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ASSESSMENT ITEM 2 Due date: Thursday 25 September 2014
Weighting: 50%
Length: Approximately 3000 – 3500 words
Objectives This assessment item relates to learning outcomes 5-12 as stated in the course profile and addresses material covered in modules 5-10 (weeks 6-12) of the course. Answer all questions. Please also note that: • Additional readings relevant to the assignments may be made available to students via the library’s Course Resources Online system. If so, students will be advised on this on the Moodle- based course website which all students should access on a regular basis.
Question 1 20 Marks In January 2013, Arukan Mining Ltd, a Queensland based-company entered into a contract – subject to Australian law - with China Iron, a Chinese iron ore processing firm for three 50,000 tonne shipments of coking grade coal at US $150 per tonne from Queensland in the first weeks of December 2013, April and July 2014 respectively. Under the contract, there was also a $1 million per instalment shipping charge. Each $4 million instalment charge was payable a week in advance by Arukan setting up a letter of credit with Brisbane bank. There was a minimum requirement of a week between payment and the earliest possible date for shipment. Arukan was to self-certify, under the contract, the coking quality for each shipment. Under the contract each instalment was to be delivered to the port of Dalian, China, by a Arukan chartered shipping carrier at Arukan expense. However, subsequent contract execution didn’t conform to the hopeful expectations of either party. Regarding the first shipment: • Due to internal delays and errors by Brisbane bank, it was 10 days late with the letter of credit. This cost Arukan $20,000 in extra bank costs. It relied on this as an excuse to delay shipment by 14 days to cover up its own 10 day delay in shipment, caused by plant failure. And due to that plant failure, Arukan could only ship 30,000 tonnes. China Iron bought the deficit through the China Beijing Metal Exchange (CBMX) at $200 a tonne plus a $100 per tonne shipping charge from a Korean company, although Happy Mining Ltd, an Australian competitor had offered and was able to arrange a substitute, equivalent delivery within a further fourteen days at no extra cost and little inconvenience to China Iron. Regarding the second shipment: • Owing to a highly unseasonal tropical cyclone, loading in Queensland was delayed by five days and the ship’s departure was delayed a further three days due to industrial action by the port workers in Queensland. • Because of a ship loading error at the port, half of the shipment was not of the appropriate coking quality. Arukan identified this before the ship departed but it delayed the shipment by 4 days, which cost an extra $250,000 in port handling and transport fees and a further $100,000 in rescheduling.
Required:
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(a) Outline and discuss each party’s likely legal rights and liabilities in relation to the above detailed first and second shipment contract deviations as governed by Australian law, assuming CISG applies. (15 marks) (b) Would China Iron be entitled to terminate the remainder of the contract – the July 2014 instalment – and if so what consequences would follow? (5 marks) Question 2 20 Marks As a variation of the facts outlined in Question 1 above, assume that Arukan and China Iron entered into a contract, subject to Australian law, for a single December 2013 iron ore shipment of 45,000 tonnes for US $4 million, on the same advance payment terms. A certificate of quality was to be separately issued by a highly reputable independent company, Toowoomba Ore Testing. China Iron’s bank, Hong Kong Bank, was similarly 10 days late in delivering the requisite irrevocable letter of credit. Due to collusive fraud between Toowoomba Ore Testing and a Arukan employee, they issued a false certificate for the single shipment. And due to fraud by Hong Kong bank officer’s and a China Iron employee, a false letter of credit and related documents were delivered to Arukan’s Brisbane bank. Required: (a) In the factual matrix outlined of two separate but concurrent fraudulent transactions, how might the parties best cooperate? (5 marks) (b) Conveniently further assuming in sequence (i) issuance only of the false certificate, and (ii) issuance only of the false letter of credit and related documents, what would be the respective innocent party’s legal rights? (15 marks)
Question 3 10 Marks There is an extensive mango industry in both Australia and the Philippines. As mangoes are grown in differing, complementary seasons in these countries, they would benefit from supporting mutual free trade in mangoes. But despite ongoing efforts especially by the Philippine Government, there has been little free trade, especially in fresh mangoes, between Australia and the Philippines. Outline and appraise the GATT/WTO, bilateral and regional free trade agreement (AANZFTA), and WTO sanitary and phyto-sanitary (SPS) Agreement sourced rules which govern the Australia- Philippine mango trade and consider whether Australia can rely on strict SPS-quarantine rules to discourage imports. Assessment Criteria Fail You will have shown evidence of the following: • the written expression is poor and difficult to understand • the answer is poorly organised • referencing is generally inadequate • lack of familiarity with the legislation and its application • failure to identify and address the issues in the question • reasoning and application demonstrated is poor.
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Pass You will have: • made a conscientious attempt to address the topic and/or answer the question • shown evidence of having done the required reading and of having understood the reading • presented a reasonable argument to back up your conclusions • demonstrated a reasonable level of spelling and grammatical usage • used referencing but this may need improvement • issues that may need to be identified and addressed in more depth.
Credit You will have: • addressed the topic and/or answered the question directly • presented soundly based arguments and backed these up with reasons • gone beyond description to analysis of key issues • used the English language well • shown evidence of reading widely • demonstrated understanding of the reading • used referencing that is satisfactory.
Distinction You will have: • met the above criteria for a credit • demonstrated the attainment of a high degree of understanding of the concepts of the course • demonstrated deep insight into the application of knowledge and skills acquired to complex theoretical and practical situations • used referencing correctly • made reference to all appropriate legislation.
High Distinction You will have: • met the above criteria for a distinction • demonstrated the attainment of an outstanding level of achievement regarding the objectives of this course • demonstrated an interesting and/or original approach/idea/argument • demonstrated mastery of the relevant referencing system • ensured conclusions are backed by well-reasoned arguments demonstrating a detailed insight and analysis of issues • ensured references are made to the appropriate legislation for particular issues.
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