Quiz 23: Warranties


Good Faith and Commercial Reasonableness: Good faith is a subjective measure applied on a case-by-case basis wherein a court determines the intent of the parties when they entered into the agreement and their conduct in reaching performance as outlined by the agreement. Alternately, commercial reasonableness is measured with an objective test that uses the reasonable person question: What would an informed person, viewing the matter realistically and practically, and having thought the matter through, conclude? The circumstances considered include the method of sale, the subject matter of the sale, advertising or other methods of exposure to the public, the time and place of the sale, and related expenses.

Laws Posed for US Businessmen Forming Contracts with French Business Firms If all the contracts were in foreign language, that is, French (F), then it might create a huge problem with the US businessman who wished to form contract with F individual or businessman. The problems that the law might imply in this case are discussed as follows: a. It is very difficult for the US nationals to understand the F language therefore, it will cause problem while determining the terms and conditions of contract. b. It will be most likely that F businessman will take undue advantage of this weakness and will commit fraud or breach of contract as it will be difficult for the US businessman to understand the terms and conditions. c. This language hurdle will directly affect the relations among the state and will also affect the commercial relationship between both the countries as US businessman then desist in entering contract with the F businessman. d. It will be difficult to understand the laws of France when forming contracts with them for the US businessmen as the F laws differ from those of US depending on the political and other perspectives.

Preclusion of the Lawsuit by FSIA The Foreign Sovereign Immunities Act (FSIA) provides jurisdictional immunity to foreign state with certain exceptions which are as follows: a. When the foreign state expressly or impliedly waived its immunity. b. When the foreign state is involved with the US regarding commercial activity or any activity outside the state which has direct effects on the US. c. When any kind of tort was committed by a foreign citizen in the US. In this scenario, R, Inc. is having commercial nexus with the Honduras state as R, Inc. is arms dealer and earlier government of Honduras had contract with the company to supply weapons. This established the commercial activity between the foreign state and the company. This activity lies in the exception to the immunity to foreign states. Hence, FSIA will not impede this lawsuit.

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