Contracting

In this module, we will identify the most effective way to memorialise an agreement from our negotiations -- whether by way of contract or other document.  

To prepare, please download and complete the assigned reading for this module.

Demonstrate class engagement by submitting evidence of (a) pre-reading and (b) post-class reflection in relation to any five modules of the course. 

The class is on 17 January 2025 (intensive class). 

First, your client seems divided on how to conclude this deal. 

• The Manager of New Business, based in the Melbourne Office, is happy to conclude the deal with a handshake and a "shared feeling" of goodwill; an invoice is sufficient, in her view. 

• The Head of Sports Division, based in New York, however, wants a written contract with "clear and detailed contractual provisions." 

What approach, in your view, should your client take? 

• The Head of Accounts, who is French, notes that the yen has depreciated to record lows against most foreign currencies in 2024 and it might fall even further, making the deal less attractive for JSportAI over the life of the lease. The Head of Accounts asks whether JSportAI is likely to re-negotiate on price if the value of the yen continues to drop. 

How would you advise? 

Second, assume JSportAI KK adopt simple in-house contracting practices relying on commercial invoices (setting out the basics of price, delivery date and time, quality, quantity, and payment method) rather than signed written documents. 

• Would such invoices be covered by the United Nations Convention on Contracts for the International Sale of Goods (CISG), whether wholly or substantially? 

• What is the advantage of having the CISG apply to this (and future) deals with JSportAI KK?

•  Would it make a difference if the invoice was issued to your client's Australian, US, English or French offices? 

• Would it make a difference if the invoice was issued from JSportAI's Indonesian or Vietnamese Ball-Bot manufacturing plants? 

• If the CISG does not apply, what steps could your client take to ensure that the CISG does apply?

Third, assume that your client accepts the lease deal for the Ball-Bots on an invoicing basis. The Ball-Bots are immediately deployed at the European clay court tournaments with considerable success.

However, a representative from JSportAI KK later telephones the client to let them know that, due to out-of-control inflation, they will need to immediately increase their rental fee by 15%. The client orally agrees because the price rise can be easily absorbed due to the larger-than-expected savings the technology has delivered for the client. 

• Would this price rise be legally binding on the client if, by accident, JSportAI KK issued its June template invoice without the new agreed price? Would it make a difference if the Ball-Bots were shipped from JSportAI's Japanese, Indonesian or Vietnamese factories? (Assume your client has not taken any extra steps to incorporate the CISG into the business relationship). 

• Further, if JSportAI KK is unable to clear customs in Japan, Indonesia or Vietnam because they neglect to obtain a valid Export Declaration Number (EDN), will the lease agreement be invalidated or frustrated? If not, what remedies will your client be able to seek?