Crab Case: Dismissal of Claim and Request for Payment

This memo discusses the dismissal of the claim made by Red Corp in the Crab Case and the request for payment of $5 million by Blue Inc. It highlights the breach of trust and carelessness shown by Red Corp and emphasizes the need for Red Corp to fulfill their part of the bargain.

MEMO

CRAB CASE
MEMORANDUM
To: Red Corp.
From: Blue Inc.
Date: March 15, 2019
Subject: Crab Case
Dear Sir,
We are contacting your regarding the “Nego Crab Case” to state that the claim sent by
you via email has not been accepted and the invoice which Red Corp sent to our company of $ 2
Million has been dismissed. I have to further state that the act depicts the carelessness and breach
of trust that our company placed in your company while entering into agreement with Green
Corp because it was done in the good faith after your manager agreed that you would discuss
about the trade afterwards and further, the company Green Corp. was the client of Red Corp.
itself. Therefore, the claim of the Red Corp. hereby stands dismissed and I request your company
to pay us $ 5 million in good faith.
We wish to complete the transaction as quickly as possible and hope that Red Corp fulfils
their part of bargain as soon as possible.
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MEMORANDUM
To: Red Corp.
From: Blue Inc.
Date: March 16, 2019
Subject: Re. Crab Case
Dear Sir,
We have received the reply of your company regarding the message that we sent earlier
and the points raised by you that you initially also, refused to acknowledge Green Corp as your
customer since the product i.e. Nego Crabs were your property and transaction was deemed
complete from your side along with the concluding claim of your company on our company that
our claim is not a viable option and hereby stands dismissed from your side was outrageous and
non-trustworthy in our eyes. We agreed at that moment only out of good faith and in order to
avoid incurring of major losses due to the short shelf life and problem of perishability. Further,
though the client was identified by your company and suggested to us, but keeping in the mind
the urgency of the transaction we decided to proceed forward with the sale of the company and
therefore, the failure of Green Corp to keep up their side of transaction and the subsequent
increase in price are to be borne by the Red Corp since the goods belonged to your company
because the transaction involving 10,000 Nego Crabs was never accepted by us.
Therefore the claim that our company should pay $ 2 million to your company should be
dismissed and rather your company should pay us the amount of $ 5 million as was stated by us
in the previous memo dated 15 March, 2019.
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MEMORANDUM
To: Red Corp.
From: Blue Inc.
Date: March 17, 2019
Subject: Re. Re. Crab Case
Dear Sir,
It can be stated that our company can claim that the entire transaction under which the
Red Corp sent us 10,000 Nego Crabs can be revoked by us and we can deny to enter into any
kind of agreement. Still, we decided to accept the transaction and asked the company to charge
us for the market rate at that time which was $ 50 per Nego Crab. However, your company
refused to change the price to the one that should have been changed and still sent us the invoice
of $ 200 per Nego Crab. Therefore, now we have reached the decision that there are only two
options that we can further give to the company i.e. either the transaction be conducted as per the
rate of $ 50 per crab and our remaining money being refunded to us, or the company pay us $ 5
million which we incurred while dealing with the Green Corp. which was the Red Corps client
since we do not assume the sale to have occurred.
If the company refuses to comply with any of the option, we would deem the previous
agreement to stand cancelled and action would be taken accordingly.
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MEMORANDUM
To: Red Corp.
From: Blue Inc.
Date: March 17, 2019
Subject: Re. Re. Re. Crab Case
Dear Sir,
This memo is in continuance with memo sent earlier on today’s date i.e. 17 March, 2019
and it can be also stated that the entire transaction with the Green Corp. can be claimed as void
or null since the sale was made to the company even before our company had accepted your
claim or redeemed the claim made by us. We were still not prepared to go forward with the sale
that took at $ 200 per Nego Crab when it should have been done at $ 50 per crab. The only
reason we even accepted the transaction was that the Smart Blue was an initiative of the Blue
Inc. itself. Therefore, the support can be taken from the various articles and sections stated in the
Unidroit Principles of International Commercial Contracts should the case move to the court and
there, the fact that no prior information was given to us regarding the order through RB link
which was formulated for this very purpose can also be disputed.
