Reference no: EM132301020 , Length: word count:2000

International Business Law and Ethics - Problem Solving Assignment

Follow the IRAC structure when you are addressing each legal element.

Issue

• What is the legal issue you are considering in this element?

Rules

• What are the relevant legal rules and principles used to determine whether this element or defence is satisfied?
• Ensure you cite the relevant legislation or international instrument.

Application

• In this section we apply the legal rules to the factual scenario we are considering.
• How do the rules apply in this scenario? Why are the legal rules satisfied/not satisfied?

Conclusion

• Based on the legal rules and their application to this scenario, what is the outcome of this scenario?

ATMC Assignment Question -

Part One -

Black Diamond Ltd ('Black Diamond') is an elite jewellery shop located in Brisbane, Queensland, Australia, that sells a range of high-quality jewellery. Black Diamond has a reputation for beautiful, one-of-a-kind designs for rings, necklaces and earrings that allows them to charge high prices for their merchandise. Following a slump in business after the Global Financial Crisis, Black Diamond try to draw customers back in by selling their rings at half of their ordinary price for a six-month period between 1 January 2020 - 30 June 2020.

In order to prepare for this sale period, Black Diamond begin to purchase high quantities of precious gemstones so they can begin transforming them into unique jewellery worthy of the Black Diamond name. Garnet Martinez, Black Diamond's Managing Director, is put in charge of purchasing gemstones on the instruction that she only buy the finest quality available. Garnet gets in contact with Greg Universe of Universe Gems Pty Ltd to discuss (see attached file).

Garnet was pleased with Greg's response, 1 million dollars (USD) for the type of diamonds she asked for was a very good price. Assured that Greg's gemstones met the CL-1 standards that all Black Diamond jewellery uses, Garnet immediately transfers the full 1 million dollars (USD) to Universe Gems.

On May 20, Garnet gets an email from one of the employees of Black Diamond who received and inspected the shipment they were sent by Universe Gems. The employee, Rose, was dismayed to find that the diamonds they were sent were not diamonds at all, but actually, cubic zirconias. Cubic zirconias are a cheap alternative to diamonds that are often used in costume jewellery. While they look like diamonds, any jewellery expert would be able to tell that the diamonds were cubic zirconias and not real diamonds. Distraught, Garnet contacts Greg via phone to ask for her money back. Greg dismisses Garnet's concern, saying 'if you don't tell the customers, they won't know! It'll be fine!'

PART ONE: ASSIGNMENT QUESTIONS - Considering the operation of international sales law, advise Garnet:

1. Does the Convention on Contracts for the International Sale of Goods ('CISG') govern the agreement between Black Diamond and Universe Gems? Why/Why not?

2. Have Black Diamond and Universe Gems entered into a contract? Outline the required elements of a contract under the CISG.

3. Have Black Diamond and Universe Gems successfully incorporated an Incoterm into the proposed contract? Why/Why Not?

4. What remedy would be most appropriate in this circumstance? Explain your answer with reference to the CISG.

Part Two -

After the failure of their contract with Universe Gems, Black Diamond asks Garnet to once more purchase gems for the use in their sale period. This time, they tell her not to worry about finding gems that meet the CL-1 standard as they are running short on time and need to start on production of the rings as soon as possible. Additionally, Black Diamond has received some bulk orders for jewellery featuring gemstones other than diamonds. Black Diamond also requests that Garnet orders these stones at the same time.

Garnet gets in contact with Crystale, a gem company based in Belarus with a world-famous reputation for quality gemstones. Garnet and a representative make a contract over the phone and agree to the following terms:

Black Diamond will purchase from Crystale:

• 500 White Diamonds, Princess Cut
• 100 Amethysts
• 100 Pearls

Crystale promises to send one sample of each stone to Black Diamond by the 1 July 2019 so that Black Diamond can see the quality they will be receiving. Black Diamond agrees to pay 2 million dollars (USD) for the merchandise, half upon approval of the samples and half upon delivery. Crystale and Black Diamond also agree that the gemstones will be transported by boat, CFR (Port of Brisbane) as per the Incoterm Rules 2010. The full delivery is to be made by 1 August 2019.

Garnet receives the sample gemstones a few weeks later, each one is flawless and exactly the quality, type and cut she requested. Garnet contacts Crystale, requesting shipment of the gemstones and deposits the first half of the money, 1 million dollars (USD), into their bank account. Although the main office of the company is located in Belarus, Crystale has a warehouse located in Melbourne, Australia. The gemstones are shipped from Melbourne to the Port of Brisbane via boat.

On 20 July 2019, Rose, an employee at Black Diamond receives a message that there is merchandise available for pickup at the Port of Brisbane. Rose completely forgets about the message and never organises a pickup. The merchandise is left for two nights at the Port of Brisbane. On the night of the 22 July 2019, the Port of Brisbane is broken into and all 100 Pearls from the shipment are stolen by robbers. The staff of the Port of Brisbane call Black Diamond on the 23 July 2019, inform them what happened and insist they collect their merchandise the same day.

Upon receiving the merchandise at the Black Diamond warehouse, Garnet inspects the shipment and discovers that the 500 diamonds are all varying colours and cuts, although all are high quality diamonds, they do not match the sample Garnet was sent. Furthermore, 10 of the amethysts were lost at sea and 30 of the 100 amethysts arrived damaged due to the poor packaging of the stones by Crystale.

Garnet contacts Crystale on 23 July 2019 and claims they are in breach of their contract, refusing to pay the second payment of 1 million dollars (USD) to complete the contract.

PART TWO: ASSIGNMENT QUESTIONS - Considering the operation of international sales law, advise Garnet:

5. Does the Convention on Contracts for the International Sale of Goods ('CISG') govern the agreement between Black Diamond and Crystale? Why/Why not?

6. What is 'CFR? How does 'CFR' apply to this agreement? Is Crystale liable for the robbery of the 100 Pearls at the Port of Brisbane? Explain your answer.

7. Under the 'CFR' term, did Crystale need to provide insurance for the merchandise?

8. Garnet has accused Crystale of breaching their contract. Consider each of the following issues and determine whether Crystale has breached their obligation?

(a) The diamonds that do not match the sample Crystale provided.

(b) The damaged amethysts due to poor packaging.

(c) The amethysts lost at sea.

9. What remedy would be most appropriate to solve the breaches in Question 8 (a)-(c)? Explain your answer to each issue with reference to the CISG.

Attachment:- Assignment File.rar