Medical Systems, Inc. has been approached by Hospital Galenia in Cancun, Mexico regarding the purchase of ten monitoring units. This memorandum with address the legal considerations of such a sale and how MSI might best protect itself from the risks associated with international trade. As MSI’s first international sale, this can have long lasting implementations for the future of the company. If this international transaction goes well, MSI can gain market share and profits from brand new markets.
First Steps:
The seller (MSI) prepares a pro forma invoice for the foreign buyer (Hospital Galenia). This form will be addressed specifically to the buyer, to ensure proper definiteness of the contact, and detail the terms and conditions of the sale…show more content… MSI’s primary transactional risk will be the failure of payment. Should Hospital Galenia refuse to pay for MSI’S products, MSI would be in the position to file a lawsuit. Resolution of a fundamental breach of a contract is intended to put the nonbreaching party in the same position as if the breach had not occurred. As an example, if MSI had to sell the equipment to another buyer because Hospital Galenia breached the contract and that buyer paid less for the goods than the hospital had promised to, then MSI would be entitled to damages to cover that difference in price. However, MSI will have a duty to mitigate the damages of the breach and protect itself from the damages as much as…show more content… What makes these terms important to international trade is that they provide a precise definition for the responsibilities of the buyer and seller at each point in the movement of the products. The International Chamber of Commerce is the publisher of these terms and recommends that contracts use the format of the three letter abbreviation, a location where delivery will take place, and the version of Incoterms being used. If MSI were to use deliver the equipment at the hospital, “EXW Hospital Galenia Incoterms 2010” would be the correct way to express that in incoterms. Incoterms are helpful for designating the allocation of risk and when delivery
