyer, but the buyer failed to pay the supplier for the purchases, making it suffer damages. Since the buyer claimed the goods were spoilt at the point of transfer instead of claiming that only 21 boxes were unfit, it took up the burden of non-conformity. In the CISG, following the raising of an affirmative defense, the defendant faces the burden of establishing the case’s rubrics. Therefore the court rules that the buyer had to go all out and establish non-conformity. The buyer argued that no contractual terms called for an inspection of goods on delivery. According to the court, the seller needs to deliver goods that are of the appropriate quantity, quality, and appropriate description, but the seller failed to meet this condition, and that is a breach of contract.
- In relation to the case, what would you have argued and negotiated on behalf of the plaintiff to avoid a dispute in court? Make sure to recommend relevant business strategies in relation to international sales and other relevant issues. (10 marks)
The plaintiff (Chicago Prime Parkers) sold a shipment of pork frozen to the defendant (Northam Food Trading); the food was instantly accepted and given directly to the buyer. Following ten days after delivery, the plaintiff was informed of the inconveniences the meat had in terms of preservation, which caused the meat’s spoilage. Due to this reason, Northam declined to pay the vendor, and the case has transferred the case to the defendant; and the claim was the failure to observe the time limit that was needed to report the issue, which represented a lack of conformity and brought the claim for payment of the declined order. The buyer failed to comply with the obligation as the case of lack of conformity was reported late and hence breached Article 39 of the Convention on Contracts for International Sale of Goods (CISG). The provision claims that the buyer ought to notice the vendor within the required time after noticing a lack of conformity, but the defendant did not do this. According to Article of CISG, the buyer had to report the case within a short period, which according to the normal claims is few days, not extending to a week plus that the buyer took to raise the alarm. Therefore following key failures that Northam is exhibited to have of failing to inspect the goods in time and failing to give the supplier a proper report in the stipulated short while after discovering, it is clear that it is the party that breached the contract. Hence, the company ought to pay prejudgment interest to the supplier and the payment of supplied goods reported to have a lack of conformity. This is in concise with the German court that gave a leading payment of goods supplied due to the buyer’s failure to check the correct seasoning that the products were reported to lack. Due to the failure of conducting the inspection immediately and instead of taking three days, the claim is not justifiable. The lack of reports that signify inspections took the place of the products also makes the case lack any strength.
- In relation to the case, what would you have argued and negotiated on behalf of the defendant to avoid a dispute in court? Make sure to recommend relevant business strategies in relation to international sales and other relevant issues. (10 marks)
Based on article 38 of CISG, the checking of products ought to be done within a short while, which is not fully clear after how long and due to business operations of loading and offloading product, the c inspection consumed time which led to elapsing of the ten days. If the article was clear on how long the inspection needed to take, the company would have been keen enough to meet the deadline. Additionally, the supplier gave a wrong description of goods that were being transported as they claimed that only 21 boxes had holes, which was not the case, and that is a lack of conformity on their end and failure to uphold article 39 that stipulates utmost honesty in describing products. Examination of perishables is often mandatory on receipt, but there is no official requirement for the pork ribs. The lack of training that is needed to defrost and detect the product is putrid by the employees was a challenge as the product was not green and slimy as it ought to be when not in the right condition. The further dispatch of the product to Beacon created further delays as this meant more days are needed for deliveries before the full examination of the pork ribs at the drop point. Therefore, no payment is deserved as Beacon will reverse the products to this company, and payment to the seller will only result in losses for the company while it is not responsible for breaching the contract.
- How would you advise each involved party on the next practical steps to take in this matter to minimize risks and Maximize their business outcomes? (5 marks)
The defendant should agree to be responsible for the breach of contract and request a share of a product’s cost to ensure that not much loss is inclined to one side of the deal. Also, the defendant should involve Beacon in the deal and clearly stipulate the situation for all the three parties involved in the contract to have a fair share of the cost that pertains to the issue that arose. Northam should exhibit a willingness to pay the supplier for the goods supplied but still raise the claim that the goods were not inappropriate condition while agreeing to the mistake made of not reporting the case on time. The plaintiff, on the other hand, should exhibit a form of responsibility in the lack of conformity of the goods despite the late reporting by Northam. Hence, it needs to show a willingness to crack a deal that will ensure the losses from the cost of transported pork ribs are shared and not demand an entire amount. This will lead to arriving at a fair deal and ultimately promote business ties between the companies.
- What, in your opinion, are the long-term implications of the outcome of this dispute for the international trading system? (10 marks)
The responsibility of buyers and sellers participating in a trade deal is elevated, which will ensure that any cases of lack of conformity are reported on time to ensure that neither the buyer nor the seller is charged with a breach of contract. Also, the international trading system will be affected as the judges seemed to favor the US Company and failed to establish the arguments raised by Northam. The case that the defendant raised was nullified and was ruled out to have a lack of conformity while the law is not clear on the reporting duration. The ruling, therefore, affects the business ties negatively as those from the Canadian side feel that the US courts fail to treat the different parties with a form of equality that is required, and therefore the judgment was inclined to favor the plaintiff more. Additionally, the judgment will help the participants in the international trading system to exercise vigilance in conducting business procedures like inspection of goods and always aim at conforming to the regulations put up by the US law, which will ensure that cases that deal with lack of conformity are addressed with the required evidence. The ultimate implication is that business will be conducted in a much legal way, and all parties take up the responsibility of verifying the condition of goods to ensure that no issues are surpassed. The heavy interest paid will affect the perception of Canadians when dealing business with Americans as if an issue arises, the litigation system seems to have preferential treatment for its citizens.