FINANCE MARKETING UNIVERSITYCOMMERCE DEPARTMENT

INTERNATIONAL TRADE

Nghiemmarket.blogspot(AVTMQT 3-4)

Chapter 1: Exporting and the Management of Risk.Chapter 2: Negotiating DeliveryChapter 3: Negotiating Price & PaymentTranslate Import & Export ContractsListening: “Business English” CD 8(AVTMQT 5-6)1. Negotiating Inspection & Defects liability.2. Legal framework3. Export Contract

“Business English” CD 9”

EXPORTING AND THE EXPORT CONTRACTDr. Dr. James R. Pinnells

Compiled by Mr. Nguyen Thanh Nghiem( For Internal Use Only )

September 2011SyllabusCD 8, 9-Lessons:1. Exporting Management of Risk 4. Negotiating Inspection & Defect Liability2. Negotiating Delivery 5. Legal Framework3. Negotiating Price & Payment 6. The Export Contract .

TABLE OF CONTENTS4. Exporting and the Management of Risk5. Negotiating Delivery6. Negotiating Price & payment7. Negotiating Inspection & Defects liability.8. Legal framework9. Export Contract

THIS PART IS USED FOR CD 88.1 ORIENTATION TO A NEW JOB

8.1.1 COMPREHENSION QUESTIONS1) What does Anthony have to do if he wants some coffee?a. He has to pay 50 cents for each cup.b. He has to help himself to it in the kitchen.c. He has to ask Kara to make some coffee for him.2) If you run out of pencils and paper at work, where can you get more?a. from the kitchenb. from the CEO’s office. c. from the storeroom.3) When Ellen says, “We have flex-time here, “what does it mean?a. Workers are not all on the same schedule.b. There are no clocks at this company.c. There is time for exercise at the office every day.4) Using Tiffany as an example, what should you when introduced to a new co-worker?a. Extend your hand for a handshake.b. Ask the new employee to make some coffee.c. Smile and look at your feet.

5) Does Anthony speak a second language?a. Yes, he speaks French very well.b. Yes, he speaks a little French.c. No, he only speaks English.6) Where is Kara’s cubicle?a. It’s to the left of the entrance door.b. Her cubicle is on the shelf in the storeroom.c. It’s free.7) If something is difficult for you at work, which phrase could you use to express this?a. “It’s quiet down here.”b. “I’m having trouble.”c. “Things are certainly flexible here.”8) What is Anthony having trouble with today?a. He’s having trouble remembering people’s names.b. He doesn’t remember how to speak French.c. Anthony’s having trouble dealing with international accounts.9) Suppose your boss wants you to visit Mr. Harmon in advance of the design meeting. What do you need to do?a. Call Mr. Harmon and invite him to talk with you during the design meeting.b. Go to the design meeting so you can tell Mr. Harmon about it when you visit him.c. Meet with Mr. Harmon first, before attending the design meeting.10) Where is Anthony’s workspace going to be at AdRad?a. Anthony will share Tiffany’s cube until his is ready.b. His cubicle is the first one on the left as you come in.c. He’ll be working in Ellen’s office for a couple of weeks.

-Perk: Use of a company car is a common perk.Free coffee is just one of the small perks of working here.This job has a lot of great perks, including a lot of free travel and membership at a nearby gym. -Storeroom: Did you look in the storeroom?I stocked the shelves in the storeroom just yesterday.Almost everything you need is already on your desk, but the extra supplies are stored in the storeroom.-What I need: What I need is a cup of strong coffee.I’m making a list of what I need for my trip to Venezuela.As soon as I find what I need, I’ll get to work.-Cubicle: Stop by my cubicle later, and we can talk about that.The worst thing about cubicles is that they have no windows.I don’t have an office of my own, but I have a comfortable little cubicle all to myself.-As you come in: As you come in, you’ll see the secretary’s desk just inside the door.Please stop and sign the registry as you come in.Our office is on the right as you come into the building, it’s on the left, of course.

Have troubleI always have trouble finding my way around downtown.No, we didn’t have trouble finding your place- you gave us excellent directions.She’s having a lot of trouble with her computer today. She’s lost several files already.

Keep names straightDo you think you can keep all the names straight.Kara’s very good at keeping names straight.When I saw Ted, I called him Tim. I just can’t seem to keep these names straight. ShareI’m going to find a roommate to share expenses, that way, I can get a better apartment.Miles dreamed that he had to share a cubicle with Rick.There’s only one piece of cake left. Get two forks, and we’ll share it.

WorkspaceMy workspace is usually pretty messy.It’s a small workspace, but you should find everything you need here.His workspace used to be a small cube, but now he has a big office with a wooden desk.

InIs the doctor in?Mr. Burns is out right now, but I’ll let you know when he gets in.I guess nobody’s in yet. The office is completely empty.

StragglingWhen the game ended in defeat, the fans went straggling home.On Monday mornings, the workers come straggling in to the office.Stop straggling, boys! Stay together and move a little faster!

Flex-timeI’m looking for a job with flex-time opportunities.Do you have flex-time here?She needs a job with flex-time because her children often need her at home.

In advanceShe didn’t schedule an appointment in advance, so she couldn’t see the dentist.You’ll need to cancel your reservation 24 hours in advance in order to get a refund.If you had explained the problem in advance, then I would have been prepared to solve it.

FlexibleOh, come on! Be flexible!You can come anytime. We’re flexible.She’s not flexible enough for this job. Things are always changing here, and she hates change.

FluencyShe has total fluency not only in Spanish, but also in Portuguese and Italian.His fluency in Japanese often surprises our clients.Susan studied German for years, but never achieved fluency until she went to live in Germany.

Useful This knowledge will be very useful to our company.Does anybody have any useful ideas?Yor umbrella is beautiful, but it can’t be very useful here in the desert.

InternationalWill the job involve international travel?The International Food Court at the mall has ethnic food from many different countries.Our international accounts are much more profitableELLEN The kitchen is down there. You’ll find coffee there and a refrigerator, if you want to bring your lunch. ANTHONY Do you have to pay for the coffee?ELLEN No, it's free, but you might have to make it yourself sometimes.ANTHONY That's OK. It's a nice perk.ELLEN Yes, it is. And down past the kitchen is the storeroom. If you need supplies like pads or pens, you can get them from here. §2ANTHONY What if I can’t find what I need?ELLEN You can ask Kara. She knows where everything is.ANTHONY Have I met her?ELLEN She's the woman who sits in the first cubicle on the left as you come in.ANTHONY Oh, yes. I’m having trouble keeping all the names straight.ELLEN And this is where you'll be working. You'll be sharing a workspace with Tiffany McGuire until we can get you one of your own.

ANTHONY That's fine. It's quiet down here. Isn’t anybody in yet?ELLEN Oh, they'll come straggling in.ANTHONY So everyone isn't required to work the same hours?ELLEN Oh, no, we have flex-time here. So everyone puts in at least 40 hours, but when they do is pretty much up to them. ANTHONY How does that work for meetings?ELLEN We try to schedule them well enough in advance so that everyone can plan to be there. ANTHONY Things are certainly more flexible here than at my last job. ELLEN That was in France? ANTHONY Yes, it was.ELLEN Your fluency in French will be very useful when dealing with some of our international accounts.TIFFANY Good morning, Ellen. Hello.ELLEN Tiffany, this is Anthony Brown, our new writer. Today's his first day.TIFFANY Nice to meet you, Anthony. Welcome.ANTHONY Thank you. It's nice to meet you, too.ELLEN Tiffany just started working here a few months ago, so she'll be a good one to ask for help.TIFFANY Sure. I know what it's like to be new and not know anyone or where things are. ANTHONY Thank you. I'm sure I'll have lots of questions.ELLEN Well, I've got to get Anthony over to see Mr. Scott in Human Resources so we can take care of his paperwork. ANTHONY Nice to meet you. Tiffany. TIFFANY See you later, Anthony.

8.1.1 COMPREHENSION QUESTIONS1) What does Anthony have to do if he wants some coffee?a. He has to pay 50 cents for each cup.b. He has to help himself to it in the kitchen.c. He has to ask Kara to make some coffee for him.2) If you run out of pencils and paper at work, where can you get more?a. from the kitchenb. from the CEO’s office. c. from the storeroom.3) When Ellen says, “We have flex-time here, “what does it mean?a. Workers are not all on the same schedule.b. There are no clocks at this company.c. There is time for exercise at the office every day.4) Using Tiffany as an example, what should you do when introduced to a new co-worker?a. Extend your hand for a handshake.b. Ask the new employee to make some coffee.c. Smile and look at your feet.5) Does Anthony speak a second language?a. Yes, he speaks French very well.b. Yes, he speaks a little French.c. No, he only speaks English.6) Where is Kara’s cubicle?a. It’s to the left of the entrance door.b. Her cubicle is on the shelf in the storeroom.c. It’s free.7) If something is difficult for you at work, which phrase could you use to express this?a. “It’s quiet down here.”b. “I’m having trouble.”c. “Things are certainly flexible here.”8) What is Anthony having trouble with today?a. He’s having trouble remembering people’s names.b. He doesn’t remember how to speak French.

c. Anthony’s having trouble dealing with international accounts.9) Suppose your boss wants you to visit Mr. Harmon in advance of the design meeting. What do you need to do?

a. Call Mr. Harmon and invite him to talk with you during the design meeting.b. Go to the design meeting so you can tell Mr. Harmon about it when you visit him.c. Meet with Mr. Harmon first, before attending the design meeting.

10) Where is Anthony’s workspace going to be at AdRad?a. Anthony will share Tiffany’s cube until his is ready.b. His cubicle is the first one on the left as you come in.c. He’ll be working in Ellen’s office for a couple of weeks.

8.2 LISTEN TO DIRECTORS8.3 TEAMWORK… Excuse me. Tiffany, could I bother you for a second? … Yes?… I'm supposed to review the documents on the Toulouse Travel account, but I can’t access the folder.… Just click on the new accounts icon.… Thanks, Tiffany. Sorry to interrupt you.… No problem.… Hey, Anthony, do you have a minute to talk about this new project?… Sure. You're Rick, right?… Righto, pal. Now, I've got an idea for this project that I think will really blow them away.… Would you guys mind discussing this somewhere else? I've got a deadline.… Sorry, Tiff. …Why don't I meet you in your office? I’ll be there in five minutes.… Perfect. I'll see you there.… Look, Anthony, I'm sorry to blow up like that.… Don't worry about it. It's understandable.… It's just that I have a lot of work to do, and having to share the workspace and the computer makes it harder.… Is there anything I can do to make it easier? … You could pick stuff up when you're done with it. … I guess I have been bad about leaving papers all over the desk.… It isn't that you've been bad. It's just that with two of us in this small space, we have to think about the other person all the time.… I’ll get these out of your way now. … This must be even harder for you, being new and all. … Well, it isn't ideal, that's for sure. But I suppose it'll make me appreciate it more when I have my own space.…That's for sure.… I’d better go see what Rick wants. See you later.TIFFANY Bye.

1) Who interrupts Tiffany while she's working?a. Anthony interrupts her. b. Rick interrupts Tiffany by asking her a question. c. Ellen does.2) In this scene, how does Tiffany feel about being interrupted while she's working?

a. She feels that Anthony and Rick need her help, and she's going to help them right away.b. She's annoyed.c. She's happy to have someone to talk to.

3) Anthony says that he's supposed to review some documents. What does he mean?a. He's volunteering to review the documents. b. It's part of his job to review the documents.c. He doesn't want to review the documents.

4) What problem does Tiffany help Anthony with?a. Tiffany shows him how to review documents.b. She tells him where to find highlighters and floppies.c. She helps Anthony locate folder in his computer.

5) Rick says that his idea "will blow them away." What does informal expression mean?a. that nobody will understand his idea b. that everybody will leave him alone in the futurec. that people will be very impressed with his idea

6) What is the main topic of conversation between Anthony and Tiffany in this scene?a. They're discussing a new project.b. Their conversation is about computers and how difficult they can be to work with.c. They talk about how hard it is to share a small workspace.

7) Why is Tiffany in a hurry?a. She has a deadline b. She always goes home at 5:00 o'clock, and it's already 4:50 .c. She has a lunch appointment and she's running late.

8) When Tiffany says that she is sorry to "blowup like that," how else could she express her feelings?a. "I'm sorry to hear you had flat tire." b. “I'm sorry to interrupt you.” c. "I'm sorry that I got angry."9) Suppose that a co-worker is eating lunch in your cube, and this bothers you. What phrase could you use to politely ask your co-worker to leave?

a. "Do you think you could crunch those chips a little louder?"b. "Would you mind eating in the kitchen?'c. "Are you going to leave mustard stains on my chair again?"

10) Where do Rick and Anthony decide to meet?a. They're going to meet in the kitchen.b. Rick has reserved a conference room for their meeting.c. Anthony's going to go to Rick's office.

11) Why does Rick come to Tiffany's cube, and why does he go away?a. He comes to the cube to help Anthony with the computer and he leaves when he's done.b. Tiffany invited Rick to the cube to help her, and he goes out to get coffee.c. Rick comes to talk to Anthony and he leaves because he's bothering Tiffany.

12) How do Tiffany and Anthony deal with the difficulty of sharing her workspace?a. They discuss the situation. b. They decide not to talk so they won't bother each other.c. Tiffany tells Anthony that he can't use her cube anymore.

13) If your colleague says that she has meetings all over town today, what is she telling you?a. Your colleague will hold several meetings at different times in her office.b. She has meetings in many different places today.c. She must attend several meetings downtown today.

14) Which phrase best follows or goes with the expression, "Don't worry"?a. "You made a huge mistake." b. "You'll get chewed out for this." c. "It's not a

problem.”15) What does Anthony offer to do to make it easier to share the cube?

a. He offers to do most of his work in the storeroom.b. He's going to ask Rick to help them discuss the situation.c. He's going to pick up his papers and other stuff.

8.4 REQUEST CLARIFICATIONANTHONY & RICK.… Rick, before we talk about the project, can I ask you a question? … Sure thing. I can't guarantee an answer though. …I've met a lot of people in the past couple of days, and most of them are pretty friendly. But I can't figure Miles out.… Welcome to the club, buddy. Nobody can.…No, I'm serious. He's very cold to me. I must have offended him somehow, but I have no idea how.…Don’t worry about it. He's that way with everybody. The only person he ever lightens up with is Ellen.… So you don't think I did something to annoy him?…Life annoys Miles, Anthony. He's basically a good guy, but he's just too serious and can't stand it when everybody isn't equally as grim.… Ellen doesn't seem so serious. Why does he lighten up with her and nobody else?RICK Those two have been friends since the Stone Age. Once you've known Miles for a few millennia, he'll relax with you, too.

ANTHONY When I was introduced to him, he seemed polite enough, but when I ran into him in the lunchroom yesterday he barely said "Hi" to me.RICK Well, he's got a lot on his mind these days.ANTHONY What do you mean?RICK Off the record, rumor has it that he's looking for another job. ANTHONY Why in the world would he do that?RICK Let's just say there are some people here with whom our Miles can't quite get along.ANTHONY But everybody here is so friendly. Why can't he talk to them about it?RICK Mostly because they won't take it as seriously as he will and then he'll get even madder.ANTHONY That's hard to believe.RICK Well, you know us creative types. We're unpredictable.ANTHONY You mean it's you that Miles can’t get along with?…To be fair, it isn't all his fault. We just don’t see eye-to-eye on many things. ANTHONY That's too bad.RICK It is too bad. But if we don’t get back to work here, we might be the ones looking for jobs.… OK. Now, what was your idea?

Questions1 Where are Anthony and Rick meeting?

a. in Ellen's office b. in Rick’s cubicle c. in the storeroom7 If you think someone is being too serious in an informal setting, what can you say?

a. Nobody can. b. "Lighten up." c. Sure thing.7 What does Rick say about Miles's personality?

a. He says that Miles likes to lighten up with most of his co-workers during meetingsb. Rick says that Miles is cold with everybody except Ellen.c. Rick thinks that Miles is very friendly.

7 Which phrase can you use to ask someone to keep your information secret or confidential?a. "these days"b. "rumor has it" c. “off the record”

7 Why does Rick say, "We just don't see eye to eye"?a. He's implying that his eyesight is better than Miles's.b. This is his way of saying that he's much taller than Miles.c. He means that he and Miles disagree.

1) What does Anthony want to talk about?A)He wants to talk about the weather. B)He asks Rick to tell him something about Ellen.C)Anthony wants to ask question about Miles.

2) Suppose that you are having trouble understanding your boss's personality. Which phrase would express this idea?

A) "I just can't figure him out." B) "I'm serious." C) "I can't guarantee an answer."7 Rick says, "Welcome to the club." What does this mean?

He means that Anthony is now a member of a special organization of writers and artists.Rick is inviting Anthony to play golf with him.It means that many people have had a similar experience.

7 What is Anthony's opinion of his co-workers?He says that they all take things too seriously, except for Miles.He thinks everyone seems cold.Anthony thinks they are friendly, except for Miles

7Which statement best summarizes this scene?Rick tries to talk about Miles, but Anthony doesn't want to.After Rick and Anthony discuss Miles, they decide to get to work.Anthony and Rick work on project, and then they start talking about Miles.

8.5 OBTAIN HELP Anthony & TiffanyANT: Oh, hello Tiffany. Would you mind helping me with something?… Sure. What can I do for you?

… I’m working on a new slogan for a travel agency, and I’m having some problems.… What's the matter?… Well, they want a short, punchy catch phrase. … We all know how easy it is to come up with those.… Yes, well, all I've got is a bunch of silly phrases, none of which hits the mark....What have you come up with so far?…”Tell us where, we'll get you there" is about the best I've got. … Hmm, I see what you mean. Rhymes are tough. What kind of travel do they specialize in?… Right now all kinds, but they're hoping to lure in more business travelers with this new campaign.… Well, can you work the word "business" into a slogan?… Something like, "It's our business to get you to your business"?… I liked the first one better. What's the name of the agency?… Toulouse Travel. I think it's the person's name or something.… How about, "No time to lose? Call Toulouse"?… They've already rejected that one, about a hundred years ago.… Well, let's work on the, "Take the hassle out of travel" angle.… "Near or far, we'll get you that"? … I was thinking more along the lines of, "Let us do the work while you relax."… Well, as you can see, I'm not coming up with anything.… When I get blocked like that, it helps to wander around and talk to people.… I don’t really know anyone well enough to just drop in on them in their cube. I'd feel like I’m disturbing them.… Don’t worry. People do it all the time. They'll let you know if they're busy.… Should I ask people for input?… You could, but be careful. If you ask, and then don’t use it, they might feel slighted.… Maybe I go find Rick. He's easy to talk to.… He's such a nut that it might help you get your creative juices flowing.… Whatever works. Thanks. I'll see you later.… Good luck!

8 What is Anthony's problem in this scene?a. He's having trouble creating a slogan. b. He wants to take a new job at a travel agency.c. He doesn't know where to get the supplies he needs.

8 If you are temporarily unable to be creative, how can you express this problem?a. I'm blocked.b. I liked the first one." c. I see what you mean"

8 How does Tiffany try to help Anthony at first?a. She tries brainstorming some ideas with him.b. She tells him that his first idea is very good.c. She tells him to go to lunch and she will think of a slogan for him.

8 Tiffany and Anthony don't create a good slogan. What does Tiffany suggest next?a. She suggests that Anthony get a different job.b. Tiffany suggests that Anthony talk to people around the office.c. She suggests that he use his first idea because it's the best one.

8 What is Tiffany's attitude in this scene?a. Tiffany is cold and rude b. She's helpful and supportive. c. She seems to be annoyed and impatient.6 What does Anthony do when he's having some problems with his work?

a. He tells his boss that the job is too difficult. b. He pretends that everything is fine.c. He asks a co-worker for help.

7. If you think your co-worker is having some problems, how can you express that you'd like to help?

a. Tell us where. b. What's the matter" c. I'll see you later.8 Which two words are an example of a rhyme?

a. near, far b. hassle, travel c. where, there9 How does Anthony feel about dropping in on his co-workers?

a. He's afraid he may bother them if they're busy.b. He wants to drop in, but Tiffany tells him nobody does that at AdRad.c. He enjoys going to visit his co-workers without telling them in advance.

10. What does Anthony decide to do?a. He's going to drink some juice and try to think some more. b. He's going to talk to Rick. c. He decides to drop in on Ellen.

8.6 DISCUSS SENSITIVE ISSUESTIFF. Rick, do you have a second?RICK. Sure, Tiff, what's on your mind?TIFF. There's something important I need to talk to you about.ANTHONY I can go somewhere else if you two want to talk.RICK. No, stay right where you are. We've got no secrets.TIFF. Rick, you probably don't even realize it, but I’m uncomfortable with the way you sometimes treat me in meetings.RICK. You're uncomfortable? Talk to Miles. He's in agony.TIFF. I'm serious, Rick. At first I let it pass, but it's becoming a problem.RICK. I’m sorry. Tiff. I had no idea I was doing anything to make you uncomfortable.ANT. Maybe I’ll get a cup of coffee. TIFF. You may not realize it, but when you interrupt me, or answer for me in a meeting, it makes it seem as though what I have to say isn't important.RICK. Gee, Tiff, I think maybe you're making too big a deal out of nothing. I don't mean to make it look that way. TIFF What you mean to do is beside the point. The fact is, you do it, and I think it hurts my credibility.RICK You know how I am in the give-and-take of a meeting, I get into the middle of it.TIFF And that's fine, up to a point. But when you start monopolizing the meeting, I feel like I might as well not even be there. "RICK All you have to do is jump in and I’ll shut up, honest.TIFF I can't do that. I hate to interrupt people. RICK Even if they've interrupted you?TIFF That's right. Rick. I don't want to work this way anymore.RICK You don't mean that you're thinking of resigning?TIFF Let's not get melodramatic. What I’m saying is I feel like it's damaging our working relationship.RICK OK, how about if we meet each other half way?TIFF How do you propose we do that?RICK I’ll do my best to not interrupt you, but if I do, you interrupt me back.TIFF No, that's just shifting the responsibility to me, and the way I see it, it's your problem, not mine.RICK. You've got a point. OK, I promise I won't cut you off anymore, no matter how excited I get.TIFF. That sounds pretty good. And if you do interrupt me again, what then?RICK. I’ll buy you lunch at The Hungry Lizard.TIFF. I'll settle for a coffee at Cool Beans.RICK. It's a deal.TIFF. Thanks, Rick.RICK. No problem, Tiff. I'll see you later.TIFF. OK, Rick.QUESTIONS1. Who opens the discussion in this scene and how?a. Tiffany does, by asking Rick if he has a second. b. Rick does, by saying, "What’s on your mind?'c. Anthony does, by getting up to go for coffee.9. What polite action does Anthony take during the discussion?

a. He offers to get coffee for everyone.b. He offers to leave the cube so that Rick and Tiffany can talk more privately.c. He offers suggestions to help Tiffany and Rick understand each other.

