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Problem Questions


To improve business, the New World Restaurant Ltd in Clayton decided that Saturday nights would be its Mexico Night and it would serve th e finest Mexican beef flown in from Mexico. To accomplish this, it purchased from a ranch in Mexico a substantial amount of beef. The restaurant contacted Kanga Air at Tullamarine Airport to organise the beefs transportati on to Melbourne. The owner of the ranch was directed to pack the beef in cool-packing and transport it in a refrigerated van to Mexico City Airport where it would be flown under refrigerated conditions to Los Angles on Lone Star Airlines, and from there to Melbourne on a Kanga Air flight. The beef was delivered to Lone Star at Mexico City and an air waybill for transportation to Australia was issued by Lone Star which was correct in all particulars. However, the cargo was not immediately loaded onto the LSA plane due to engine difficulties at Mexico City. Indeed, the LSA flight to Los Angeles did not take off until 19 hours after the planned time. In the interim, the cargo of beef sat in a container on the tarmac under the hot Mexican sun. When eventually loaded onto the refrigerated aircraft the remainder of the journey proved uneventful. The cargo was transferred at Los Angeles to Kanga Air and flown to Melbourne Airport. From Melbourne Airport it was delivered to the Restaurant the day before the Restaurants inaugural Mexican Night, as scheduled. Unfortunately, when the beef was served at the Restaurant the following night, it caused a great deal of illness in the customers. Further investigation quickly determined that the beef was unfit for human consumption, because the bacteria levels were well above the safe limit. The tests confirmed that the bacteria levels were consistent with the beef being

left in the sun at Mexico Airport for a long period of time. The New World Restaurant immediately telephoned Kanga Air to complain about the state of the beef demanding compensation, and also reimbursement for any claims which might be made against it by ill customers. They confirmed this is in a letter sent two weeks later. Advise Kanga Air of its rights and liabilities.

Accra Electronics Ltd in South Africa made a contract with Icarus Airlines for the delivery of a shipment of 30 computers worth $600,000 for sale at the International Trade Fair in Melbourne Australia at the end of June 2001. The computers were delivered to OR Tambo Airport by Accra Electronics, and an air waybill was issued by Icarus noting the number of computers, their total weight (400 kilograms) and their value (although no special premium was paid). Unfortunately, shortly after take-off hijackers wielding firearms seized control of the aircraft diverted the plane to the airport at Casablanca, Morocco. With the hijackers onboard, the aeroplane sat on the tarmac in Casablanca for three weeks, with its passengers and cargo of computers also onboard. After the three weeks, the hijackers were overpowered and the passengers and cargo released. The computers were flown on to their destination. A subsequent inquiry revealed that the hijackers had been able to smuggle their weapons on the aircraft through the negligence of Safetycorp Ltd, a wholly owned subsidiary of Icarus which was responsible for security, baggage and cargo checks on all Icarus flights. Unfortunately for Accra Electronics, half the computers arrived badly damaged as a consequence of the carriers poor stowage and the violent aerial manoeuvres which occurred during the hijacking. In addition, the computers arrived in Australia a week after the Trade Fair, and, having no retail outlets in

Australia, the company was forced to sell the remaining working computers at half of their value. Accra Electronics is concerned about whether it can claim back its losses against either Icarus or Safetycorp and seeks your advice.