Case Study on International Trade: Payment and Goods Conformity

Background

Case Study

FT is a leading commodity trading company headquartered in Singapore. 

SL is a company that processes, packs and sells soybeans from over 20 farms across Australia. 

FT purchased 100 metric tons of “Australian grown non-GMO (non-Genetically Modified) soybeans” from SL. The purchase was made under a CIF contract, goods to be shipped to Hong Kong from Port Kembla, New South Wales, Australia, latest date of shipment, March 15, 2018. 

[Treat the additional facts in each part of the following questions independently from the other parts.]

Additional facts

An irrevocable letter of credit was issued by Bank of Singapore and confirmed by Sunshine Bank in Sydney, Australia, for S$450,000 requiring the following documents: 

?insurance certificate for S$450,000, 

?clean bill of lading stating that the goods are in “apparent good order and condition”

?invoice for 100 metric tons of non-GMO soybeans at S$$450,000, and

?an inspection certificate from an Approved Certifier appointed by Australian Organic Limited certifying that the soybeans are non-GMO

The soybeans were loaded on board the ship in Port Kembla, New South Wales, Australia and a bill of lading was issued, shipment dated 15 March 2018. The bill of lading contained a notification in red stating that the carrier was not responsible for any bursting of bags because “packaging was insufficient, several bags torn and re-sewn”. The seller’s commercial invoice and the Inspection Certificate stated that the goods were “organic soybeans”. 

These documents were presented by SL to Sunshine Bank. Sunshine Bank is unsure about making payment and has consulted Bank of Singapore.

Question -

Should Sunshine Bank and Bank of Singapore make payment under the Letter of Credit? Please cite relevant provisions of the UCP (if any) to support your answer. (16 marks)

Answer - 

Additional facts

When the goods arrived in Hong Kong, the soybeans were tested by a laboratory in Hong Kong and found to be genetically modified soybeans. FT promptly emailed the laboratory results to SL, complaining of the non-conformity.

Question -

?whether the UN Convention on the International Sale of Goods (“CISG”) applies to FT’s contract with SL, 

?if CISG applies, advise FT of any breach by SL of its duties under the CISG for the non-conforming goods, and

The Payment Issue

?whether FT can claim damages and avoid the contract under the CISG.

Support your answers with relevant articles of the CISG (if any). (36 marks)

Answer 

Case Study

FT is a leading commodity trading company headquartered in Singapore. 

SL is a company that processes, packs and sells soybeans from over 20 farms across Australia. 

FT purchased 100 metric tons of “Australian grown non-GMO (non-Genetically Modified) soybeans” from SL. The purchase was made under a CIF contract, goods to be shipped to Hong Kong from Port Kembla, New South Wales, Australia, latest date of shipment, March 15, 2018. 

[Treat the additional facts in each part of the following questions independently from the other parts.]

Additional facts

An irrevocable letter of credit was issued by Bank of Singapore and confirmed by Sunshine Bank in Sydney, Australia, for S$450,000 requiring the following documents: 

?insurance certificate for S$450,000, 

?clean bill of lading stating that the goods are in “apparent good order and condition”

?invoice for 100 metric tons of non-GMO soybeans at S$$450,000, and

?an inspection certificate from an Approved Certifier appointed by Australian Organic Limited certifying that the soybeans are non-GMO

The soybeans were loaded on board the ship in Port Kembla, New South Wales, Australia and a bill of lading was issued, shipment dated 15 March 2018. The bill of lading contained a notification in red stating that the carrier was not responsible for any bursting of bags because “packaging was insufficient, several bags torn and re-sewn”. The seller’s commercial invoice and the Inspection Certificate stated that the goods were “organic soybeans”. 

These documents were presented by SL to Sunshine Bank. Sunshine Bank is unsure about making payment and has consulted Bank of Singapore.

Question -

Should Sunshine Bank and Bank of Singapore make payment under the Letter of Credit? Please cite relevant provisions of the UCP (if any) to support your answer. (16 marks)

Answer

Additional facts

When the goods arrived in Hong Kong, the soybeans were tested by a laboratory in Hong Kong and found to be genetically modified soybeans. FT promptly emailed the laboratory results to SL, complaining of the non-conformity.

Question -

?whether the UN Convention on the International Sale of Goods (“CISG”) applies to FT’s contract with SL, 

?if CISG applies, advise FT of any breach by SL of its duties under the CISG for the non-conforming goods, and

The Conformity Issue

?whether FT can claim damages and avoid the contract under the CISG.

Support your answers with relevant articles of the CISG (if any). (36 marks)

FT is a leading commodity trading company headquartered in Singapore. 

SL is a company that processes, packs and sells soybeans from over 20 farms across Australia. 

FT purchased 100 metric tons of “Australian grown non-GMO (non-Genetically Modified) soybeans” from SL. The purchase was made under a CIF contract, goods to be shipped to Hong Kong from Port Kembla, New South Wales, Australia, latest date of shipment, March 15, 2018. 

[Treat the additional facts in each part of the following questions independently from the other parts.]

Additional facts

An irrevocable letter of credit was issued by Bank of Singapore and confirmed by Sunshine Bank in Sydney, Australia, for S$450,000 requiring the following documents: 

?insurance certificate for S$450,000, 

?clean bill of lading stating that the goods are in “apparent good order and condition”

?invoice for 100 metric tons of non-GMO soybeans at S$$450,000, and

?an inspection certificate from an Approved Certifier appointed by Australian Organic Limited certifying that the soybeans are non-GMO

The soybeans were loaded on board the ship in Port Kembla, New South Wales, Australia and a bill of lading was issued, shipment dated 15 March 2018. The bill of lading contained a notification in red stating that the carrier was not responsible for any bursting of bags because “packaging was insufficient, several bags torn and re-sewn”. The seller’s commercial invoice and the Inspection Certificate stated that the goods were “organic soybeans”. 

These documents were presented by SL to Sunshine Bank. Sunshine Bank is unsure about making payment and has consulted Bank of Singapore.

Question -

Should Sunshine Bank and Bank of Singapore make payment under the Letter of Credit? Please cite relevant provisions of the UCP (if any) to support your answer. (16 marks)

Additional facts

When the goods arrived in Hong Kong, the soybeans were tested by a laboratory in Hong Kong and found to be genetically modified soybeans. FT promptly emailed the laboratory results to SL, complaining of the non-conformity.

Question -

?whether the UN Convention on the International Sale of Goods (“CISG”) applies to FT’s contract with SL, 

?if CISG applies, advise FT of any breach by SL of its duties under the CISG for the non-conforming goods, and

?whether FT can claim damages and avoid the contract under the CISG.

Support your answers with relevant articles of the CISG (if any).

dditional facts

When the goods arrived in Hong Kong, the soybeans were tested by a laboratory in Hong Kong and found to be genetically modified soybeans. FT promptly emailed the laboratory results to SL, complaining of the non-conformity. FT has proceeded to sue SL in the High Court of Singapore for breach of contract. SL has responded by applying for a stay of the Singapore proceedings on the ground that Australia is the more appropriate forum, because site visits to farms in Australia will be required.

Question –

Discuss whether the Singapore High Court is likely to grant a stay of action on the basis that Singapore is a forum non-conveniens, and what legal principles, facts and considerations will be taken into account in making its decision.