This case revolves around the international sale of goods act and the law of contract. Goodscan Company which is located in Paris wants to sell goods to Hospitex hospital situated in Toronto. The legal bodies involve their members into negotiations on behalf of them. A representative of Goodscan travels to Toronto to contract with Hospitex hospital’s representative. He offers to sell five X-ray machines at 200,000 Canadian dollars per unit; the offer is accepted with condition that the goods are to be delivered by March 1, 2003. This brings to existence a binding contract between Hospitex hospital and Goodscan Company. They also include the FOB clause in their contract meant to help in case the goods are destroyed while in transit and also to decide who settles the transportation cost.
The first contract was breached by the Goodscan Company since they had violated its initial terms. Goodscan Company through its representative changed the price at which the goods were to be sold and informed the CEO of Hospitex company about that. The CEO was under pressure as the company needed to receive the X-ray units in time, he agreed to the new price. The products were then delivered at a different date from that agreed and also one X-ray unit was damaged in transit. This amounts to a total breach of contract, and Hospitex hospital is the aggrieved party in this scenario.
The offer by Goodscan Company to sell the units at a new total cost of 1,100,000 Canadian dollars, accepted by Hospitex hospital, brought into existence a different contract. This contract had the price as its only term because the rest conditions were not clearly stated as per phone conversation, so the terms of the original contract cannot be assumed as relevant. Hospitex hospital’s representative made a mistype in the word ‘Goodscan’ when filling in the payment information, and this led to the delay in date of receiving the cash by the Goodscan company representatives.
It was only Hospitex hospital that had a right to sue for breach of contract as the terms of the first contract were not honoured by Goodscan Company. The goods were to be sold at a total price of 1,000,000 Canadian dollars. This term was particularly violated. Hospitex hospital should have received the goods by March 1 as per agreement; that condition was also not met. Hospitex hospital received the equipment later and one X-ray unit was damaged.
The inclusion of FOB clause in the contract would have helped sort out the issue, since as per the contract, goods in transit would belong to the sender that was responsible for any damages during the transit process. Hospitex hospital can sue Goodscan for breach of contract based on these legal facts.
On the other hand, Goodscan Company has no right to go to the court because Hospitex hospital did not breach any terms of the initial contract. The second contract negotiated via phone included the price as its only term. The mode and date of payment were not agreed on. Although the payment from Goodscan Company was delayed due to mistype in the name in the credit letter of payment, this does not amount to any breach of contract due to the fact that, in the second contract, they did not fix the date by which Goodscan Company should have received the money. Thus the whole delay does not amount to breach of contract, and hence Goodscan Company is left with no grounds to sue.
In international business transaction the mode of payment becomes a major problem. Credit letters are used in most cases to pass the consideration of supplied goods or services. The credit letters are passed to the bank which then changes money from one account to another. However, the bank effects the process it has to confirm that the details provided are correct and this may cause delay in payment that the name of the receiver was not correctly spelled thus it had to take time and correct it hence the delay in the receiving of cash by Goodscan Company.
The remedies available to Hospitex hospital are rescission of the first contract and payment of damages. In rescission, both parties will be reinstated to their initial financial conditions. This will ensure that Hospitex Hospital regains its money that could have been lost since one of the units arrived while damaged. Hospitex hospital may also apply the payment of damages remedy to help regain their lost funds. In this remedy, the court will decide on a fair amount that Goodscan Company should pay Hospitex hospital. It should be an amount enough to cater for the delay and repair of the damaged unit or purchase of a new one. The right place of settling the dispute is in Toronto, as per the terms of their contract.
CISG has one major disadvantage in that It becomes difficult to ensure consistency when different systems of law are involved. However, using CISG to solve international disputes is advantageous as both parties are placed on a fair ground. This ensures equity, which is one of the major legal principles. CISG is also advantageous in that it harmonizes the legal principles of different nations. If Hospitex hospital files the case in Toronto, as per the terms of the contract, then it will be advantaged since their lawyers will have an upper hand in applying the legal principles of Toronto. On the other hand, the lawyers of Goodscan Company will have a rough time trying to comprehend and apply the new legal principles.