Question
Golden Horseshoe Industries Ltd., a Canadian manufacturer located in Toronto, is entering into negotiations with Atacadista do Brasil Ltda., a potential buyer/importer in Brazil. The
Golden Horseshoe Industries Ltd., a Canadian manufacturer located in Toronto, is entering into negotiations with Atacadista do Brasil Ltda., a potential buyer/importer in Brazil. The product is a patented small butane torch shaped like a hockey stick for commercial kitchen use. Golden Horseshoe will sell these to Atacadista for CAD 5.00 per unit. Brazils Most-Favoured-Nation tariff rate on the product is 18%, and shipping and insurance costs will be CAD 0.50 per unit.
Assuming that the negotiations are successful and Atacadista do Brasil orders 10,000 units under terms EXW Toronto (Ex Works), answer the following questions.
- What contracts do you anticipate will arise in this transaction and who will be a party to each contract? (4 points)
- In what circumstances does the Convention on Contracts for the International Sale of Goods (CISG) apply to a sale of goods transaction? Will CISG apply in this transaction? Why or why not? (3 points)
- What documents will likely be required in the shipment of the goods and who will prepare each of these? (4 points)
- Assuming payment is to be made by letter of credit, list at least five (5) terms and conditions that must be addressed by the parties negotiating the payment. (5 points)
- How much will the letter of credit be for, who will issue it and who will it be payable to? (3 points)
- What will be the value for duty in BRL at Brazils customs office at the port of entry assuming CAD 1.00 = BRL 4.50? What will the total duty amount to? Who will pay the duty? (4 points)
- What will be the landed cost per unit in BRL for Atacadista (the total cost to Atacadista when the product arrives at its warehouse in Brazil)? (2 points)
- Assuming this is their first international sale, what type of Intellectual Property protection should Golden Horseshoe seek and in what jurisdiction? (2 points)
- How can Golden Horseshoe mitigate the risk of product liability in Brazil? (3 points)
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