Background Information of the Case
Based on the initial frozen semen sales agreement between the claimant (Phar Lap Allevamento) and the respondent (Black Beauty Equestrian), the claimant, who is also the seller, agreed to provide 100 frozen semen doses. The respondent, who is also the buyer, agreed to pay $100,000, not to be refunded fee, per insemination amount from the English Thoroughbred and Nijinsky III (Kroll, 2019, p. 13). In the agreement’s conditions and circumstances, the seller gave no assurances or promises, indirect or articulated, as to any semen ability to fertilize provided within the accord terms, among other prerequisites. On their part, the agreement terms saw the buyer is responsible for compliance with requirements for the registry for frozen semen use and payment of any additional fee for the subsequent registry, among many other needs.
The parties had agreed to a purchase price that was to be paid in two installments. The first installment, due on May 18, 2017, was $5,000,000, and the second similar installment was due on January 21, 2018. In three shipment installments, Phar Lap Allevamento dispatched the first 25 DDP doses on May 27, 2017 (Kroll, 2019, p. 14). The second and third shipment installments of 25 and 50 were released on October 3, 2017, and January 23, 2018, respectively (Kroll, 2019, p. 14). However, the agreement was made when both the Equatoriana and the Mediterraneo were engaged in free trade. With the opening two shipments absolute, the recently selected Mediterraneo president, President Ian Bouckaert, broadcasted a 25% duty on farming goods from the Equatorianans two months prior to the last consignment.
The announcement by the Mediterraneo president came as a sudden and complete surprise. Regardless of the clear intent of the president to safeguard the country’s undeveloped sector, the agreement did not include the 25% tax in the accord between the applicant and the respondent (Kroll, 2019, p. 6). The terms of the deal became worse with the Equatoriana regime imposing a 30% tax upon all farming supplies from Mediterraneo, a move aimed to retaliate against the security gauge by the Mediterraneo administration.
Contracts for the International Sale of Goods (CISG)
CISG gives a homogeneous, modern, and just regime for treaties for intercontinental sales of goods. The United Nations show the contribution to international agreements is to significantly introducing certainty in commercial exchanges and a decline in costs of transaction (United Nations. 2000). CISG’s relevance in international trade is by providing a careful balance between the parties involved. With CISG’s implementation, the accord between Black Beauty Equestrian and Phar Lap Allevamento would avoid any recourse to rules of private international law towards determining the applicable law to the contract. The CISG would further significantly add to the predictability and certainty of the agreement sales between the two parties (Lookofsky. 2017, p. 34). With CISG only applying to international transactions and helping to avoid recourse to the international rules for the contracts falling under its application scope, the agreement between the parties offers freedom of contract form.
CISG provides standard rules that regard remedies for contract breaches. Any party aggrieved has the opportunity to avoid the contractual agreement or claim damage in a fundamental breach case. Further, through CISG, the parties are provided with additional rules that regulate risk passing, anticipatory contract breach, potential harms, and exemptions from contract performance (United Nations. 2000). CISG provides that the claimant has to ensure it conforms to the delivery of the frozen semen in quantity and quality as stipulated in the agreement it made with Black Beauty Equestrian.
UNIDROIT International Principles of Commercial Contracts
Based on Article 6.2.3, it is stipulated that the disadvantaged party has the right to request renegotiation of contractual agreements in hardship cases. The claimant should request without undue delay indicating the ground on which the renegotiation should be made (Oser, 2008, n.p). The other five effects of hardship cause that can cause renegotiation constitute contract termination at a date and through fixable terms and contract adaption with an equilibrium restorative perspective (Mercatoria, 2004). Also, renegotiations can be established based on whether the court finds hardships in the agreement and failure to attain a reasonable time agreed between the parties involved.
Should the claimant pay the $1,250,000 or any other amount resulting from the adaptation of the price?
In line with the 2013 HKIAR’s Article 5, the lawful judgment made, based on the jurisdiction’s absence, the plaintiff did not initially have the same opinion about contractual compensation undisputedly rewarded by the respondent. In its place, the applicant sought payment that went past the sum and for which the authorities had to acclimatize the contract (Kroll, 2019, p. 31). Based on this comprehension and coupled with the perception the last consignment had been made to incur a 30% cost, the plaintiff was not reasonable in paying the $1,250,000 or any other total that was associated with the alteration of the price. First, the tariff made compulsory by the two nations was not the making of either party involved in the trade accord (Kroll, 2019, p. 17). With the retaliatory tariffs by the Equatoriana government and the realization it would impact the frozen semen, the claimant had to incur an additional cost of 30 percent to ship the semen to the respondent.
