Question

Topic: Strategy

Violation Of International Contract....

Posted by Blaine Wilkerson on 7/22/2004 at 5:20 PM ET 2500 Points
Hey guys, I have a major problem in which I would like to get your advice BEFORE I contact my attorneys.

To make a long story short, I have a global marketing and distribution contract with a client whose product is an internationally popular toy. A toy store out of Australia (Melbourne) sent us an unexpected email about the delivery of a sea container. We knew nothing about the order.

Since we have been ignored by our Vietnamese manufacturer for the past 3-4 months, we assumed he was out of business or not interested so we moved on to a new factory. Well, this toy store in Melbourne states they are friends with the factory owner, spoke to him on the phone, and said he had several thousand puzzles ready for shipping. However, we cannot get the manufacturer himself to call us, email us, or confirm the conversation.

I warned this store that Jett Enterprises had global rights for distribution and we have not authorized anyone to distribute the puzzles in Australia as of date. In spite of my notification, theis store went on to contact other puzzle stores in Australia in attempt to resell the puzzles as distributors...even going as far as to using some of my statements about new packaging etc. as if THEY were designing it when in fact, I have been working on the packaging for weeks now!

My client and I are up in arms about this. He is in Canada, I am in the US, the offensive Distributor in is Australia, and the factory is in Vietnam. So here is the meat:

I am posting a bounty of 20% of the company's profits for the next year (through next Christmas), whether achieved through the courts, and/or helping us get in touch with the manufacturer (must speak Korean or know someone who does), AND help investigate the toy company in Melbourne.

So, that's 20% of my client's net corporate profits for the next 17 months for someone to start immediately. The first thing we want to do is call the factory. Next, and/or in addition to calling the factory, I need someone in Melbourne to dig up info on this particular company and provide as much info as possible.

An NDA is required, and of course, I will put it in writing.

I hope someone can help. In the event it requires 2 separate entities to accomplish each goal, I will divide the percentage based on the amount of evidence/progress is achieved from the different projects.
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RESPONSES

  • Posted by Peter (henna gaijin) on 7/22/2004 at 5:58 PM Accepted
    I am confused as to why they need someone who speaks Korean? You mention Viet Nam, Canada, Australia, and the US, but not Korea... Is the manufacturing company based in Korea?

    International conflicts can be interesting. The main questions you need to answer before you get too far in are:

    1) what legal system would govern the contract? Likely Canada, Viet Nam, or Korea. I am pretty sure you would want it to be Canada, as the rule of law is much more set and also the courts atre local. But the supplier will want their local court system.

    2) given where the contract if governed by, is the contract enforcable? Or is there some way that the manufacturer can slip out of it?

    Once you determine if the contract is enforceable, then you know whether there is any chance of going after them (or if it is even worth the cost).

    I suspect that even if you do get a court order against the Vietnamese company, you won't be able to get much (if any) recourse from them (fines, restarting of supplies, etc.). You'll fare slightly better if it is a Korean company.

    You may be more successful against the company in Australia (stopping them from selling the product, perhaps getting them to sell you their product, etc.), but that won't do anything towards getting things corrected with the supplier.

    Good luck.
  • Posted by Blaine Wilkerson on 7/22/2004 at 6:53 PM Author
    Peter- the owner of the Vietnam factory is Korean.

    The contract is enforced by Candadian Law, but since I am an American corporation, I have the US legal system as well.

    The factory has been AWOL for quite some time now, so if we could just get them to stop making and selling our product, I think we could live with that.

    However, I plan on putting the Australian company through the ringers. We have copies of emails sent from them claiming to be the distributors to an independant puzzle shop...AFTER I told them at least 4-5 times to cease and desist. The shop owner has been very cooperative in sending us all communications, invoices, etc. But the company in question is expressing a very literal and blantant disregard for the distribution contract and is trying to sell the toys anyway...as if I never said anything. I can't believe it!

    Apparently, they are resting on a statement my client made on his website announcing the new factory in Vietnam. My client stated the factory will be providing FOB shipping for his customers. WEll, this Aussie company took this to mean they could order direct from the factory. Now, this would not necessarily be a problem if we had been notified...better yet, PAID for the order. They areusing trademarked, and copyrighted names, designs, packaging, everything. It even has my client's logo on the box!

    Amazing...
  • Posted by telemoxie on 7/22/2004 at 9:44 PM Accepted
    Would it be a possible strategy to find a well-heeled and aggressive, legally savy distributor in Australia, preferably well funded with experience working with Vietnamese companies, and somehow share or assign regional rights for distribution? Such as person might be well positioned both to protect your interests and to capitalized on the Australian market.
  • Posted by Peter (henna gaijin) on 7/22/2004 at 10:15 PM Accepted
    Jett,

    What I was referring to when I said where is it enforceable is what is called 'forum'. Often in an international contract, you will have a forum selection clause. This is a provision designating a particular country's court to resolve any dispute that may arise concerning the contract. Does the contract have this? If so, this says which laws are meant to be followed.

    Of course, even if you go to that forum and win a case, this doesn't necessarily mean that you would be able to collect any recourse.

    I came across an interesting resource on Australian Law: https://aussielegal.aol.com.au/
  • Posted by Blaine Wilkerson on 7/22/2004 at 10:33 PM Author
    Marcus - It's on the way. Thank you.

    Telemoxie- GREAT idea! Get an attorney to have a vested interest and protect.

    Cal- Please let me know when you find the article. Thank You!

    Peter - The contract states the "forum" is to be administered under Canadian law.

    virago - Thank you for the advice. Fo now, I just want someone who speaks the language to get him on the phone. If I have to move forward with Vietnamese counsel, I'll see what I can do.

    This is one of those things we just can't let go. If this guy does it, who else will try?

    I'll keep everyone updated on the status....
  • Posted by Chris Blackman on 7/24/2004 at 8:52 PM Accepted
    Jett

    We have had dealings with a very realistic, down to earth firm of IP lawyers in Melbourne called Ellis King McEwan www.ekmlegal.com and I would recommend you have an initial discussion with them. Ask for David King and tell him I suggested he could help.

    If you need any legwork done downunder (are these bandits in Melbourne???) let me know...

    ChrisB
  • Posted by Blaine Wilkerson on 7/24/2004 at 9:12 PM Author
    Cal- What can I say? Outstanding feedback/recommendations as usual! Thank you!!!

    Chris- Yes, the culprits are in Melbourne. I'll send you an email later on to discuss.

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