PROTECTING THE INTERESTS OF BUYERS IN INTERNATIONA

This case analysis deals with a problem sometimes presented in international trading agreements between buyers and sellers which involve a letter of credit which is used to finance the transaction. Often in these transactions the buyer may be left without any effective legal remedy for the failure of the seller to ship the goods it contracted with the buyer to deliver. The obvious problem is that the buyer has not received the goods it contracted for and has incurred costs and possible liabilities to third parties as a result of the seller's default. More fundamentally, it may not have the management systems in place needed to protect its interests. Two business/legal issues are presented: (1) what can a buyer do to protect its interests once it discovers that it is not getting the goods for which it bargained? and (2) what can a buyer do to protect itself against a reoccurrence of such problems in future transactions?

The assumption is made is that the facts of the 1941 case of Sztejn v. J. Henry Schroder Banking Corp. or variations thereof reoccur today. In that case, a buyer, Sztejn, with operations in New York contracted to purchase hog bristles from an Indian supplier, Transea Traders. Sztejn established an irrevocable international letter of credit with an American (New York) bank, Schroder, to pay for the goods under which funds were to be released to

. . .
been released, it will have to face up to the difficulties associated with attempting to pursue its legal remedies against the supplier in India. In deciding whether to initiate suit in India, the buyer, in consultations with its attorneys, must weigh the likelihood of success versus the costs of litigation. Disadvantages of litigation, in addition to its cost, include the possibility that the local courts will favor the local supplier and that the supplier may lack sufficient assets to satisfy buyer's claim which is unsecured. If litigation abroad is not feasible, buyer could write off and take a tax deduction for its losses. To mitigate its exposure, the buyer should immediately cut off all its business relationships with the foreign supplier on other orders. It should also inquire into whether the Indian supplier does business in the United States or other jurisdictions near by or has any assets there which it could legally seize to satisfy its claim. It should consider apart from its legal remedies whether it has any basis for exerting leverage over the Indian supplier to induce it to make reimbursement for their fraud. Loss Prevention An international buyer may prevent or mitigate its business risks in such situati
. . .

Some common words found in the essay are:
Loss Prevention, American York, Recoupment Losses, Follow Evaluation, Definition Sztejn, STUDY Definition, Recommendations Buyer, Banking Corp, letter credit, Traders Sztejn, international trading, indian supplier, shipping documents, hog bristles, funds letter credit, funds letter, buyer protect, letters credit, legal remedies, international transactions, Schroder Banking, international trading transactions, supplier hog bristles, schroder banking corp, henry schroder banking,
Approximate Word count = 1736
Approximate Pages = 7 (250 words per page)