In early January 2015, Smith Mining Ltd (“Smith”), a Queensland based-company entered into a
contract, subject to Australian law, with China Aluminium, a Chinese aluminium processing firm for
three 60,000 tonne shipments of high grade aluminium at US $200 per tonne from Queensland in the
first weeks of February, May and August 2015 respectively. Under the contract, there was also a $1
million per instalment shipping charge. Each instalment charge was payable a week in advance by
Smith setting up a letter of credit with Brisbane Bank. There was a minimum requirement of a week
between payment and the earliest possible date for shipment. Smith was to self-certify, under the
contract, the quality for each shipment. Under the contract each instalment was to be delivered to the
port of Dalian, China, by a Smith chartered shipping carrier at Smith’s expense.
However, subsequent contract execution didn’t conform to the hopeful expectations of either party.
Regarding the first shipment:
 Due to internal delays and errors by Brisbane bank, it was 10 days late with the letter of credit.
This cost Smith $20,000 in extra bank costs. It relied on this as an excuse to delay shipment by 14
days to cover up its own 10 day delay in shipment, caused by plant failure. Due to that plant
failure, Smith could only ship 30,000 tonnes. China Aluminium bought the deficit through the
China Beijing Metal Exchange (CBMX) at $300 a tonne plus a $150 per tonne shipping charge
from a Korean company, although Happy Mining Ltd, an Australian competitor had offered and
was able to arrange a substitute, equivalent delivery within a further fourteen days at no extra
cost and little inconvenience to China Aluminium.
Regarding the second shipment:
 Owing to a tropical cyclone, loading in Queensland was delayed by six days and the ship’s
departure was delayed a further four days due to industrial action by the port workers in
Queensland.

 Because of a ship loading error at the port, half of the shipment was not of the appropriate quality.
Smith identified this before the ship departed but it delayed the shipment by 4 days, which cost
an extra $250,000 in port handling and transport fees and a further $200,000 in rescheduling.
Required:
(a) Outline and discuss each party’s likely legal rights and liabilities in relation to the above detailed
first and second shipments as governed by Australian law, assuming CISG applies.