Assignment
You have just been hired to head up a new division of Hope Springs Eternal Inc. (the "Corporation"). The Corporation is in the business of selling bottled spring water. The Corporation is headquartered in Montreal, Quebec and until now has always sourced its water from a spring in northern Quebec. Because business has improved and the spring's capacity is not sufficient to meet the demand, the Corporation has decided to import water from sources around the world. Essentially, the business plan is to find high quality fresh spring water outside of Canada. Offshore suppliers will be expected to supply water having the same quality and chemical composition as the spring water from Quebec. They will also supply the bottles and labels according to the Corporation's design and specification.
The division that you have been hired to head is responsible for overseeing these imports. The President of the Corporation has told you that a meeting has been arranged with the Corporation's lawyers, the firm of Takem Forall Theygott, to discuss the preparation of a standard form of contract for the purchase and import of bottled water. In preparation for this meeting the President has asked that you prepare a report that is well researched that addresses the following issues:
Should the Corporation be concerned with the possibility that the Vienna Convention applies to the imports of bottled water? What are the advantages or disadvantages, if any, to the Corporation if the Vienna Convention does apply? How can the Corporation get around any such disadvantages?
The Corporation will be importing from many countries, but sells its product only in the Canadian market. Suppliers will wish to be paid in American Dollars. How can the Corporation protect itself from currency fluctuations? What will such protection cost the Corporation and what are the disadvantages to such protection?
As the Corporation will probably be paying by irrevocable confirmed letter of credit, it is important that the Corporation be sure that the imported bottled water meets with the Corporation's specifications. What specific provisions can the Corporation include in the contract to ensure that the bottled water meets with the Corporation's requirements?
Would it be in the Corporation's interest to agree to an arbitration process in the event of dispute with the importer? In this regard, keep in mind that the Corporation has a history of having chronic cash flow shortages and has been known to use litigation to buy time for payment. However, also keep in mind that the Corporation will also wish to maintain good relations with its offshore suppliers. Whether or not you think that arbitration is the way to go, the President has asked you to indicate to him the provisions should be included in arbitration clause and that why you feel such provisions are important.