International BLAW Part 2 (Chapters 4-7)

The Carriage of Goods by Sea Act (COGSA) does not apply to bills of lading:

Issued for shipments between San Francisco and Los Angeles.

In a standard LOC arrangement, the buyer's bank is the:

Issuing bank.

Charles is a farmer who grows tobacco. He delivers 1,000 pounds of tobacco leaves to a warehouse in Memphis (Bob's Warehouse) and it issues to him a warehouse receipt for all products. Charles sells the tobacco and as part of the transaction delivers the warehouse receipt to buyer. This is an example of:

Negotiation

The transfer of an instrument from one party to another so that the transferee (holder) takes rights in the instrument is called:

Negotiation.

A agrees to sell goods to B (buyer) under an LOC arrangement. If there is a discrepancy in documents upon presentation to the issuing bank in arrangement, the best thing for the document officer at the bank to do is:

Call the buyer and ask for a waiver of the discrepancy.

Examples of negotiable instruments include:

Check and promissory note.

Refer to the Aegon Bricks question. In this case, the buyer in Germany will seek the opposite i.e., the delivery terns that most reduce its own risks and costs while shifting them to ABI. This means the buyer will seek to negotiate a delivery term called:

DDP

John is a Houston manufacturer of aircraft parts. He wants to sell a large number of parts to a South African buyer. That buyer is having no luck obtaining credit. John can suggest to the buyer that he approach the largest export financier called ___ for a fixed-rate loan.

Eximbank.

The price charged to transport cargo is called:

Freight.

If a bank under an LOC rejects a presentation this is called:

Dishonor.

A ____ represents ownership of the goods specified.

Document of title

A clause contained in a commercial contract excusing a party from performance if specified circumstances occur is often included, generally for the benefit of a seller. The clause is called:

Force majeure clause.

A writes a check payable to B and drawn on his account. B takes the check to his own bank, endorses it and presents it for payment. The bank notices there is no signature by A on the check and dishonors it. B is furious and yells "You have to take the check, it is a negotiable instrument." Is B correct?

No, it is not a "negotiable instrument."

The CISG does not incorporate the:

Parol evidence rule.

In a _____, the seller passes the risk of loss or damage to the buyer when the goods are given to the first carrier.

Shipment contract.

In a standard letter of credit transaction, the seller is identified as:

The beneficiary.

Seller's bank (A) may agree to purchase documents and honor drafts on the same terms as the issuing bank (B) has in the LOC. By doing so, A has provided:

A confirmed letter of credit.

The Montreal Convention is best described as an example of:

A self-executing treaty.

A(n) ________ is a relationship separating ownership and possession of personal property.

Bailment.

John owns a small tractor. He "loans it out" to Fred who will use it for plowing his farm on basis he will return it to John when done. John and Fred are in order:

Bailor and bailee.

A _________ is a document issued by a carrier to the shipper upon receiving possession of goods for transport.

Bill of lading.

COGSA exempts carriers from liability from:

Perils of the sea.

Many attorneys encourage their clients to exclude application of CISG law in an international contract by:

Placing a choice of law clause in the contract specifying a national law to be applied.

Examples of a discrepancy under terms of an LOC and presented documentation which a bank official may find does not include:

Price per contract is "unconscionable" and may be too far above a reasonable price for same goods as per law in the nation where bank is located.

Check My Work John's Used Car Company states on June 1st to its customer Fred that "We will offer you and your family two red jeeps from our inventory for $50,000 and will hold this open until July 1st." What statement below best describes the ability of the parties to terminate this offer as of June 17th?

Revocation can be made legally by John's Used Cars.

The Convention on Contracts for the International Sale of Goods (CISG) general applies:

To contracts for the international sale of goods (excluding consumer items).

The ______ is the primary body for commercial law covering domestic transactions in the US.

Uniform Commercial Code (UCC)

The fastest growing mode of ocean transport is called:

Containerized ocean cargo.

Credit risk of seller is completely eliminated by the seller:

Demanding payment prior to shipment.

A contract between buyer and seller calling for seller to deliver the goods to buyer's specified location (e.g., buyer's factory) is called a:

Destination contract.

John is new to the international commercial sales world and knows he needs help in dealing with delivery/shipment issues involving contracts with buyers. His best resource may be to rely upon and use:

Freight forwarders

Jill is a passenger on an international flight covered by the Montreal Convention (MC). Her luggage is stolen. She is shocked because her Wimbledon tennis trophy was in the bag and is now gone. She is upset, becomes angry and is in tears, and later sues (in appropriate court) the air carrier for losing her luggage and causing her emotional distress in amount of $500,000. What is the result in court?

Maximum amount under MC allowed, e.g., approximately $1,600 USD.

Boeing Company in the US has a contract with Air France located in Paris to sell Air France 20 aircrafts it makes. Is this contract covered by CISG?

No.

On Tuesday Sam says to John "Let me sell you my car for $10,000, a great deal and below "blue book" value of the car. If I don't hear from you by Friday before I go to Chicago, I assume we have a deal." As of the following Saturday, is there a contract between Sam and John?

No.

The prevailing standard established by the courts for examining documents at presentation is called:

Rule of strict compliance.

Bank A in Mexico City posts a letter of credit with an American company as the seller-beneficiary in the transaction. How will A typically advise the seller that the letter of credit is available for pick up?

Send the letter to a correspondent bank in the US which itself will advise seller.

A California seller has a sales contract to deliver a ton of cement to a Utah buyer. If the Utah buyer is most worried about damage to the goods it is buying and wants to best protect its interests, it will ask for:

The carrier to provide a clean bill of lading.

The CISG governs:

The formation of an international contract and obligations of the parties under the contract.

