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Contract draft and answer questions for Detroit Mini Safe

Please respond to the following two assignments.

Assignment 1: Scenario Analysis and Discussion

Read the case scenario provided below. Based on the information provided in the case scenario and the readings for this module, prepare a contract that will protect your company.

Scenario

You are the Vice President of Sales for Detroit Mini Safe, a U.S. manufacturer of small fireproof safes with headquarters in Detroit, Michigan. The raw materials used in making the safes are sourced from Japan, Canada, and Saudi Arabia. You have been approached by a group of Chinese buyers who are interested in purchasing a large quantity of your model 1505 mini safes. The Chinese buyers submitted an order consisting of the following pertinent information:

? Name of Company: Chinese Safe Distributors
? Address: 35 Taishan Rd, E.D.Z., Jiashan, Zhejiang, China
? Description of Goods: 5000 Model 1505 mini safes with keypad combination
? Price: $250.00 each
? Payment Terms: Open account, payable in U.S. dollars
? Shipping: Seller to ship the goods by ocean container to Shanghai within 90 days after acceptance of order

The selling price includes the cost of the good, marine insurance, and cost of freight (CIF). Draft a standard contract containing terms and clauses applicable between the parties. Consider requirements found in Chapters 7 and 8 of your textbook as well as any supplemental resources.

Write the contract draft in a Microsoft Word document. Please cites inside and outside your paper also use more resources (references) by following APA style.

Assignment 2: Scenario Analysis and Discussion

Read the case scenario below. Based on the information presented in the case and the readings for this module, prepare answers to the questions provided after the case. You may find individuals in your company's logistics or international compliance departments who are good sources of information.

Case Scenario

You are the Vice President of Sales for Detroit Mini Safe, a U.S. manufacturer of small fireproof safes with headquarters in Detroit, Michigan. You entered into a contract with Chinese Safe Distributors to supply model 1505 mini safes. Each safe weighs approximately 15 pounds. You just received a purchase order from China Safe Distributors for 2500 safes to be delivered to their warehouse in Jiashan.
Name of Company: Chinese Safe Distributors
Address: 35 Taishan Rd, E.D.Z., Jiashan, Zhejiang, China.
Description of Goods: 2500 qty Model 1505 Mini Safe with keypad combination
Price: $250.00 each

Based on the information provided in the case scenario, answer the following questions:

Q 1. The order made a request for payment on an open account. They are willing to consider other terms, but they do not want to purchase against documents unless they can inspect the safes to ensure quality and to locate any possible damage. What method of payment will your company find acceptable? Prepare a letter to the Chinese company explaining the best options, your company's preference, and reasons why this option is fair to both parties. Provide information on how you can address their concerns about the quality and damage issues.

Q 2. The order specified that China Safe Distributors would like to consider the cost of shipping before they decide whether to handle the arrangements themselves. Using several of the most relevant international commercial terms (Incoterms), prepare a letter to your client providing the various methods and costs for transporting the safes. Suggest the most appropriate method of transportation, and provide transit times from Detroit Michigan to Shanghai, China. Assume that China Safe Distributors does not have any experience in this area and that it will be necessary for you to explain the responsibilities of all of the parties for your final recommendation and support your selection.

Q 3. What documents will be necessary for this shipment? Provide a brief description of the purpose and use of each document as well as the party responsible for creating the document.

Q 4. Assume that China Safe Distributors agreed to CIF terms. Detroit Mini Safe arranged for transportation by XYZ Ocean

Carriers and purchased an "all risk" insurance policy from an American surety company. The 2500 Model 1505 Mini Safes were loaded into a container and placed onboard a U.S. flag vessel on June 1. Twenty-four hours after sailing, the vessel was hit by bombs from a terrorist attack. Because of the damage, the vessel sank to the bottom of the ocean. Evaluate the possible legal ramifications for each party resulting from the loss of the cargo.

Write the answers in a Microsoft Word document. Please cites inside and outside your paper also use more resources (references) by following APA style.

Solution Preview

See the attached sales contract document. I was able to find shipping costs for both air and sea, by using a calculator that one shipping company provided.

Detroit Mini Safe

July 10, 20011
Chinese Safe Distributors
Address: 35 Taishan Rd, E.D.Z.
Jiashan, Zhejiang, China

Dear Manager:

This letter serves to inform you of the various options available in procuring a shipment of safes from Detroit Mini Safe. The various contracts used for shipping and sale of goods will depend on the requirements of both the buyer and seller.
There are two types of terms we can negotiate. C Terms or Shipment contracts involve the seller responsibility, up to the point of delivery to the carrier used for transport. In such contracts, the risk of loss will be passed on to China Safe Distributors, after goods have crossed the ship's rail. With such a contract, Detroit Mini Safe would be responsible for making shipping arrangements to the port desired by China Safe Distributors. With such terms, the seller provides a clean bill of lading and forwards an invoice to the buyer. There are two main forms of C Terms, CFR and CIF. CIF includes an insurance policy that is passed to the buyer, at the time the buyer takes ownership of the goods. Under such terms, China Safe Distributors would be responsible for payment upon receipt of the bill of lading.

D Terms include DES and DEQ contracts. D terms are also known as destination contracts. Under such contracts, the seller maintains responsibility for goods until they are delivered to the specified port. If such a contract is agree upon, Detroit Mini Safe has sole ability to received damages from a claim, if goods should be damaged at any point, during the shipping route or process. China Safe Distributors would have no claim of loss of potential profit, if products are lost or damaged (Schaffer Et al., 2009). A DES contract requires the buyer to pay for unloading of the shipment. DEQ contracts require the seller to pay for unloading of the shipment (Financial Terminology, 2011). Determining who will pay for the unloading may depend on how familiar the seller is with customers in the country of a specific port.

As China Safe Distributors is requesting an open account, it is recommended that a destination contract is agreed upon. While costs for shipping are included in the agreed upon price, the buyer has the option of not accepting the goods, if the quality does not meet ...

Solution Summary

The expert examines contract drafts for Detroit Mini Safe.

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