International Trade Regulation and Practices

Running head- INTERNATIONAL TRADE REGULATION AND PRACTICES
International Trade Regulation and Practices
Name of the Student
Name of the University
Author Note

1International Trade Regulation and Practices
Facts
 Ali started his clothing company in the name of Alhob Co in Hobart, Australia and
decided to sell Harajuku style clothing and established contact with Benji from
Hajima Co. in Yokohama, Japan.
 Ali agreed to purchase 2500 pieces of clothing and entered the contract on 14th
January 2019. The order value of Ali was 35,000 as for the reason he was
inexperienced Ali entirely relied upon the agents to arrange for the delivery.
 During the negotiations, Benji mentioned to Ali that the shipping would be done by
another company operating in Thailand that is a subsidiary of Hajima Co and it was
specified in the contract that the order would reach Hobart by 10th March 2019
 As soon as the order finished Benji informed Ali that he would soon receive the order
by 20th February 2019. The export formalities were clear, and all the goods left
Thailand with a caused bill stating that there were 20 damaged pieces that Benji
knew.
 Due to specific unexpected occurrences on the sea carriage water seeped into boxes
for the result, 1000 pieces of the goods became mouldy.
 Upon the arrival of the product on Port of Melbourne on the day of 7th March 2019 the
agent that Ali appointed failed to inspect the goods and further forward it to Hobart as
per Ali’s request.
 Due to another event, there was no ship available for the delivery before 9th March
2019.
 As per the negotiation, Ali will receive the order by 10th March 2019 and due to the
situations occurring the agent decided to hire an air service for the delivery of the
goods to Ali that costed an extra of AUD 5000.

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 Upon the delivery of the goods to Ali, he found out that only 1480 pieces were in
good condition that was merchantable and among then 1000 pieces were mouldy, and
20 were defective, and the final bill that he received was of AUD 40,000.
 However, Ali refuses to accept the order and pay the bill and further sued Benji and
Hajima Co. for the damages incurred to him as he will not be able to sell the goods on
the right time.
Issues
The issue of the case is stated in the polling points:
1. Is there an obligation upon Ali to make the payment of AUD 40,000?
2. Will the claim of Ali be successful?
3. Which party will be liable to pay for the damages to Ali?
4. Will the agent be able to recover the money for the arrangement of the air service and
from whom?
Rule
The rules applicable in the cases include the following sections and articles of the Contracts
for the International Sale of Goods, 1980
1. Article 53 states the obligation of the buyer to take the delivery and make the payment
of the respective goods.
2. Article 57 states that when a buyer is not obligated to make the payment. This article
further states that the buyer will not be obligated to pay the amount at any other place
provided other than the given location. The buyer shall pay the amount to the seller at
the given location and against the goods or services or the documents that were stated
in the contract for sale.

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3. Article 45 states the remedies provided to the buyer when there is a breach by the
seller. As per the article, this portion of the rule states that the seller fails to achieve
any of his responsibilities under this Convention, the buyer has the right to apply the
rights as per given in articles 46 to 52 and also liable to claim the damages as
provided in articles 74 to 77 (Chengwei 2014). As per the provisions of this article,
the buyer will not be deprived of any right where he has to claim such costs by
exercising his right to other remedies and along with that period of grace may be
granted to the seller by a court or any other tribunal when there exists a remedy for
the breach of contract.
4. Article 40 states where the seller loses the right to rely upon the provision of lack of
conformity of the goods (Zeller 2015). As per this provision, the seller will not be
allowed to rely on the provisions of articles 38 and 39 in the cases where there is lack
of conformity that further relates to facts upon which the seller knew, but he did not
convey it to the buyer.
5. Article 79 releases a party from the liability to pay damages for the non-performance
of any obligation that includes the seller obligation to deliver the confirming goods
(Schwenzer, Fountoulakis, and Dimsey 2014). It further states that a party will not be
liable in a case where he fails to perform any responsibilities if it is proved that the
failure is due to a situation or a circumstance that was beyond his control or it was not
foreseen that particular situation could occur. It might also occur where the party’s
failure related to the failure of performance of a third person who was engaged to
perform the act.
6. Article 37 states the rights of the buyer to recover the damages from the seller. It
further states that in cases where the seller has delivered the contracted goods before
the date of the delivery. The seller can deliver any misplaced or the missing parts to

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make up the deficiency or in some instances the quantity of the goods that are stated
as the non-conforming goods or remedy in the lack of conformity of the goods
(Lookofsky 2017). The right of the buyer does not cost any additional charges from
the part of the seller. However, the buyer retains any right to claim damages as
provided for in this Convention.
7. Article 38 states the duties of the buyer for receiving the delivery of the product. It
further discusses that the buyer must inspect the goods, or make it examined by some
agent, within the period as is feasible in the situations.
8. Article 43 states the limited right of the buyer upon the delivery of goods where there
is an involvement of a third party. Further, the following article states that the buyer
will lose the right to depend upon the provisions as per mentioned in article 41 or
article 42 if no notice is provided to the seller stating the nature and the claim within a
limited period (Ferrari 2014).
9. Article 66 states the loss or damage to the goods after the risk has passed. It further
discusses the loss, or the danger possessed to those goods after the passing of the risk
to the buyer, and it does not discharge him to pay the amount of the damage, or the
loss is from an act or the omission of the seller.
Analysis
1. As per the rules and the issues stated in the case, Ali is not obligated to make the
payment of AUD 40,000 to the seller. As per the contract between Ali and Benji, the
contract was set to be delivered within the given set of time, and the amount of the
goods was fixed to be 2500 by both of them. Agreeing upon the facts Ali entered into
the contract and appointed an agent on his behalf to take the delivery. As per the facts,
the goods to be delivered was to be 2500 but due to certain occurrences in the ship the

