Reference no: EM132307562
Best Quality Cotton Traders (BQCT), a South African company, intends to import certain textiles from Green Fields Traders (GFT), a company based in China. BQCT has never contracted with GFT before and does not know GFT well. BQCT has however; come across GFT produced textiles in the industry and is satisfied that they produce a good product.
1. The intended contract involves a large amount of money and BQCT is nervous about paying such a large amount of money considering that it has never done business with GFT before and does not know the company well. Advise BQCT about one of the safest forms of payments in international sales. In your answer identify the international instrument that governs this form of payment; explain the basic structure of such payments and how this form of payment protects the interests of the seller as well as that of the buyer. (12 Marks)
2. BQCT has recently heard of the United Nation Convention on Contracts for the International Sale of Goods (CISG). It would like to know whether the CISG would be applicable to its contract with GFT. Advise your client on whether the CISG would be applicable to this contract by referring to all relevant articles in the CISG. (8 Marks) NB: For the purpose of answering the remaining questions, you may assume that the CISG is applicable to the above contract between BQCT and GFT.
3. BQCT further instructs you that it is considering another contract with GFT in terms of which it will provide harvested cotton to GFT, which GFT will convert into rolls of material dyed in accordance with BQCT’s instructions. BQCT would like to know from you whether it is conceivable that such a contract may also be governed by the CISG. Advise your client with reference to relevant article/s in the CISG.
4. As agreed to by the parties, BQCT receives the products it ordered from GFT on 11 March 2016. Your client informs you that upon inspection of the goods, it discovered that the goods are not of the of the ‘sunrise yellow’ shade agreed to by the parties, but are of a much darker shade and not acceptable to the buyer. The buyer had ordered the particular shade of material to produce garments for one of its South African based clients that specially ordered garments in that shade of yellow.
1. Is the seller guilty of breach under the circumstances? Refer to relevant sections of the CISG to substantiate your answer.
2. Do the seller’s actions constitute a fundamental breach of contract? Substantiate your answer by referring to the relevant article/s in the CISG and explain the implications there of.
3. If the seller is guilty of breach under the circumstances, advise your client of the obligations placed upon it (buyer) in terms of the CISG in order to be able to claim remedies based on this type of breach of contract and the consequences of its failure to do so. Also advise your client of any exceptions that it may rely on in order not to lose its right to remedies against the seller for such breach of contract.
4. Outline at least two possible remedies that your client may be able to claim under the CISG for breach of contract by the seller.