This examination includes three (3) questions to be answered in three (3) hours if you are a regular J.D. student or in four (4) hours if you are not a native English speaker. You must answer all three questions. When computing the examination grade each question will be given the weight indicated at the beginning of the question.
Please answer Question I in one bluebook, and Questions II and III in one or more separate blue books. Indicate on the front of each bluebook which question is answered in that bluebook.
This is an open book examination. During the examination you may consult any written materials except materials checked out of the reserve section of the law library.
Reach each question carefully. Organize your answer before you begin to write and emphasize those points you think are most significant. If you find an ambiguity or if you need more facts, make reasonable assumptions and state these clearly in your answer. Be concise. Be clear. Good luck!
The American Cement Export Co. (ACE) of Houston, Texas has a contract to supply cement to the Nigerian Port Authority (NPA) for improvements at the Nigerian port of Lagos. The contract calls for payment by NPA through a letter of credit to be opened by the National Bank of Nigeria (NBN) in favor of ACE. ACE attempted to negotiate confirmation of the NBN letter of credit by an American bank, but NPA refused. Instead, the letter of credit was advised to ACE by First Texas Bank, which is also acting as paying bank.
The letter of credit provides for payment against presentation of the following documents: sight draft, invoice, three copies of a bill of lading showing shipment on the "S.S. Corvo," a certificate of origin, and an inspection certificate issued in the port of shipment. The issues of the letter of credit, NBN, is wholly owned by the Government of Nigeria and exercises certain governmental functions such as handling foreign exchange and implementing monetary policy set by the Nigerian Ministry of Finance. NBN also engages in ordinary banking activities such as the issuance of letters of credit in trade transactions and borrowing money on international markets on behalf of Nigerian government entities. NBN has a representative office in New York staffed by two officers who work with correspondent banks and solicit business for the bank.
ACE shipped the cement and presented its documents to the First Texas Bank. The bills of lading indicated shipment on the "S.S. Norvo," a typographical error. The cement arrived in Nigeria, but the NPA had ordered too much cement and asked NBN to delay payment of outstanding letters of credit opened in favor of cement suppliers and to avoid payment altogether, if possible. Accordingly, when First Texas Bank forwarded the documents to NBN, the latter refused to honor the draw, citing nonconformity of the bills of lading and disagreement over the identity of the U.S. firm issuing the inspection certificate.
ACE has consulted you to seek your advice on what options it has to bring an action against First Texas Bank and NBN. What defenses might it expect these banks to raise and how would you counter these defenses?
Small Tool Company is a Texas corporation with its place of business in Houston. Bottling Company has its place of business in Naples, Italy. Some time after January 1, 1988 Small Tool Company agrees to manufacture and to sell to Bottling Company a machine that will cap 10,000 bottles per hour. When the machine is delivered and installed in Naples it can process an average of only 7,000 bottles per hour.
As counsel for Small Tool Company, you are asked to advise the company on the legal remedies Bottling Company might have against Small Tool Company if Bottling Company brings a legal action in a Texas court. Please advise the Small Tool Company.
Monarch Cattle Company is in the cattle business. MCC is incorporated under Texas law and has its headquarters in San Angelo, Texas. Different divisions of MCC raise cattle, manage feedlots, and operate slaughterhouses throughout the United States.
Recently MCC started to breed exotic cattle to increase the yield and quality of the meat. Yield, in particular, has been enhanced by genetic engineering using a device for which a U.S. patent is pending. To avoid U.S. government regulation of the use of genetic engineering George "Tex" Monarch, president of MCC, wishes to move the breeding operation from Texas to Mexico or Argentina. Knowing that you have studied with Rendell and Winship, Tex asks you the following questions. Advise him on any three of the following four points.
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