3 What is the subject of this discussion?a. Tiffany doesn't like Rick to interrupt her during meetings.b. Rick thinks that Tiffany is hurting his credibility.c. Rick thinks that Tiffany is monopolizing the meetings.

10. What is a good phrase to use if you want to compromise with someone?a. "Let's meet each other halfway." b. “That's beside the point." c. "Don't be melodramatic."10. Which of the following is an example of cutting someone off?

a. You interrupt a colleague who hasn't finished speaking.b. You call the office to reschedule your meeting.c. You resign from your job because you can't get along with a colleague.

6. Why does Anthony go out for a cup of coffee?a. He wants to let Tiffany and Rick talk privately.b. Tiffany asked him to get her a cupc. He's feeling very sleepy and wants a caffeine boost.

7. Suppose your client makes a rude comment, and your boss tells you to let it pass. What does your boss want you to do?

a. Ask the client to apologize.b. Ignore the comment or pretend you didn't hear it.c. Make a rude comment back to the client.

8. Why does Rick interrupt Tiffany during meetings?a. He gets excited and has a lot to say.b. He wants her to resign from her job.c. He wants to further credibility and embarrass her.

9. What does Rick suggest that Tiffany do about the problem?a. He says that Tiffany should tell him to shut up.b. He suggests that Tiffany jump up and down every time he interrupts her.c. He says that Tiffany should interrupt him in the same manner.

10. Tiffany and Rick make a deal. What are the terms of their deal?a. If Rick interrupts her again, he has to buy her a coffee at Cool Beans.b. If Tiffany takes Rick to lunch at The Hungry Lizard, Rick will stop interrupting her.c. Rick won't interrupt anymore if she promises to stop yelling at him.

8.7 ASSERT AUTHORITYRICK: Hi, Ellen. What's up?ELLEN Come on in, Rick. Would you mind closing the door? RICK Sure. Why all the secrecy? ELLEN No secrecy. I just don't want to be interrupted. RICK Uhuh. Sounds like I'm going to get chewed out. ELLEN Rick, can you be serious for five minutes? RICK I’ll try, but you know me, Boss.ELLEN You know that Miles has given notice? He's going to work for Cool Beans. RICK Cool.ELLEN Not cool at all. That's going to leave us scrambling to fill his position. RICK Just stuff a shirt and prop it up in the meeting room. That'll be fine. ELLEN Listen, Rick, I don't have time for fooling around. RICK: OK, Ellen, I’m at your service. What do you need done? ELLEN: I need you to wrap up your work on the Food Forum project. RICK: No problem. I'll have it done in plenty of time. ELLEN: Rick, we're already a week past deadline. I have to nail down a final date now. RICK: How about a week from today?ELLEN: Not good enough. I have a meeting with Terrence Landis Monday morning. RICK: Then when do you need it?ELLEN: I'll need it by Friday noon in order to have time to get ready for the meeting. RICK: Gee, Ellen, I don't know. That's kind of tight. ELLEN: I know it is Rick, and I'd like to give you more time, but I’m up against the wall. RICK: OK, Chief, you'll have it by noon on Friday. ELLEN: Thanks, Rick.RICK: As the wharf boss said in On the Waterfront, “Let’s go to work!”

Answer the following questions10) What does Rick think this meeting is about?

a. Rick thinks that perhaps Ellen is going to reprimand him.

b. He thinks maybe Ellen will offer him Miles's old job.c. Rick thinks Ellen's angry at him for chewing gum.

11) Why does Ellen ask Rick to close the door?a. She doesn't want to be interrupted while she's talking to Rick.b. She wants to yell at Rick and she doesn't want anyone else to hear her.c. She wants to tell Rick secret.

11) Suppose you are in a meeting, and your boss asks you to be serious for five minutes. What do you need to do?

a. Concentrate on the importance of the meeting.b. Tell a few good jokes to help everyone lighten up.c. Look at your watch and don't talk for exactly five minutes.

11) Which is the best way to tell a colleague that you've resigned from your job?a. "I'm going to get chewed out." b. "No secrecy." c. "I've given notice."

11) How does Rick react to the news that Miles has given notice?a. He doesn't believe the news b. He becomes very serious and expresses concern. c. He's not bothered at all.6) What does Ellen actually want to discuss at this meeting with Rick?a. Ellen wants Rick to schedule a meeting with Mi. Landis.b. Ellen wants him to finish up the Food Forum project ASAP.c. She's asking Rick to extend the deadline for the Food Forum project.7) How does Ellen feel about Miles's resignation?

a. She's not bothered at all.b. She thinks it's very cool that he's leaving.c. She thinks it will be difficult to find someone to do his job.

8) If your client asks you to nail down a date for a meeting, what do you need to do?a. Give your client three or four possible dates for the meeting.b. Choose a specific date for the meeting and notify your client.c. Secure the calendar to the wall so it won't blow away when the window's open.

9) When does Ellen need the Food Forum work from Rick?a. by 12:00 on Friday b. by noon on Monday c. a week from today

10) What is Rick's response to Ellen's request?a. He's happy that Ellen has given him more time.b. He says that he can't possibly complete the work by Friday.c. He'd like more time but promises to finish by the deadline.

8.8 NETWORKINGTIFFANY Wow, what a long day!ANTHONY No kidding. Are you getting ready to leave?TIFFANY No. I’ve got some things to do.ANTHONY Do you work late a lot?TIFFANY Sometimes. But this isn't work.ANTHONY What are you doing? TIFFANY I'm writing a paper for a course I’m taking. I don’t have a computer at home.ANTHONY Do they mind if you do that kind of work in the office?TIFFANY Oh, no. As long as I do it on my own time, Ellen says it's fine. And I bring in my own paper to print it on.ANTHONY Are you taking courses for fun, or working toward a degree? TIFFANY: I’m working on an M.B.A. I'd like to open my own agency some day.ANTHONY: Wow, that's impressive. You know, I took a couple of business courses and enjoyed them. I’d like to take more some day.TIFFANY Why not start now? AdRad will pay tuition for work-related courses. ANTHONY Even for a new employee?TIFFANY Yeah, it's one of the benefits. Didn’t you read the manual? ANTHONY I just skimmed through it. I haven’t had much time recently.TIFFANY Well, the courses are great and you meet a lot of interesting people that can help you in your career.ANTHONY In a college class?TIFFANY Sure. Actually, I heard about this job from one of my professors.

ANTHONY Seriously?TIFFANY Really. A lot of the teachers are tied into local businesses. It's great for networking.ANTHONY It wouldn't hurt me to meet some people.TIFFANY And most of the students are professionals working to advance their skills. I've made lots of contacts in the advertising business through my classes. ANTHONY Is the program hard to get into?TIFFANY Yes, but I think if you've come this far in your career, you've probably got the credentials to be accepted.ANTHONY Do you know who I should talk to about applying?TIFFANY Why don't you come to class with me tomorrow night? I can introduce you to Professor Cassandra and show you around.ANTHONY That would be great. Are you sure you don’t mind?TIFFANY Not at all. Class starts at seven. We can leave from here and grab something to eat first. ANTHONY Thanks, Tiffany. I'll see you tomorrow. TIFFANY Good night.

QUESTIONS:1 Tiffany and Anthony are talking in Tiffany's cube. What time is it?

a. It's probably about 5:00 p.m. because they're talking about going home.b. It must be about noon since they're planning to get some lunch.c. It seems to be early in the morning as they've just arrived at the office.

2) Why is Tiffany planning to stay at the office?a. Tiffany needs to use the computer for some college work.b. She wants to work late so that she can earn some extra money.c. Tiffany is finishing Anthony's work for him.

12) Why is Tiffany taking courses?a. She wants to get an MBA degree and start her own business.b. She takes courses for fun.c. Ellen told Tiffany she has to take the courses.

12 ) Where can you find information about the benefits your company offers?a. in any newspaper b. in the employee manual c. in a college class

12) If you want to meet and talk with people who can help you advance your career, how can you express this?

a. "That's impressive."b. "I take courses just for fun." c. "I need to do some networking."6) What do you know about Tiffany's work habits?a. She always works late, including today. b. She never works late c. She sometimes works late7) Why does Tiffany write her college papers at the office?

a. She doesn't want to buy paper for her printer at home.b. Tiffany writes her papers when she's bored by the work at the office.c. Tiffany doesn't have computer at home.

8) If a colleague asks you to skim through a report before a meeting, what do you need to do?a. Count the pages in the report and sign it at the bottom.b. Read every word and be prepared to discuss every detail.c. Read the report quickly, looking for the main points.

9) How do you know that Tiffany has used networking as a way to help her career?a. She says that she heard about her present job from college professor.b. She says that she got this job through an employment agency.c. She says that the only way to get a good job is by reading the newspaper ads.

10) Tiffany invites Anthony to go to class with hex tomorrow night. What are they going to do first?a. They're going to order dinner from the comer restaurant to eat at the office.b. Tiffany and Anthony are going to have a quick dinner.c. They're going to go to a restaurant for a relaxed, seven-course meal.

1-6CHAPTER 1: INTRODUCTION

Exporting and the Management of Risk

1. The Meeting of MindsTHE PROBLEMAn exporter and a buyer negotiate together. At some point there is a "meeting of minds”: their discussion becomes an agreement - with important legal consequences for both sides. This is a dangerous moment for first-time exporters: they know their local market but exporting poses new problems in production, delivery and, above all, pricing. A hasty agreement can cause heavy losses.

THE PRINCIPLE: Once scope (the goods to be delivered) and price (the price to be paid) are agreed, the bare bones of a legally enforceable agreement are in place. Before reaching such agreement, the exporter must be sure that the goods can be delivered exactly as promised and that the price covers the full cost of exporting.

Nguyên tắc: Một khi hàng hoá được chuyển giao và giá sẽ phải thanh toán được các bên thỏa thuận, thì các quy định trong hợp đồng sẽ trở nên có hiệu lực cuỡng chế. Trước khi ký kết hợp đồng, nhà xuất khẩu phải đảm bảo rằng hàng hoá được giao theo đúng như thỏa thuận và giá cả phải tính đến tất cả các chi phí liên quan đến xuất khẩu.

rehearsal

IN MORE DEPTHLet us start with a company and a product. Office Enterprises makes office furniture: its main lines are desks and filing cabinets. The company is located in a country we can call Verbena, a small island republic, somewhere in the tropics. Office Enterprises was founded ten years ago by Alec Patel. So far, Patel has sold products only on the domestic market.

At a seminar in 1995, Patel meets Juliana Gomez, owner of Esperanza Trading. Esperanza Trading is an import-export company located in Esperanza, a developing country, also in the tropics. Gomez sees a potential market for Patel's office furniture in Esperanza. A negotiation begins. The two negotiators quickly reach an agreement, a ''meeting of minds" as lawyers call it: Office Enterprises will supply 30 leather-covered executive chairs for which Esperanza Trading will pay $9.000.1 "Everything else," they say, "we can agree when the time comes.”

This agreement, although nothing is in writing and no details have been worked out, is a contract: each side has commitments to the other—both have rights, and both have duties. What are these rights and duties? Office Enterprises has the duty to deliver the chairs and the right to collect payment. Esperanza Trading's situation is exactly complementary: it has the right to receive the chairs and the duty to pay for them. In contract language, the scope of the contract is 30 chairs, and the price is $9.000.Scope against price—that is the essence of the export contract. Let's look more closely at scope, price, and the associated risks. SCOPE PRICE

Let’s look more closely at scope, price, and associated risks.First, scope: the product. An exportable product will normally be mature, in other words, the manufacturer should have experience in making the product and enough production capacity in coping with the size of the order, quality assurance problems should already be solved.Closely related to scope is Delivery. The exporter must have access to safe and timely means of delivery: for example, the export of cut flowers will certainly lose money unless the grower is certain of regular and reliable air shipment. Unfortunately, exporters sometimes contract to supply goods but fail to think about the problems of delivering their goods until after the contract is signed. By then it is too late: a bad name in the trade or an expensive lawsuit are the common results of this lack of foresight.1 : Most of the deals in this book are denominated in Verbena dollars (V$). This imaginary has no steady value and is liable to float from chapter to chapter.And finally price. Does the contract price cover the exporter’s costs and leave a reasonable profit margin. Answering this question calls for careful and knowledgeable pricing. There are two pricing models are worth mentioning: the free market and the loaded market model. First the “free-market” approach.

In a market that is free, a manufacturer calculates export prices by adding:a. The cost of making the goods in the factory; b. An appropriate portion of the overhead costs of the factory (e.g.,if the export deal is worth

2% of annual sales, the export price should include roughly 2% of annual overhead costs);c. The extra costs associated with exporting (e.g., the cost of international faxes and telephone

calls, additional freight costs, the administrative cost of preparing the full export documentation, the cost of waiting perhaps ninety days for payment rather than the usual thirty, and so on);

d. A profit margin (high enough to make a fair profit but low enough to make the goods competitive in the intended market.)

The resulting price is a fair reflection of the manufacturer's costs, plus a reasonable expectation of profit. Charging a lower price immediately erodes profit, the erosion that quickly leads to losses.

SituationVerbena Fan is a successful producer in the domestic market. It is looking for new markets and sees good potential sales in Esperanza.

First CalculationsThe wholesale price of the product is $3 cheaper in Verbena than the wholesale price of a comparable product in Esperanza. Negotiations with an importer in Esperanza begin. To secure the business, Verbena Fan quotes an attractive price of $22. The contract is signed.

$20Wholesale price of fan in Verbena

$23Wholesale price of similar product in Esperanza

$22Export price low enough to beat competition in Esperanza

The Learning ProcessDuring manufacture and shipping, additional costs continually arise. When payment is later than expected, Verbena Fan must borrow from the bank, further increasing costs Warranty claims are more expensive internationally than they are locally—more costs

$23When the extra costs of export production emerge, the real wnole sale price is higher.

$25When payment is made later than expected, the cost of capital drives up the wholesale price still further.

$26After warranty claims are met, the true wholesale price emerges.

The OutcomeAn expected profit of up to $2 per fan turns into a actual loss of $4

$4 Loss per fan

THE ANATOMY OF AN EXPORT LOSS

The arithmetic of exporting is often sobering: the manufacturer’s export price is likely to be appreciably higher than the price he charges locally- and it may well be more than any buyer is prepared to pay. But why? What are the extra costs that drive export prices uneconomically high? These costs fall into three categories:

♦ Direct additional costs;♦ Intangible management costs;♦ The cost of capital.

Direct Additional CostsSome additional costs are easily identified. Some examples: international telephone calls are clearly more expensive than local ones; costly foreign travel is neces'sary for face-to-face negotiation; pack-aging must often be upgraded to withstand a sea journey or rough handling. Extremely important are the extra costs of meeting warranty claims: a warranty repair that costs a few dollars to make in Verbena will cost far more when the full international costs are added in.2

Intangible Management CostsOther costs are less tangible: for example, misunderstandings can arise if foreign languages are involved; management time must be invested in completing export formalities: obtaining the certificate of origin or the export license, negotiating the transport contract, collecting a letter of credit—all are time-consuming activities.

Chi phí quản lý vô hìnhCó những chi phí khác rất khó nhìn thấy: ví dụ, hợp đồng viết bằng ngoại ngữ, nếu nhà xuất khẩu hiểu sai có thể dẫn đến bồi thường; bộ phận quản lý phải mất nhiều thời gian để lo thủ tục chứng từ xuất khẩu như chứng thư xuất xứ hoặc giấy phép xuất khẩu, rồi phải đàm phán hợp đồng vận chuyển, mở tín dụng thư - tất cả đều cần đến nhiều người tham gia và công ty phải mất tiền để trả lương cho họ.

The Cost of CapitalThe cost of capital must also be considered: let's take an example. Patel is charging $9,000 for 30 chairs. Perhaps $1,000 of this is expected profit—the remaining $8,000 are his costs. In his own country, Patel is paid within thirty days, so, assuming he pays his own suppliers and his workforce on time, he has a debt of $8,000 for about a month. At 15% annual interest, that will cost him about $100. If he has to wait three months for payment, his debt will cost him $300. Higher interest rates (in some countries banks charge 45%) and longer waiting periods will quickly wipe out his expected profit.

Precise calculations are often difficult: correct allocation of overhead or an accurate allowance for the cost of delay in payment depend on reliable business data and considerable management expertise. Let's assume, though, that reliable data is available to the exporter. A sober review of the facts then indicates whether exporting is likely to be profitable or not. If not, then—like all bad deals—exporting should be avoided.

What then is the "loaded" market? In practice very few markets offer the free and stable conditions we have just discussed—in most markets factors beyond supply and demand, cost and profit influence price. These distortions are of two main types: promotional and macroeconomic.

Promotional LoadingIn order to promote a product in a new market exporters often slash prices: to gain a foothold in the market, the exporter decides to trade— for a short while- at a loss. The exporter assesses first what price will be attractive in the export market and then offers the goods at that price—whether it creates a profit or not._________________________________________See Chapter 3, Section 1 for a detailed example.

Macroeconomic Loading In developing countries, pricing is sometimes distorted by an urgent need to earn foreign currency: if the price is to be paid in foreign currency, the exporter offers goods at unrealisiically low prices.Export incentive schemes also influence pricing: exporters sometimes decide to sell accost price (or below) and to take the incentive paid by their own government as their "profit." Such distorted pricing is dictated more by economic than by purely commercial considerations.Many factors influence export pricing. To keep things simple, however, when this book speaks of "price"; it means the free-market price.

The major problem of export pricing is now apparent: the additional costs, if correctly calculated, often increase the exporter's price until he is not competitive in any foreign market. For many would-be exporters the crucial question is always—will I make a profit from exporting? Only careful calculation can answer that question—and the manufacturer must be wary of entering a legally binding agreement until the answer is clear.Let us return, then, to Office Enterprises and the export of the chairs. Assume that Patel is conducting his business wisely, in other words:

•He can produce the chairs without problems of quality or quality:•He has access to effective transportation:•He is calculating his price on the "free and stable" model.

Will he make a profit? It seems likely. Now he must consider the risks of doing export business and find a means of coping with them.

CASE STUDY: A Good Deal?Study the scenario below, and then answer the questions. If your answer is "No” give your reasons.

In July 1992, Joe Anderson started a company in Verbena to manufacture foot balls. His workshop has the capacity to make 500 footballs a week working one eight-hour shift five days a week. At present (May 2010) he is selling 1,200 footballs a week on the Verbenan market. Because of the overtime shifts necessary and because of problems with the supply of leather quality is unreliable about 100 balls a week are returned to the factory. Anderson replaces these returned balls, immediately and without question. Anderson’s price structure (in Verbena dollars) is:

Cost of labor and materials per ball $3Cost of running the business per week $1,200.00Selling price per ball (no discounts) $4.25

Anderson is now approached by Juliana Gomez of Esperanza Trading. She wants to buy 500 footballs a week for 6 months: she orders a price per ball of $4.20- take it or leave it.Assume that the government of Verbena offers no export incentives and there are no foreign exchange problems.

1. How much is the cost of a foot ball?2. Is Anderson making a profit at present? Yes, but a small profit. 3. Does he have the manufacturing capacity to handle this order? No.4. Is his product “mature”?No, because of too many returns.5. If he accepts the deal will he make money on it?Probably not. He will have problems all round.6. Why is this a good contract for Anderson? A. The product is normally be immature B. The manufacturer should have experience in making the product C. The manufacturer should have enough production capacity in coping with the size of the order.D. The quality assurance problems should already be solved.

