Quality Claim

To: Young Fan

President and CEO

From: Eric H. Williams

Purchasing Manager

Date: August 19,2002

Re: Quality Claim on the Dead-Burned Magnesite as per Vessel “Golden Eagle”

Dear Mr. Young Fun,

We have found the discrepancies of the quality as mentioned in the subiect. Leo, the Chief Engineer of our client, is extremely not happy with the quality. The basic element is not upto the minimum requirement. Therefore we claim for an amount of US $ 839,696 based on the following specifications and formula:

MgO:90.95%

SiO₂:4.154%

CaO:1.82%

Al₂O₃:1.78%

Fe₂O₃:0.65% max.

L. O. I.:0.35% max.

B. D.:3.19 g/cm2

Size:0-1 mm17%, 1-10 mm 80%, above 10 mm 3%

Special formula:

aMgO:below 91%, minus 5% on price.

($ 104×0.05=$5.20) ×36,700=$190,840

bSiO₂:above 4.15% minus 5% on price.

($ 104×0.05=$5.20) ×36,700=$190,840

cFe₂O₃: above 0.60% minus 7% on price.

($ 104×0.07=$7.28) ×36,700=$267,176

dRatio of SiO₂ to CaO should be between 2.

($ 104×0.05=$5.20) ×36,700=$190,840

Total claim= $ 839,696

Please let us know how you’ll compensate us.

Eric H. WilliamsPurchasing Manager