On May 30, 2009, Oriental Mft. Ltd., shipped a container of silicon wafers from Narita, Japan, to Big Star Technologies, Inc. in Austin, Tx. Oriental used International Shipping Ltd., a Texas based company, as the carrier.
The shipment arrived at the Austin Port of Entry the following day, where it was held for clearance by the US Customs Service. International cannot release and deliver shipments from outside the US until Customs has approved delivery and all applicable import duties and taxes have been paid.
Before clearance by US Customs was obtained, Big Star notified International and Oriental that it was rejecting the shipment and directed that the goods be returned to Oriental by International at the expense of Big Star.
The shipment left Austin in good condition, but when it arrived in Japan on June 15, 2009 Oriental found that the outer container had broken and was covered with an oily substance that had permeated the interior cardboard boxes. As a result, the sealed aluminum
bags containing computer chips which were inside the cardboard boxes, were also coated with the oily substance.
Oriental did not attempt to open the sealed aluminum
bags to determine whether the computer chips inside were damaged, but declared the entire shipment a loss.
Oriental Mfg. Ltd. filed a lawsuit against International Shipping Ltd. in the US District Court for the Western District of Texas, Austin Division, for breach of contract. (Assume proper jurisdiction)
International defended by pointing out that Oriental could not prove that the computer chips were in any way damaged, thus as Oriental did not attempt to mitigate its damages it was not entitled to recover any damages.
Oriental claimed that the sealed aluminum
bags had to be opened in a special "clean room" to prevent contamination to the chips, which could not be done because the oily substance on the outside of the bags would contaminate the clean room.
International also defended by saying that Oriental failed to mitigate its damages, if any, because it did not clean or attempt to the the outside surface of the aluminum
bags in order to allow use of the clean room. Oriental admitted that while it might have been technically possible to remove the oily residue from the bags it would have been prohibitively expensive.
Problem & Instructions:
Assume that the shipping contract would contain a provision under which the shipping company would guarantee safe delivery of shipped products.
1. Discuss the dispute between Oriental Mfg and International Shipping as to whether there was evidence supporting Oriental's contention that all the computer chips were damaged. You should include in the discussion your conclusion as to which party should prevail on this issue in the lawsuit and support your decision with the legal basis therefore.-It is suggested to research the facts alleged by Oriental.
2. Discuss International's contention that Oriental failed to mitigate its damages. You should include int the discussion your conclusion as to which party should prevail on this issue in the lawsuit and support your decision with the legal basis therefore.-Suggested to research the issue of mitigation.
3. On each issue identify and apply the legal principles and statutes, if any, that support the conclusions you state.
4. NOTE: This problem focuses on international law, not US or Texas law.
5. HINT: There is a reported federal case directly on point.
Include URL for electronic sources, proper legal citation.
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