LAW 3111

MEMO ASSIGNMENT

You were recently hired as an associate in the procurement department of a local construction company, Roebling Builders. Your company has a constant demand for cement, which the company uses in constructing buildings in the New York area.

Yesterday, the CFO of the company, Neil Cassidy, came to your office and told you that he had located a supplier of "Grade A" cement in China. The supplier, Wang Industries, was ready to ship large quantities of the goods as soon as October 1, and Cassidy liked that fact.

Cassidy explained that in the past the company bought its cement from U.S. and Mexican companies, and it was delivered by truck on a "COD" basis. But lately, the price of cement has been rising on world markets, and there have been shortages. Cassidy explained to you that the sellers in China offered good quality cement at a good price, and he wanted to buy from them CIF NY -- "that way the shipping costs are included in the price," he said. (Even with recently-introduced tariffs imposed by the US, the price being quoted is still less than Roebling can get anywhere else.) But Cassidy said he was very worried about Covid-19, further restrictions on global trade, and more shortages. He wants to move fast in securing this cement at the quoted CIF price.

The problem, Cassidy told you, is that the Wang insists on "payment against documents." Cassidy says he had never done any deal like that before, and is worried about paying before getting and inspecting the goods. The shipping, Cassidy said, is likely to take many months. (You know, as procurement manager, that Roebling has enough current supply to meet its needs during that time.)

Cassidy always worries about risks, and he especially wanted to know what assurances he would have that once Roebling paid for the cement, the company would not (after making the contract), get "held up" for more money by the seller. Cassidy said he was also worried about the quality of the goods from this new supplier, and he was looking for ways to obtain appropriate assurances that Wang was shipping "Grade A" cement.

Cassidy instructs you to submit to him a one-page memo setting out your recommendation about the proposed agreement, and your suggestions on how to manage the risks involved.

must be word-processed and checked for spelling, diction and grammar. Memos must be at least 12 point font with 1 inch margins. Space-and-a-half or double space, please. No more than 1 page.