In January 2016, Ferrum Corp, a Queensland based-company entered into a contract – subject to Australian law, with Sino Steel, a Chinese steel

In January 2016, Ferrum Corp, a Queensland based-company entered into a contract – subject to Australian law, with Sino Steel, a Chinese steel milling firm for four 40,000 tonne shipments of high grade iron ore at US $40 per tonne from Queensland in the first weeks of February, March and April 2016 respectively.  Under the contract, there was also a $2 million per instalment shipping charge. Each instalment charge was payable a week in advance by Ferrum Corp setting up a letter of credit with Queensland Bank.  There was a minimum requirement of a week between payment and the earliest possible date for shipment. Ferrum Corp was to self-certify, under the contract, the ore quality for each shipment. Under the contract each instalment was to be delivered to the port of Guangzhou, China, by a Ferrum chartered shipping carrier at Ferrum’s expense.

However, subsequent contract execution didn’t conform to the hopeful expectations of either party.

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Regarding the first shipment:

 Due to internal delays and errors by Queensland Bank, the Bank was 14 days late with the letter of credit. Ferrum relied on that bank delay as an excuse to delay shipment by 14 days to cover up its own 10 day delay in shipment, caused by plant failure.


Regarding the second shipment:

 Owing to a flood, loading in Queensland was delayed by six days.       Due to a ship loading error at the port, half of the shipment was not of the appropriate ore quality.


Required: (a) Outline and discuss each party’s likely legal rights and liabilities in relation to the first and second shipments by reference to Australian law and where applicable referring to the CISG.             (1000 words)


(b) Would Sino Steel be entitled to terminate the remainder of the contract – the April 2016 instalment – and if so what consequences would follow?     (300-330 words) 


Question 2        (1350 words)

As a variation of the facts outlined in Question 1 above, assume that Ferrum Corp and Sino Steel entered into a contract, subject to Australian law, for a single February 2016 iron ore shipment of 60,000 tonnes on the same advance payment terms. A certificate of quality was to be separately issued by a reputable independent company, Gladstone Iron Testing.  Sino Steel’s bank, Shanghai Bank, was also 10 days late in delivering the requisite irrevocable letter of credit.  Due to fraud by a Gladstone Iron Testing employee, a false certificate was issued as to quality. There was also an error by a Shanghai Bank officer, who issued a letter of credit, even though there was not any basis for the issuing of the same.


(a) How might the parties best cooperate?                  (300-330 words)


(b) Assuming that only the false certificate issued and that alternatively only the incorrect letter of credit issued, what would be the respective innocent party’s legal rights? (1000 words) 


 Question 3           (650-700 words)

There is an extensive banana industry in both Australia and the Philippines. As bananas are grown in differing, complementary seasons in these countries, they would benefit from supporting mutual free trade in bananas. Outline and appraise the applicable GATT/WTO, bilateral and regional free trade agreement (AANZFTA), and WTO sanitary and phyto-sanitary (SPS) Agreement sourced rules which govern the Australia-Philippine banana trade and consider whether Australia can rely on strict SPSquarantine rules to discourage imports.

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