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delivery reached to him was 1480 pieces that were in a merchantable condition and
the remaining were either defective or damaged due to the delivery. So as per Article
57, a buyer is not obligated to make the payment where there is a breach of contract
(Cisgw3.law.pace.edu 2020). However, for the fact that the delivery received on time
and due to the failure of the agent, Ali received the defective goods, he will be liable
to make the payment. As the contract stated clearly the number of goods to be 2500
that would cost him AUD 35,000 but the final amount he received was of AUD
40,000 that was for the shipment of the order plus the airfare cost to him by the agent.
When he appointed someone as an agent, it was the duty of the agent to conduct a
proper inspection. Due to the negligence of the agent, it cost him more, and the bill
clearly stated that before the shipment, there were 20 goods damaged and this fact
was known to Benji. So as per the facts though not the full amount but Ali will be
obligated to only pay for the goods that were in a merchantable condition. As per
Article 40, the seller knew the defective goods that he did not convey further; in that
case, he conducts a breach. So as per the provisions of the Act, Ali is not obligated to
make the payment of either AUD 35,000, and the airfare of AUD 5000 to both Benji
and the agents as he received damaged goods and the airfare was made without his
knowledge and by the agent. So though not the full amount, Ali will be obligated to
pay only for the goods that were in a merchantable condition.
2. The claim of Ali will be successful. As per the Article 45, it provides a remedy to the
buyer where there is a breach of contract by the seller, and the buyer becomes entitled
to use such rights under 46 to 52 and will be liable to claim the damages as mentioned
in articles 74 to 77. So as per the provisions of the Act, Ali appointed an agent to
receive the delivery at the first point as it was all new to him (Coyle 2016). So, in that
case, it becomes the responsibility of the agent to conduct proper inspection and then

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only forward the shipment to Ali, but he was negligent, did not conduct proper
inspection and forward him the delivery that costed Ali around AUD 5000 that was
not as per the contracts or this fact was unknown to Ali. Furthermore, the seller who
was Benji knew the damaged goods and yet did not convey anything to Ali. So as per
Article 40, Benji loses all the right to depend upon the provision for the lack of
conformity of goods and further under Article 37 Ali, will be able to claim for the
damages.
3. As per the facts of the case, Benji shipped the order before the due time, and the
goods that were damaged were only 20 that was manufacturing defect which persists
almost in cases where the amount of delivery is vast, and the other goods that were
damaged was due to specific natural occurrences that were beyond his control. So as
per article 38 of the act, Benji was liable to get the payment, and as per the provisions
it was the duty of the buyer to inspect the goods and convey it to the seller when the
goods received are defective (Soni 2014). So upon that knowledge received, the seller
can compensate or add the missing parts of the delivery to the buyer. As in this case,
it was the duty of the agent to conduct the proper investigation of the goods and then
only forward it to Ali. As per Article 43, the buyer has limited rights to claim damage
where there is an involvement of the third party. So, in this case, Ali can claim the
damages from both Benji and the agent.
4. The agent will not be able to recover the money for the airfare from either Benji or
Ali. As per the contract, the contract was between Benji and Ali and the agent was
appointed by Ali for which he was responsible for acting on behalf of Ali. So it was
the agent’s duty to conduct the proper inspection and convey about the damaged
goods to Benji that he failed to do. So as per Article 66 the loss or damage of the
goods has passed on to the third party and as per article 38, it was the duty of the

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buyer to conduct the inspection (Uncitral.org 2020. The agent failed in performing his
duties and the fact that he booked the air service was without the knowledge or
consent of Ali. So in that case, neither Ali nor Benji will be liable to make any
payment for the airfare to the agent. Hence, he will not be liable to recover the money
for the air service.
Conclusion
In conclusion, it is stated that considering all the facts of the cases and analyzing the
issues and the facts of the case it is stated that Ali will be obligated to make the payment of
only those goods that were in a merchantable condition. He can claim for the damages of the
goods to both Benji for the delivery of the damaged goods and the agent for not conducting a
proper inspection. Further, the agent will not be liable to recover the money for the air service
that he arranged as it was neither known to Benji or Ali and the air service availed by the
agent was his own decision and not upon the knowledge of Ali.

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Reference
Chengwei, L., 2014. Remedies for Non-performance-Perspectives from CISG, UNIDROIT
Principles and PECL.
Cisgw3.law.pace.edu, 2020. Guide To Article 57. [online] Cisgw3.law.pace.edu. Available at:
<http://cisgw3.law.pace.edu/cisg/text/peclcomp57.html> [Accessed 11 March 2020].
Contracts for the International Sale of Goods, 1980
Coyle, J.F., 2016. The Role of the CISG in US Contract Practice: An Empirical Study. U. Pa.
J. Int'l L., 38, p.195.
Ferrari, F., 2014. Contracts For The International Sale Of Goods. Leiden: Martinus Nijhoff
Publishers.
Lookofsky, J., 2017. Understanding The CISG. Alphen aan den Rijn: Wolters Kluwer.
Schwenzer, I., Fountoulakis, C. and Dimsey, M., 2014. International Sales Law. Oxford,
United Kingdom: Hart Publishing.
Soni, P., 2014. The Benefits of Uniformity in International Commercial Law with Special
Reference to the United Nations Convention on Contracts for the International Sale of Goods
(1980).
Uncitral.org,2020.[online]Uncitral.org.Availableat:<https://www.uncitral.org/pdf/english/
CISG25/Gabriel.pdf> [Accessed 11 March 2020].
Zeller, B., 2015. Damages Under The Convention On Contracts For The International Sale
Of Goods.