PRACTICE: Translate into VietnameseContract for fertilizerNo: 01-93/ XYZ- ABC

Date: Sep. 07 1999Between: ..............Address:.............Tel:Telex:................Fax:................Represented by Mr................. Hereinafter called The BuyerAnd: ................Address:.............Tel:......................Telex:...................Fax:................... Represented by Mr........... Hereinafter called The SellerIt is mutually agreed between both sides to sign this contract with terms and specifications specified hereunder:It is mutually agreed between both sides to sign this contract with terms and specifications specified hereunder:ARTICLE 1: COMMODITY & SPECIFICATION1.1 Commodity: UREA FERTILIZER1.2 Origin: INDONESIA1.3 Specification: - Nitrogen: 46% min.- Moisture: 0.5% max.- Biuret: 1.0% max.- Color: White- Free flowing: treated with Anti- Caking

1.4 Packing: - 50 kg net in Polypropylen Woven bag with polythylene inner liner - 2% of total bag as empty spare bags to be supplied free of chargeARTICLE 2: UNIT PRICE - QUANTITY & TOTAL AMOUNT2.1 Unit price: USD 178/ MT C&F Hochiminh City Port2.2 Quantity: 10,000 MT ( plus or minus 10% at seller's option)2.3 Total amount: USD 1,780,000 (+/- 10% at seller's option)Say: US Dollars one million seven hundred eighty thousand.ARTICLE 3: SHIPMENT - DELIVERY3.1 Time of shipment: not later than September 19933.2 Port of loading: Indonesia main ports3.3 Destination port: Hochiminh City Port3.4 Notice of shipment:Within 2 days after the sailing date of carrying vessel to S.R Vietnam, the Seller shall notify by cable to the Buyer the following information:+ L/C number+ Amount+ Name and nationality of the vessel+ Bill of Lading number/ date+ Port of loading+ Date of shipment+ Expected date of arrival at discharging port3.5 Shipping mark: UREA46% NITROGEN MINIMUM1% BIURET MAXIMUM0.5% MOISTURE MAXIMUM50 KGS NETUSE NO HOOKSMADE IN INDONESIAOne side printed in green color3.6 Discharging terms: When Notice of Readiness tendered before noon, laytime shall be commenced from 13:00 on the same date,- When Notice of Readiness tendered afternoon, laytime shall be commenced from 8:00 on next date3.7 Discharging term: 900MT/ day WWDSHEX EIUDem/ Des: USD 2,000/ halfARTICLE 4: PAYMENT4.1 By irrevocable Letter of Credit at sight forn B/L date for the full amount of the conntract value4.2 L/C Beneficiary: KOLON INTERNATIONAL CORP.45 Mugyo- Dong, Chung Gu, Seoul - Korea4.3 L/C advising Bank: KOREA FIRST BANKSeoul - Korea4.4 Bank of Opening L/C: VIETCOMBANK/ EXIMBANK

4.5 Time of opening L/C: within Sep. 15 19994.6 Payment documents:Payment shall be made upon receipt of the following documents:- 3/3 of clean on board Bill of Lading marked FREIGHT PREPAID- Commercial invoice in triplicate- Packing list in triplicate- Certificate of origin issued by manufaturer- SUCOFINDO's Certificate on quality/ weight- One copy of sailing telex/ shipping advice- Remark: the shipping document acceptable- 1/3 B/L ( the top copy ) and transport documents sent by DHLARTICLE 5: FORCE MAJEUREStrike, sabotage, which may be occures in Origin Country shall be considered as Force Majeure

ARTICLE 6: ARBITRATION6.1 In the execution course of this contract, all disputes not reaching at amicable agreement shall be settled by the Economic Arbitration board of Hochiminh City under the rules of the International Chamber of Commerce whose awards shall be final and binding both parties6.2 Arbitration fee and other related charges shall be borne by the losing party, unless otherwise agreed.

ARTICLE 7: PENALTY7.1 To delay shipment/ delay paymentIn case delay shipment/ delay payment happens, the penalty for delay interest will be based on annual rate 15 percent7.2 To delay opening L/C:In case delay opening L/C happens, the Seller has the right to delay shipment 7.3 To cancellation of contractIf Seller or Buyer want to cancelled the contract, 5% of the total contract value would be charged as penalty to that party.ARTICLE 8: GENERAL CONDITION8.1 By signing this contract, previous correspondence and negotiations connected herewith shall be null and void8.2 This contract comes into effect from signing date, any amendment and additional clause to these conditions shall be valid only if made in written form and duty confirmed by both sides.8.3 This contract is made in 6 Ennglish originals, each side keeps 3.

PRACTICE: Translate into VietnameseContract for fertilizerNo: 01-93/ XYZ- ABC

Date: Sep. 07 1999Between: ..............

Hợp đồng phân bón (bản tiếng Việt) Hợp đồng phân bón

Số: 01-93/XYZ- ABCNgày 07/08/1999

Address:.............Tel:Telex:................Fax:................Represented by Mr................. Hereinafter called The BuyerAnd: ................Address:.............Tel:......................Telex:...................Fax:................... Represented by Mr........... Hereinafter called The SellerIt is mutually agreed between both sides to sign this contract with terms and specifications specified hereunder: (OLD ENGLISH)

Giữa:..........Ðịa chỉ:.....Ðiện thoại:.........Telex:...........Fax:.........Do ông ................ làm đại diệnDưới đây gọi là Bên MuaVà:.................................Ðịa chỉ:.................Ðiện thoại:...............Telex:.................. Fax:................Do Ông ..................... làm đại diệnDưới đây gọi là : Bên Bán

Hai bên thoả thuận kí hợp đồng với những điều kiện và qui cách được nêu ra dưới đây:

ARTICLE 1: COMMODITY & SPECIFICATION1.1 Commodity: UREA FERTILIZER1.2 Origin: INDONESIA1.3 Specification: - Nitrogen: 46% min.- Moisture: 0.5% max.- Biuret: 1.0% max.- Color: White- Free flowing: treated with Anti- Caking1.4 Packing: - 50 kg net in Polypropylen Woven bag with polyethylene inner liner - 2% of total bag as empty spare bags to be supplied free of charge)

Điều 1: Hàng hoá và quy cách kỹ thuật1.1 Tên hàng: Phân urê1.2 Nguồn gốc: Indonesia1.3 Qui cách kỹ thuật:- Nitrogen ( đạm) : 46% tối thiểu- Ẩm độ: 0,5% tối đa- Biuret: 1,0% tối đa- Màu sắc: trắng- Hạt rời: được xử lí bằng Anti- Caking1.4 Ðóng gói: 50 kg không kể bao PP có lớp trong bằng PE 2% tổng số bao dùng làm bao dự phòng ( bao không) được cung cấp miễn phí

ARTICLE 2: UNIT PRICE - QUANTITY & TOTAL AMOUNT2.1 Unit price: USD 178/ MT C&F Hochiminh City Port2.2 Quantity: 10,000 MT ( plus or minus 10% at seller's option)2.3 Total amount: USD 1,780,000 (+/- 10% at seller's option)Say: US Dollars one million seven hundred eighty thousand.

Điều 2: Đơn giá- Số lượng - Tổng giá trị2.1 Ðơn giá: 178,00 USD/ MT C&F cảng Hồ Chí Minh2.2 Số lượng: 10.000 MT (+/- 10% tuỳ theo lựa chọn của bên Bán)2.3 Tổng trị giá: 1.780.000 USD ( +/- 10% tuỳ theo lựa chọn của Bên Bán)Ghi bằng chữ: Một triệu bảy trăm tám mươi ngàn USD

ARTICLE 3: SHIPMENT - DELIVERY3.1 Time of shipment: not later than September 19933.2 Port of loading: Indonesia main ports3.3 Destination port: Hochiminh City Port3.4 Notice of shipment:Within 2 days after the sailing date of carrying vessel to Socialist Republic of Vietnam, the Seller shall notify by cable to the Buyer the following information:+ L/C number+ Amount+ Name and nationality of the vessel+ Bill of Lading number/ date+ Port of loading+ Date of shipment+ Expected date of arrival at discharging port

Điều 3: Gửi và giao hàng3.1 Thời gian gửi hàng: không trễ hơn tháng 9 năm 19993.2 Cảng bốc hàng: những cảng chính ở Indonesia3.3 Cảng đến: Cảng tp Hồ Chí Minh3.4 Thông báo gửi hàng:

Trong vòng 02 ngày sau ngày khởi hành của tàu vận tải đến nước CHXHCN Việt Nam, bên Bán sẽ phải thông báo cho bên Mua bằng điện tín những thông tin sau đây:+ L/C số...+ Giá trị+ Tên và quốc tịch tàu+ Cảng bốc hàng+ Ngày gửi hàng+ Ngày dự kiến tàu đến ở cảng dỡ hàng

3.5 Shipping mark: UREA46% NITROGEN MINIMUM1% BIURET MAXIMUM0.5% MOISTURE MAXIMUM50 KGS NETUSE NO HOOKSMADE IN INDONESIAOne side printed in green color3.6 Discharging terms: When Notice of Readiness tendered before noon, laytime shall be commenced from 13:00 on the same date,- When Notice of Readiness tendered afternoon, laytime shall be commenced from 8:00 on next date3.7 Discharging term: 900MT/ day WWDSHEX EIUDem/ Des: USD 2,000/ half

3.5 Kí mã hiệu vận tải: kí mã hiệu của bên BánUREA46% NITROGEN MINIMUM1% BIURET MAXIMUM0.5% MOISTURE MAXIMUM50 KGS NETUSE NO HOOKSMADE IN INDONESIAMột bên phải sơn màu xanh lá cây.3.6 Những điều kiện dỡ hàng: khi thông báo sẵn sàng được gửi tới trước 12:00 giờ trưa, thời gian dỡ hàng bắt đầu từ 13:00 giờ cùng ngày. Khi thông báo sẵn sàng dỡ hàng được gửi tới vào buổi chiều, thời gian dỡ hàng sẽ bắt đầu từ 8:00 giờ sáng của ngày hôm sau

3.7 Ðiều kiện dỡ hàng: 900 MT/ ngày (WWDSHEX EIU U) ngày làm việc tốt trời không kể chủ nhật và ngày lễ không được tính kể cả khi sử dụngTiền phạt/ tiền thưởng: 2 000 USD/1000 USD

ARTICLE 4: PAYMENT4.1 By irrevocable Letter of Credit at sight forn B/L date for the full amount of the conntract value4.2 L/C Beneficiary: KOLON INTERNATIONAL CORP.45 Mugyo- Dong, Chung Gu, Seoul - Korea4.3 L/C advising Bank: KOREA FIRST BANK Seoul - Korea4.4 Bank of Opening L/C: VIETCOMBANK/ EXIMBANK4.5 Time of opening L/C: within Sep. 15 19994.6 Payment documents:Payment shall be made upon receipt of the following documents:- 2/3 of clean on board Bill of Lading marked FREIGHT PREPAID- Commercial invoice in triplicate- Packing list in triplicate - Certificate of origin issued by manufaturer- SUCOFINDO's Certificate on quality/ weight- One copy of sailing telex/ shipping advice- Remark: the shipping document acceptable- 1/3 B/L ( the top copy ) and transport documents sent by DHL

Ðiều 4: Thanh toán4.1 Bằng L/C không huỷ ngang, trả tiền ngay từ ngày cấp vận đơn đường biển cho tổng trị giá hợp đồng4.2 Người thụ hưởng L/C: KOLON INTERNATIONAL CORP. 45 Mugyo Dong, Chung Gu, Seuol - Korea4.3 Ngân hàng thông báo L/C : KOREA FIRST BANKSeoul - Korea4.4 Ngân hàng mở L/C : VIETCOMBANK/ EXIMBANK4.5 Tthời hạn mở L/C: trong ngày 15/09/1999

4.6 Chứng từ thanh toán: Việc thanh toán sẽ phải thực hiện khi nhận được những chứng từ sau đây:- 2/3 vận đơn đường biển xếp hàng hoàn hảo có ghi cước trả trước- Hoá đơn thương mại 03 bản - Phiếu đóng gói hàng hoá 03 bản- Giấy chứng nhận xuất xứ/ chứng thư nguồn gốc do người sản xuất cấp- Giấy chứng nhận số lượng/ chất lượng cảu SUVOVINDO- Một bản telex của tàu về thời gian khởi hành / phiếu thông báo gửi hàng-Nhận xét: chứng từ vận chuyển sẽ được chấp nhận

- 1/3 bộ vận đơn đường biển ( bản gốc) và những chứng từ vận tải được gửi đến bên mua bằng DHL ( thư tốc hành trực tiếp trao tay) 

ARTICLE 5: FORCE MAJEURE (MAJOR FORCE)Strike, sabotage, which may be occures in Origin Country shall be considered as Force Majeure

Ðiều 5: Bất khả khángÐình công, phá hoại có thể xảy ra ở bất cứ nước xuất xứ hàng hoá sẽ được xem như trường hợp bất khả kháng

ARTICLE 6: ARBITRATION6.1 In the execution course of this contract, all disputes not reaching at amicable agreement shall be settled by the Economic Arbitration board of Hochiminh City under the rules of the International Chamber of Commerce whose awards shall be final and binding both parties6.2 Arbitration fee and other related charges shall be borne by the losing party, unless otherwise agreed.

Ðiều 6: Trọng tài6.1 Trong quá trình thực hiện hợp đồng này, mọi tranh chấp không được thoả thuận hoà giải sẽ phải được giải quyết bằng một hội đồng Trọng tài kinh tế của Tp Hồ Chí Minh theo những luật lệ của Phòng Thương mại quốc tế. Quyết định của Hội đồng trọng tài kinh tế sẽ phải là chung thẩm và ràng buộc cả hai bên6.2 Lệ phí trọng tài và những chi phí liên hệ khác do bên thua kiện chịu, trừ khi có những thoả thuận khác

ARTICLE 7: PENALTY7.1 To delay shipment/ delay paymentIn case delay shipment/ delay payment happens, the penalty for delay interest will be based on annual rate 15 percent7.2 To delay opening L/C:In case delay opening L/C happens, the Seller has the right to delay shipment 7.3 To cancellation of contractIf Seller or Buyer want to cancelled the contract, 5% of the total contract value would be charged as penalty to that party.ARTICLE 8: GENERAL CONDITION8.1 By signing this contract, previous correspondence and negotiations connected herewith shall be null and void8.2 This contract comes into effect from signing date, any amendment and additional clause to these conditions shall be valid only if made in written form and duty confirmed by both sides.8.3 This contract is made in 6 Ennglish originals, each side keeps 3.

Ðiều 7: Xử phạt7.1 Ðối với việc gửi hàng chậm trễ/ việc thanh toán chậm trễ : trong trường hợp việc gửi hàng hoặc thanh toán chậm trễ xảy ra, tiền phạt do sự chậm trễ phải chịu lãi sẽ dựa trên lãi suất hàng năm 15%7.2 Ðối với việc chậm trễ mở L/C: trong trường hợp việc chậm trễ mở L/C xảy ra, bên bán có quyền gửi hàng chậm trễ7.3 Huỷ bỏ hợp đồng: Nếu bên mua hoặc bên bán huỷ bỏ hợp đồng, 5% tổng giá trị hợp đồng sẽ phải được tính là tiền phạt cho bên đó

Ðiều 8: Ðiều kiện chung8.1 Bằng việc kí hợp đồng này, những văn bản giao dịch và những đàm phán trước đây theo đó sẽ không có giá trị và vô hiệu8.2 Hợp đồng này có giá trị kể từ ngày ký, mọi điều khoản sửa đổi bổ sung cho những điều kiện này sẽ chỉ có giá trị khi được thực hiện bằng văn bản và nghĩa vụ được 2 bên xác nhận8.3 Hợp đồng này được lập thành 06 bản gốc bằng tiếng Anh, mỗi bên giữ 03 bản

Contract for fertilizerNo: 01-93/ XYZ- ABC

Date: Sep. 07 1999Between: ..............Address:.............Tel:Telex:................Fax:................Represented by Mr................. Hereinafter called The BuyerAnd: ................Address:.............Tel:......................Telex:...................Fax:................... Represented by Mr........... Hereinafter called The SellerIt is mutually agreed between both sides to sign this contract with terms and specifications

specified hereunder:ARTICLE 1: COMMODITY & SPECIFICATION

1.1 Commodity: UREA FERTILIZER1.2 Origin: INDONESIA1.3 Specification: - Nitrogen: 46% min.- Moisture: 0.5% max.- Biuret: 1.0% max.- Color: White- Free flowing: treated with Anti- Caking1.4 Packing: - 50 kg net in Polypropylen Woven bag with polythylene inner liner - 2% of total

bag as empty spare bags to be supplied free of chargeARTICLE 2: UNIT PRICE - QUANTITY & TOTAL AMOUNT2.1 Unit price: USD 178/ MT C&F Hochiminh City Port2.2 Quantity: 10,000 MT ( plus or minus 10% at seller's option)2.3 Total amount: USD 1,780,000 (+/- 10% at seller's option)Say: US Dollars one million seven hundred eighty thousand.ARTICLE 3: SHIPMENT - DELIVERY3.1 Time of shipment: not later than September 19933.2 Port of loading: Indonesia main ports3.3 Destination port: Hochiminh City Port3.4 Notice of shipment:Within 2 days after the sailing date of carrying vessel to S.R Vietnam, the Seller shall notify by

cable to the Buyer the following information:+ L/C number+ Amount+ Name and nationality of the vessel+ Bill of Lading number/ date+ Port of loading+ Date of shipment+ Expected date of arrival at discharging port3.5 Shipping mark: UREA46% NITROGEN MINIMUM1% BIURET MAXIMUM0.5% MOISTURE MAXIMUM50 KGS NETUSE NO HOOKSMADE IN INDONESIAOne side printed in green color3.6 Discharging terms: When Notice of Readiness tendered before noon, laytime shall be commenced from 13:00 on

the same date,- When Notice of Readiness tendered afternoon, laytime shall be commenced from 8:00 on

next date3.7 Discharging term: 900MT/ day WWDSHEX EIUDem/ Des: USD 2,000/ halfARTICLE 4: PAYMENT4.1 By irrevocable Letter of Credit at sight forn B/L date for the full amount of the conntract

value4.2 L/C Beneficiary: KOLON INTERNATIONAL CORP.

45 Mugyo- Dong, Chung Gu, Seoul - Korea4.3 L/C advising Bank: KOREA FIRST BANK

Seoul - Korea4.4 Bank of Opening L/C: VIETCOMBANK/ EXIMBANK4.5 Time of opening L/C: within Sep. 15 19994.6 Payment documents:Payment shall be made upon receipt of the following documents:- 3/3 of clean on board Bill of Lading marked FREIGHT PREPAID- Commercial invoice in triplicate- Packing list in triplicate

- Certificate of origin issued by manufaturer- SUCOFINDO's Certificate on quality/ weight- One copy of sailing telex/ shipping advice- Remark: the shipping document acceptable- 1/3 B/L ( the top copy ) and transport documents sent by DHLARTICLE 5: FORCE MAJEUREStrike, sabotage, which may be occures in Origin Country shall be considered as Force

MajeureARTICLE 6: ARBITRATION6.1 In the execution course of this contract, all disputes not reaching at amicable agreement

shall be settled by the Economic Arbitration board of Hochiminh City under the rules of the International Chamber of Commerce whose awards shall be final and binding both parties

6.2 Arbitration fee and other related charges shall be borne by the losing party, unless otherwise agreed.

ARTICLE 7: PENALTY7.1 To delay shipment/ delay paymentIn case delay shipment/ delay payment happens, the penalty for delay interest will be based on

annual rate 15 percent7.2 To delay opening L/C:In case delay opening L/C happens, the Seller has the right to delay shipment 7.3 To cancellation of contractIf Seller or Buyer want to cancelled the contract, 5% of the total contract value would be

charged as penalty to that party.ARTICLE 8: GENERAL CONDITION8.1 By signing this contract, previous correspondence and negotiations connected herewith

shall be null and void8.2 This contract comes into effect from signing date, any amendment and additional clause to

these conditions shall be valid only if made in written form and duty confirmed by both sides.8.3 This contract is made in 6 Ennglish originals, each side keeps 3.

