Reference no: EM13940001
Here is the Scenario: Fun Fashion Clothing (Fun Fashion), a US company, has its line of clothing manufactured in India, by Glamor Fabrics (Glamor). Glamor supplies garments to many U.S. companies using the designs supplied by the US company. Glamor purchases fabrics from around the world and subcontracts some of the clothing assembly to lower labor cost manufacturers in other countries. Glamor received an initial shipment of non-conforming garments from one of its Taiwanese suppliers; the garments used 9 oz. cloth instead of the 12 oz. cloth specified in the contract.
Glamor shipped the goods containing the non-conforming goods to Fun Fashion; further shipments are to come. Fun Fashion wants to solve the current problem and avoid future problems. It's thinking of canceling the contract by refusing the non-conforming garments and purchasing cheaper garments from a Vietnamese manufacturer. Meanwhile, Fun Fashion is without garments for the upcoming fashion season and wants to cancel its contract with Glamor. Fun Fashion wants get out the contract by refusing the garment and purchasing cheaper garments from a Vietnamese manufacturer. Please discuss the following:
1. To which, if any, international tribunals could Fun Fashion turn to resolve its issue? Under what rules?
2. To which, if any, international tribunals could Glamor turn to resolve its issue? Under what rules?
3. What are Fun Fashion's contract rights concerning the non-conforming goods?
4. What are Glamor's contract rights concerning the non-conforming goods?
5. What are some strategies for reducing risk to both Fun Fashion and Glamor, particularly some of the terms that should be in future contracts that might minimize the types of problems FFC and Glamor now faces? Please support your strategies with full IRAC analyses.