Case: Overshipped & Short-shipped China's Company A imported wheat from a foreign company. It was contracted...

Case: Overshipped & Short-shipped
China's Company A imported wheat from a foreign company. It was contracted "Quantity: 2,000,000 M/T, USD 100 per M/T FOB ..." But the foreign company shipped 2,300,000 M/T.
Question:
(1) How to deal with the over-shipped goods?
(2) What if the foreign company only shipped 1,800,000 M/T?

Solutions

Expert Solution

1. The company A must be levied additional charges for the extra 300,000 M/T of the wheat that is being imported from a foreign company. The reason being, the China's Company A must have ensured the foreign company exports the quantity mentioned in the contract i.e. 2,000,000 M/T for which it sought permission from the import officials. Thus, it was the responsibility of Company A to ensure abiding to the contract. The Company A in return may levy additional penalty charges to the foreign company for having broken the contract terms and conditions.

2. In the second case, the China's Company A must pay the foreign company for only the amount of wheat received. i.e. it receives 1,800,000 M/T. Thus, it must not pay for the remaining 200,000M/T. Also, if the contract mentions any partial delivery penalty, the same may also be applied in this case. Thus, the Company A must pay $100 x 1,800,000 = $180,000,000 minus any penalties for partial delivery to the foreign company.

keosha answered 2 months ago

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