Equapack Corporation
345 Commercial Ave.
Oceanside, Equatoriana
Phone. 555-1235
Fax 555-1237
June 24, 2002
Medical Machines, Inc.
415 Industrial Plaza
Capitol City, Mediterranean Sea
Dear Sir:
We anticipate the possibility of up to 6 machines in the market being able to dry bulk packaged goods into retail packages of 500 grams to 1 kilogram. The machines are expected to be used for a wide variety of products, whether fine products such as coffee or flour, and coarse items such as beans or rice. I need to know what you might be able to offer us, which includes price and delivery terms. Price and timely delivery will be an important part of the purchasing decision.
To,
(Signed)
Donald Swan
Engineering Management
Claimant's Exhibit No. 2
Medical Machines, Ltd.
415 Industrial Plaza
Capitol City, Mediterranean Sea
Tel. 487-2314
Fax 487-2320
July 3, 2002
Mr. David Swan
Engineering Management
Equapack, Inc.
345 Commerce Ave.
Oceanside, Equatoriana
Dear Mr. Swan:
Thank you for your inquiry of June 24, 2002 . We, as you are undoubtedly aware, are the premier equipment manufacturer for the food packaging industry. Our packaging machinery has been providing complete satisfaction to our customers.
If you are planning to use the machine for a wide variety of products, as you have said, you will want to purchase a screw feeder machine. You need to auger, feeder for excellent products. O'Shea, feeders can also be used to pack rough items such as beans or rice, but they are slower than doing so is manifold, as are head weighers. As you also undoubtedly know, multi-head weighers are considerably more expensive than spiral, feeder wire. I can offer you 6 models of 16 spiral feeder machines. This is our newest model introduced this year and it has been a favorite with every customer. The price is $75,000 per unit. Due to huge demand, there will be two months after we will be able to ship.
There is also a possibility that can better meet your needs for rapid delivery and desire for a good price possible. I can offer you 6 models of 14 augerfeeder packers. This model was first introduced in 2000 and was one of our top products. It has been discontinued to support the model 16 , but I am sure that you guys will be more than satisfied. Because it is a discontinued model, I can offer you a special price of US $6.5 million per unit for immediate shipment with a minimum of 6 machines. We only have a limited number of these so I encourage you to be quick if you are interested.
You will find closed copies of our general conditions of sale. You will note in particular that all sales are F.O.B. or F.C.A. (General Conditions 2000) and of course we will be happy to arrange shipment for you. Shipping can be expected to be $1000.
I look forward to receiving your order.
Thanks,
(Signed)
Stephane Drake
Salesman
Medical Machines, Ltd.
General Conditions of Sale
International Sales
(Excerpts - reproduced only in relevant terms)
3 . All prices quoted FOB, if the goods are expected by sea, or in frontier closed areas, if the goods are transported by land or air. (General Conditions 2000)
4. Prices for all international contracts exceeding $ 50,000 must be paid by opening a letter of credit with a first class bank in favor of Medical Machinery, South Africa, Mediterranean paid by Commercial and Industrial Bank.
* * * *
15. Any dispute arising out of or relating to this Contract, including any question as to its existence, validity or termination, shall be submitted to and finally resolved by arbitration at the Singapore International Arbitration Center in Vindobona, Danubia in accordance with the Rules of Arbitration (the "SIAC Rules") at such time as the Rules of Arbitration are deemed to be in force for information purposes only. This clause.
The tribunal consisted of three arbitrators.
The governing law of the contract shall be the United Nations Convention on Contracts for the International Sale of Goods (Article). All matters not governed by the Convention shall be governed by these rules of international commercial law as deemed appropriate. The language of the arbitration shall be English.
Claimant's Exhibit No. 3
Equapack Corporation
345 Commercial Avenue.
Oceanside, Equatoriana
Phone. 555-1235
Fax 555-1237
July 12, 2002
Mr. Stefan Drake
Medical Machines, S.A. Incorporated
415 Industrial Plaza
Congressional Municipal, Mediterranean
Reply to your response of July 3, 2002
Dear Mr. Drake:
Thank you for your prompt response to my inquiry. The contract for our anticipation of needing more equipment has been signed. Therefore, it is urgent to provide new packaging machines in a timely manner.
I am therefore authorized to order you to demonstrate the 14 six year dry stuff packer. We would appreciate it if you would arrange for shipment to us. The letter of credit in favor of the U.S. forty-three point zero zero zero million dollars in favor of the medical machinery, the company will be open for payment with the commercial bank Equatoriana Mediterranean Commercial and Industrial Bank.
Please let me know if there is anything further you need from me to effect delivery.
I remain
To,
(Signed)
Donald Swan
Engineering Management
Claimant's Exhibit No. 4
Medical Machines, Ltd.
415 Industrial Plaza
Capitol City, Mediterranean
Phone. 487-2314
Fax 487-2320
July 24, 2002
Mr. David Swan
Engineering Management
Equapack Incorporated
345 Commerce Ave.
Oceanside, Equatoriana
Fax
Dear Mr. Swan:
It's a pleasure to tell you about yesterday.
In reference to your inquiry about the status of your order for 6 No. 14 screw feeder dry commodity packer, packer for ocean cargo. Fast Freight Forwarding, which is the company's freight forwarder that we use for international shipments, has informed me that they expect to pick up the machines and load them into a container next Monday. Ship sailing should be later this week. As soon as we have the bill of lading in process, we will request payment for the letter of credit so that you will have all the documents you need to unload and clear customs when the ship arrives.
I would like to say again that we are pleased to serve you.