Therefore, the company can take the desired legal action should the need arise and Red
Corp is requested to take responsibility for their actions and formulate appropriate steps and
actions that they need to adopt.
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MEMORANDUM
To: Red Corp.
From: Blue Inc.
Date: March 18, 2019
Subject: Re. Re. Re. Re. Crab Case
Dear Sir,
It can be stated that the claim of your company that we are liable to fulfil the claim of $ 2
million raised by your company is null and does not contain any basis or foundation. Further it
can be stated that the sale that was conducted by our company with Green Corp was done on the
behalf of Red Corp. to which your manager with whom we had the telephonic conversation
agreed completely. Also you are legally bounded to pay us $ 5 million as we stated earlier and
the question that you raised that we should have not gone forwards with the entire transaction if
we had not ratified the transaction altogether has been explained to you that it was done only to
avoid the loss of entire $ 2 million being lost as the perishability of the crabs was at cost.
Therefore, the laws and court case which the company talked about in its last memo are being
taken extremely seriously and the fact that you stated in the previous memo that as per the
Article 3.2.10 of Unidroit Act, when a party without confirming to the contract, begins to
execute the contract, it is deemed to be accepted by the party and therefore despite Red Corp’s
mistake, you state that you are not liable. However we would like to quote in return that as per
Article 3.2.15, the company is bound to restitute or avoid a contract if the goods that have been
returned back by one party and in this regard, our company have complete right to avoid the
contract.
Therefore, the claim of the Red Corp is baseless and can be completely restituted and
therefore we are not liable to pay the claim amount of $ 2 million to the Red Corp and rather
have a right to claim $ 5 million from your company.
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BLUE HOT CASE
MEMORANDUM
To: Red Corp.
From: Blue Inc.
Date: March 5, 2019
Subject: Blue Hot Case
Dear Sir,
In accordance with the memo received by your company, you wrote to us that as per the
terms and conditions agreed upon in the joint venture agreement formulated between the two
company, it can be stated that the Yellow Corp., i.e., the Joint venture impacts the profitability of
both the companies and therefore its progress and growth is a concern for both the companies.
Further, it can be stated that the very tendency with which your company should operate should
be that the company should be in profitability. When the parent company itself becomes a source
of competition for the joint venture, the very purpose becomes with which trade was initiated
becomes void. The company is therefore requested to immediately terminate the selling of Blue
Hot product in Negoland through any third party. Further, in order to compensate for the loss that
has occurred to the Yellow Corp, the Blue Inc. should pay the losses that amount to an average
amount of $ 4 million. This amount has been derived on the basis of the expert opinion of Bob
Orange obtained for the company on the basis of the decline in sales of the company.
The claim amount is taken as an inference from Exhibit 12 and only the amount relevant
to the decrease in profits in Negoland in the year 2018 due to introduction of Blue Hot series in
Negoland. This would act as a step towards covering up the losses that are incurred by the
Yellow Corp Company due to Blue Inc.
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MEMORANDUM
To: Red Corp.
From: Blue Inc.
Date: March 6, 2019
Subject: Re. Blue Hot Case
Dear Sir,
As per the requirement stated by you that our company should stop the supply of Blue
Hot in Negoland since it leads to reduction in the sales of our joint venture, Yellow Corp. is
baseless and cannot be accepted. Further, as per the article 2.2 quoted in the Unidroit, the legal
relation of the one party does not get impacted by the relationship with another party and
therefore, the selection of Brown Trading Corp. in order to sell our own product Blue Hot is not
in violation of any norms. Further, it would be apt to remind Red Corp. that the basic contract
between both the companies was to form a joint venture i.e. Yellow Corp. that would operate in
Negoland and Arbitria and therefore appointing Brown Corp. as our agent is not in violation of
the trading norms.
Therefore, the claim of Red Corp. is hereby dismissed and we are not in any manner
liable to cancel our claim or contract with the Brown Corp. Our company is not liable for the
losses incurred by Yellow Corp in any manner and therefore, we will continue to sell Blue Hot in
Negoland and the request of Red Corp to stop selling the product by giving reason of losses for
Yellow Corp. hereby stand cancelled and dismissed.
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MEMORANDUM
To: Red Corp.
