UCLY Contract LLM Malaysian Textile CASE AND Analysis Table PDF

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UCLY CONTRACT LLM MALAYSIAN TEXTILE CASE AND ANALYSIS TABLE MALAYSIAN TEXTILE FACTORY & FRENCH LUXURY CO --------- International Sale of Goods and Incoterms: ©simonwesley2020

French Luxury Company (‘FLC’) SAS, is a start-up French luxury clothes and textiles design company developing and implementing new technologies for leisure and sportswear. It has recently developed its first specialized sports textiles range incorporating new technologies. This is the cutting edge “Cannes Festival sports range” which comprises new patented sportswear technologies related to breathability, temperature, moisture evacuation and muscular support & enhancement. It is planning to launch this first product to the market for the Spring/Summer season 2019 putting forward those special features as part of the marketing. The products are aimed at the high end of sports clothing market and professional sports people. Malaysia Textile Factory PTY (‘MTF’) based in Kuala Lumpur Malaysia, is a leading clothes manufacturer exporting worldwide. MTF does an increasing amount of business with French luxury clothes manufacturers, but this is the first time it is envisages doing business with FLC. MTF are interested in manufacturing the “Cannes Festival sports range” products for the 2019 Spring Summer season onwards. FLC has already provided MTF with detailed specifications for the products, and this has enabled MTF to provide a financial quote subject to final agreement on terms. FLC will provide the necessary software to enable integration of the technologies to be integrated into the sports clothing. However, MTF has raised the question of the new technology needed, as this will require adaptation of MTF’s processes; and upgrade certain aspects of their production facilities to handle the new technologies between acceptance of order and production. It is likely that MTF will itself develop new technology to do this, and questions whether the specifications for the technology developed by FLC will be sufficient. FLC has incorporated an initial proposal into a pro forma purchase order for acceptance by MTF. However, FLC is saying this is “non-negotiable”. FLC is happy to receive a quote in USD as it has significant sales in the US paid in USD, but its own accounts are in Euros, and it requires protection against currency risk. Payment is to be made by transfer 60 days from end of month of invoice. FLC have indicated that they do business on their standard import purchase terms and conditions (“T&C’s”) which are on the back of their standard purchase order form, which they have provided. They say that these conditions are non-negotiable and accepted by all their suppliers. The terms indicated on their pro forma order refer to FCA Incoterm 2010 Kuala Lumpur airport as FLC prefer to manage the international transport themselves. MTF questions whether it would not be simpler for the transport to be organized by MTF through to Charles de Gaulle airport instead of to Kuala Lumpur airport only. MTF delivers textile goods to Europe on a regular basis.

You are a French lawyer consulted by MTF and are being asked to review these terms and conditions, and advise on what risks arise, whether they are acceptable, and, if not, what needs to be discussed and changed. Use the checklist set out below as an initial analysis tool.

TERMS &CONDITIONS ANALYSIS TOOL 1

QUOTE PARTIES PRODUCT/SERVICE DESCRIPTION PRICE/PAYMENT

DELIVERY CONDITIONS CUSTOMS/TARIFFS/TAX T&Cs PARTIES DEFINITIONS CONTRACT PROCESS ORDERS CHANGES TO ORDER PRODUCTS ALTERATIONS QUOTATIONS/PRICES DELIVERY/RETURNS INSPECTION/REJECTIO N PRICES PAYMENT DAMAGE to GOODS PACKAGING RISK ETHICS / POLICIES INTELLECTUAL PROPERTY CONFIDENTIALITY WARRANTIES

LIABILITY

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LEGAL OBJECTIVE Type of legal entity/authority of signatories? Adequacy of descriptions ? Clarity of price & currency components/payment conditions Incoterm & special conditions Any highlighted conditions ? Amount /responsibility ? Define identity of seller/buyer Define special terms used in T&Cs Imposes seller or purchaser T&Cs Regulates order process & conditions of acceptance of order Reference to specs/PO Effect of changes to product requested by purchaser Ref: P/O Currency /taxes… Date/place/allocation/ late delivery/INCOTERM/documents Buyer’s time limit to reject goods Revision or fixed price? When/where/how/% on late payment Time limit to notify Responsibility/type/cost Allocation & transfer Compliance by seller/purchaser Nature/rights/transfer/licence/ protection/restrictions Definition & protection of information Definition & limitations of product scope/liability for defects in design or manufacture /non-conformity with description or purpose Limitations/exclusions of liability: direct/indirect loss

LEGAL RISKS

CISG/UNIDROIT COMMENTS

INDEMNITY PROPERTY/RISK INSURANCE

AUDIT RIGHTS VAT/TAXES/DUTIES GOVERNMENT CONSENTS VISAS /EMPLOYEE INSURANCE RESALE/REPOSSESSION /RECOVERY

RELATIONSHIP

ENTIRE AGREEMENT ASSIGNMENT/SUBCONTRACTING FORCE MAJEURE

Indemnity for third party claims Time of transfer of ownership/risk Who insures goods in transit Who carries civil liability insurance/how much? Right to inspect/audit other party Added to price & payable/due by purchaser Whose responsibility? What happens if not obtained? Allocates responsibility to one of the parties Covers resale by purchaser before transfer of ownership from seller /recovery of goods by seller Nature of legal relations /excludes certain types of legal relationship Cancels all earlier information/ statements/reps/agreements… Prohibits or subject to consent

Defines events preventing performance and release of parties from contract NOTICES Method of giving notices WAIVER & ELECTION No renunciation of rights if contract is continued by one party even if other is serious breach INSOLVENCY Right to terminate if other party insolvent APPLICABLE LAW Defines which national law governs contract/may exclude international law JURISDICTION/DISPUTE Choice of court or arbitration to RESOLUTION decide disputes/mediation SCHEDULES Contain detailed description /specifications of product

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