Japan Intercollegiate Negotiation & Arbitration Competition
English Speaking Round B - Negotiation
2007

Blue enters this negotiation with the intention to preserve its harmonious
relationship with Red.
Our objective is to achieve a win-win situation overall for both Blue and Red.
As such, we will accept any solution which best meets the needs and wantsof both companies.
We believe that the four issues to be addressed are:
1. The increasing price of corn
2. The lack of management controls in Yellow
3. The sale of the water treatment facility
4. The negotiation of a potential platinum contract.

ISSUE 1:

INCREASING PRICE OF CORN

Since the execution of the corn trading contract between Red and Blue, theprice of corn has significantly increased.
We wish to ascertain the reasons for Red’s sudden request to amend or
terminate the existing contract. Should the reason be solely based on
financial grounds, we have been given the authority to increase the contract
price to 270 cents per bushel. It is our intention that the overall contract
price be aligned with the other contracts held with Pine, Co. and Melon, Co.;
thus, we believe that overall price should be increased to 240 cents perbushel.
Moreover, it is our opinion that there is no hardship as the price of corn has
experienced dramatic fluctuations in the past, so it can be reasonably taken
into account that this trend would continue in the future.1 In addition, thefact that Red agreed to enter such a long term agreement implies they haveassumed all such risks.2 Further, it is important to note that the contract
price of 200 cents per bushel was above the market price of 191 cents perbushel at the time.

ISSUE 2:QUALITY ASSURANCE OF YELLOW, CO. PRODUCTS

The cooperation of Red and Blue has resulted in ventures of value to bothcompanies and it would be ideal to maintain this relationship. We believe thekey to resolving this issue lies in ensuring that both Red and Blue are inagreement regarding the importance of quality.
We understand that the cultures of Red and Blue are based on different
values – ‘just challenge yourself…do not stick to manuals or fixed ideas’ and12UNIDROIT Art. 6.2.2.(b).
UNIDROIT Art. 6.2.2.(d).

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English Speaking Round B - Negotiation
2007‘quality first’ respectively – and as such, we are reluctant to impose specificmethods on Yellow with which to achieve the standard of quality we require.
However, it is not acceptable to us for Yellow to continue with its current lax
risk management practices and lack of management accountability. It istherefore our intention to reach an agreement with Red regarding a set ofquantifiable goals based on external standards. While we are happy to assist
wherever required, we would like to have Red suggest the most appropriate
methods to achieve these goals. In such a way, we hope to strike a balance
between the cultures of Red and Blue and set procedures in place toguarantee the quality that we require without unduly interfering with theinnovative freedom inherent in Red.

ISSUE 3:

WATER TREATMENT FACILITY

Blue is seeking to sell its water treatment facility to Red, with primary focus
on market expansion. The actual price is of secondary concern as we arewilling to accept a base price of USD650,000 in cash and any additional value
in non-cash assets.
In negotiating the price, the basis of Red’s need for the treatment of theirwater needs to firstly be discerned, as does the reason for Red valuing thisneed at USD500,000. If Red discloses no specific urgency for the need of thisfacility, we will outline the reasons as to why this facility will add value totheir company.
As our main focus is on market expansion, we will be willing to offer a
discount of up to 10% on the price of the water treatment facility. Depending
on Red’s willingness to offer us a referral service, this discount may be
increased to a maximum of 35%. However, in the case that the discountexceeds 10%, Red must agree to a confidentiality agreement ensuring that
this discount rate is not to be publicly disclosed as the conventional discountoffered in the western market is 10%.

ISSUE 4:

POTENTIAL PLATINUM CONTRACT

We must verify the rumor regarding the existence of platinum in Negoland
before committing further.
If the rumor is true, we will need to investigate whether the source of
platinum is of a sufficient amount for investment.
Furthermore, we wish to enter into a long-term purchase agreement ofplatinum with Red Mining. It is our intention to contract with Red Mining
through our connection with Red. However, the contract duration must be atleast three years. We also wish to contract at a reasonable price in theappropriate circumstances.

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