Course name International business transaction

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You are the General Counsel for a Boulder, Colorado based company, Bella's Fine Chocolates, Inc. ("Bella's"). Bella's is a closely held, Colorado Corporation that is a family-owned business. Bella's was started over 75 years ago by the great grandfather of the current President, your boss. Since then Bella's reputation for high quality chocolates and other confections has spread from Boulder throughout the world. Bella's manufactures all of its products in a state-of-the-art facility in Boulder using its patented equipment and trade secrets (including highly protected family recipes and manufacturing methods that have been handed down from the founder that he received from his Grandmother who immigrated to the USA from Switzerland). Bella's has developed several distinctive trademarks: customers know a Bella's products when they see its distinctive trademarks and packaging. Bella's uses the finest ingredients (always natural and organic) that its buyers' source from suppliers throughout the world. One of Bella's most loved products uses organic milk to provide a rich and creamy taste and texture reminiscent of the finest European chocolates. Bella's buys most of its premium, organic milk from a dairy farm located just across the Colorado-Wyoming border. Bella's is developing a top-secret chocolate energy bar with enhanced protein levels by using organic whey protein. This product will be Bella's first entry into the rapidly growing energy bar market. There are a few key suppliers for the high quality, organic milk and whey protein required by Bella's that are based in Canada, New Zealand, India, Germany and Brazil. Bella's wants to begin selling its products to customers in countries throughout the world, especially the EU and, possibly, China. In fact, it has recently begun using the Internet to directly market to customers in order to expand its domestic sales and worldwide sales. In the EU, Bella's will be faced with much stiffer competition with other manufacturers of fine chocolates (many located in Belgium, the UK and Germany). Recently, one of Bella's long-standing and key suppliers of cocoa powder and cocoa butter, CPEcuador, has experienced quality control, financial and distribution issues that are becoming a significant source of concern. There are a few key alternative suppliers for the high-quality cocoa required by Bella's that are based in Brazil, Indonesia, Ghana, Nigeria, and Mexico. You received a message from the President with the questions listed below. She is a very driven, detail-oriented executive and expects comprehensive answers. If you need additional information you need to explain the information required, and the legal implications. If you require additional resources, you need to clearly identify the resources required. If you are proposing specific wording to use in the company's contracts, you must provide the actual provision you are proposing.

Question Yesterday, Bella's President received a "Force Majeure Notice" from one of its most important packaging suppliers located in China notifying Bella's of a 4+ month "excused" delay in delivery of specialty packaging required by Bella's (as buyer). That supplier (as seller) is claiming that they are excused from performance because of the continuing coronavirus pandemic, the China government's actions to contain the disease and the increasingly problematic worldwide supply chain disruption. Bella's uses a just in time delivery program for its ingredients and packaging so any delay longer than 1 week or so will result in a severe disruption in Bella's business: if it cannot package its products, there is no need to manufacture products because it cannot ship to its customers. If Bella's is not manufacturing its chocolates, it does not need ingredients from its other suppliers. In short, the severe disruption of its manufacturing process causes increased manufacturing costs, lost sales and potential breach under contracts to Bella's customers and its other suppliers. There is no "Force Majeure" type provision in the particular packaging supply agreement. Your boss wants to know the following: A. Is the packaging supplier really excused from performance so all of the costs and damages resulting from the supplier's failure to perform are now borne by Bella's? B. Should Bella's send its own "Force Majeure Notice" to its customers and its other suppliers? Will those notices be effective to shield Bella's from legal claims for damages? What needs to be considered to make that decision? What if there is no force majeure provision in the particular contract? 5 In answering these questions make sure to discuss the following: 1. What is the purpose of a "force majeure" provision? What is the legal test for excuse from performance under the UCC? Under the CISG? Under English common law? Under civil law (given that several of Bella's suppliers and customers are from countries that have a civil law jurisprudence)? 2. Do the parties to a contract have the legal ability to substitute their own, negotiated provision and vary from 'gap filling' provisions of the UCC? Of the CISG? Provide relevant legal citations to support your answer. C. What a mess. What should Bella's do in the future to protect its interests as both a buyer and seller? 1. Provide a force majeure provision designed to protect Bella's as a seller, especially considering that Bella's uses a just in time delivery program for its ingredients and packaging so that any interruption in its supply chain will result in severe disruption of its manufacturing process resulting in increased costs, lost sales and potential breach under contracts to Bella's customers. 2. Provide a force majeure provision designed to protect Bella's as a buyer, and explain the differences compared to the seller-oriented provision you have proposed.

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