FOR THE BUYER FOR THE SELLER

Hợp đồng phân bón (bản tiếng Việt) Hợp đồng phân bón

Số: 01-93/XYZ- ABCNgày 13/08/1999Giữa:..........Ðịa chỉ:.....Ðiện thoại:.........Telex:...........Fax:.........Do ông ................ làm đại diệnDưới đây gọi là Bên MuaVà:.................................Ðịa chỉ:.................Ðiện thoại:...............Telex:.................. Fax:................Do Ông ..................... làm đại diệnDưới đây gọi là : Bên BánHai bên thoả thuận kí hợp đồng với những điều kiện và qui cách được nêu ra dưới đây:Điều 1: Hàng hoá và quy cách kỹ thuật1.1 Tên hàng: Phân urê1.2 Nguồn gốc: Indonesia1.3 Qui cách kỹ thuật:- Nitrogen ( đạm) : 46% tối thiểu- Ẩm độ: 0,5% tối đa- Biuret: 1,0% tối đa- Màu sắc: trắng- Hạt rời: được xử lí bằng Anti- Caking

1.4 Ðóng gói: 50 kg không kể bao PP có lớp trong bằng PE 2% tổng số bao dùng làm bao dự phòng ( bao không) được cung cấp miễn phí

Điều 2: Đơn giá- Số lượng - Tổng giá trị2.1 Ðơn giá: 178,00 USD/ MT C&F cảng Hồ Chí Minh2.2 Số lượng: 10.000 MT (+/- 10% tuỳ theo lựa chọn của bên Bán)2.3 Tổng trị giá: 1.780.000 USD ( +/- 10% tuỳ theo lựa chọn của Bên Bán)Ghi bằng chữ: Một triệu bảy trăm tám mươi ngàn USDĐiều 3: Gửi và giao hàng3.1 Thời gian gửi hàng: không trễ hơn tháng 9 năm 19993.2 Cảng bốc hàng: những cảng chính ở Indonesia3.3 Cảng đến: Cảng tp Hồ Chí Minh3.4 Thông báo gửi hàng:Trong vòng 02 ngày sau ngày khởi hành của tàu vận tải đến nước CHXHCN Việt Nam, bên

Bán sẽ phải thông báo cho bên Mua bằng điện tín những thông tin sau đây:+ L/C số...+ Giá trị+ Tên và quốc tịch tàu+ Cảng bốc hàng+ Ngày gửi hàng+ Ngày dự kiến tàu đến ở cảng dỡ hàng3.5 Kí mã hiệu vận tải: kí mã hiệu của bên Bán3.6 Những điều kiện dỡ hàng: khi thông báo sẵn sàng được gửi tới trước 21:00 giờ trưa, thời

gian dỡ hàng bắt đầu từ 13:00 giờ cùng ngày. Khi thông báo sẵn sàng dỡ hàng được gửi tới vào buổi chiều, thời gian dỡ hàng sẽ bắt đầu từ 8:00 giờ sáng của ngày hôm sau

3.7 Ðiều kiện dỡ hàng: 900 MT/ ngày ( EEDSHESEIU) ngày làm việc tốt trời không kể chủ nhật và ngày lễ không được tính kể cả khi sử dụng

Tiền phạt/ tiền thưởng: 2 000 USD/1000 USDÐiều 4: Thanh toán4.1 Bằng L/C không huỷ ngang, trả tiền ngay từ ngày cấp vận đơn đường biển cho tổng trị giá

hợp đồng4.2 Người thụ hưởng L/C: KOLON INTERNATIONAL CORP.45 Mugyo Dong, Chung Gu, Seuol - Korea4.3 Ngân hàng thông báo L/C : KOREA FIRST BANK

Seoul - Korea4.4 Ngân hàng mở L/C : VIETCOMBANK/ EXIMBANK4.5 Tthời hạn mở L/C: trong ngày 15/09/19994.6 Chứng từ thanh toán: Việc thanh toán sẽ phải thực hiện khi nhận được những chứng từ sau

đây:- 3/3 vận đơn đường biển xếp hàng hoàn hảo có ghi cước trả trước- Hoá đơn thương mại 03 bản- Phiếu đóng gói hàng hoá 03 bản- Giấy chứng nhận xuất xứ do người sản xuất cấp- Giấy chứng nhận số lượng/ chất lượng cảu SUVOVINDO- Một bản telex của tàu về thời gian khởi hành / phiếu thông báo gửi hàng- 1/3 bộ vận đơn đường biển ( bản gốc) và những chứng từ vận tải được gửi đến bên mua bằng

DHL ( thư trực tiếp trao tay)Ghi chú: Chứng từ vận tải của bên thứ ba được chấp nhậnÐiều 5: Bất khả khángÐình công, phá hoại có thể xảy ra ở bất cứ nước xuất xứ hàng hoá sẽ được xem như trường hợp

bất khả khángÐiều 6: Trọng tài6.1 Trong quá trình thực hiện hợp đồng này, mọi tranh chấp không được thoả thuận hoà giải sẽ

phải được giải quyết bằng một hội đồng Trọng tài kinh tế của Tp Hồ Chí Minh theo những luật lệ của Phòng Thương mại quốc tế. Quyết định của Hội đồng trọng tài kinh tế sẽ phải là chung thẩm và ràng buộc cả hai bên

6.2 Lệ phí trọng tài và những chi phí liên hệ khác do bên thua kiện chịu, trừ khi có những thoả thuận khác

Ðiều 7: Xử phạt

7.1 Ðối với việc gửi hàng chậm trễ/ việc thanh toán chậm trễ : trong trường hợp việc gửi hàng hoặc thanh toán chậm trễ xảy ra, tiền phạt do sự chậm trễ phải chịu lãi sẽ dựa trên lãi suất hàng năm 15%

7.2 Ðối với việc chậm trễ mở L/C: trong trường hợp việc chậm trễ mở L/C xảy ra, bên bán có quyền gửi hàng chậm trễ

7.3 Huỷ bỏ hợp đồng: Nếu bên mua hoặc bên bán huỷ bỏ hợp đồng, 5% tổng giá trị hợp đồng sẽ phải được tính là tiền phạt cho bên đó

Ðiều 8: Ðiều kiện chung8.1 Bằng việc kí hợp đồng này, những văn bản giao dịch và những đàm phán trước đây theo đó

sẽ không có giá trị và vô hiệu8.2 Hợp đồng này có giá trị kể từ ngày ký, mọi điều khoản sửa đổi bổ sung cho những điều

kiện này sẽ chỉ có giá trị khi được thực hiện bằng văn bản và nghĩa vụ được 2 bên xác nhận8.3 Hợp đồng này được lập thành 06 bản gốc bằng tiếng Anh, mỗi bên giữ 03 bản 

Ðại diện bên mua Ðại diện bên bán

7-102. Exporting - Where are the Risks?

THE PROBLEM What risks face the exporter beyond the risks of doing normal local business? And what safeguards exist - to protect the exporter's interests?

THE PRINCIPLE Exporting creates risks for everyone involved: governments, exporters and buyers alike. For the exporter, non-payment is the major risk: insurance. a bank guarantee or, most beneficially, a letter of credit offer proteciion. Problems in making delivery are best tackled by agreements tailored to the exporter's needs.

IN MORE DEPTHIn every export deal, there are four principal parties: the exporter, the importer, and the governments of the two countries involved. Each party faces a series of risks and should take protective measures.

Government: The government represents the interests of its people. These interests do not always coincide with the interests of an exporter who wants to maximize profit. All countries take measures to protect what they see as their best interests. One obvious example is the trade in weapons: countries such as Germany strictly control the export of weapons to areas of potential conflicts, international arms embargoes against countries perceived as aggressive are common. 4 In such a case, the threat to the national interest is obvious. Similariy, in time of famine, a government normally prohibits the export of food—regardless of the potential profits of an exporter.Foreign exchange is another area where shortages often occur and where governments act to protect the interests of the country at large. Where a government sees a risk, it has little choice but take action to protect the country. The export license, phytosanirary certificate, certificate of origin, and many similar documents are the direct result. And governments not only restrict; they also promote – with direct incentive, tax credits, retention schemes, and so on. In practice, the individual exporter can do little to influence government policy or to alter public law, the instrument that the government uses to express its will. In regulating the relations between themselves, however, the exporter and the importer have a great deal of freedom; profitable use of this freedom is, in effect, the subject of this book.

The Exporter For the exporter, every deal poses risks. The most obvious risk is the risk of non-payment—what happens if the goods are delivered but the buyer fails to pay? This is a risk in every kind of business, but it is particularly acute in exporting: the buyer is a long way off; he can make excuses that are difficult to check.

------------------------------------------------------4 Until early 1994, the countries in the “western alliance” used the COCOM (Coordinating Committee on Multilateral Export Controls) rules to control the export of weapons or strategic equipment such as computers to the Warsaw Pact countries.

Some typical examples:- The goods never arrived;- The goods arrived damaged;- The central bank has no foreign exchange to make payment;- A government regulation makes payment impossible.

Or he can simply disappear. Almost as damaging as non-payment is late payment: if, as sometimes happens, the exporter hopes for payment within thirty days but is not paid for eighteen months, then money must be borrowed from the bank: an expected profit can vanish in a matter of weeks.

And there are other problems too. The crucial moment for the exporter in any deal is the moment of delivery: as soon as delivery has successfully taken place, the exporter's main duties are discharged and the right to collect payment takes effect. But many things can delay delivery. For an example, let's go back to the Office Enterprises deal: Alec Patel is selling chairs made in Verbena to a company in Esperanza. Verbena is an island, so the chairs must go by sea. Who is responsible for organizing transport? If we assume that Patel and Gomez agreed FOB delivery 5, then the buyer, Gomez, must nominate a ship and Patel must load the goods on board. But what if the expected ship fails to arrive? The chairs will stand at the docks, rotting and rusting, earning nothing, even though Patel must pay to his suppliers the money he spent in manufacturing the chairs. A long delay will hurt him financially. How can the exporter protect himself? The most obvious course is to deal only with trading partner's who are known to be trustworthy—and solvent. Unfortunately this strategy is not always practicable, in particular, the first business with a new partner is always risky. Two valuable mechanisms, however, protect the exporter against the risk of non-payment: third-pany security and the letter of credit.

Third-Party Security The exporter can often secure a promise from a third party that if the buyer fails to pay, the invoice will be paid anyway. Such a promise may be given by an insurance company—in this case the exporter takes out an export credit insurance policy to cover the greater part of the risk. Unfortunately, however, this kind of insurance is not available in all countries. Alternatively, the promise is given by a bank in the form of a bank guarantee—the buyer's bank guarantees that if the buyer fails to pay, the bank will pay instead. The disadvantages here are that such guarantees are expensive and that buyers are reluctant to establish them.

Letter of CreditA letter of credit, if the terms are properly negotiated, ensures payment on delivery of the goods. As soon as the goods are shipped, the exporter takes the shipping documents to an agreed bank, often in his neighborhood. If the shipping documents are in order, the bank pays the agreed sum immediately. The letter of credit is obviously an ideal arrangement for the exporter, and it is the basis of most export trade around the world.

But what about the other risks, the failure of the ship to arrive which we mentioned earlier, or unreasonable complaints made by the buyer when he finally receives the goods? Before asking how exporters protect themselves in such cases, let us look at the risks faced by the buyer—the importer.

The ImporterCaveat emptor is an old principle of law: buyer beware. This is easy enough in a vegetable market or when one is buying a used car, but internationally it is difficult for the buyer to be sufficiently wary. The dangers are obvious: late delivery of the goods, delivery of goods that are inadequate in quantity or in quality, failure by the exporter to make necessary repairs or to supply spare parts when things go wrong. How is the buyer to limit such risks when his best weapon refusal to pay—is taken out of his hands, in most cases, by the mechanism of the letter of credit.

----------------------------------------------------------------------------5 FOB – Free on board – delivery means delivery takes place when the goods “cross the ship’s rail.” For full details of FOB and other terms of trade, see Chapter 1, section 6 below.

In some cases, in particular when purchasing capital equipment, the buyer asks for a performance guarantee. Like the payment guarantee, this is a promise made by a bank—in this case though, it is a promise to compensate the buyer if equipment fails to function as specified. Another safeguard is the retention. If goods are delivered subject to a warranty period of, say.

six months, many buyers ask for a retention: they retain perhaps 5% of the contract price until the goods are no longer under warranty: they finally pay this 5% but only if no warranty claims are in the pipeline. However, neither the guarantee nor the retention is common in simple agreements for the export of goods. There has to be something more. The answer lies, as we shall see in the next section, in the contract and in the law the private law that supplements the agreement between the parties.

CASE STUDYA RISKY BUSINESS

Verbena Knits export sweaters and other traditional knitwear made of synthetic fibers. An importer from Esperanza contracts with Verbena Knits for a consignment of pullovers. The order is large: about 12% of Verbena Knits annual turnover. Terms:

- Payment by confirmed, irrevocable, at-sight letter of credit;- Letter of credit to be opened four weeks before delivery due- Delivery: FOB Port Verbena- Delivery date: 8 weeks after signing contract (Manufacture takes 4 weeks.)- Defects liability period (warranty): 6 months from acceptance by buyer.

Below is a schedule of events during contract performance. At each stage there is some risk to Verbena Knits. State the risk and then evaluate its seriousness in each case.Step 1: Ordering Raw MaterialsA local supplier has been ordered to provide Verbena with necessary materials.The risk: ................................................................................................□ SERIOUS □ MODERATE □ NEGLIGIBLEStep 2: Manufacture and deliveryVerbena Knits manufactures the goods and delivers them to the ship.The risk: ................................................................................................□ SERIOUS □ MODERATE □ NEGLIGIBLEStep 3: Collection of the letter of creditVerbena Knits presents the shipping documents to the bank and asksmanufactures the goods and delivers them to the ship.The risk: ................................................................................................□ SERIOUS □ MODERATE □ NEGLIGIBLEStep 4: Open Package Inspection and Warranty PeriodVerbena Knits inspects the goods on their arrival in Esperanza. Then the defects liability period begins.The risk: ................................................................................................□ SERIOUS □ MODERATE □ NEGLIGIBLE

Step 1: Verbena knits has ordered materials before the letter of credit is open. If the letter of credit is not opened or if opening is delayed, Verbena Knits will have unnecessary raw materials on its hands. This could be expensive. Risk – serious.Step 2: Until he has collected payment, the seller always runs the risk of non-payment. However, with the letter of credit mechanism, this risk is small. Risk- neglibible.Step 3: Everything now depends on the correctness of shipping documents. If the seller has correct documents, he will almost certainly paid. But many sellers present incorrect documents to the bank. Risk-ModerateStep 4: Again everything depends on how well the seller has done his job. Correct goods will be accepted. Even so, open package inspection is a difficult time for the seller if the buyer has changed his mind about the order, this is when he tries to make trouble. Risk – Moderate.

Translate into VietnameseContract for Newsprinting paper

Contract ( No 205 TL)Between:Vietnam Scientific- Production Union of Geodesy and CartograhpyLang Trung - Dong Da - Ha Noi - VietnamTel: 42.846829 Telex: 294887 Vietco VTHereinafter called the BuyerAnd:BOO SON Co., LTDRM. 306, DONGHWA BLDG

Hợp đồng giấy in báo (bản tiếng Việt) HỢP ĐỒNG GIẤY IN BÁO 

HỢP ĐỒNG SỐ 205 TLNgày 1 tháng 12 năm 1999Giữa: Liên hiệp Khoa học sản xuất Trắc địa Bản đồÐịa chỉ: Láng Trung - Ðống Ða - Hà Nội - Việt NamÐiện thoại: 42.846829 Telex: 294887 Vietco VTFax: 84-4-56446

19-2, NONHYUN - DIONG, KANGNAM - KUSEOUL, KOREACable address: TWOHANDCO, SEOUL, KOREAHereinafter called SellerIt has been agreed that Buyer buys and Seller sells on the terms and conditions as follows:

Dưới đây gọi là người MuaVà:Công ty BOO SON, LTDÐịa chỉ: RM. 306, DONGHWA BLDG19-2, NONHYUN - DIONG, KANGNAM - KUSEOUL, KOREAÐịa chỉ điện tín: TWOHANDCO, SEOUL, KOREADưới đây gọi là Người BánHai bên thoả thuận: Người Mua mua và người Bán bán các mặt hàng với các điều khoản sau:

ARTICLE 1: DESCRIPTION - SPECIFICATION- QUALITY- QUANTITY

1. Description: NEWSPRINTING PAPER2. Country of origin: CHINA3. Maker's name:4. Quality/ Specification: Substance: 49 +/-

2 g/m2Ro IL 787 mm width5. Quantity: 200 MT +/- 5%6. Packing: EXPORT STANDARD7. Marking:Substance: 49 g/m2 +/-2Destination: Haiphong Port8. Destination:HAIPHONG PORTARTICLE II: PRICEPrice to be understood CIF Hai Phong port

including Seaworthy packingUnit price: USD 535/MTTotal amount: USD 107,000.00Say: United States Dollar one hundred and

seven thousand onlyARTICLE III: DELIVERY TIME

40 days after L/C receivedARTICLE IV: PAYMENTBy irrevocable Letter of Credit in U.S

Dollar within 180 days with 0.8% of dividend ( in favour of ) each the Seller and payable and payable on presentation to the Bank for Foreign Trade of Vietnam of the following documents, each in three copies:

- Clean on board Bill of Lading- Commercial Invoice- Certificate of weight and/or quantity- Certificate of Quantity issued by the

Seller and/or the Maker- Certificate of Origin issued by Chamber

of Commerce and/or the Seller- Insurance Policy- Receipt of Shipmaster acknowledging it

duly having received 3 sets of non- negotiation shipping documents as above mentioned

- Letter of Credit will be valid for 15 days after loading completed. The Buyer and the Sller will bear bank charges in their respective country

Ðiều 1: Mặt hàng, quy cách, chất lượng và số lượng

1. Mặt hàng: Giấy in báo2. Nước xuất xứ: Trung Quốc3. Tên người sản xuất:4: Chất lượng và qui cách: Ðịnh lượng 49

+/- 2 gam/m2Cuộn khổ rộng 787 mm5. Số lượng: 200 MT ( tấn mét) +/- 5%6. Ðóng gói: đạt tiêu chuẩn xuất khẩu7. Kí mã hiệu: Substance: 49 g/m2 +/-2Destination: Haiphong Port8. Cảng đến: Cảng Hải PhòngÐiều 2: Giá cảGiá CIF cảng Hải Phòng bao gồm cả tiền

bao bì đóng gói có thể đi biển đượcÐơn giá: USD 535/MTTổng trị giá: 107.000,00USDBằng chữ: Một trăm linh bảy nghìn Ðôla

Mỹ chẵn Ðiều 3: Thời gian giao hàng40 ngày sau khi nhận được thư tín dụng

(L/C)Ðiều 4: Thanh toánBằng thư tín dụng không huỷ ngang trả

bằng Ðôla Mỹ trong vòng 180 ngày với 0,8% tiền lãi cho người Bán khi xuất trình với Ngân hàng Ngoại thương Việt Nam bộ chứng từ sau, mỗi loại ba bản:

- Vận đơn sạch đã xếp hàng- Hoá đơn thương mại- Giấy chứng nhận trọng lượng và/hoặc số

lượng- Giấy chứng nhận do người Bán và/hoặc

người sản xuất cấp- Giấy chứng nhận xuất xứ do Phòng

Thương mại hoặc do người Bán cấp- Giấy chứng nhận bảo hiểm- Biên lai của thuyền trưởng thông báo đã

nhận được 3 bộ chứng từ gửi hàng không chuyển nhượng được như đã nêu trên L/C được mở có giá trị trong vòng 15 ngày sau khi xếp hàng. Người Bán và người Mua sẽ chịu chi phí ngân hàng tương ứng ở nước mình, chi phí sửa đổi hoặc gia hạn L/C theo yêu cầu của bên nào thì

but charges for amendment or extension of L/C will be borne by party that requires.

bên ấy chịu

ARTICLE V: INSURANCE / SHIPMENT

1. Insurance :Insurance for the contracted goods will be

covered by the Seller by All Risk Policy2. Notice of shipment:- Pre- advice of shipment: Before shipment

of the goods the Seller shall advice by cable/telex the Buyer of estimated time of shipment and name of carrying vessel

- Final advice of shipment: within 24 hours after shipment the Seller shall advice by cable/telex : Contract No, quantity, gross weight, net weight, measurement, number of packages, invoice value, name of carrying vessel, Bill of Lading number, sailing date for insurance purpose

ARTICLE VI: PORT OF DICHARGE AND INSPECTION

The Buyer will be entitled to have the goods inspected by Vinaconntrol at the destination, if any discrepancy arises in respect of quantity and quality the Buyer will first lodge claim by cable with the Seller, then within 90 days from the date of discharge will make a formal claim with supporting documents, such claim shall be setlled by the Seller within 30 days from its receipt of the Buyer's formal claim

ARTICLE VII: FORCE MAJEURENeither party shall be held responsible for

delay of failure of performance of obligations provided for herein when such delay or failure is caused by strike, fire, flood, Act of God, earthquake or any laws, rules,or regulations of any governmental authority or other conditions beyond its control which can not be forecast or provided against and provided one or both parties are subject to such obligation.

The party wishing to claim relief by reason of any of the said circumstances shall notify the other party in writing of the circumstance its commencement and ceasation and then deliver a certificate issued by the Chamber of Commerce at the place where the event or events occured as evidence thereof; In the event of delay caused by such force majeure exceeding 60 days each party shall have the right to cancel his contract, unless otherwise agreed, in which case neither party shall have the right to claim damages

ARTICLE VIII: ARBITRATIONThis contract will be governed by the

provision of Incoterms 1990. If any dispute that arises under this contract can not be settled by an amicable agreement between the two sides, the

Ðiều 5: Bảo hiểm và giao hàng1. Bảo hiểm: bảo hiểm của hàng hoá do

Người bán chịu với điều kiện Mọi Rủi Ro2. Thông báo giao hàng:- Thông báo trước khi giao hàng: Trước khi

gửi hàng, người bán sẽ thông báo cho người Mua bằng điện hoặc telex về thời gian giao hàng dự tính và tên tàu vận chuyển.

- Thông báo cuối cùng về giao hàng : Trong vòng 24 giờ sau khi gửi hàng, Người bán sẽ thông báo bằng điện hoặc telex về: số hợp đồng, số lượng, trọng lượng cả bì, trọng lượng tịnh, kích thước (dung tích), số kiện, giá trị hoá đơn, tên tàu vận chuyển, số vận đơn, ngày tàu rời cảng...

Ðiều 6. Kiểm tra tại cảng dỡ hàngNgười Mua có quyền nhờ

VINACONTROL kiểm tra hàng ở cảng đến, nếu có sự không khớp nhau về số lượng và chất lượng thì trước tiên Người Mua sẽ gửi điện khiếu nại cho người Bán, sau đó trong vòng 90 ngày kể từ ngày dỡ hàng người Mua phải làm khiếu nại chính thức đòi bồi thường cùng các tài liệu kèm theo, người Bán phải giải quyết cho người Mua trong vòng 30 ngày nhận được yêu cầu chính thức đòi bồi thường của người Mua

Ðiều 7: Trường hợp bất khả khángKhông bên nào phải chịu trách nhiệm về sự

trì hoãn hoặc sự không thực hiện được những nghĩa vụ với điều kiện là sự trì hoãn hoặc sự không thực hiện được những nghĩa vụ đó xảy ra do đình công, hoả hoạn, lũ lụt, tác động của thiên nhiên, động đất, hoặc những luật lệ qui tắc, qui định của các nhà chức trách, hoặc những điều kiện khác không thể dự đoán hoặc lường trước được

Bên yêu cầu khiếu nại về thiệt hại do bất kì trường hợp nào đã nêu sẽ thông báo cho bên bằng văn bản và theo đó gửi một giấy chứng nhận do Phòng Thương mại tại nơi xảy ra sự việc cấp, như là chứng cứ của việc đó. Khi sự trì hoãn do trường hợp bất khả kháng nêu trên mà vượt quá 60 ngày, mỗi bên của hợp đồng có quyền huỷ bỏ hợp đồng này, trong trường hợp đó không bên nào có quyền khiếu nại cuối cùng về những thiệt hại

Ðiều 8: Trọng tàiHợp đồng này chịu sự chi phối của

Incoterms 1990. Những tranh chấp phát sinh từ hợp đồng này mà hai bên không giải quyết bằng thương lượng sẽ được giải quyết bởi Trọng tài Thương mại Quốc tế tại Paris, theo các qui chế xét xử của nó

Ðiều 9: Các điều kiện khácNgười Mua sẽ phải làm thủ tục bảo lãnh tại ngân hàng Ngoại thương Việt Nam

matter shall be settled by the Internatiional Commercial Arbitration in Paris in accordance with its rules

ARTICLE IX: OTHER CONDITIONSThe Buyer shall give a guarantee pursuant to procedure at the Bank for Foreign Trade of Vietnam

Contract for Newsprinting paperContract ( No 205 TL)

Between:Vietnam Scientific- Production Union of Geodesy and CartograhpyLang Trung - Dong Da - Ha Noi - VietnamTel: 42.846829 Telex: 294887 Vietco VTHereinafter called the BuyerAnd:BOO SON Co., LTDRM. 306, DONGHWA BLDG19-2, NONHYUN - DIONG, KANGNAM - KUSEOUL, KOREACable address: TWOHANDCO, SEOUL, KOREAHereinafter called SellerIt has been agreed that Buyer buys and Seller sells on the terms and conditions as follows:ARTICLE 1: DESCRIPTION - SPECIFICATION- QUALITY- QUANTITY1. Description: NEWSPRINTING PAPER2. Country of origin: CHINA3. Maker's name:4. Quality/ Specification: Substance: 49 +/- 2 g/m2Ro IL 787 mm width5. Quantity: 200 MT +/- 5%6. Packing: EXPORT STANDARD7. Marking:Substance: 49 g/m2 +/-2Destination: Haiphong Port8. Destination:HAIPHONG PORTARTICLE II: PRICEPrice to be understood CIF Hai Phong port including Seaworthy packingUnit price: USD 535/MTTotal amount: USD 107,000.00Say: United States Dollar one hundred and seven thousand onlyARTICLE III: DELIVERY TIME

40 days after L/C receivedARTICLE IV: PAYMENTBy irrevocable Letter of Credit in U.S Dollar within 180 days with 0.8% of dividend ( in

favour of ) each the Seller and payable and payable on presentation to the Bank for Foreign Trade of Vietnam of the following documents, each in three copies:

- Clean on board Bill of Lading- Commercial Invoice- Certificate of weight and/or quantity- Certificate of Quantity issued by the Seller and/or the Maker- Certificate of Origin issued by Chamber of Commerce and/or the Seller- Insurance Policy- Receipt of Shipmaster acknowledging it duly having received 3 sets of non- negotiation

shipping documents as above mentioned

- Letter of Credit will be valid for 15 days after loading completed. The Buyer and the Sller will bear bank charges in their respective country but charges for amendment or extension of L/C will be borne by party that requires.

