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Analyses of Contract.
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, and then determine who is right and what type of remedies either party might seek? In 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.
Please do the part two for 5 pages. We are aiming for above standards as it shows in column 1. You can use references and we examples of some reading provided
in the course.
Goodscan Contract 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.
Goodscan is a French company established in Paris that manufactures x-ray machines.
They have been in negotiations with Hospitex, a Canadian hospital in Toronto, to sell
them 5 x-ray machines. A representative from Goodscan travels to Toronto to negotiate
a deal with the CEO of Hospitex on February 1, 2013. At the meeting, Goodscan offers
to sell 5 x-ray machines at a price of Two Hundred Thousand Canadian Dollars (CA
$200,000) per unit. The parties agree to use the UN Convention for Contracts for the
International Sale of Goods (CISG). Hospitex agrees to a final price of One million
Canadian Dollars (CA $1,000,000), but insists that the contract should include a clause
stating that the forum for any dispute arising during the contract should be arbitrated
using the laws of Ontario.
Furthermore, Goodscan has guaranteed that it will deliver the x-ray machines by March
1, 2013. The parties have included a “FOB clause” in the contract. Since Goodscan has
never done business with Hospitex, they requested that Hospitex pay by using a letter
of credit.
2. Assume the facts below occurred after the signing of the contract.
a. Goodscan’s suppliers go on strike on February 5
th
. Due to this disruption,
Goodscan has to outsource and obtain the raw materials for manufacturing the x-ray
machines from another supplier. Goodscan’s costs have increased by 10%. In order to
please its shareholders, Goodscan attempts to pass this additional cost on to all of its
customers. A representative from Goodscan calls the CEO of Hospitex and says that
they will not be able to deliver the printing presses unless Hospitex pays an additional
10%. The CEO of Hospitex 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 the x-ray machines. The CEO, although hesitant, accepts to pay the
new price of One Million One Hundred Thousand Canadian Dollars (CA $1,100,000).
b. Goodscan places the 5 x-ray machines 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 Hospitex’s 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: Goodscan’s name is spelt incorrectly on the cargo manifest documents.
Consequently, the bank refuses to pay Goodscan.
c. There is a delay in the shipment, and Goodscan notifies Hospitex that the x-ray
machines will not arrive in Toronto until March 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 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.
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