Question

Company D in Guangzhou sent a catalog of gloves to company W in US. On Oct 22th D company faxed an offer to W company: 300 dozen pairs of ladies gloves, Article no. 2011w,2121, 2210 for 100 dozens each. CIF Los Angles USD 12, packed in carton, 10 dozens per carton, shipment in November, payment by letter of credit. Offer subject to reply received within Oct 31st.

•    Reply from W: Subject to email of Oct 22nd, the price is too high, CIF Los Angeles USD 10 per pair is acceptable.

•    Reply form D: Subject to July 28th email, the lowest price should be 11 USD per pair CIF Los Angeles. Offer subject to reply received within Nov 11th.

•    Nov 3rd: Company D received the Letter of Credit from company W, unit price 11 USD, packing: 15 dozens per carton.

•    Nov 4th: D company replied to W company and accepted the letter of credit.

•    But they could not find the suitable cartons for 15 dozen pairs. So D company sent email to W company, asking for change the packing clause in the letter of credit.

•    W company rejected.

•    D company had to pay much higher price for suitable cartons in order to satisfy the delivery terms in letter of credit.

•    What lessons we can learn from the case?

Answer 1

In current case, the company D accepted the offer when on november 4, the company replied and accepted the letter of credit. The contract became binding and as the packing size is especifically mentioned in the contract, the company is bound to supply it.

The lessons learned, before accepting an offer or counter offer, it is necessary to ascertain the costs of serving the offer including all things as well as availablity of the items.

i hope it helps..

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