Reference no: EM1333397

Dracca is prohibited from selling its Funny Bunny toys in the United States because they do not meet product safety guidelines. Because there is a high profit margin on these toys, Dracca sells them overseas via electronic contracts. Dracca offered 100 cartons of Funny Bunny toys to a retailer in Canada known as Northern Toys, Ltd (NT). NT accepted the offer, stating, "We accept your offer for 100 cartons of Funny Bunny toys, but require an additional 20 cartons of Happy Hippos for the same price."

Another international retailer with which Dracca does business is Baby Supplier out of Mexico. Baby Supplier discovered it could easily manufacture the GlideStride stroller for much cheaper in its plant in Mexico City. The GlideStride is patent pending in the United States.

The GlideStride is shipped to six other countries, including several countries in the European Union. Upon shipment to the EU, a Dracca employee offered a customs official $1,000 U.S. dollars in exchange for levying duties on only half of the shipment. This could save Dracca $5,700 U.S. dollars over a two-month period.

The GlideStride is manufactured by Dracca in Indonesia at a plant that employs children as young as eight. Recently, a television news program in the United States reported that Dracca products were made in factories where workers were paid less than the applicable minimum wage, were required to work excessive overtime, and were exposed to toxic chemicals in violation of applicable health and safety laws. It was noted that the GlideStride could not be manufactured in the United States due to environmental restrictions.

Dracca issued publicity refuting the allegations of the television report. Tanya Crier sued Dracca on behalf of the public, claiming Dracca's statements were false and misleading. Dracca moved to dismiss the complaint, noting its statements were protected under the First Amendment to the United States Constitution.

In light of these facts, please respond to the following questions using course material and credible outside research to support your findings.

1) What are the ethical considerations of Dracca selling the Funny Bunny toys in Canada when they are banned in the United States?

2) Under the CISG, has Dracca entered a contract with NT? Why or why not?

3) What are the legal and ethical ramifications of the Dracca employee's offer to the customs official?

4) What legal and ethical issues are presented by Baby Supplier's manufacture of the GlideStride?

5) What legal and ethical issues are presented by the working conditions of Dracca's Indonesian factory?

6) Can a corporation such as Dracca participating in a public debate be subjected to liability for factual inaccuracies? Would the First Amendment protection apply to Dracca's statements?

7) What actions (internal and external) do you recommend to Dracca to remedy the ethical and legal considerations of this scenario? Be specific and detailed, and be sure to base recommendations on relevant legal and ethical principles.