Sincerely,
(Signed)
Stephane Drake
Salesman
Claimant's Exhibit No. 5
Witness Statement
Mr. Donald Tsang, Swan
Engineering Manager, Equapack Corporation
My Engineering Manager, Equapack Corporation. Equapack Inc. is a company that packages a variety of other goods. A small portion of the business in the past has been packaging of bulk commodities, almost all of which are legumes all types of sizable retail packaging. It has not been a significant part of our business. My role as engineering manager I've been responsible for overseeing the firmness of the packaging process. In June 2002 we received a survey from a chain of retail food stores named Equatoriana A2Z as to whether we would be able to package various bulk commodities into packages of 500 grams to 1 kilogram. The amount they were interested in was well beyond our capacity. Therefore, on June 24, 2002 I wrote to Medical Machinery, South Africa, I knew that there was a good reputation as a manufacturer of the type of packaging machinery we needed.
Mr. Stefan Drake, the salesman for Medical Equipment, supplied us with 6 models of 14 spiral splicing packaging machines at a very reasonable price. The price was reasonable because such a demonstration of 14 has been discontinued in support of their model 16. We are not worried about the fact that the machines are supplied with stopped models. What mattered most to us was that the machine was immediately available at a price that was reasonable. By that time, we had signed a contract with A2Z and we were obliged to start packing for them within a short period of time. So, on July 12, 2002 I wrote to Mr. Drake that we would be purchasing their machines. Although the contract is FOB, the medical equipment is handled by shipping us. I expect to hear from Mr. Drake within a few days to be fair when the machines will be shipped or when we can expect them to be delivered. Since I had not heard from him, on July 23, 2002 I called Mr. Drake. He said he could not be sure, but he would find out and let me know as soon as possible. Mr. Drake did not send me a fax the next day and said in his letter that the machine was ready for shipment and that they would choose to have it shipped by freight forwarder the following Monday. In my conversation with Mr. Drake I told him that A2Z wanted us to package a wide range of products and that salt would also be included. Whatever experience Equapack and I had packing salt in the past did not recognize that it was so corrosive that special machinery would be required. Mr. Drake had no response to what I told him about packing salt and certainly did not tell me that the machine would soon become unusable if we used this to pack salt. Fax Mr. Drake did not mention it. It should have been able to confirm what had just been said between us, because I think that conversation with Mr. Drake was recorded on the medical equipment. At the very least, when I asked for a recorded message before anyone answered the phone to say that there might be a record of the call to ensure customer satisfaction. It would give more customer satisfaction if they sold us normal type machines.
(Signed)
January 15, 2003
Claimant's Exhibit No. 6
Equapack Corporation
345 Commercial Ave.
Oceanside, Equatoriana
Phone. 555-1235
Fax 555-1237
October 19, 2002
Mr. Stefan Drake
Medical Machines, Incorporated
415 Industrial Plaza
Capitol City, Mediterranean
Dear Mr. Drake:
This is to confirm what I told you in our phone conversation yesterday. In my original letter of June 24, 2002 inquiring about the possibility of purchasing a packaging machine from Medical Devices, I wrote that the machine was expected to be available for use with a wide variety of products, regardless of thickness. In your letter of July 3, 2002 responding to my inquiry you said that we needed an augerfeeder because it could package both coarse and fine goods. You did not say that there were any products that your machine suggested should not be used. When I called you on July 23, 2002 to inquire about the shipment date, I specifically told you that the one product that would be packaged with the machine was salt. You did not tell me that the machine could not be used to package salt. Furthermore, when you answered the inquiry, the day after the telex, you did not even mention salt.
We can't use the machines, almost can't use them. There was corrosion, enough to cause product blockage, causing power outages when we tried to package any product. Before reaching this stage, corrosion, inability to clean surfaces properly for feeding, which is a serious problem when dealing with food.
If you want the machines, they are yours and we would be grateful if you would arrange to have them done with. We will have to buy replacement machines from other sources and we need to have the space. In addition, we would like you to reimburse us for the price of the machine, as well as all other costs that have been caused by the total failure on our part.
Thanks,
(Signed)
Donald Swan
Engineering Management
Claimant's Exhibit No. 7
Medical Machines, Ltd.
415 Industrial Plaza
Capitol City, Mediterranean
Phone. 487-2314
Fax 487-2320
27 Oct 02
Mr. David Swan
Engineering Management
Equapack, Inc.
345 Commerce Ave.
Oceanside, Equatoriana
Your October 19, 2002
Dear Mr. Swan:
I can only say that I am sorry that you have had corrosive problems with the Demonstration 14 Screw Feeder Packaging Machinery that Equapack purchased from us.
As I told you on the phone, salt is a very special item to deal with. It is highly corrosive. All of our literature and our website clearly indicates that the machine is built to package salt, which is our model 17, using high grade stainless steel. These machines are quite expensive compared to the machines used to package all other products. Since salt is a special product, we do not, and cannot assume that a customer intends to package it unless we are told to be specific. You do not have to do this when ordering our machines.
You must insist that you told me that you would use the machine to package salt when you called me and asked when the machine would ship. To say the least, you weren't very specific. Even so, I did not tell you that the Demo 14 machine should not be used for salt. You wanted the best price on the machine that we could offer you, which is why I suggested the Demo 14 machine to you. We wouldn't be able to sell you the machine and you would probably pay for your Model 14 machine using the price of salt. While we are not liable for anything that goes wrong, we will be prepared to make major concessions by purchasing our Model 17 Packaging Machine. I have enclosed our literature on these. I hope you will find this a satisfactory solution to your present situation.
Thanks,
(Signed)
Stephane Drake
Salesman
Singapore International Arbitration Center