French company Essay

In October, a cut ac family ( vendor) and a nobble company ( purchaser) have site up a contract of change 200 sets of electronic computers (1000 USD each(prenominal)), and the pay sh every be made according to the irre turn toable earn of impute. And the speech communication should be made on declination at Port de Marseille. On November 15, blaspheme of China nobble Branch ( release till) made a $ 200,000 irrevocable garner of credit according to the instruction of the vendee and licensed a french wedge in Marseille to notify and negotiate this letter of credit. On celestial latitude 20, the seller steady the 200 computers on get on and got the bill of lading, policy policy policies, invoices and other documents as required by the letter of credit. And then it went to the Marseille bank for negotiation.Upon review, the documents are consistent at that placefore the bank had paid $ 200,000 immediately to the seller. At the same cartridge holder, 10 days the d espatch ship leave the apply of Marseilles, the cargo, along with tout ensemble the grievouss, sank into the sea in a heavy storm. By that time the issuing bank had received the whole set of the documents and the buyer had already jazzn the total vent of the goods. Bank of China affect Branch intends to reimburse the negotiating bank to pay the purchase price of $ 200,000 on the grounds that its customers can not expect the goods. In accordance with foreign trade practices, the following questions are askedWhen would the risk of the consignment be transferred from the seller to the buyer ? Whether Issuing bank would exempted from the payment obligations due to the total loss of the goods, If so, on what basis? How to compensate the loss of the buyer?Case moot1. The Risk shall be transferred from the seller to the buyer since the goods were loaded on board at the port of shipment. 2. The issuing bank has no right to abnegate payment. According to the International Chamber of Commerce Uniform Customs and pull for Documentary Credits, the letter of credit trans marchs are independent from the gross revenue contract. And the Bank is only responsible for document examination. As long as the documents are in line with the terms of the credit, the banks are required to imbibe its payment obligations. 3. The buyer could claim compensation from the Sellers insurance company with other relevant insurance documents and proof of the sinkage of the cargo ship.I. metre context* In October, a French company (seller) and a Shanghai company (buyer) have set up a contract of merchandising 200 sets of electronic computers (1000 USD each. And the delivery should be made on December at Port de Marseille. * This trans fulfil is only made for 2 months consisting of its selling contracts and delivery.* On November 15, Bank of China Shanghai Branch (issuing bank) made a $ 200,000 irrevocable letter of credit according to the instruction of the buyer and commissi geniusd a French bank in Marseille to notify and negotiate this letter of credit. * November 15 is the pass over of Bank of China Shanghai Branch issuing the Letter of Credit to the French bank.* On December 20, the seller loaded the 200 computers on board and got the bill of lading, insurance policies, invoices and other documents as required by the letter of credit. And then it went to the Marseille bank for negotiation. * December 20, start of according all the requirements and documents needed in Letter of Credit.* At the same time, 10 days the cargo ship left the harbor of Marseilles, the cargo, along with all the goods, sank into the sea in a heavy storm. * This is the last event happened and the cargo didnt delivered as what the buyer expects.II. ViewpointWe should consider this problem from the point of view of the French company, they are liable for negligence beca part from the very start they didnt ensured the possible factors may arise when delivering. They must always contem plate selecting a good transportation carrier, the weather conditions,customs clearance, reliability and etc. The French company must fix all this difficulties so that they can motionlessness maintain a good and harmonious relationship once the Shanghai Company made a second transaction with them, and must comply with the partys sympathy.III. Related Facts* Irrevocable Letter Of Credit ILOC symmetry issued by a bank guaranteeing payment for goods and services purchased by the one requesting the letter. An irrevocable letter of credit, or ILOC, cannot be canceled or modified in any way without distinct consent by the affected parties involved. For example, the issuing bank has no power to change the terms of an ILOC simply because the letter requester is having second thoughts. It should be noted, however, that ILOCs are in effect only for a specified time period and do, in fact, expire at a pre-determined point.* Bill of LadingA legal document between the shipper of a particular good and the carrier detailing the type, quantity and destination of the good being carried. The bill of lading in any case serves as a pass of shipment when the good is delivered to the predetermined destination. This document must accompany the shipped goods, no matter the form of transportation, and must be signed by an trustworthy representative from the carrier, shipper and receiver.* Insurance PoliciesA contract (policy) in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. The company pools clients risks to adjudge payments more affordable for the insured.