In the last two years leading to the previous shipment, the claimant had financial challenges on January 23, 2018. However, the respondent should not use this as the claimant should not pay the $1,250,000 and associated amounts. The claimant was already a victim of the tariff’s impact on imported animal products. An extra 30 percent of the original price from the shipment cost meant the organization’s profit margin of 5 percent, which further meant more hardships for the claimant. The DDP agreement was explicit that the claimant was not to bear every risk associated with the delivery. The role played by the claimant was to safeguard the transportation of the frozen semen and, based on their experience, ensure swift delivery of the product to the respondent.
Initially, the agreement between the claimant and the respondent required 100 frozen semen doses at $100,000, and the payment was in two terms of five million each and a three-term shipment program. In light of the imposed tariffs and the breach of contractual agreement by the respondent to resell the semen without the claimant’s consent, the respondent has the sole reason to pay the amounts. The claimant was not the party involved in breaching the contract established between it and the respondent, and with that, it should not be the one paying the $1,250,000.
Under the 12th close of the agreement
The 12th close of the accord stipulates that the plaintiff is under no accountability for any delivery holdup or misplaced semen during consignment since it was not in power. The particulars comprised weather delays, missed flights, third-party service failure, or acts of God either matching unforeseen events or caused by safety and additional health requirements that made the contract more generous (Kroll, 2019, p. 14). As long as the claimant shipped the frozen semen, it was no longer their responsibility to ensure its safety and whether or not it would reach the respondent on time. Nevertheless, even this accountability is taken off from the plaintiff’s list of obligations, and the applicant should not be made to pay the $1,250,000 or any other total associated with the alteration of the price.
The breach of the resale prohibition under the contract alongside the need for the shipped doses for commitments to affiliate parties by the respondent was never in any way associated with close 12. Whether or not the frozen semen reached the respondent on time or safe never had a role to play, according to the claimant, in breach of the contract made by the respondent. Hence, should any party be made to incur the $1,250,000 and associated amounts resulting from the adoption price, it should be the respondent.
Under the CISG
Under the CISG, the parties have the mandate of conforming to the agreement terms in the contract. The respondent has to ensure the respondent receives the frozen semen, and the respondent has to provide the semen, not for resale. However, given that the respondent breached the contractual agreement and needed part of the shipped dose for its commitment to other parties, the claimant has every legal responsibility to renegotiate a contractual agreement with the upcoming third shipment. Despite the financial challenges faced by the claimant, the choice to sell the frozen semen to Black Beauty Equestrian was justified by the need to make efforts to recover from the complex financial hardships encountered in the last two years. However, the provision by the claimant did not allow for Black Beauty Equestrian to take advantage of the business agreement between the two and resell the frozen semen to other organizations. The breach of contract positions the respondent to be obligated to pay $1,250,000, and associated amounts resulted from the price’s adoption.
Further, with the adoption of CISG, the agreement by Phar Lap Allevamento would avoid any recourse to rules of private international law towards determining the applicable law to the contract. The respondent should either disburse the sum or permit Phar Lap Allevamento the control to an alternative to rules of confidential intercontinental law. Coupled with UNIDROIT international principles of commercial contracts, the applicant has not broken the stipulations of the accord and has every truth in renegotiating the stipulations of the accord for the third consignment of frozen semen. CISG shows that any party aggrieved has the opportunity to avoid the contractual agreement or claim damage in a fundamental breach case. The breach of contract made terms means the claimant request can make renegotiation without undue delay indicating the ground on which Phar Lap Allevamento should make the renegotiation. With the blunder by the defendant, Phar Lap Allevamento should in no way be made to pay the $1,250,000 or any other total associated with the alteration of the price.
References
Kroll, S. (2019). Association for the Organisation and Promotion of the Willem C. Vis International Commercial Arbitration Moot.
Lookofsky, J. M. (2017). Understanding the CISG: A compact guide to the 1980 United Nations Convention on Contracts for the International Sale of Goods. Alphen aan den Rijn, The Netherlands: Kluwer Law International B.V.
Mercatoria, L. (2004). 6.2.3 – Principles of International Commercial Contracts, 1994 –UNIDROIT. Jus.uio.no. Web.
Oser, D. (2008). The Unidroit Principles of International Commercial Contracts: A Governing Law?. Leiden: BRILL.
United Nations Commission on International Trade Law. (2000). United Nations Convention on Contracts for the International Sale of Goods. Vienna: UNCITRAL