Business Law & Ethics
Preparation of Contract (groups of 2)
Part 1 ? Identify all of the elements of a contract in detail and indicate where you find each one in the scenario given.
Part 2 ? Explain both sides arguments, determine what type of remedies that each party might seek and then explain which party you agree with and why.
Preparation of Contract Rubric
CATEGORY 4 – Above
Standards 3 – Meets
Standards 2 -Approaching
Standards 1 – Below
Content – Accuracy
(40 points) All elements of a sales contract are included and identified in the facts given. All elements of the sales contract are included and identified in the facts given with one inaccuracy. All elements of the sales contract are included and identified in the facts given with two inaccuracies. All but one element of the sales contract is included, written clearly and identified in the facts given.
Explanation of Arguments
(60 points) Conclusion identifies both sides? arguments and determines who is right with types of remedies available. Conclusion only identifies one party?s argument or does not make a determination of who is right or leaves out remedy. Conclusion does not identify arguments and does not make a determination of who is right or leaves out remedy. Conclusion does not identify arguments and does not make a determination of who is right and does not discuss remedies.
PrintCo Contracts Fact Pattern
1. Based on the fact pattern below, identify the facts that establish each of the six elements; if any are missing, identify which ones.
PrintCo is a German company established in Frankfurt that manufactures industrial printing presses. They have been in negotiations with Worldnews, an American newspaper publisher in New York, to sell them 15 new printing presses. A representative from PrintCo travels to New York to negotiate a deal with the CEO of Worldnews on January 1, 2013. At the meeting Printco offers to sell 15 printing presses at a price of One Hundred Thousand Dollars ($100,000) per unit. The parties agree to use the UN Convention for Contracts for the International Sale of Goods (CISG). Worldnews agrees to a final price of One Million Five Hundred Thousand Dollars ($1,500,000), but insists that the contract should include a clause stating that the forum for any dispute arising during the contract should be arbitrated using New York law.
Furthermore, Printco has guaranteed that it will deliver the presses by February 1, 2013. The parties have included a ?CIF clause? in the contract. Since Printco has never done business with Worldnews, they requested that Worldnews pay by using a letter of credit.
2. Assume the facts below occurred after the signing of the contract.
a. Printco?s suppliers go on strike on January 5th. Due to this disruption, Printco has to outsource and obtain the raw materials for manufacturing the printing presses from another supplier. Printco?s costs have increased by 20%. In order to please its shareholders, Printco attempts to pass this additional cost on to all of its customers. A representative from Printco calls the CEO of Worldnews and says that they will not be able to deliver the printing presses unless Worldnews pays an additional 20%. The CEO of Worldnews is furious; however, he is under a lot of pressure to get the new presses installed on time and a lot of time will be wasted if he attempts to find a new supplier of printing presses. The CEO, although hesitant, accepts to pay the new price of One Million Eight Hundred Thousand Dollars ($1,800,000).
b. Printco places the 15 presses on a ship at the port and receives the Bill of Lading. They send the Bill of Lading, the insurance certificate and all the other relevant documents to Worldnews? bank (the issuing bank), which has issued a letter of credit. However, upon reviewing the documents, the bank notices that there is a spelling mistake: Printco?s name is spelt incorrectly on the Insurance certificate. Consequently, the bank refuses to pay Printco.
c. There is a delay in the shipment, and Printco notifies Worldnews that the printing presses will not arrive in New York until February 5th. When the goods finally arrive, one of the machines is badly damaged from the boat journey.
Explain both sides? arguments, and then determine who is right and what type of remedies either party might seek? In giving your answer, explain the advantages and disadvantages of using the CISG and using letters of credit for international sales transactions. Furthermore, mention where the parties can resolve their dispute and what the advantages and disadvantages of their options are.