Supplements of Case Studies about Business Negotiation
Our company imports from abroad a batch of agricultural products
and resells them to an American company.
Our company makes an offer to the American company.
The next day the American company accepts our offer completely.
And they request us to offer the certificate of origin.
Two weeks later,
the American businessman opens an L/C to us.
When we are prepared to dispatch the goods,
we receive the advice from the Commodity Inspection Bureau.
The certificate of origin should not be issued
because the goods are not produced by Chinese company.
Then we inform the American businessman to cancel the clause
which required to offer the certificate of origin,
American businessman REJECTED.
Then we put forward that
However, they believe that it is our duty to offer.
Please try to make arbitration on this case according to the CISG.
Analysis:
Since the both parties don’t eliminate
and reserve for the application of the CISG,
this case shall be settled according to the provisions of the CISG.
(3)The American businessman has opened an L/C
according to the acceptance.
When we received the L/C,
we did not raise objection
and were prepared to dispatch the goods.
Then the Commodity Inspection Bureau
refused to issue the certificates of origin to us.
So it is none of business to the American businessman,
we breached the contract.
As an exporter,
we cable an American businessman
to export agricultural products.
Beside the necessary items stated in the offer,
the clause “Packing in Sound--bags” is also added in.
During the validity of the offer,
the American businessman replies
“Refer to your telex first accepted. Packing in new bags.”
When receive the above reply, we are ready for shipment.
The international market price for the agricultural products
tumbled a few days ago.
The American businessman replies that
the contract was not established
because we did not confirm when they changed the packing condition.
We insists that the contract has been established.
So the parties occur this argument.
How to handle this case?
Analysis:
In this case
the American businessman’s packing change
belongs to a substantial change.
It constitutes the effective acceptance.
So the contract is established.
And the conditions on the contract are subject to the conditions
on the offer and the changes on the acceptance.
A Chinese International engineering contracting company
asks an Italian supplier to make an offer for us
to sell a batch of steel on May 3 by telex.
In our telex statement,
The Italian supplier cables us the offer on May 5
for the above mentioned steel.
We calculate the price on his offer
and submit the tender to the tenderer on May 15.
The Italian supplier sends a telex to revoke his May 5 offer on May 20,
because of the rising price of the steel market,
we immediately reply to them that
we don’t agree to revoke the offer.
So, both sides make a dispute on the revocation of the offer.
Then on May 31,
we bid successfully.
We immediately telex the Italian supplier to accept the May 5 offer.
But the Italian supplier insists that
they have canceled the offer on May 20.
The contract is not established.
However, we believe that the contract is established.
Both sides argue.
Hence both sides agree to submit it to arbitration.
Question:
If you are an arbitrator, how to make an arbitration? Explain the reasons.
Analysis:
The contract is established. The reasons are as follows:
(1)Both Italy and China are member states in the CISG.
The telex exchanged by the two parties has not ruled out the CISG,
so this case should be restricted by the CISG;
(2)The Italian supplier’s offer is irrevocable;
We have definitely notified the Italian supplier
the intentions why we invite this offer in our inquiry.
The Italian supplier is aware of our intention
and makes an offer for us.
We have the reason to believe that the offer is irrevocable,
and participate in the bid with the trust;
The offer has not stipulated the validity
and it should be regarded the time is reasonable and effective.
In this case the reasonable time should be regarded as
several days after the opening date;
(3)The Italian supplier cabled to revoke the offer on May 20,
we made an immediate rejection,
so the revocation cannot be established.
According to the regulations of the CISG,
(4)When we bid successfully,
we advise the Italian supplier immediately that
the acceptance is effective.
The contract comes into effect.
A Britain businessman( Businessman A) makes an offer to
a federal Germany businessman(Businessman B)
on May 3 to tell a certain batch of goods.
Businessman B is in the receipt of this offer the next day (May 6),
Businessman B makes a complete answer to accept the offer
on the morning of May 6.
After Businessman A sends the offer,
he finds the commodity prices upward,
hence he cabled Businessman B to withdraw the offer
on the afternoon of May 7.
It is on the morning of May 8 that
Businessman A receives the acceptance from Businessman B.
Analysis:
According to the CISG,
an offer can be withdrawn before the offeree advises the commitment.
However,
in this case, Businessman B has made a commitment
before Businessman A makes the withdrawal advice.
So Businessman A cannot withdraw.
The commitment made by Businessman B has come into effect
when it reaches Businessman A on the afternoon of May 8.
The contract is formed.