John is in New York. On June 1, he transmits an offer via email to Susan in Boston stating he will sell her his red car for $15,000. She reads it on the 1st and places a letter and check in the mailbox on June 3 accepting his offer. On June 4 he emails her that he has changed his mind. On June 7 he receives in the mail her letter with the check. Is there a contract in effect between them?

Yes, because the mailbox rule means Susan's acceptance occurred when her letter was placed in the mail on the 4th.

John works on a dredge that removes dirt and silt from bottom of Shiloh River. This is basically a "crane" sitting on a platform that is barely moveable. He is injured by another vessel striking the dredge while he was operating it. Can his lawsuit be heard by a court with admiralty jurisdiction?

Yes, if the river is "navigable water." Dredge is a "vessel."

Admiralty jurisdiction applies to the operation and management of vessels while engaged in navigation on:

"Navigable waters" used or capable of being used for commercial activity.

John flies from New York City to Athens directly. When he arrives, he discovers his luggage has been lost and is not found after a search. He places a claim with the air carrier seeking a recovery that will compensate him for his loss of bag and contents, including the replacement value of a diamond ring worth $10,000 he was taking to Greece as a gift for his fiancée. The air carrier under the Montreal Convention will pay him an amount equal to approximately:

$1,600

As of January 2017, the maximum carrier liability from pasenger death or bodily injury is in US dollars approximately:

$153,000

William is a contractor who is asked by Joanne to build her a house. Joanne shows her architect's plan to William and he estimates his total labor and materials costs will be $200,000. He proposed to build the house for a fixed price of $240,000 and a contract is signed. The next day Joanne calls William before he has done anything and tells him she has been transferred to another city and no longer wants the house. William is furious and will likely sue her for:

$40,000

The COGSA per-package liability limitation for carriers is ________ per package or customary freight unit.

$500

A bill of lading does not accomplish which role below?

Acts as a receipt of goods and is issued by shipper.

When one party to a contract fails to perform, the contract does not end automatically but the other party may as a result declare ______ of the contract.

An avoidance (tantamount to a termination) of the contract.

A cargo vessel is owned by A. While on the ocean, the vessel springs a bad leak. The captain throws cargo overboard that belongs to B and C to make the vessel lighter. D also has cargo on the vessel which remains in the vessel and is not damaged or removed. Who will file a claim for general average against whom?

B and C have each a general average claim against D.

A is a company in Dallas, Texas in the process of selling 1,000 tractors to Company B in Venezuela. Company B agrees to post a LOC at its bank in Caracas with A as beneficiary. A is nervous about political instability in Venezuela and asks its own Dallas main bank to assist it by providing a(n):

Confirmed letter of credit on same terms as Caracas bank.

The CISG permits recovery by an injured party of a monetary amount called:

Consequential damages if proved to be "reasonably foreseeable" as a consequence of the breach.

Michelle leaves Miami on a flight bound for London. While proceeding up the east coast over Virginia, the plane makes an emergency landing and crashes too hard on the ground. Michelle is hurt. She brings a lawsuit under Virginia tort law seeking $250,000 for bodily injuries caused by pilot negligence, in addition to a recovery under the Montreal convention. The court will likely:

Decide only the Montreal Convention claim as the exclusive remed

Aegon Bricks Inc. (ABI) in New Orleans is negotiating a contract to sell a German company in Berlin approximately 1,000,000,000 bricks. ABI wants to place the "most seller-friendly" delivery terms under INCO and reduce its delivery risks and financial risks to greatest extent possible. This means it will try to negotiate delivery terms of:

EXW

ABC Inc. is a Texas company that wants to sell its products to a buyer in Guatemala for the first time. It has never been in an international transaction before and is worried about payment. Its best and most likely strategy is to:

Implement a documentary collection process whereby a bank acts as an intermediary.

Both the UCC and the CISG allow a seller to cure a ____ within a reasonable time.

Nonconforming shipment.

Computation of maximum carrier liability is often difficult in damage claims because of the lack of clarity defining the term:

Package.

Raul signs a written lease with ABC Apartments to pay "$1,000 per month" for occupancy. He pays $800 rent the first month of occupancy; ABC sues to collect its $200 in rent. Raul testifies in court that he and the leasing agent has a "gentleman's understanding" that all months were for only $800 in rent. ABC's lawyer objects that this testimony cannot be admitted into evidence and consideration by the jury because of:

Parol evidence rule.

The _______ states that a court may not consider evidence or oral statements made prior to or at the time of contracting that vary or contradict the clear, unambiguous terms in a written contract.

Parol evidence rule.

John in Mexico wants to purchase goods from Frank in the United States. John needs these component engine parts from Frank to make car engines under his agreement with a local Mexican car manufacturer. John has a one-year agreement with his local manufacturer and is not sure how many parts he really needs from Frank. John is well-advised to go to the bank and ask for a _____ with Frank as beneficiary allowing John to buy parts under one LOC when needed, and not separate LOCs.

Revolving letter of credit.

The Montreal Convention provides that an international carrier must pay an amount computed on the value of:

Special drawing rights.

The independence principle:

States that the bank's obligations under the LOC are separate from any issues arising between buyer and seller, e.g., warranty claims.

A complying presentation is when:

The seller timely presents all documents required under the LOC and there are no discrepancies.

Tom travels by air from Miami to New York, and then has a three-hour layover before he boards a flight to London. He is injured when aircraft encounters bad turbulence, lands in Charlotte, and the erratic landing there injures his leg. Is his injury covered by absolute liability provisions of Montreal Convention?

Yes, if he is deemed to be in one undivided carriage (i.e., all segments booked on one ticket) that is part of a single operation.

In the case of a check written by a party, the bank account holder writing the check is the ________ and they order the bank who is the _______ to pay the indicated amount. The blanks are in order:

drawer...drawee