* InvoiceIt is a detailed bill left by vendors and outside suppliers for goods or services rendered to a company. Typically, it lists the quantity of each item, prices, billable hours, a service description, and a contact address for payment. While more or less expenses may be paid out of a general parentage or petty cash grade, an invoice is usuall y paid by dint of an payable department by the posted due date.* Letter of creditA letter from a bank guaranteeing that a buyers payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to exact payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase.* Issuing BankA bank that writes a letter of credit, in particular on behalf of an exporter. The issuing bank operates in the country of the importer, and facilitates trade between the importer and exporter by providing credit for the transaction. It is withal called an opening bank.* SellerThe seller or salesperson the provider of the goods or services completes a sale in response to an acquisition or to an appropriation or to a request.* BuyerA buyer or merchandiser is a person who purchases finished goods, typically for resale, for a firm, government, or organization. (A person who purchases material apply to make goods is so metimes called a buy agent.)IV. Statement of the Problem* When would the risk of the consignment be transferred from the seller to the buyer ? * Whether Issuing bank would exempted from the payment obligations due to the total loss of the goods, If so, on what basis? * How to compensate the loss of the buyer?V. General Objectives1. For the French company to cope with the problems arise during the delivery of the goods. 2. To identify French companys acquired big loss and how they can replace the goods.VI. proper(postnominal) objectives1. Both parties should know the consequences of their agreement once it is not delivered properly. 2. To identify and analyze well the fracture of French company. 3. The Shanghai bank must be capable of reimbursing the negotiating bank.VII. utility(a) Causes of ActionAction no. 1 The buyer shouldve complied with the insurance company of the seller immediately after the event happened buckle under 3 advantages for action 11. Risk Cover2. Protection against rising goods expenses3. Future helpsGive 3 disadvantages1. Pay commission for the agent2. You can only use insurance if you gain loss.3. It comprises moneyAction no. 2 The seller shall have alternative service delivery. Give 3 advantages for action 11. To have a substitute method once the delivery didnt work as it is.2. To avoid wasting of time and tally the due time.3. Greater securityGive 3 disadvantages1. It will cost much for one party.2. It will enable company to have more data to encode.3. Lower profit.Action no. 3 Made used of LC kinda of Irrevocable LCGive 3 advantages for action 11. roll in the hay be canceled or modified in any way without explicit consent by the affected parties involved. 2. Guaranteed payment upon presentation of the documents specified in the terms of the letter of credit. 3. The buyer cannot refuse to pay due to a complaint about the goods.Give 3 disadvantages1. Subject to the financial posture and stability of the Issuing bank 2. More ex pensive than other methods of payment 3. Requires a high level of expertise to successfully navigate the mouldFindingsIt is apparent from the case that the seller is the most problematic party of all because they hold the big loss on goods, at the same time they made the wrong choice of method for delivering goods which subjected to higher cost.RecommendationThe French company must improve their facilities so that when the calamity strikes again there is a high probability that they will carry through. And dont forget to approach the shanghai company that the cargos will be arrived to them late. sojourn to explore better ways of integrating technology into instruction on a daily basis, including providing training and support for the company.ConclusionsThis paper has given an account of and the reasons for the agreement between French company and Shanghai Company to be deliberate. The seller must be liable for any damages happened at bottom the incident while the buyer is secured by insurance company for what they lost, especially their money. No one was to blame for that scenario, each party just did what is supposed(p) to do and it is only due by nature thats wherefore it is wrecked.Action plansThey must design and implement assessment and differentiated instructional strategies that enable the company to achieve competency and right decision-making.They must also focus on the second action Made used of LC instead of Irrevocable LC because it is the most important, it carries the whole transaction and will make the agreement more clarified.S.M.A.R.T.(The company must possess this 5 skills)S = Specific an objective should be precise and should focus on a superstar result. A specific objective answers the questions, who, what, where, and how?M = Measurable an objective should involve specific criteria or stairs that indicate whether the objective has been met. A good measure answers the question, How will we know if we have accomplished the objective?A = accomplishable an objective should be attainable and within the centers or programs reach.R = Realistic an objective should be tangible given the time, resources, and activities proposed and available.T = Time-bound an objective should include the date it will be started and the date the center expects to complete it.