Iris Window Fashions, USA Ocean Freight Contracts: Legal and Ethical Issues

This critical incident explores decisions and issues faced by the management team of Iris Window Fashions, USA, a wholly owned subsidiary of a large international manufacturer of hard window treatments, in contracting for container freight from China to Texas. Iris Window’s USA president, Steve Bauer, decided to commit the firm’s ocean freight business to two wellestablished carriers, Sealand and “K” Line America, Inc., to obtain the best shipping rates for containers of blinds imported from China. For a time, the firm was easily able to meet its contract obligations of 200 containers per year to both carriers. However, a series of unanticipated events plunged the company into internal chaos, created a management upheaval, and made it virtually impossible for Iris Windows to meet its ocean freight contractual obligations, embroiling the firm’s new management team in legal and ethical issues that threatened the company’s continued existence. How could Iris Window’s managers have let this happen?