Facts of the case study:

"Beer Mania" is a chain of upscale beer tasting bars solely owned by Imran and based in Costa Rica. Each bar provides customers with an opportunity to sample selected tastings of a large variety of craft beers. In a continuing effort to provide quality craft beers at his tasting bars, Imran surveyed his patrons regarding their interest in alcohol-free beers. The survey results revealed that there was considerable interest in a crafted alcohol-free beer, but patrons also wanted the taste of the alcohol-free beer to be the same as that of a full strength beer.

With these survey results in mind, Imran attended the Small Beer Manufacturers' Convention in Paris, France. The convention boasted of having over seven hundred exhibits featuring the latest and best products and services that industry brewers and vendors had to offer. In his tour of the various booths, Imran was attracted to Carlos's exhibit. Carlos is a national of Argentina but now lives and operates a small brewery in Finland., Carlos had an excellent reputation as a master brewer of craft beers. Imran, who was familiar with many of Carlos's beers, stopped to examine what brews he had to offer.

Imran and Carlos discussed Imran's interest in offering alcohol-free beers at his tasting bars. Imran told Carlos about "Beer Mania" and the interest of many of his customers in drinking alcohol-free beers. Imran indicated that he would like to provide a choice of alcohol-free beers to his customers but that the beers had to have the same quality and taste as a full-strength beer. Carlos stated that although he had never produced an alcohol-free beer before, he understood that the process for producing alcohol-free beer was not much different from producing a full-bodied beer. He explained that the process involved brewing a normal strength beer and then carefully heating the brew to evaporate the alcohol. Imran asked how much it would cost to produce such a beer. Carlos said that he did not think that there would be any additional cost over the cost of producing a normal-strength beer, and that even if there was an additional cost, such additional cost would be nominal.

Imran inquired further regarding the quality of the resulting product. In particular, he wanted to know whether the beer would have the same quality and taste as a full-strength beer? Carlos assured Imran that there was no reason why it would not. Imran asked Carlos for his business card and thanked him for the information.

On July 20, one month after returning home from the convention and having thought more about his conversation with Carlos, Imran telephoned Carlos at his brewery in Tampere, Finland to discuss the brewing and final production of an alcohol-free beer. The conversation dealt mainly with the style of beer that Imran wished to be brewed. Imran told Carlos that he wanted a beer that was totally free of alcohol, that was light in color, well-balanced, medium in body, and mildly assertive, with a simple citrusy aroma and taste. Carlos indicated that it would be possible to satisfy Imran's request.

Carlos explained that it would take some time to determine what specific ingredients (barleys, hops, and yeast) would be needed to make the beer to Imran's specifications. Carlos indicated that he would brew several different small batches of beers and send samples to Imran so he could taste the beers and determine which sample best met his requirements. In addition, Imran told Carlos that he needed to have a label designed to place on the bottled beer. Carlos said that he could have his design department work on several labels and forward the designs to Imran for his approval. Most importantly, Imran wished to know how much the brewing, bottling, labeling, and shipping would ultimately cost. Carlos asked Imran what quantity of beer he had in mind. Imran indicated that he would like fifty kegs of forty liters each and 5000 bottles oftwelve ounces each. Carlos stated that it would take a little time to do the calculations to determine the final cost, and asked Imran if he could e-mail the information to Imran later that day. Imran told Carlos that he understood and was anxious to receive Carlos's e-mail. However, before ending the call Imran again stressed that the final product was to be a beer that was free of alcohol. Carlos replied that the final product would meet Imran's specifications.

Later in the day on July 20, Imran received an e-mail proposal from Carlos stating that he would "create and brew an alcohol-free Finnish-style beer". The final cost stated in the proposal was 30,000. The e-mail also stated that he (Carlos) would expect Imran to make an initial payment of 10,000 before Carlos would start the project, a further payment of 10,000 upon notification that the beer was ready for shipment, and a final payment of 10,000 due upon delivery. Carlos' proposal also contained a provision stating that if any disputes resulted that could not be resolved mutually, then the disputes would be submitted for arbitration in Finland. He added that the price quote was good for 90 days.

After receiving Carlos's proposal, Imran e-mailed an order acknowledgment on July 26 that stated: "Your proposal is accepted subject to the Standard Conditions of Sale contained in this acknowledgment. Receipt of this acknowledgment by you without prompt written objection thereto shall constitute an acceptance of these terms and conditions."

The Standard Conditions of Sale contained the following clause: "Seller agrees that this acknowledgment constitutes the entire agreement between the parties and overrides all negotiations, prior discussions, and preliminary agreements, whether written or oral." This clause was not contained in Carlos's July 20 proposal.

On the same day that Imran e-mailed the order acknowledgment, he sent Carlos, via electronic bank transfer, an initial payment of 10,000. Carlos did not raise any objections to Imran's order acknowledgment. About six weeks after Imran's e-mail confirmation, Carlos sent Imran six different samples of beers that had been brewed to meet Imran's requirements. In addition, Carlos sent five bottle label designs for Imran's approval. Imran chose the sample beer that he felt met his specific requirements. He also selected one of the bottle label designs and notified Carlos of his selections. Following Imran's selection of beer and bottle label, matters proceeded smoothly. Not long afterward, Carlos notified Imran that the beer was ready for shipment.

Imran responded that Carlos should ship the beer and he sent Carlos a payment of 10,000, again by electronic bank transfer. The beer was shipped and delivered to Imran's refrigerated warehouse as agreed. Following the delivery and acceptance of the shipment, Imran opened one of the boxes containing the bottled beer. He was pleased with the label design that he had chosen. However, in a close reading of the label, he noted that the label stated that the beer "Contains Less Than 0.5% Alcohol by Volume." Concerned about the statement on the label, Imran called Carlos and inquired about the alcoholic content of the beer. Imran reminded Carlos that he wanted a beer that was completely free of alcohol. Carlos responded that in the beer industry "alcohol-free" beer is understood to contain a small amount of alcohol. Imran was not satisfied with this explanation and indicated that he would not be sending his final payment and would be consulting his lawyer as to how to proceed.

What is required of you?

On the basis of the above facts, you are required to answer the following questions. All answers must demonstrate a high degree of reasoning. You must identify the relevant provisions of the CISG, outline what the provision states and apply the provisions to the relevant facts in order to produce an analytical conclusion.

Question 1: [3 marks]

Does the CISG apply to this transaction. Provide a clear explanation

Question 2: [3 marks]

Assuming that the CISG applies, did Carlos make a valid offer to Imran on July 20? If so and Carlos later changed his mind, could Carlos have withdrawn the offer on July 23?

Question 3: [6 marks]

Assuming that the CISG applies, is Imran's reply on July 26 a valid acceptance of the offer? If so, what are the terms of the contract?

Question 4: [3 marks]

Assuming that a contract exists, is it possible for the parties to modify it if Carlos and Imran agree to change the date for delivery under the CISG?

Question 5: [3 marks]

If Carlos and Imran had not included a date of delivery term in their contract, what would be the date for delivery?

Question 6: [3 marks]

If Imran and Carlos had concluded a final agreement during their telephone conversation on July 20, would the contract have been enforceable?

Question 7: [3 marks]

Assuming that there is a contract governed by the CISG has either party broken the contract?

Question 8: [3 marks]

If you have found at question 6, that one of the parties has broken the contract, what are the remedies available to the other party under