Midcity Air

Essay length: The word-limit for this essay is 3000 words.There is an allowance up to 10% either way.The word-limit does not include title page, footnotes, and bibliography.Referencing should follow the OSCOLA style.
Midcity Air (M) is an English company producing innovative heating units and is planning to expand its business in Europe.It has successfully negotiated a contract with a retail company (hereinafter, the Buyer), for the sale of 400 heating units, to be delivered by 1 September 2021.Given the Buyer’s long business experience in Ruritania, the parties also agreed that the Buyer becomes the exclusive distributor of Midcity Air in Ruritania.The contract has been formed under Buyer’s general terms and conditions which include the following clause:In case of a delay in the delivery of the goods, Buyer is entitled to terminate the contract and the Seller is obliged to pay double compensation for the losses caused by the delay.Furthermore, the parties agreed that the general principles of international commercial law (lex mercatoria) should apply to their contract and the courts of Ruritania have exclusive jurisdiction over their disputes.Ruritania is a small European state that has adopted the CISG, and its courts recognise lex mercatoria as applicable to cross-border commercial contracts.Following an increase in the cost of raw materials between 5% and 20% over the summer, M refused to deliver the goods at the agreed price and asked for a renegotiation of the contract price, arguing that the cost increase exceeds the normal fluctuations in the relevant marketplace.The Buyer refused to renegotiate and brought action against M, seeking compensation for material loss and loss of profit, as well as the payment of a penalty provided for in the contract in the event of delay in delivery.Midcity Air is shocked by this turn of events and asks for your advice on their contractual position.In view of this experience and in preparation for their further European expansion, M also seeks your advice on including the following clauses in their forthcoming contracts with other European retail companies.(1) Prices are based on present day costs of manufacture and design and having regard to the delivery quoted and uncertainty as to the cost of labour, materials etc. during the period of manufacture, we regret that we have no alternative but to make it a condition of acceptance of order that goods will be charged at prices ruling upon date of delivery.(2) The Buyer shall not be entitled to withhold payment of any amount due to Midcity Air under the Contract by reason of any payment credit, set off, counterclaim, allegation of incorrect or defective goods, or for any other reason whatsoever which the Buyer may allege excuses him from performing his obligations hereunder.In particular, they ask whether these clauses are enforceable under a) English; b) German; c) French law; d) the law of a further European jurisdiction of your choice.

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