ARTICLE V: INSURANCE / SHIPMENT1. Insurance :Insurance for the contracted goods will be covered by the Seller by All Risk Policy2. Notice of shipment:- Pre- advice of shipment: Before shipment of the goods the Seller shall advice by cable/telex

the Buyer of estimated time of shipment and name of carrying vessel- Final advice of shipment: within 24 hours after shipment the Seller shall advice by cable/telex

: Contract No, quantity, gross weight, net weight, measurement, number of packages, invoice value, name of carrying vessel, Bill of Lading number, sailing date for insurance purpose

ARTICLE VI: PORT OF DICHARGE AND INSPECTIONThe Buyer will be entitled to have the goods inspected by Vinaconntrol at the destination, if

any discrepancy arises in respect of quantity and quality the Buyer will first lodge claim by cable with the Seller, then within 90 days from the date of discharge will make a formal claim with supporting documents, such claim shall be setlled by the Seller within 30 days from its receipt of the Buyer's formal claim

ARTICLE VII: FORCE MAJEURENeither party shall be held responsible for delay of failure of performance of obligations

provided for herein when such delay or failure is caused by strike, fire, flood, Act of God, earthquake or any laws, rules,or regulations of any governmental authority or other conditions beyond its control which can not be forecast or provided against and provided one or both parties are subject to such obligation.

The party wishing to claim relief by reason of any of the said circumstances shall notify the other party in writing of the circumstance its commencement and ceasation and then deliver a certificate issued by the Chamber of Commerce at the place where the event or events occured as evidence thereof; In the event of delay caused by such force majeure exceeding 60 days each party shall have the right to cancel his contract, unless otherwise agreed, in which case neither party shall have the right to claim damages

ARTICLE VIII: ARBITRATIONThis contract will be governed by the provision of Incoterms 1990. If any dispute that arises

under this contract can not be settled by an amicable agreement between the two sides, the matter shall be settled by the Internatiional Commercial Arbitration in Paris in accordance with its rules

ARTICLE X: OTHER CONDITIONSThe Buyer shall give a guarantee pursuant to procedure at the Bank for Foreign Trade of Vietnam

FOR THE SELLER FOR THE BUYERHợp đồng giấy in báo (bản tiếng Việt)

HỢP ĐỒNG GIẤY IN BÁO HỢP ĐỒNG SỐ 205 TL

Ngày 1 tháng 12 năm 1999Giữa: Liên hiệp Khoa học sản xuất Trắc địa Bản đồÐịa chỉ: Láng Trung - Ðống Ða - Hà Nội - Việt NamÐiện thoại: 42.846829 Telex: 294887 Vietco VTFax: 84-4-56446Dưới đây gọi là người MuaVà:Công ty BOO SON, LTDÐịa chỉ: RM. 306, DONGHWA BLDG19-2, NONHYUN - DIONG, KANGNAM - KUSEOUL, KOREAÐịa chỉ điện tín: TWOHANDCO, SEOUL, KOREADưới đây gọi là Người BánHai bên thoả thuận: Người Mua mua và người Bán bán các mặt hàng với các điều khoản sau:

Ðiều 1: Mặt hàng, quy cách, chất lượng và số lượng1. Mặt hàng: Giấy in báo2. Nước xuất xứ: Trung Quốc3. Tên người sản xuất:4: Chất lượng và qui cách: Ðịnh lượng 49 +/- 2 gam/m2Cuộn khổ rộng 787 mm5. Số lượng: 200 MT ( tấn mét) +/- 5%6. Ðóng gói: đạt tiêu chuẩn xuất khẩu7. Kí mã hiệu: Substance: 49 g/m2 +/-2Destination: Haiphong Port8. Cảng đến: Cảng Hải PhòngÐiều 2: Giá cảGiá CIF cảng Hải Phòng bao gồm cả tiền bao bì đóng gói có thể đi biển đượcÐơn giá: USD 535/MTTổng trị giá: 107.000,00USDBằng chữ: Một trăm linh bảy nghìn Ðôla Mỹ chẵn Ðiều 3: Thời gian giao hàng40 ngày sau khi nhận được thư tín dụng (L/C)Ðiều 4: Thanh toánBằng thư tín dụng không huỷ ngang trả bằng Ðôla Mỹ trong vòng 180 ngày với 0,8% tiền lãi

cho người Bán khi xuất trình với Ngân hàng Ngoại thương Việt Nam bộ chứng từ sau, mỗi loại ba bản:

- Vận đơn sạch đã xếp hàng- Hoá đơn thương mại- Giấy chứng nhận trọng lượng và/hoặc số lượng- Giấy chứng nhận do người Bán và/hoặc người sản xuất cấp- Giấy chứng nhận xuất xứ do Phòng Thương mại hoặc do người Bán cấp- Giấy chứng nhận bảo hiểm- Biên lai của thuyền trưởng thông báo đã nhận được 3 bộ chứng từ gửi hàng không chuyển

nhượng được như đã nêu trên L/C được mở có giá trị trong vòng 15 ngày sau khi xếp hàng. Người Bán và người Mua sẽ chịu chi phí ngân hàng tương ứng ở nước mình, chi phí sửa đổi hoặc gia hạn L/C theo yêu cầu của bên nào thì bên ấy chịu

Ðiều 5: Bảo hiểm và giao hàng1. Bảo hiểm: bảo hiểm của hàng hoá do Người bán chịu với điều kiện Mọi Rủi Ro2. Thông báo giao hàng:- Thông báo trước khi giao hàng: Trước khi gửi hàng, người bán sẽ thông báo cho người Mua

bằng điện hoặc telex về thời gian giao hàng dự tính và tên tàu vận chuyển.- Thông báo cuối cùng về giao hàng : Trong vòng 24 giờ sau khi gửi hàng, Người bán sẽ thông

báo bằng điện hoặc telex về: số hợp đồng, số lượng, trọng lượng cả bì, trọng lượng tịnh, kích thước (dung tích), số kiện, giá trị hoá đơn, tên tàu vận chuyển, số vận đơn, ngày tàu rời cảng...

Ðiều 6. Kiểm tra tại cảng dỡ hàngNgười Mua có quyền nhờ VINACONTROL kiểm tra hàng ở cảng đến, nếu có sự không khớp

nhau về số lượng và chất lượng thì trước tiên Người Mua sẽ gửi điện khiếu nại cho người Bán, sau đó trong vòng 90 ngày kể từ ngày dỡ hàng người Mua phải làm khiếu nại chính thức đòi bồi thường cùng các tài liệu kèm theo, người Bán phải giải quyết cho người Mua trong vòng 30 ngày nhận được yêu cầu chính thức đòi bồi thường của người Mua

Ðiều 7: Trường hợp bất khả khángKhông bên nào phải chịu trách nhiệm về sự trì hoãn hoặc sự không thực hiện được những

nghĩa vụ với điều kiện là sự trì hoãn hoặc sự không thực hiện được những nghĩa vụ đó xảy ra do đình công, hoả hoạn, lũ lụt, tác động của thiên nhiên, động đất, hoặc những luật lệ qui tắc, qui định của các nhà chức trách, hoặc những điều kiện khác không thể dự đoán hoặc lường trước được

Bên yêu cầu khiếu nại về thiệt hại do bất kì trường hợp nào đã nêu sẽ thông báo cho bên bằng văn bản và theo đó gửi một giấy chứng nhận do Phòng Thương mại tại nơi xảy ra sự việc cấp, như là chứng cứ của việc đó. Khi sự trì hoãn do trường hợp bất khả kháng nêu trên mà vượt quá 60 ngày, mỗi bên của hợp đồng có quyền huỷ bỏ hợp đồng này, trong trường hợp đó không bên nào có quyền khiếu nại cuối cùng về những thiệt hại

Ðiều 8: Trọng tài

Hợp đồng này chịu sự chi phối của Incoterms 1990. Những tranh chấp phát sinh từ hợp đồng này mà hai bên không giải quyết bằng thương lượng sẽ được giải quyết bởi Trọng tài Thương mại Quốc tế tại Paris, theo các qui chế xét xử của nó

Ðiều 9: Các điều kiện khácNgười Mua sẽ phải làm thủ tục bảo lãnh tại ngân hàng Ngoại thương Việt Nam

Người Bán Người Mua

11-17

3. Risk, the Contract, and the Law

THE PROBLEMThe law offers protection to both exporter and importer. What is this “law”? And how can the two parties ensure that they achieve the best possible protection?

THE PRINCIPLELaw exists in two forms, public and private. Public law regulates the relationship between the citizen and the state. Private law regulates relationship between private citizens (or companies). Most provisions of the private law are disposive—the parties to a contract are free to change or ignore them. A well written contract clarifies exactly what the parties have agreed and, supplementary to their agreement, which law they have chosen to fill in any gaps. Contract law belongs to the private law.A negotiated, written contract is a key safeguard against the risks of exporting.

IN MORE DEPTHSuccessful trade depends on peaceful and orderly movement of goods and money between communities. In the modem world, the main safeguard of peace and order is probably the law. Within most societies, law exists in two forms, public and private. The public law is imposed by a government within a specific territory: the citizen or foreigner within this territory is obliged to obey; private law regulates the rights of individual citizens among themselves. (Not all legal systems make this absolute distinction, but it helps our present purpose. The public law of a country controls, for example, taxation, immigration, crime, use of foreign exchange, and such matters. Private law controls, typically, contracts of sale, employment contracts, contracts to lend money, and so on. One branch of private law particularly concerns us here, contract law. which looks at the agreements citizens or companies make with each other.

When Patel agreed 10 sell Gomez chairs for $9,000, the two of them entered a contract. A contract is an agreement enforceable of law: both sides can ask a court to enforce their rights, and it will do so. (Not all agreements are contracts: if a teenager agrees with his parents to come home before midnight and is late; he is not in breach of contract: his agreement is not a contract, because it is not. for various reasons, legally enforceable.) The essence of an enforceable agreement is that the parties, when they made it, intended to be legally bound by their promises. Since Patel and Gomez clearly intended tins, they have a contract.

A contract is an exchange of rights and duties within the framework of the private law. These rights and duties are specially created by the two sides and apply only to them. This is clear if we look at the $9.000 Gomez agrees to pay: until she reached her agreement with Patel, he had no claim against her for any sum of money—and. of course, she had no right to claim delivery of thirty chairs. So we can say that, in reaching a deal, each side surrenders to the other certain clearly specified rights—for example, the right of Gomez to keep her $9,000. Each party retains, of course, all rights not expressly given up. Any right that we can legally waive is called a disposive right—we are free to dispose of it. Most of the rights of an exporter under the private law are disposive although we shall come to some exceptions, rights that cannot be given away. In principle, though, the parties are free to agree anything as long as it affects only the two of them. This principle is known freedom of contract and it is well established in most legal systems.

We have already said that the minimum contract (scope in exchange for price) is enforceable but contains too many uncertainties. In practice, how do businesspeople regulate things more effectively? There are three basic approaches: reliance on trade practices; use of general conditions; and the conclusion of a negotiated, written contract.

Trade PracticesSome trades—for example, the diamond trade in Antwerp—have well established rules familiar to everyone in the business; two dealers need agree nothing more than scope and price. Similarly, rice merchants in Southeast Asia seldom enter elaborate agreements—the rules are too well known to both sides.

General ConditionsMore common is the second approach: the use of general conditions of sale or of purchase. General conditions work in this way: a buyer sends an order to an exporter. Somewhere on the order are the words: 'This order is subject to our General Conditions of Purchase as printed on the back of this Order Form." When the exporter sends the order confirmation for the invoice) it, in turn, bears the words: "All goods are supplied subject to our General Conditions of Sale as printed on the back of this Order Confirmation." You have probably seen such general conditions; they are usually in very small print and regulate every foreseeable problem in favor of the party who drafted them.7 The problem here is obvious: each side says, "My conditions apply." But neither side has agreed to the other's conditions. In such a situation, the two sides have very different expectations, and disputes are inevitable. If a dispute goes before a court, the judge must give one set of conditions preference. But which? The answer is unpredictable: and unpredictability is another name for risk. Exporting on the basis of general conditions—especially if the buyer does not agree to them in advance--is unnecessarily risky for the exporter.The Negotiated, Written ContractThe third approach to export agreements is the most professional and the safest: negotiating the terms of the agreement and putting them in writing—the negotiated written contract. The advantages are obvious. First, clarity: all the crucial issues are resolved during negotiation, making disputes unlikely. Then workability: both sides know what they have to do and are confident that they can do it: this creates a good working relationship. And finally enforceability: if a dispute arises, both sides can reread the contract and find a clear statement of their mutual rights and duties. Usually the dispute can be resolved without the help (and expense) of the courts—people seldom go to law when the case is clear.

The mention of lawyers brings us to the main problem with contracts: because they are normally drafted by a lawyer, they are expensive and sometimes difficult to understand. These problems are not insoluble: in the following chapters you will find advice on many common provisions found in export contracts. That will help you with most of the "jargon." You will also find a "model sales contract." Using a model contract for your own export business has a number of advantages: by completing the various clauses, you ensure that you have negotiated all the essentials; by using the options in the model contract, you gain flexibility during negotiations; and by establishing a sound legal relationship, you help things runs smoothly in future. (If you are in doubt, you should ask a lawyer to check the final version of your contract.)The best safeguard against the risks of exporting is a contract that is clear, workable and enforceable.

What You Should Know1. Law has two branches, public and private.2. A contract operates within the sphere of private law.3. Most rights and duties under the private law are disposive; the parties can agree to set them aside.4. The parties to a contract create new, legally enforceable rights and duties that exist only between the two of them.5. The parties cannot set aside rights or duties under the public law.6. In principle, the parties are free to choose which national private law applies to their contract.7. If a particular trade has strong, well understood conventions, the parties often agree only the minimum contract: scope and price.8. Trade is often conducted on the basis of general conditions of sale or purchase; this often leads to conflict between sets of conditions.9. The safest and most satisfactory basis for concluding an export agreement is the negotiated written contract. A model contract can offer useful guidance.---------------------------------------

7 The problem of conflicting sets of general conditions, the so-called "Battle of the Forms." is discussed in more detail in Chapter 4, Section 3.

What You ShouId Know1. Law has two branches, public and private. 2. A contract operates within the sphere of private law.3. Most rights and duties under the private law are disposive; the parties can agree to set them aside. 4. The parties to a contract create new, legally enforceable rights and duties that exist only between the two of them. 5. The parties cannot set aside rights or duties under the public law.6. In principle, the parties are free to choose which national private law applies to their contract.7. If a particular trade has strong, well understood conventions, the parties often agree only the minimum contract: scope and price.8. Trade is often conducted on the basis of general conditions of sale or purchase: this often leads to conflict between sets of conditions.9. The safest and most satisfactory basis for concluding ah export agreement is the negotiated written contract. A model contract can offer useful guidance.

CONCEPT REVIEWA Tax-Free Contract

Alec Patel's company, Office Enterprises, in Verbena is selling office furniture to an importer in Esperanza. The parties agree that "The law of Verbena applies." Patel, however, wants to ensure that he is not liable for tax under the tax law of Esperanza; therefore, Patel's lawyer tries to put this clause in the export contract:

All income taxes or other tax obligations created as a result ofthis contract shall be assessed and regulated exclusively according to the Verbenan tax law in force at the time of assessment.

1. Is Office Enterprises now free of Espcranzan income taxes?YESNO—because tax law is public law and the panics cannot set it asideNO—because the clause is worded too weakly

2. Does the clause below create a "tax-free contract" for Office Enterprises?The Buyer shall compensate and save harmless the Seller from alltaxes assessed against the Seller by the government: of theBuyer's country.

YES NO YES, UNLESS ____________

1. No. The parties to a contract cannot set aside public law such as tax law.2. Yes- unless the buyer goes bankrupt or unless there is a law in the buyer’s country forbidding

such clauses in contracts.

Translate into VietnameseMẫu hợp đồng chuyển giao công nghệ

TRADEMARK LICENSE AGREEMENT

Between:A) Information about LicensorAnd:B) Vietnam Forest Corporation (VINAFOR), a company organized and existing under the laws of the Socialist Republic of Vietnam (hereinafter called “the Licensee”.(Detailed information about party B)

Whereas the licensor is the owner of Trademark Registration Certificate which is issued by the National Office of Industrial Property of Vietnam (“NOIP”) for the Trademark “UNION”. (the “Trademark”) for motor cycles: and

Whereas the Lisensor agrees to license the right to use in Vietnam to the Licensee.

Now, therefor both parties agree as follows:

Giữa: A) Thông tin về Cấp Phép: B) Tổng công ty Lâm nghiệp Việt Nam (VINAFOR), một công ty tổ chức và tồn tại theo pháp luật của nước Cộng hoà xã hội chủ nghĩa Việt Nam (sau đây gọi là "cấp phép" (thông tin chi tiết về bên B)

Trong khi đó, người cấp phép. là chủ sở hữu của Giấy chứng nhận đăng ký nhãn hiệu do Cục Sở hữu công nghiệp của Việt Nam (Cục Sở hữu trí tuệ ") cho các thương hiệu" ĐOÀN "(" Thương hiệu ") cho động cơ chu kỳ: Trong khi Lisensor đồng ý cấp giấy phép quyền để sử dụng tại Việt Nam để được cấp phép, do cả hai bên đồng ý như sau:

Article 1: Grant of the license Điều 1: Cấp giấy phép 1.1 Cấp Phép sẽ hỗ trợ để

1.1 The Licensor hereby grants to the Licensee, and the Licensee hereby accepts the license (the “License”) to use the Trademark under Certificate in the Territory.1.2 The Licensor shall have the right to grant the license to any third party in the territory of Vietnam other than the Licensee herein.

được cấp phép, và được cấp phép hướng chấp nhận giấy phép ("Giấy phép") để sử dụng thương hiệu theo Giấy chứng nhận trong Lãnh thổ. 1.2-Cấp Phép có quyền cấp giấy phép cho bất kỳ bên thứ ba trên lãnh thổ của Việt Nam khác so với các tài liệu này được cấp phép.

Article 2: Object of the licenseThe Licensee is entitled to apply the Trademark to motor cycles which are imported in CKD and/or IKD form from the Licensor then assembled and sold in Vietnam.

Article 3: TerritoryThe License is effective in the entire territory of the Socialist Republic of Vietnam (“the Territory”).

Article 4: TermThis agreement shall be invalid until termination of the contract for supplying spare parts of Union motor cycle.

Article 5: Amendment, suspension and cancellation 5.1 Upon the request of either party, the Agreement may be amended or supplemented in writing. Any amendment or supplement must be signed by the legal representatives of the both parties.5.2 The Agreement shall be terminated in the following cases: a - Expiry of contract for supplying parts for Union motor cycles.b - The industrial property rights of the Licensor are suspended or cancelled.c - The performance of the Agreement is prevented by a force majeure events. Force majeure events include events beyond the control of the parties including, but not limited to, acts of God, strikes, riots, war and similar events.

Điều 2: Đối tượng của giấy phép được cấp phép có quyền áp dụng các thương hiệu đến chu kỳ động cơ nhập khẩu trong suy thận và / hoặc hình thức IKD từ Cấp Phép sau đó lắp ráp và bán tại Việt Nam. Điều 3: Lãnh thổ Giấy phép có hiệu lực trong toàn bộ lãnh thổ của nước Cộng hoà xã hội chủ nghĩa Việt Nam ("Lãnh thổ"). Điều 4: Thời hạn thỏa thuận này sẽ không có hiệu lực cho đến khi chấm dứt hợp đồng cung cấp phụ tùng thay thế của Liên minh động cơ chu kỳ. Điều 5: Sửa đổi, đình chỉ và huỷ bỏ 5.1 Khi yêu cầu của một trong hai bên, Hiệp định có thể được sửa đổi, bổ sung bằng văn bản. Việc sửa đổi, bổ sung phải có chữ ký của người đại diện pháp lý của hai bên. 5,2 Hiệp định phải được chấm dứt trong các trường hợp sau đây: - Hết thời hạn hợp đồng cung cấp phụ tùng cho xe máy Liên minh. b - Các quyền sở hữu công nghiệp của Cấp Phép bị đình chỉ hoặc hủy bỏ. c - Việc thực hiện Hiệp định là ngăn chặn một sự kiện bất khả kháng. Sự kiện bất khả kháng bao gồm các sự kiện ngoài sự kiểm soát của các bên, bao gồm, nhưng không giới hạn, hành vi của Thiên Chúa, đình công, bạo loạn, chiến tranh và các sự kiện tương tự.

