Assignment on International Business Law PDF

Running head- INTERNATIONAL BUSINESS LAW
International Business Law
Name of the Student
Name of the University
Author Note
1.

1International Business Law
Memo
Date: 19th April 2020
From: Stella Inc.
Re: Issues relating to the business with Harpo Inc.
The issues to be discussed are as follows:
 If the Harpo Inc. instructs Chase and Fredonia Bank not to honour the Letter of
Credit, how will the Bank Behave?
 Will the fact that Harpo obtaining the letter with Chase as a confirming bank would
provide us with an advantage and are we eligible to get the payment?
 Should Harpo get the refund as the shipment did not arrive on time?
Important Facts:
 As per the terms and the conditions provided in the contract the goods were to be
delivered on or before 11th April 2020 and contained a Force Majeure Provision.
 On 1st April, Stella delivered the consignment to Brother Shipping.
 During the voyage, three members were infected with Corona Virus for which the
ship was not allowed to Dock
 On 7th April the Landing Bill was presented
 Harpo Inc. gave their mail on 14th stating if the bank pays then they will sue Stella for
the breach of contract.
Issue: 1
The bank shall be liable to make the payment to Stella Inc. as the documentations were
correct and the consignment was shipped at the correct time. It was due to the natural
occurrence during the voyage that was beyond human control and was not foreseen.
Moreover, under the provision of “Force Majeure Provision,” no party shall be liable for the

2International Business Law
delay or the non-performance if the situation was beyond control or is an act of god.
Moreover, a letter of credit is usually issued by a bank and is an agreement on behalf of a
customer and issued to another confirming bank in order to make the payment to the
beneficiary upon the completion of the contract (Walt 2015). So under the condition that the
goods were delayed due to the natural occurrence, the bank shall consider it and enforcing the
provision makes the payment.
Issue 2:
Chase was the confirming bank. The duty of the confirming bank will be limited to
confirming the letter of credit in regards to the beneficiary. After the request of the issuing
bank has been initiated, it becomes an obligation upon them to cover the payment under the
letter of credit. Moreover, they are considered as the conventional bank (Jain 2014).
Considering the revocability of the letter of credit, it may be only revocable until the
presentation of the documents. After the documents are presented, and the bank honours the
draft, then it becomes an obligation upon them to make the payment.
Issue 3:
Harpo Inc. will not be eligible to get the refund, and Stella Inc. is entitled to get the amount as
per following the provision of “Force Majeure” no party shall be liable or responsible for the
delay in the performing the contract or failure for performing the contract (Firoozmand and
Zamani 2017). Under the conditions where the delay has been occurred due to some act that
could not be reasonably seen by the parties, beyond the justifiable control and material affects
upon any obligation under the agreement. In that case, the party shall be excused. Following
that Harpo Inc. cannot sue Stella Inc. for the delay as the delay was out of such occurrence
that was beyond human control. Moreover, Stella Inc. abided by their duties on time
regarding the delivery and the delay was due to the natural cause.
Conclusion
Hence, it can be concluded by stating that the bank shall be obligated to make the payment
upon the bill of landing. Further, Stella Inc. shall be eligible for the payment as the delay was
due to specific occurrence that was beyond their control—so following that they shall not be
liable for the delay and another party shall not be excused for the payment upon the delay.

3International Business Law
Reference
Firoozmand, M.R. and Zamani, J., 2017. Force majeure in international contracts: current
trends and how international arbitration practice is responding. Arbitration
International, 33(3), pp.395-413.
Jain, S., 2014. Commercial Instruments: Bank Guarantee and Letter of Credit. Available at
SSRN 2460246.
Walt, S.D., 2015. Letter of Credit Issuance Fees of Large US Banks. Banking LJ, 132, p.129.