From: Blue Inc.
Date: March 7, 2019
Subject: Re. Re. Blue Hot Case
Dear Sir,
The claim made by regarding the sale of Blue Hot in Negoland and its impact on the
profitability of Yellow Corp. is being termed as baseless and redundant by our company since it
is not in violation of any of the guidelines stated in the articles under Unidroit which is followed
by companies trading on an international level. Further, it can be quoted that as per the article
5.1.3, every party should co-operate with other while entering in long term contracts and shall
refrain or abstain fro9m doing those activities that might act as a hindrance or barrier for the
formulated company. Therefore, it can be clearly stated that our product is purely based on
entirely different characteristics from the one which is manufactured by and therefore, the
company is not liable for selling the Blue Hot product in Negoland. Further, the agreement made
between the two companies stated that they would operate for the purpose of producing Yellow
Quick and Blue Noodles only which in no manner restricted the manufacturing and distribution
of any other commodity of similar nature and therefore, the company has complete right to
manufacture and sell the Blue Hot in Negoland as well as in Arbitria.
Our company does not intend to sell our technology to the Yellow Corp for
manufacturing of Blue Hot in Negoland and further, the company also refuses to stop its further
contract of with the Brown Corp. and it would be carried forward as it was previously in the
same light.
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MEMORANDUM
To: Manager of Blue Inc.
From: Company Secretariat
Date: March 8, 2019
Subject: Blue Hot Case
Dear Sir,
This is regarding the Blue Hot case that the company is currently negotiating with the
Red Corp. It has come to my notice that the Red Corp company is stating that the sale of Blue
Hot in Negoland is against the joint venture agreement formulated between both the companies
while incorporating the Yellow Corp. Company. This is to state that the article form Unidroit
which was quoted in the memo sent to the Red Corp. Company dated March 7, 2019 i.e. Article
5.1.3 has not been understood and analysed by our managers in a comprehensive manner.
Therefore, the fact that was quoted in the memo i.e. every party entering into long term contract
on an international basis must perform their designated and assigned roles and therefore, the fact
which was stated that the Blue Inc.is operating in good faith and does not intend to withdraw
their product from the market is an inappropriate one and no such action will be taken is a wrong
one. The article further stated that the companies entering into such a contract are not allowed to
deal in any manner beyond the norms and boundaries agreed to previously and therefore. Any act
or activity that will create a negative impact on the basic term of agreement between both the
parties can act as a challenging one and further can be considered as in bad faith with regards to
the activities being performed by their joint venture. Further, the company is also not allowed to
enter into contracts with third parties or any agents that would lead to contradiction to the goals
and objectives stated in the basic nature of agreement or the basic purpose for whose fulfilment,
the agreement has been formulated. Therefore, I wish to bring to your notice sir, that as per the
norms and rules stated in the Article are taken into view in a comprehensive manner, it becomes
clear that what our company is doing is wrong since they are not dealing fairly.
Further, the target market of the Blue Hot manufactured by our company conflicts with
the commercial market and interests of the company and therefore, we are not allowed to legally
sell the product in Negoland directly or through any other agent or third party. Further, the
arbitral tribunal can issue a penalty i.e. arbitral award that might even lead to the cancellation of
the joint venture i.e. Yellow Corp. altogether and this can have a disastrous effect on the
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profitability of the company. Hence, I insist that the company formulate or agree at some
common point with Red Corp. so that our company can avoid the legal trouble and maintain the
goodwill and integrity of the company in the foreign country as well as the domestic country.
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MEMORANDUM
To: Red Corp.
From: Blue Inc.
Date: March 10, 2019
Subject: Re. Re. Blue Hot Case
Dear Sir,
It is to bring in your notice that the claim made by the Red Corp. to our company that
regarding the claim of US $ 4 million is valid and therefore we are accepting the claim.
However, we wish to contradict that we will not pay the entire amount of $ 4 million since we
have a partnership in the Yellow Corp and as per that we are liable to only pay the 40% of its
share i.e. the share of Red Corp. therefore we will compensate for the amount of $ 4 million 8
40% i.e. $ 1.6 million to the reed Corp. and remaining share of profit which belonged to our
company will be borne by us.
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