Article 6: Obligations of the Licensor6.1 The Licensor hereby represents that it is true and legal owner of the Trademark and the grant of the License of the Trademark shall not infringe the industrial property rights of any third party. The Licensor shall be responsible, at his own expenses, to resolve any dispute with any third party arising from the grant of the License under this Agreement.6.2 The Licensee shall be responsible to take all necessary and appropriate measures, at his own expenses, to prosecute infringements of the Trademark by any third party.The Licensor shall have the obligation to fully cooperate with and assist the Licensee in any

Điều 6: Nghĩa vụ của Cấp Phép 6,1 Cấp Phép hướng đại diện cho rằng đó là đúng sự thật và pháp lý chủ sở hữu nhãn hiệu hàng hoá và cấp giấy phép nhãn hiệu hàng hoá không được xâm phạm quyền sở hữu công nghiệp của bất kỳ bên thứ ba. Cấp Phép sẽ chịu trách nhiệm, chi phí riêng của mình, để giải quyết bất kỳ tranh chấp với bất kỳ bên thứ ba phát sinh từ việc cấp Giấy phép theo Hiệp định này. 6.2 được cấp phép phải chịu trách nhiệm thực hiện tất cả các biện pháp cần thiết và thích hợp, chi phí riêng của mình, để truy tố các hành vi xâm phạm nhãn hiệu hàng hoá bởi bất kỳ bên thứ ba. Cấp Phép có nghĩa vụ hoàn toàn hợp tác và hỗ trợ được cấp phép trong bất kỳ vấn đề nào đó.

such matter.

Article 7: Obligations of the Licensee 7.1 The Licensee shall ensure that the quality of the Product assembled by the Licensee shall not be lower than those manufactured by the Licensor. The method to determine the quality of the Product shall be mutually agreed by the Licensor and the Licensee.7.2 The Licensee is entitled to use the Trademark only in the Socialist republic of Vietnam.7.3 The Licensee is not permitted to transfer the Trademark to any third party.7.4 The Licensee shall have the obligation to identify the Licensor on the Product or...7.5 The Licensee shall be responsible for submitting this Agreement to the NOIP for registration and paying all relevant fee within fifteen (15) days from the date of signing this Agreement.

Điều 7: Nghĩa vụ của người được cấp phép 7,1 Các cấp phép phải đảm bảo rằng chất lượng của sản phẩm được lắp ráp bằng cách cấp phép không được thấp hơn so với những sản xuất bởi Cấp Phép. Các phương pháp để xác định chất lượng sản phẩm sẽ được hai bên thoả thuận Cấp Phép và được cấp phép. 7,2 cấp phép có quyền sử dụng nhãn hiệu hàng hoá chỉ trong các nước cộng hòa xã hội chủ nghĩa Việt Nam. 7,3 được cấp phép là không được phép chuyển nhượng thương hiệu cho bất kỳ bên thứ ba. 7.4 Việc cấp phép có nghĩa vụ để xác định Cấp Phép sản phẩm hoặc ... 7,5 cấp phép sẽ có trách nhiệm trình Hiệp định này để Cục Sở hữu trí tuệ đăng ký và thanh toán hết các khoản phí có liên quan trong thời hạn mười lăm (15) ngày, kể từ ngày ký kết Hiệp định này.

Article 8: Dispute ResolutionAny dispute, breach, controversy or claim arising out of or in connection with this Agreement shall be firstly settled amicably between two parties. If the dispute can’t be settled amicably, either party has the right to submit the dispute to international Organization foe settlement.

Article 9: Implementing Provisions9.1 This Agreement is made on the basis of equality and voluntarism. The two parties pledge to comply strictly with the terms and conditions of the Agreement.9.2 The Agreement shall be made in six (6) sets in English which shall be equal force. Each party shall keep three (3) sets in English.

Điều 8: giải quyết tranh chấp Mọi tranh chấp, vi phạm, tranh cãi hoặc khiếu nại phát sinh từ hoặc liên quan đến Hiệp định này được trước hết là giải quyết một cách hữu nghị giữa hai bên. Nếu tranh chấp không giải quyết được một cách hữu nghị, một trong hai bên có quyền đưa vụ tranh chấp quốc tế Tổ chức giải quyết kẻ thù.

Điều 9: Thực hiện Quy định 9,1 Hiệp định này được thực hiện trên cơ sở bình đẳng, tình nguyện. Hai bên cam kết thực hiện đúng các điều khoản và điều kiện của Hiệp định. 9,2 Hiệp định được thực hiện trong sáu (6) bộ bằng tiếng Anh có được bằng lực lượng. Mỗi bên giữ ba (3) bộ bằng tiếng Anh.

Mẫu tiếng Anh:

TRADEMARK LICENSE AGREEMENT

Between:A) Information about LicensorAnd:B) Vietnam Forest Corporation (VINAFOR), a company organized and existing under the laws of the Socialist Republic of Vietnam (hereinafter called “the Licensee”.(Detailed information about party B)

Whereas the licensor is the owner of Trademark Registration Certificate which is issued by the National Office of Industrial Property of Vietnam (“NOIP”) for the Trademark “UNION”. (the “Trademark”) for motor cycles: and

Whereas the Lisensor agrees to license the right to use in Vietnam to the Licensee.

Now, therefor both parties agree as follows:

Article 1: Grant of the license

1.1 The Licensor hereby grants to the Licensee, and the Licensee hereby accepts the license (the “License”) to use the Trademark under Certificate in the Territory.1.2 The Licensor shall have the right to grant the license to any third party in the territory of Vietnam other than the Licensee herein.

Article 2: Object of the licenseThe Licensee is entitled to apply the Trademark to motor cycles which are imported in CKD and/or IKD form from the Licensor then assembled and sold in Vietnam.

Article 3: TerritoryThe License is effective in the entire territory of the Socialist Republic of Vietnam (“the Territory”).

Article 4: TermThis agreement shall be invalid until termination of the contract for supplying spare parts of Union motor cycle.

Article 5: Amendment, suspension and cancellation 5.1 Upon the request of either party, the Agreement may be amended or supplemented in writing. Any amendment or supplement must be signed by the legal representatives of the both parties.5.2 The Agreement shall be terminated in the following cases: a - Expiry of contract for supplying parts for Union motor cycles.b - The industrial property rights of the Licensor are suspended or cancelled.c - The performance of the Agreement is prevented by a force majeure events. Force majeure events include events beyond the control of the parties including, but not limited to, acts of God, strikes, riots, war and similar events.

Article 6: Obligations of the Licensor6.1 The Licensor hereby represents that it is true and legal owner of the Trademark and the grant of the License of the Trademark shall not infringe the industrial property rights of any third party. The Licensor shall be responsible, at his own expenses, to resolve any dispute with any third party arising from the grant of the License under this Agreement.6.2 The Licensee shall be responsible to take all necessary and appropriate measures, at his own expenses, to prosecute infringements of the Trademark by any third party.The Licensor shall have the obligation to fully cooperate with and assist the Licensee in any such matter.

Article 7: Obligations of the Licensee 7.1 The Licensee shall ensure that the quality of the Product assembled by the Licensee shall not be lower than those manufactured by the Licensor. The method to determine the quality of the Product shall be mutually agreed by the Licensor and the Licensee.7.2 The Licensee is entitled to use the Trademark only in the Socialist republic of Vietnam.7.3 The Licensee is not permitted to transfer the Trademark to any third party.7.4 The Licensee shall have the obligation to identify the Licensor on the Product or...7.5 The Licensee shall be responsible for submitting this Agreement to the NOIP for registration and paying all relevant fee within fifteen (15) days from the date of signing this Agreement.

Article 8: Dispute ResolutionAny dispute, breach, controversy or claim arising out of or in connection with this Agreement shall be firstly settled amicably between two parties. If the dispute can’t be settled amicably, either party has the right to submit the dispute to international Organization foe settlement.

Article 9: Implementing Provisions9.1 This Agreement is made on the basis of equality and voluntarism. The two parties pledge to comply strictly with the terms and conditions of the Agreement.9.2 The Agreement shall be made in six (6) sets in English which shall be equal force. Each party shall keep three (3) sets in English.

Mẫu tiếng Việt:

Cộng hoà xã hội chủ nghĩa Việt NamĐộc lập - Tự do - Hạnh phúc

HỢP ĐỒNG CHUYỂN GIAO CÔNG NGHỆ

(Số:.... /HĐCGCN)- Căn cứ chương... phần... của Bộ luật dân sự.- Căn cứ nghị định số 63/CP ngày 28/10/1996.- Căn cứ thông tư số 3055/BKHCNMT ngày 31/12/1996.(Đối với trường hợp luật điều chỉnh là luật Việt Nam)

Hôm nay, ngày... tháng... năm 2000, chúng tôi gồm:

Bên chuyển giao: (bên A)- Tên doanh nghiệp:- Trụ sở chính:- Điện thoại: - Tài khoản số:- Đại diện là:- Theo giấy uỷ quyền số (nếu có):

Bên nhận chuyển giao: (bên B)- Tên doanh nghiệp:- Trụ sở chính:- Điện thoại: - Tài khoản số:- Đại diện là:- Theo giấy uỷ quyền số (nếu có):

Hai bên cam kết các điều khoản sau

Socialist Republic of Vietnam Independence - Freedom - Happiness

TECHNOLOGY TRANSFER AGREEMENT (No. :.... / HDCGCN) - Pursuant to Chapter ... the ... of the Civil Code. - Pursuant to Decree No. 63/CP dated 28/10/1996. - Pursuant to Circular No. 3055/BKHCNMT on 31/12/1996. (For the case law governing the law of Vietnam) Today, on ... May ... in 2000, we are: The transferor: (side A) - Name: - Head Office - Tel: - Account No: - Representatives are: - The authorization number (if any): Licensees: (side B) - Name: - Head Office - Tel: - Account No: - Representatives are: - The authorization number (if any): The two sides pledged to the following amounts

Điều 1: Đối tuợng chuyển giao- Tên (sáng chế, giải pháp hữu ích, nhãn hiệu hàng hoá, bí quyết công nghệ):- Đặc điểm công nghệ: - Kết quả áp dụng công nghệ:- Căn cứ chuyển giao (số văn bằng bảo hộ nếu có):

Điều 2: Chất lượng, nội dung công nghệ- Công nghệ đạt tiêu chuẩn gì?- Mô tả nội dung và tính năng của công nghệ:

Điều 3: Phạm vi và thời hạn chuyển giao- Phạm vi: Độc quyền hay không độc quyền? Sử dụng trong lãnh thổ nào?- Thời hạn chuyển giao: Do hai bên thoả thuận phù hợp với thời hạn mà đối tượng chuyển giao được bảo hộ (nếu có).

Điều 4: Địa điểm và tiến độ chuyển giao1. Địa điểm: 2. Tiến độ:Điều 5: Thời hạn bảo hành công nghệ

Article 1: to be assigned - Name (invention, utility solution, trademark, trade secret): - Technology Features: - The results of applying the technology: - Pursuant to the transfer (of degree of protection if any): Article 2: The quality, content and technology - what technology standards? - Describe the content and features of the technology: Article 3: Scope and time of delivery - Scope: Monopoly or exclusive? Use of territory? - Time of delivery: As the mutually agreed time limit that matches the object transfer protection (if any).

Article 4: Location and schedule a delivery. Location: 2. Schedule: Article 5: The warranty period technology Article 6: Price of technology transfer and payment methods - Rates Available: - Payment: Article 7: The scope and extent of confidentiality of the parties Article 8: The obligation to protect the technology of communication and the communication nhanchuyen Article 9: Acceptance of the results of technology transfer Article 10: Improved technology transfer of the transferee of any

Điều 6: Giá chuyển giao công nghệ và phương thức thanh toán- Giá chuyển giao:- Phương thức thanh toán:

Điều 7: Phạm vi, mức độ giữ bí mật của các bên

Điều 8: Nghĩa vụ bảo hộ công nghệ của bên giao và bên nhậnchuyển giao

Điều 9: Nghiệm thu kết quả chuyển giao công nghệ

Điều 10: Cải tiến công nghệ chuyển giao của bên nhận chuyển giaoMọi cải tiến của bên nhận chuyển giao đối với công nghệ chuyển giao thuộc quyền sở hữu của bên nhận chuyển giao.

improvement for licensees technology transfer of ownership of the transferee.

Điều 11: Cam kết của bên chuyển gíao về đào tạo nhân lực cho thực hiện công nghệ chuyển giao- Số luợng:- Thời gian:- Chi phí đào tạo:

Điều 12: Quyền và nghĩa vụ của các bên1. Bên chuyển giao- Cam kết là chủ sở hữu hợp pháp của công nghệ chuyển giao và việc chuyển giao công nghệ sẽ không xâm phạm quyền sở hữu công nghiệp của bất kỳ bên thứ 3 nào khác. Bên chuyển giao có trách nhiệm, với chi phí của mình, giải quyết mọi tranh chấp phát sinh từ việc chuyển giao công nghệ theo hợp đồng này.- Có nghĩa vụ hợp tác chặt chẽ và giúp đỡ bên nhận chuyển giao chống lại mọi sự xâm phạm quyền sở hữu từ bất kỳ bên thứ 3 nào khác.- Đăng ký hợp đồng chuyển giao công nghệ.- Nộp thuế chuyển giao công nghệ.- Có quyền/không được chuyển giao công nghệ trên cho bên thứ 3 trong phạm vi lãnh thổ quy định trong hợp đồng này. 2. Bên nhận chuyển giao- Cam kết chất lượng sản phẩm sản xuất theo công nghệ nhận chuyển nhượng không thấp hơn chất lượng sản phẩm do bên chuyển giao sản xuất. Phương pháp đánh giá chất lượng do hai bên thoả thuận.- Trả tiền chuyển giao theo hợp đồng.- Không được phép/được phép chuyển giao lại cho bên thứ 3 công nghệ trên.- Ghi chú xuất xứ công nghệ chuyển giao trên sản phẩm.- Đăng ký hợp đồng (nếu có thoả thuận).

Article 11: Commitments of the transfer of personnel training for the implementation of technology transfer - Quantity: - Time: - Cost of training:

Article 12: Rights and obligations of the parties 1. The transferor - Commitment is the legal owner of the technology transfer and technology transfer will not infringe industrial property rights of any other third party. The transferor is responsible, with their costs and settle any disputes arising from technology transfer under this contract.- Be obliged to cooperate closely and assist licensees against any infringement of property rights from any other third party. - Registration of technology transfer contracts. - Tax payment technology transfer. - Having the right / not transfer the technology to third party within the territory specified in this contract.2. Licensees - Commitment to quality products produced by the transfer of technology does not lower the quality of products produced by the transferor. Quality assessment method shall be mutually agreed upon. - Transfer payments under the contract. - Not allowed / permitted to transfer back to the third party technologies. - Note the origin of technology transfer products. - Sign a contract (if agreed).

Điều 13: Sửa đổi, đình chỉ hoặc huỷ bỏ hợp đồng

Article 13: To amend, suspend or cancel the contract, the Contract may be amended and

Hợp đồng có thể bị sửa đổi, bổ sung theo yêu cầu bằng văn bản của một trong các bên và được đại diện hợp pháp của các bên ký kết bằng văn bản. Các điều khoản sửa đổi, bổ sung có hiệu lực từ thời điểm được sửa đổi. Hợp đồng bị chấm dứt trong các trường hợp sau đây: - Hết thời hạn ghi trong hợp đồng.- Quyền sở hữu công nghiệp bị đình chỉ hoặc huỷ bỏ.- Hợp đồng không thực hiện được do nguyên nhân bất khả kháng như: thiên tai, bãi công, biểu tình, nổi loạn, chiến tranh và các sự kiện tương tự.

Điều 14: Trách nhiệm do vi phạm hợp đồng Bên nào vi phạm hợp đồng phải chịu phạt hợp đồng và bồi thường cho bên kia toàn bộ thiệt hại theo quy định của...

Điều 15: Luật điều chỉnh hợp đồngHợp đồng này được điều chỉnh bởi luật của nước...

Điều 16: Trọng tàiMọi tranh chấp phát sinh từ hợp đồng này phải được giải quyết trước hết thông qua thương lượng, hoà giải. Trong trường hợp không giải quyết được thì các bên có quyền kiện đến trọng tài quốc tế tại...

Điều 17: Điều khoản thi hành Hợp đồng được xây dựng trên cơ sở bình đẳng và tự nguyện. Hai bên cam kết thực hiện đúng và đầy đủ các điều khoản trong hợp đồng này.Hợp đồng được lập thành... (bản) bằng tiếng Anh... (bản) bằng tiếng Việt có giá trị như nhau. Mỗi bên giữ... (bản) để thi hành.

supplemented by the written request of one of the parties and legal representatives of the Contracting Parties in writing. The revised terms, additional effect from time it is modified. The contract was terminated in the following cases: - The term specified in the contract. - Industrial property rights are suspended or canceled. - Contracts were not achieved due to force majeure such as natural disasters, strikes, demonstrations, riots, war and similar events.

Article 14: Liability for breach of contract that violates the contract agreement shall be subject to fines and compensation for all damage beyond the provisions of ... Article 15: Governing Law This contract is a contract governed by the laws of the country ... Article 16: Arbitration Any dispute arising from this contract must be settled first by negotiation and conciliation. In case no settlement, the parties can sue to international arbitration in ...

Article 17: Term of contract enforcement is built on the basis of equality and voluntariness. The two sides pledged to comply with and complete the terms of this contract. The contract shall be made ... (A) in English ... (A) in the Vietnamese language has equal value. Each party shall keep ... (A) to implement.

Cộng hoà xã hội chủ nghĩa Việt NamĐộc lập - Tự do - Hạnh phúc

HỢP ĐỒNG CHUYỂN GIAO CÔNG NGHỆ

(Số:.... /HĐCGCN)- Căn cứ chương... phần... của Bộ luật dân sự.- Căn cứ nghị định số 63/CP ngày 28/10/1996.- Căn cứ thông tư số 3055/BKHCNMT ngày 31/12/1996.(Đối với trường hợp luật điều chỉnh là luật Việt Nam)

Hôm nay, ngày... tháng... năm 2000, chúng tôi gồm:

Bên chuyển giao: (bên A)- Tên doanh nghiệp:- Trụ sở chính:- Điện thoại: - Tài khoản số:- Đại diện là:

- Theo giấy uỷ quyền số (nếu có):

Bên nhận chuyển giao: (bên B)- Tên doanh nghiệp:- Trụ sở chính:- Điện thoại: - Tài khoản số:- Đại diện là:- Theo giấy uỷ quyền số (nếu có):

Hai bên cam kết các điều khoản sauĐiều 1: Đối tuợng chuyển giao- Tên (sáng chế, giải pháp hữu ích, nhãn hiệu hàng hoá, bí quyết công nghệ):- Đặc điểm công nghệ: - Kết quả áp dụng công nghệ:- Căn cứ chuyển giao (số văn bằng bảo hộ nếu có):

Điều 2: Chất lượng, nội dung công nghệ- Công nghệ đạt tiêu chuẩn gì?- Mô tả nội dung và tính năng của công nghệ:

Điều 3: Phạm vi và thời hạn chuyển giao- Phạm vi: Độc quyền hay không độc quyền? Sử dụng trong lãnh thổ nào?- Thời hạn chuyển giao: Do hai bên thoả thuận phù hợp với thời hạn mà đối tượng chuyển giao được bảo hộ (nếu có).

Điều 4: Địa điểm và tiến độ chuyển giao1. Địa điểm: 2. Tiến độ:Điều 5: Thời hạn bảo hành công nghệ

Điều 6: Giá chuyển giao công nghệ và phương thức thanh toán- Giá chuyển giao:- Phương thức thanh toán:

Điều 7: Phạm vi, mức độ giữ bí mật của các bên

Điều 8: Nghĩa vụ bảo hộ công nghệ của bên giao và bên nhậnchuyển giao

Điều 9: Nghiệm thu kết quả chuyển giao công nghệ

Điều 10: Cải tiến công nghệ chuyển giao của bên nhận chuyển giaoMọi cải tiến của bên nhận chuyển giao đối với công nghệ chuyển giao thuộc quyền sở hữu của bên nhận chuyển giao.

Điều 11: Cam kết của bên chuyển gíao về đào tạo nhân lực cho thực hiện công nghệ chuyển giao- Số luợng:- Thời gian:- Chi phí đào tạo:

Điều 12: Quyền và nghĩa vụ của các bên1. Bên chuyển giao- Cam kết là chủ sở hữu hợp pháp của công nghệ chuyển giao và việc chuyển giao công nghệ sẽ không xâm phạm quyền sở hữu công nghiệp của bất kỳ bên thứ 3 nào khác. Bên chuyển giao có trách nhiệm, với chi phí của mình, giải quyết mọi tranh chấp phát sinh từ việc chuyển giao công nghệ theo hợp đồng này.

- Có nghĩa vụ hợp tác chặt chẽ và giúp đỡ bên nhận chuyển giao chống lại mọi sự xâm phạm quyền sở hữu từ bất kỳ bên thứ 3 nào khác.- Đăng ký hợp đồng chuyển giao công nghệ.- Nộp thuế chuyển giao công nghệ.- Có quyền/không được chuyển giao công nghệ trên cho bên thứ 3 trong phạm vi lãnh thổ quy định trong hợp đồng này. 2. Bên nhận chuyển giao- Cam kết chất lượng sản phẩm sản xuất theo công nghệ nhận chuyển nhượng không thấp hơn chất lượng sản phẩm do bên chuyển giao sản xuất. Phương pháp đánh giá chất lượng do hai bên thoả thuận.- Trả tiền chuyển giao theo hợp đồng.- Không được phép/được phép chuyển giao lại cho bên thứ 3 công nghệ trên.- Ghi chú xuất xứ công nghệ chuyển giao trên sản phẩm.- Đăng ký hợp đồng (nếu có thoả thuận).

