International Shipping Oriental Manufacturing Ltd. Is Suing Essay

International Shipping

Oriental Manufacturing Ltd. is suing International Shipping Ltd. For damages to a return shipment that had outer container breakage and soiled with an oily substance that had permeated the interior of the cardboard boxes. The inner sealed aluminum bags were also covered with the oily substance. Oriental did not attempt to open the bags to determine damage to the computer chips they contained.

Under Article 77 of CISG, Oriental would have been required to undertake reasonable measures to minimize loss to satisfy the duty to mitigate (Risnik, 2009). Under Article 77 Oriental would not be able to recover loss that could have been avoided if reasonable steps could have been taken. The principle of good faith suggests no compensation for avoidable loss. Where Oriental made no attempt to open the aluminum bags, there is no evidence of damage to the computer chips.

Under the Carriage of Goods by Sea Act, if the damage was caused by the carrier's failure to exercise due diligence, the carrier will be held responsible (Shipping Law). Under this law, International Shipping would be liable if it is proven that due diligence was not exercised.Where Oriental did not open the aluminum bags to assess the damage and they really did not know how the damage was done, there is no evidence that due diligence was not exercised.

International Shipping's contention that Oriental failed to mitigate the damages is obvious because Oriental did not open the packages to access any damage. They declared the entire shipment as a loss without assessing the present damage or to avoid any further damage if the oily substance had leaked through the aluminum bags. Under Article 77, if reasonable measures are not taken, the breaching party, International Shipping in this case, may claim a reduction in the damage amount (Guide to Article 77). It also states the aggrieved party; Oriental in this case, is entitled to recover expenses reasonably incurred in attempting to reduce the loss.

Oriental's argument that it would have been….....