Điều 13: Sửa đổi, đình chỉ hoặc huỷ bỏ hợp đồng Hợp đồng có thể bị sửa đổi, bổ sung theo yêu cầu bằng văn bản của một trong các bên và được đại diện hợp pháp của các bên ký kết bằng văn bản. Các điều khoản sửa đổi, bổ sung có hiệu lực từ thời điểm được sửa đổi. Hợp đồng bị chấm dứt trong các trường hợp sau đây: - Hết thời hạn ghi trong hợp đồng.- Quyền sở hữu công nghiệp bị đình chỉ hoặc huỷ bỏ.- Hợp đồng không thực hiện được do nguyên nhân bất khả kháng như: thiên tai, bãi công, biểu tình, nổi loạn, chiến tranh và các sự kiện tương tự.

Điều 14: Trách nhiệm do vi phạm hợp đồng Bên nào vi phạm hợp đồng phải chịu phạt hợp đồng và bồi thường cho bên kia toàn bộ thiệt hại theo quy định của...

Điều 15: Luật điều chỉnh hợp đồngHợp đồng này được điều chỉnh bởi luật của nước...

Điều 16: Trọng tàiMọi tranh chấp phát sinh từ hợp đồng này phải được giải quyết trước hết thông qua thương lượng, hoà giải. Trong trường hợp không giải quyết được thì các bên có quyền kiện đến trọng tài quốc tế tại...

Điều 17: Điều khoản thi hành Hợp đồng được xây dựng trên cơ sở bình đẳng và tự nguyện. Hai bên cam kết thực hiện đúng và đầy đủ các điều khoản trong hợp đồng này.Hợp đồng được lập thành... (bản) bằng tiếng Anh... (bản) bằng tiếng Việt có giá trị như nhau. Mỗi bên giữ... (bản) để thi hành.

Bên A Bên B

Translate into EnglishTranslate into English

CONTRACT FOR THE PURCHASE OF RICE

No.018VNF/1999

BetweenGALLUCK LIMITED

Flat A.3/F, Causeway Tower,16 -22 Causeway Road

Causeway Bay HONGKONG

HỢP ĐỒNG MUA BÁN GẠOSố 018/NVF-GL 1999

Giữa GALLUCK LIMITEDPhòng A.3/F, Causeway Tower,16 -22 Ðường Causeway Vịnh Causeway HONGKONGTel: 8479900, 8976422: Fax: 4839200Telex: 57889 WSGTC HK ( sau đây gọi là

Tel: 8479900, 8976422: Fax: 4839200 ( hereinafter called the Buyer)

And HANOI FOOD EXPORT IMPORT

COMPANY40 Hai Ba Trung Street, Hanoi VIETNAM

Tel: 328999, Telex: 328492 - VNF VTEmail :

WWW.VINAFOODHN@Yahoo.com (hereinafter called the Seller)

It has been mutually agreed to the sale and purchase of rice on the terms and conditions as follows:

1. Commodity: Vietnamese White Rice2. Specification:- Brokens: 35% max- Moisture: 14,5%- Foreign matter: 0,4%- Crop: 2009-20103. Quantity: 100,000 MT more or less 5%

at Seller's option4. Price: 200 USD per metrric ton net for

June - Sepember 2009 shipments,a- Dunnage, bamboomat for

Shipowner's/Buyer's accountb-Shore tally to be at Seller's accountc-Vessel's tally to be at Buyer's/

Shipowner's accountd- All export duties, taxes, levied in the

country of origin to be at Seller's accounte- All import duties, taxes, levied in the

country of destination and outside Vietnam shall be for Buyer's account.

người Mua)VàCông ty xuất nhập khẩu lương thực Hà Nội40 đường Hai Ba Trung , Hà Nội

VIETNAMTel: 328999, Telex: 328492 - VNF VTÐịa chỉ điện tín : VINAFOOD HANOI

( sau đây gọi là người Bán)Hai bên cùng đồng ý đối với hợp đồng mua

và bán gạo trên cơ sở điều kiện như sau:1. Hàng hoá: Gạo trắng Việt Nam2. Quy cách phẩm chất:- Tấm: tối đa 35% - Thuỷ phần: tối đa 14,5%- Tạp chất: tối đa 0,4%- Gạo vụ mùa 1998-19993. Số lượng: 100.000 MT trên dưới 5%

theo sự lựa chọn của người bán4. Giá cả: 2USD một MT( tịnh) giao hàng

tháng 6 đến tháng 9- 1999a- Lót hàng, phên cói tính vào tài khoản

của chủ tàu/ người muab- Chi phí kiểm kiện ở trên cầu cảng đi

được tính vào tài khoản của người bán (do người bán chịu)

c- Chi phí kiểm kiện trên tàu được tính vào tài khoản của người mua/ chủ tàu

d- Tất cả các khoản thuế xuất khẩu ở nước xuất xứ do người bán chịu

e- Tất cả các khoản thuế nhập, thuế khác ở nước đến ... và ở các nước bên ngoài Việt Nam sẽ được tính vào tài khoản của người mua

5. Time of shipment: 20 – 25 days after L/C opening date

6. Packing: Rice to be packed in single jute new bags of 50 kgs net each, about 50.6 kgs gross each, hand-sewn at mouth with jute twine thread suitable for rough handling and sea transportation. The Seller will supply 0.2% of new jute bags free of charge out of quantity of bags shipped

7. Insurance: To be arranged by the Buyer8. Inspection and fumigationa- The certificate of quality, weight and

packing issued by Vinacontrol at loading port to be final and for Seller's account

b- Fumigation to be effected on board the vessel after completion of loading with expenses to be at Seller's account. But expenses for crew on shore during the fumigation period including transportation, accommodation and meals at hotel for Ship owner's account

c- Time for fumigation not to count as laytime

9. Loading terms:a- Buyer shall advise vessel's ETA and its

5. Thời hạn giao hàng: 20-25 ngày sau ngày mở L/C

6. Bao bì: Gạo phải được đóng trong bao đay mới trọng lượng tịnh mỗi bao 50kg, khoảng 50,6 kg cả bì, khâu tay ở miệng bằng chỉ đay xe đôi thích hợp cho việc bốc vác và vận tải đường biển; người bán sẽ cung cấp 0,2% bao đay mới miễn phí ngoài tổng số bao được xếp trên tàu.

7. Bảo hiểm: Người mua sẽ chịu8. Kiểm tra và xông khói:a- Giấy chứng nhận chất lượng, trọng

lượng và bao bì do Vinacontrol cấp ở cảng xếp hàng hóa tính chất chung thẩm và chi phí do người bán chịu

c- Thời gian xông khói không tính là thời gian xếp hàng

9. Các điều khoản về xếp hàng:a. Người mua sẽ thông báo ETA của con

tàu và các nội dung chi tiết của nó 15 ngày ( sau khi tàu nhổ neo) và thuyền trưởng sẽ thông báo ETA của tàu, khối lượng sẽ được xếp lên tàu và những thông tin cần thiết khác 72/48/24 giờ trước khi tàu đến cảng xếp hàng

b- Thời gian xếp hàng bắt đàu tính từ 1h

particulars 15 days and Captain shall inform vessel's ETA, quantity to be loaded and other necessary imformation 72/48/24 hours before the vessel's arrival at loading port

b- Laytime to commence at 1.pm if N.O.R given before noon and at 8. AM next working day if NOR given in the afternoon during office hours. In case, vessel waiting for berth due to congestion, time commence to count 72 hours after N.O.R submitted

c- Loading rate: 800 MT per weather working day of 24 consecutive hours Sundays, holidays excepted even if used, based on the use of at least four to five normal working hatches/holds and all cranes /derricks and winches available in good order, if less than prorata

d- Seller shall arrange one safe berth of one safe port for the vessel of 10,000 - 20,000 MT capacity to load the cargo

e- Time between 17.00 PM on Saturday and the day preceeding a holiday until 8.AM next working day not to count as laytime even if used

f- Before submitting N.O.R., the vessel must be in free pratique. Immediately after vessel at berth, captain shall request Vinacontrol to inspect the hatches/holds and issue a cetificate certifying the hatches/ holds are clean, dry, free from harmful factions and suitable for goods loading with such expensses to be at ship owner's account and time not to count as laytime

g- Demurrage/Despatch of any, to be as per C/P rate

But maximum 4,000/ 2,000 USD per day or prorata and to be settled directedly between Seller and Buyer within 90 days after B/L date

h- For the purpose of obtaining shipping Documents such as:

- Commercial Invoices- Cetificate of quality, weight and packing- Certificate of originThe responsible party shall Cable/ Telex/

Fax advising shipment particulars within 24 hours after completion of loading

In order for the Buyer to obtain insurance, a Bill of Lading shall be issued immediately after completion of loading and before fumigatiooon and provided immediately to the Buyer

i- In case, cargo is ready for shipment as scheduled in this contract, but the Buyer fails to nominate the vesel to load, then all risks, damages, and associated expenses for cargo to be borne by the Buyer based on the Seller's actual claim. In the event no cargo is available to be loaded on the nominated vessel at the loading port, then dead freight to be paid by Seller based on Buyer's actual claim and the Buyer will submit the following documents to Vietcombank

trưa nếu NOR được trao trước buổi trưa và từ 8h sáng của ngày làm việc tiếp theo nếu như NOR được trao vào buổi chiều trong giờ làm việc, trong trường hợp tàu đợi để thả neo vì cảng tắc nghẽn thì thời gian xếp hàng được tính sau 72 giờ kể từ khi trao NOR

c- Tốc độ xếp hàng: 800 MT mỗi ngày làm việc liên tục 24h thời tiết cho phép làm việc , chủ nhật, ngày nghỉ được trừ ra thậm chí nếu có sử dụng, trên cơ sở có ít nhất từ 4 đến 5 hầm tàu/hầm hàng làm việc bình thường và tất cả các cần cẩu/cần trục và cuộn dây tời sẵn sàng trong trạng thái tốt, nếu ít hơn thì tính theo tỷ lệ

d- Người bán sẽ thu xếp một địa điểm bỏ neo an toàn tại một cảng an toàn cho con tàu có sức chứa từ 10.000 MT - 20.000 MT để bốc hàng

e- Khoảng thời gian từ 17h chiều thứ bảy và ngày trước một ngày nghỉ cho đến 8 sáng của ngày làm việc tiếp theo không tính là thời gian xếp hàng thậm chí có sử dụng

f- Trước khi trao NOR, con tàu phải có giấy quá cảng, ngay sau khi tàu cập cảng ( bỏ neo) , thuyền trưởng sẽ yêu cầu Vinacontrol kiểm tra các hầm tàu/hầm hàng và cấp giấy chứng nhận các hầm tàu/hầm hàng sạch khô, không có tác nhân gây hại và thích hợp để chở lương thực và những chi phí như vậy sẽ được tính vào tài khoản của chủ tàu và thời gian không tính là thời gian xếp hàng

g- Phạt xếp hàng chậm/ thưởng xếp hàng nhanh nếu có, sẽ theo như mức quy định trong hợp đồng thuê tàu chuyến; nhưng tối đa là 4.000/2.000 USD một ngày hoặc tính theo tỷ lệ và phải được giải quyết ( thanh toán ) trực tiếp giữa người mua và người bán trong vòng 90 ngày kể từ ngày kí B/L

h- Ðể có được những chứng từ giao hàng như:

-Các hoá đơn thương mại- Giấy chứng nhận chất lượng, trọng lượng

và bao bì- Giấy chứng nhận xuất xứBên có trách nhiệm phải thông báo các chi

tiết về giao hàng bằng điện tín /telex/fax trong vòng 24h sau khi hoàn thành giao hàng

Vận đơn sẽ được cấp ngày sau khi hoàn thành việc giao hàng và trước khi xông khói và được giao ngay cho người mua để mua bảo hiểm

i- Trong trường hợp hàng hoá đã sẵn sàng để xếp lên tàu như đã được dự định trong hợp đồng này nhưng người mua không chỉ định tàu để bốc hàng thì tất cả rủi ro, thiệt hại, những chi phí có liên quan đến hàng hoá do người mua chịu trên cơ sở đòi bồi thường thực tế của người bán ;ngược lại, nếu không hàng hoá để bốc lên tàu đã được chỉ định ở cảng bốc hàng, thì cước khống sẽ do người bán trả trên cở sở bản đòi bồi thường thực tế của người mua và người mua sẽ

for receiving P.B: ( time counted : 20 -25 days from L/C opening date):

- N.O.R. with seller's signature- Report signed by the Captain and the

Seller confirming that the vessel has already arrived at the port to receive the

cargo but the Seller has no cargo to load- Vietcombank's confirmation

xuất trình những chứng từ sau cho Vietcombank để nhận P.B. ( thời gian được tính từ 20-25 ngày kể từ ngày mở L/C)

- NOR có chữ kí của người bán- Biên bản được kí giữa thuyền trưởng và người bán xác nhận rằng con tàu đã được chỉ định đã đến cảng xếp hàng để nhận số hàng trong hợp đồng nhưng người bán không có hàng để bốc lên tàu xác nhận của Vietcombank

10. Payment:a- After signing the contract, the Buyer or

the Buyer's nominee ( SHYE LIAN( HK) MANUFACTURING CO.LTD OR OTHER NOMINEE) will telex asking the Seller to open P.B. of 1% of total L/C amoount at Vietcombank Hanoi within two days thereof the Seller open P.B. and in form the Buyer, then, four days after receiving Vietcombank 's confirmation, the Buyer will open a telegraphic, irrevocable and confirmed L/C which is in conformity with this contract by an international first class bank at sight with T.T.R. acceptable for 40,000 MT in favour of Vinafood Hanoi through the Bank for Foreign Trade of Vietnam

For 60,000 MT the Buyer or Buyer's nominee will open a telegraphic, irrevocable and transferable at sight L/C which is in conformity with this contract with T.T.R. accepable. In case, the Seller requests the confirmation of L/C, the L/C will be confirmed for Seller's account

In the event that the Buyer fails to open L/C four days after receiving confirmation from Vietcombank then the Seller shall collect P.B. from the Vietcombank and then the contract is automatically cancelled

The Seller will collect the P.B. against presentation of shipping documents at Vietcombank

b- Presentation of the following documents to the Bank for Foreign Trade of Vietnam, payable within 3-5 banking days after reciept of the telex from Vietcombank cetifying that documents have been checked in conformity with the L/C terms:

- Full set of Clean on board B/L in three ( 3) originals marked Freight to collect

- Commercial invoice in three (3) folds- Certificates of quality, weight and

packing issued by Vinaconntrol to be final at loading port in six ( 6) folds

- Certificate of fumigation issued by VIetnam Chamber of Commerce in six (6) folds

- Phytosanitary certificate issued by the Competent authority of Vietnam in six (6) folds

- Cable/ Telex/ Fax advising shipment Particulars within 24 hours after completion of loading

10. Thanh toán:a- Sau khi kí kết hợp đồng này, người mua

hoặc người bán được chỉ định của người mua ( SHYE LIAN(HK)- MANUFATURING CO.LTD hoặc người được chỉ định khác) sẽ telex đề nghị người bán mở P.B. với 1% tổng giá trị LC tại Vietcombank Hà Nội trong vòng 2 ngày người bán sẽ mở P.B. và thông báo cho người mua, sau đó, 4 ngày sau khi nhận được xác nhận của Vietcombank, người mua sẽ mở một L/C được xác nhận không huỷ ngang bằng điện tín phù hợp với hợp đồng này tại ngân hàng quốc tế hạng nhất thanh toán bằng T.T.R có thể chấp nhận được đối với 40.000 MT cho Vinafood Hanoi hưởng qua ngân hàng Ngoại thương Việt Nam

Ðối với 60.000 MT người bán cũng chấp nhận rằng người mua hoặc người chỉ định của người mua sẽ mở một thư tín dụng thanh toán ngay có thể chuyển nhượng được không huỷ ngang bằng điện báo không phù hợp với hợp đồng này có thể chấp nhận với chuyển tiền bằng điện. trong trường hợp người bán yêu cầu xác nhận L/C, L/C sẽ được xác nhận với chi phí của người bán.

Trong trường hợp bốn ngày kể từ ngày người mua nhận được xác nhận của Vietcombank, nhưng L/C không được mở thì người bán sẽ thu hồi P.B từ Vietcombank và sau đó hợp đồng tự động được huỷ bỏ.

Người bán sẽ thu hồi P.B trên cơ sở xuất trình các chứng từ vận tải cho Vietcombank

b- Việc xuất trình những chứng từ sau đây cho ngân hàng Ngoại thương Việt Nam, được thanh toán trong vòng 3-5 ngày làm việc của ngân hàng sau khi nhận được bức telex đã được kiểm tra từ Vietcombank chứng tỏ rằng những chứng từ này đã được kiểm tra và phù hợp với các điều khoản của L/C

- Một bộ đầy đủ vận đơn sạch đã xếp hàng lên tàu ba bản gốc có ghi Cước phí trả sau

- Hoá đơn thương mại làm thành ba bản - Giấy chứng nhận chất lượng, trọng lượng

và bao bì do Vinacontrol cấp ở cảng bốc hàng sẽ có giá trị pháp lí cuối cùng được làm thành sáu bản

- Những chi tiết thông báo gửi hàng bằng điện tín/Telex/Fax trong vòng 24h sau khi hoàn

11. Force Majeure:The Force Majeure( exemptions) clause of

the international Chamber of Commerce (ICC publication No. 421) is hereby incorporated on this contract

12. Arbitration:Any discrepancies and/or disputes arising

out or in connection with this contract not settled amicably shall be referred to Arbitration accordance with the Rules and Practices of the International Chamber of Commerce in Paris or such other place agreed by both sides

13. Other terms:Any amendment of the terms and

conditions of this contract must be agreed to by both sides in writting

This contract is made in 06 originals in the English language, three for each party

This is subject to the Buyer's final confirmation by telex (June 18th, 1999 latest)

Made in Hanoi, on 9th June, 1999

thành việc bốc hàng11. Bất khả khángÐiều khoản bất khả kháng của Phòng

Thương mại quốc tế ( ICC ấn phẩm số 421) theo hợp đồng này được kết hợp thành 1 bộ phận trong hợp đồng này

12. Trọng tài:Bất cứ sự khác biệt và/hoặc tranh chấp nào

phát sinh từ và trong quan hệ với hợp đồng này mà không được giải quyết bằng thương lượng sẽ phải đưa ra xử theo luật và tập quán trọng tài của Phòng Thương Mại quốc tế ở Paris hợc những nơi khác do hai bên thoả thuận

13. Các điều khoản khác:Bất cứ sự sửa đổi điều khoản và điều kiện

nào của hợp đồng này phải được hai bên thoả thuận bằng văn bản

Hợp đồng này được làm thành 6 bản gốc bằng tiếng Anh, 3 bản cho mỗi bên

Hợp đồng này phụ thuộc vào xác nhận cuối cùng của người mua bằng telex ( 18 tháng 6 năm 1999 là muộn nhất)Ðược làm ở Hà Nội, ngày 9 tháng 6 năm 1999

CONTRACT FOR THE PURCHASE OF RICENo.018VNF/1999

BetweenGALLUCK LIMITED

Flat A.3/F, Causeway Tower,16 -22 Causeway Road

Causeway Bay HONGKONGTel: 8479900, 8976422: Fax: 4839200

( hereinafter called the Buyer)And

HANOI FOOD EXPORT IMPORT COMPANY40 Hai Ba Trung Street, Hanoi VIETNAM

Tel: 328999, Telex: 328492 - VNF VTEmail : WWW.VINAFOODHN@Yahoo.com (hereinafter called the Seller)

It has been mutually agreed to the sale and purchase of rice on the terms and conditions as follows:

1. Commodity: Vietnamese White Rice2. Specification:- Brokens: 35% max- Moisture: 14,5%- Foreign matter: 0,4%- Crop: 2009-20103. Quantity: 100,000 MT more or less 5% at Seller's option4. Price: 200 USD per metrric ton net for June - Sepember 2009 shipments,a- Dunnage, bamboomat for Shipowner's/Buyer's accountb-Shore tally to be at Seller's accountc-Vessel's tally to be at Buyer's/ Shipowner's accountd- All export duties, taxes, levied in the country of origin to be at Seller's accounte- All import duties, taxes, levied in the country of destination and outside Vietnam shall be for

Buyer's account.5. Time of shipment: 20 - 25 days after L/C opening date

6. Packing: Rice to be packed in single jute new bags of 50 kgs net each, about 50.6 kgs gross each, hand-sewn at mouth with jute twine thread suitable for rough handling and sea transportation. The Seller will supply 0.2% of new jute bags free of charge out of quantity of bags shipped

7. Insurance: To be arranged by the Buyer8. Inspection and fumigationa- The certificate of quality, weight and packing issued by Vinacontrol at loading port to be

final and for Seller's accountb- Fumigation to be effected on board the vessel after completion of loading with expenses to

be at Seller's account. But expenses for crew on shore during the fumigation period including transportation, accommodation and meals at hotel for Ship owner's account

c- Time for fumigation not to count as laytime9. Loading terms:a- Buyer shall advise vessel's ETA and its particulars 15 days and Captain shall inform vessel's

ETA, quantity to be loaded and other necessary imformation 72/48/24 hours before the vessel's arrival at loading port

b- Laytime to commence at 1.pm if N.O.R given before noon and at 8. AM next working day if NOR given in the afternoon during office hours. In case, vessel waiting for berth due to congestion, time commence to count 72 hours after N.O.R submitted

c- Loading rate: 800 MT per weather working day of 24 consecutive hours Sundays, holidays excepted even if used, based on the use of at least four to five normal working hatches/holds and all cranes /derricks and winches available in good order, if less than prorata

d- Seller shall arrange one safe berth of one safe port for the vessel of 10,000 - 20,000 MT capacity to load the cargo

e- Time between 17.00 PM on Saturday and the day preceeding a holiday until 8.AM next working day not to count as laytime even if used

f- Before submitting N.O.R., the vessel must be in free pratique. Immediately after vessel at berth, captain shall request Vinacontrol to inspect the hatches/holds and issue a cetificate certifying the hatches/ holds are clean, dry, free from harmful factions and suitable for goods loading with such expensses to be at ship owner's account and time not to count as laytime

g- Demurrage/Despatch of any, to be as per C/P rateBut maximum 4,000/ 2,000 USD per day or prorata and to be settled directedly between Seller

and Buyer within 90 days after B/L dateh- For the purpose of obtaining shipping Documents such as:- Commercial Invoices- Cetificate of quality, weight and packing- Certificate of originThe responsible party shall Cable/ Telex/ Fax advising shipment particulars within 24 hours

after completion of loadingIn order for the Buyer to obtain insurance, a Bill of Lading shall be issued immediately after

completion of loading and before fumigatiooon and provided immediately to the Buyeri- In case, cargo is ready for shipment as scheduled in this contract, but the Buyer fails to

nominate the vesel to load, then all risks, damages, and associated expenses for cargo to be borne by the Buyer based on the Seller's actual claim. In the event no cargo is available to be loaded on the nominated vessel at the loading port, then dead freight to be paid by Seller based on Buyer's actual claim and the Buyer will submit the following documents to Vietcombank for receiving P.B: ( time counted : 20 -25 days from L/C opening date):

- N.O.R. with seller's signature- Report signed by the Captain and the Seller confirming that the vessel has already arrived at

the port to receive thecargo but the Seller has no cargo to load- Vietcombank's confirmation10. Payment:a- After signing the contract, the Buyer or the Buyer's nominee ( SHYE LIAN( HK)

MANUFACTURING CO.LTD OR OTHER NOMINEE) will telex asking the Seller to open P.B. of 1% of total L/C amoount at Vietcombank Hanoi within two days thereof the Seller open P.B. and in form the Buyer, then, four days after receiving Vietcombank 's confirmation, the Buyer will open a telegraphic, irrevocable and confirmed L/C which is in conformity with this contract by an

international first class bank at sight with T.T.R. acceptable for 40,000 MT in favour of Vinafood Hanoi through the Bank for Foreign Trade of Vietnam

For 60,000 MT the Buyer or Buyer's nominee will open a telegraphic, irrevocable and transferable at sight L/C which is in conformity with this contract with T.T.R. accepable. In case, the Seller requests the confirmation of L/C, the L/C will be confirmed for Seller's account

In the event that the Buyer fails to open L/C four days after receiving confirmation from Vietcombank then the Seller shall collect P.B. from the Vietcombank and then the contract is automatically cancelled

The Seller will collect the P.B. against presentation of shipping documents at Vietcombankb- Presentation of the following documents to the Bank for Foreign Trade of Vietnam, payable

within 3-5 banking days after reciept of the telex from Vietcombank cetifying that documents have been checked in conformity with the L/C terms:

- Full set of Clean on board B/L in three ( 3) originals marked Freight to collect- Commercial invoice in three (3) folds- Certificates of quality, weight and packing issued by Vinaconntrol to be final at loading port

in six ( 6) folds- Certificate of fumigation issued by VIetnam Chamber of Commerce in six (6) folds- Phytosanitary certificate issued by the Competent authority of Vietnam in six (6) folds- Cable/ Telex/ Fax advising shipment Particulars within 24 hours after completion of loading11. Force Majeure:The Force Majeure( exemptions) clause of the international Chamber of Commerce (ICC

publication No. 421) is hereby incorporated on this contract12. Arbitration:Any discrepancies and/or disputes arising out or in connection with this contract not settled

amicably shall be referred to Arbitration accordance with the Rules and Practices of the International Chamber of Commerce in Paris or such other place agreed by both sides

13. Other terms:Any amendment of the terms and conditions of this contract must be agreed to by both sides in

writtingThis contract is made in 06 originals in the English language, three for each partyThis is subject to the Buyer's final confirmation by telex (June 18th, 1999 latest)

Made in Hanoi, on 9th June, 1999For the Seller

Director (signed/sealed)

Nguyen Duc

For the BuyerManaging Director

(signed)S.Y.Chan

Hợp đồng mua bán gạo (bản tiếng Việt)

HỢP ĐỒNG MUA BÁN GẠOSố 018/NVF-GL 1999

Giữa GALLUCK LIMITEDPhòng A.3/F, Causeway Tower,16 -22 Ðường Causeway Vịnh Causeway HONGKONGTel: 8479900, 8976422: Fax: 4839200Telex: 57889 WSGTC HK ( sau đây gọi là người Mua)VàCông ty xuất nhập khẩu lương thực Hà Nội40 đường Hai Ba Trung , Hà Nội VIETNAMTel: 328999, Telex: 328492 - VNF VTÐịa chỉ điện tín : VINAFOOD HANOI ( sau đây gọi là người Bán)Hai bên cùng đồng ý đối với hợp đồng mua và bán gạo trên cơ sở điều kiện như sau:1. Hàng hoá: Gạo trắng Việt Nam2. Quy cách phẩm chất:- Tấm: tối đa 35% - Thuỷ phần: tối đa 14,5%- Tạp chất: tối đa 0,4%

- Gạo vụ mùa 1998-19993. Số lượng: 100.000 MT trên dưới 5% theo sự lựa chọn của người bán4. Giá cả: 2USD một MT( tịnh) giao hàng tháng 6 đến tháng 9- 1999a- Lót hàng, cói tính vào tài khoản của chủ tàu/ người muab- Chi phí kiểm kiện ở trên cầu cảng đi được tính vào tài khoản của người bán (do người bán

chịu)c- Chi phí kiểm kiện trên tàu được tính vào tài khoản của người mua/ chủ tàud- Tất cả các khoản thuế xuất khẩu ở nước xuất xứ do người bán chịue- Tất cả các khoản thuế nhập, thuế khác ở nước đến ... và ở các nước bên ngoài Việt Nam sẽ

được tính vào tài khoản của người mua5. Thời hạn giao hàng: 20-25 ngày sau ngày mở L/C6. Bao bì: Gạo phải được đóng trong bao đay mới trọng lượng tịnh mỗi bao 50kg, khoảng 50,6

kg cả bì, khâu tay ở miệng bằng chỉ đay xe đôi thích hợp cho việc bốc vác và vận tải đường biển; người bán sẽ cung cấp 0,2% bao đay mới miễn phí ngoài tổng số bao được xếp trên tàu.

7. Bảo hiểm: Người mua sẽ chịu8. Kiểm tra và xông khói:a- Giấy chứng nhận chất lượng, trọng lượng và bao bì do Vinacontrol cấp ở cảng xếp hàng hóa

tính chất chung thẩm và chi phí do người bán chịuc- Thời gian xông khói không tính là thời gian xếp hàng9. Các điều khoản về xếp hàng:a. Người mua sẽ thông báo ETA của con tàu và các nội dung chi tiết của nó 15 ngày ( sau khi

tàu nhổ neo) và thuyền trưởng sẽ thông báo ETA của tàu, khối lượng sẽ được xếp lên tàu và những thông tin cần thiết khác 72/48/24 giờ trước khi tàu đến cảng xếp hàng

b- Thời gian xếp hàng bắt đàu tính từ 1h trưa nếu NOR được trao trước buổi trưa và từ 8h sáng của ngày làm việc tiếp theo nếu như NOR được trao vào buổi chiều trong giờ làm việc, trong trường hợp tàu đợi để thả neo vì cảng tắc nghẽn thì thời gian xếp hàng được tính sau 72 giờ kể từ khi trao NOR

c- Tốc độ xếp hàng: 800 MT mỗi ngày làm việc liên tục 24h thời tiết cho phép làm việc , chủ nhật, ngày nghỉ được trừ ra thậm chí nếu có sử dụng, trên cơ sở có ít nhất từ 4 đến 5 hầm tàu/hầm hàng làm việc bình thường và tất cả các cần cẩu/cần trục và cuộn dây tời sẵn sàng trong trạng thái tốt, nếu ít hơn thì tính theo tỷ lệ

d- Người bán sẽ thu xếp một địa điểm bỏ neo an toàn tại một cảng an toàn cho con tàu có sức chứa từ 10.000 MT - 20.000 MT để bốc hàng

e- Khoảng thời gian từ 17h chiều thứ bảy và ngày trước một ngày nghỉ cho đến 8 sáng của ngày làm việc tiếp theo không tính là thời gian xếp hàng thậm chí có sử dụng

f- Trước khi trao NOR, con tàu phải có giấy quá cảng, ngay sau khi tàu cập cảng ( bỏ neo) , thuyền trưởng sẽ yêu cầu Vinacontrol kiểm tra các hầm tàu/hầm hàng và cấp giấy chứng nhận các hầm tàu/hầm hàng sạch khô, không có tác nhân gây hại và thích hợp để chở lương thực và những chi phí như vậy sẽ được tính vào tài khoản của chủ tàu và thời gian không tính là thời gian xếp hàng

g- Phạt xếp hàng chậm/ thưởng xếp hàng nhanh nếu có, sẽ theo như mức quy định trong hợp đồng thuê tàu chuyến; nhưng tối đa là 4.000/2.000 USD một ngày hoặc tính theo tỷ lệ và phải được giải quyết ( thanh toán ) trực tiếp giữa người mua và người bán trong vòng 90 ngày kể từ ngày kí B/L

h- Ðể có được những chứng từ giao hàng như:-Các hoá đơn thương mại- Giấy chứng nhận chất lượng, trọng lượng và bao bì- Giấy chứng nhận xuất xứBên có trách nhiệm phải thông báo các chi tiết về giao hàng bằng điện tín /telex/fax trong vòng

24h sau khi hoàn thành giao hàngVận đơn sẽ được cấp ngày sau khi hoàn thành việc giao hàng và trước khi xông khói và được

giao ngay cho người mua để mua bảo hiểmi- Trong trường hợp hàng hoá đã sẵn sàng để xếp lên tàu như đã được dự định trong hợp đồng

này nhưng người mua không chỉ định tàu để bốc hàng thì tất cả rủi ro, thiệt hại, những chi phí có liên quan đến hàng hoá do người mua chịu trên cơ sở đòi bồi thường thực tế của người bán ;ngược lại, nếu không hàng hoá để bốc lên tàu đã được chỉ định ở cảng bốc hàng, thì cước khống sẽ do người bán trả trên cở sở bản đòi bồi thường thực tế của người mua và người mua sẽ xuất trình những chứng từ sau cho Vietcombank để nhận P.B. ( thời gian được tính từ 20-25 ngày kể từ ngày mở L/C)

- NOR có chữ kí của người bán

- Biên bản được kí giữa thuyền trưởng và người bán xác nhận rằng con tàu đã được chỉ định đã đến cảng xếp hàng để nhận số hàng trong hợp đồng nhưng người bán không có hàng để bốc lên tàu xác nhận của Vietcombank

10. Thanh toán:a- Sau khi kí kết hợp đồng này, người mua hoặc người bán được chỉ định của người mua

( SHYE LIAN(HK)- MANUFATURING CO.LTD hoặc người được chỉ định khác) sẽ telex đề nghị người bán mở P.B. với 1% tổng giá trị LC tại Vietcombank Hà Nội trong vòng 2 ngày người bán sẽ mở P.B. và thông báo cho người mua, sau đó, 4 ngày sau khi nhận được xác nhận của Vietcombank, người mua sẽ mở một L/C được xác nhận không huỷ ngang bằng điện tín phù hợp với hợp đồng này tại ngân hàng quốc tế hạng nhất thanh toán bằng T.T.R có thể chấp nhận được đối với 40.000 MT cho Vinafood Hanoi hưởng qua ngân hàng Ngoại thương Việt Nam

Ðối với 60.000 MT người bán cũng chấp nhận rằng người mua hoặc người chỉ định của người mua sẽ mở một thư tín dụng thanh toán ngay có thể chuyển nhượng được không huỷ ngang bằng điện báo không phù hợp với hợp đồng này có thể chấp nhận với chuyển tiền bằng điện. trong trường hợp người bán yêu cầu xác nhận L/C, L/C sẽ được xác nhận với chi phí của người bán.

Trong trường hợp bốn ngày kể từ ngày người mua nhận được xác nhận của Vietcombank, nhưng L/C không được mở thì người bán sẽ thu hồi P.B từ Vietcombank và sau đó hợp đồng tự động được huỷ bỏ.

Người bán sẽ thu hồi P.B trên cơ sở xuất trình các chứng từ vận tải cho Vietcombankb- Việc xuất trình những chứng từ sau đây cho ngân hàng Ngoại thương Việt Nam, được thanh

toán trong vòng 3-5 ngày làm việc của ngân hàng sau khi nhận được bức telex đã được kiểm tra từ Vietcombank chứng tỏ rằng những chứng từ này đã được kiểm tra và phù hợp với các điều khoản của L/C

- Một bộ đầy đủ vận đơn sạch đã xếp hàng lên tàu ba bản gốc có ghi Cước phí trả sau- Hoá đơn thương mại làm thành ba bản - Giấy chứng nhận chất lượng, trọng lượng và bao bì do Vinacontrol cấp ở cảng bốc hàng sẽ có

giá trị pháp lí cuối cùng được làm thành sáu bản- Những chi tiết thông báo gửi hàng bằng điện tín/Telex/Fax trong vòng 24h sau khi hoàn

thành việc bốc hàng11. Bất khả khángÐiều khoản bất khả kháng của Phòng Thương mại quốc tế ( ICC ấn phẩm số 421) theo hợp

đồng này được kết hợp thành 1 bộ phận trong hợp đồng này12. Trọng tài:Bất cứ sự khác biệt và/hoặc tranh chấp nào phát sinh từ và trong quan hệ với hợp đồng này mà

không được giải quyết bằng thương lượng sẽ phải đưa ra xử theo luật và tập quán trọng tài của Phòng Thương Mại quốc tế ở Paris hợc những nơi khác do hai bên thoả thuận

13. Các điều khoản khác:Bất cứ sự sửa đổi điều khoản và điều kiện nào của hợp đồng này phải được hai bên thoả thuận

bằng văn bảnHợp đồng này được làm thành 6 bản gốc bằng tiếng Anh, 3 bản cho mỗi bênHợp đồng này phụ thuộc vào xác nhận cuối cùng của người mua bằng telex ( 18 tháng 6 năm

1999 là muộn nhất)Ðược làm ở Hà Nội, ngày 9 tháng 6 năm 1999

Người bán Giám đốc

(đã ký/đóng dấu)Nguyễn Ðức

Người muaGiám đốc điều hành

(đã ký) Eddy.S.Y.Chan

19-24CHAPTER 1

Negotiating Delivery

Problem in negotiating delivery In many export negotiations, the two sides fail to discuss important aspects of delivery. This creates a risky, and uncertain situation if there is a delay or if delivery does not go according

to plan. How can the exporter be sure that all the necessary delivery provisions are in the contract?

The Principle. The exporter and the buyer should negotiate delivery systematically, making all necessary decisions and discussing how they will solve any problems that might arise. A step-by-step overview of the delivery procedure is an important aid to planning.

In more depthWhen an exporter and a buyer negotiate delivery, certain questions always arise. What is the date of delivery? Where must the goods be sent? Who pays for transportation? But other questions are often overlooked. One example: the transfer of risk. When exactly does the risk of owning the goods- the risk of losing them, the risk of injury to an innocent passer-by - when do such risks pass from the exporter to the buyer?

To make things clear, we’ll use a case based on the following scenario:Ayshe Aziz owns Double-A Limited., a company in Verbena that manufactures hair treatment products. A buyer from Esperanza, Tony Mino, visits Aziz to discuss the export of a trial consignment: 100 cartons of standard shampoo and 100 cartons of shampoo for dry hair. If the shampoo sells well, more orders will follow.

The idea of working in “steps” looks simple, but it seldom works out in practice: decision-making processes are nearly always “recursive”.(Recursive means that a process constantly loops back, comparing and connecting, and then recomparing and reconnecting various stages.) A logical, step-by-step sequence is suggested here to simplify discussion of the idea. After an overview of the five negotiating steps in this section, the following sections look at the issues in detail.

Step 5Step 4 TERMS OF

Step 3 RISK, TITLE TRADE Step 2 TRANSPORT AND Incoterm to

Step 1 LOCATION Mode(s) of INSURANCE be used.TIMING Place of transport Transfer Date of delivery to be used ofdelivery, &alternatives ownership.&results andof delay insurance

Step 1: Timing: When Must Delivery Take Place?The first question most negotiators tackle is when? In our scenario, Aziz and Mino are certain to discuss a delivery schedule:

♦ The date of dispatch from the factory;♦ The date of loading onto a ship;♦ The date when the goods should arrive in Esperanza.

The date of delivery lies at the heart of a sales contract because it is the key to many contract events—as we shall see in the next section. Although most negotiators fix this date, they often forget the "what-if?" questions: What if Aziz is late in sending the goods? What //there is delay in loading the goods onto the ship? What if the ship arrives late? What if the goods arrive late in Esperanza? These are questions of delay. Some kinds of delay may be excusable: for example, delay of a day or two, especially over a weekend, is often no problem for the buyer. A more serious case: if war breaks out, or if Aziz' factory is swept away by a hurricane, then both sides must accept that delivery will be late (or may not take place at all). Again, Aziz' failure to deliver is excusable. But if delivery is late and there is no reasonable excuse, what then? Delay will cost Mino money: can he reclaim part of his losses from Aziz? And, if so, how much? All these questions arise from the fundamental question when? And, as we saw in the Introduction, if the contract provides no answers, then the answers are found in the applicable law—often to the surprise of both parties. Accordingly, good negotiators regulate such matters in their agreement.8

Step 2: Location: What is the Place of Delivery?The question of where delivery takes place is not as simple as it seems on the surface. An easy case first: if I order a pizza from the local pizzarto-go, it is "delivered" when it reaches my house. If I buy a piano and the music store asks a specialist company to transport it, the piano is, again, delivered when it reaches my address. Things are different, however, if/ organize transport of the piano. In that case, delivery takes place when my friends arrive with their van at the music shop to pick up the piano. The shop will not accept liability for what my friends might do to the piano once it has left the store. This is a fair principle: the exporter should have no liability for the goods when they are beyond his control.Most international trade works on that principle: control and responsibility go together. One common pattern is for the exporter to transport the goods to the docks in his own country and for the importer to organize transport on from there. (This is the pattern of FOB delivery, as we shall see later.') Such an arrangement is usualh cheaper than if the exporter tries to organize door-to-door transportation. But, under so-called FOB deliver)', where does "delivery" take place? At Point A, B. C or D?

The answer in our case (FOB delivery) is B. But the parties are free to arrange anything that suits them. The place of delivery is doubly important to the exporter because the date of payment normally depends on the place and time delivery. At this point, too, risk and ownership often pass.10

-----------------------------------------------------------------------------------------------8 See Chapter 1. Section 2 below for detailed information. 9 See Chapter 1. Section 6 below for delivery under Incoterms10 For detailed information on risk and ownership, sec Section 3 below.

Step 3: TransportThe first question about transport is howl What mode of transport is most appropriate? From an island like Verbena, two modes of transport are available: ships and aircraft. It is unlikely that Mino will ask Aziz to ship the shampoo by air: air transport is too expensive. Sea transport is, then, the more appropriate. When goods travel by sea, they are often shipped by container. The advantages of containers are well known (lower risk of pilferage, easy traceability, smoother handling), but the economics of containerization depend largely on the size of the consignment. In practice, each consignment should be roughly one container load: a little more, and two containers will be needed at double the cost; somewhat less and the carrier is paid to transport thin air. 200 cartons of shampoo are not a large enough order to justify a container; if Aziz is a good negotiator, she will suggest that Mino increase the size of the order to create a container-load, or that he order different products to fill up the container.

Inland transport is made by road, by rail, by barge, by mail, or by a mixture: the choices are familiar.For the goods to arrive safely, correct packaging and shipping marks are essential. Such matters are often made the subject of a separate clause in the export contract because claims arising from delay or damage can be settled only if it is clear who is responsible for packing and marking.

Transportation poses a third, altogether different kind of problem: documentation. Whatever means of transport is chosen, correct documentation is essential. If payment is made by letter of credit—as is often the case— then the bank must refuse to pay if the shipping documents are in any way incorrect.11

Step 4: Transfer of Risk, Transfer of Ownership, Insurance

At the point of delivery, risk generally passes from the exporter to the buyer. What is the "risk" that passes? First, the risk of loss or damage. If the goods are smashed by a fork-lift, stolen by a stevedore or damaged by a downpour—one side must bear the loss. Similarly if the goods cause harm to a third party—for example, a consignment of corrosives left in the sun explodes and severely burns a passer-by—who pays? Negotiators often decide, for the sake of simplicity, that these risks are transferred at the point of delivery, and this, as we shall see, is the standard arrangement under the so-called Incoterms.

Obviously the issues of risk and insurance go hand in hand. A prudent businessman who faces a risk, arranges insurance.Transfer of ownership (or title as it is often called) can take place at any point between the signature of the contract and final payment for the goods. In international trade, these two points are often widely separate; the parties must decide what they want.12

Step 5: Terms of TradeAll the decisions that Aziz and Mino make about the delivery of their shampoo have been made millions of times before. For this reason, the business community has developed a kind a shorthand for standard delivery situations. Some of these shorthand expressions, FOB (free on board), for example, or CIF (cost, insurance and freight) are familiar to most businesspeople. Others, such as DDU or FCA are less well known. The advantages of using such terms are obvious: if Aziz offers the shampoo for $20 a canon FOB (Port Verbena), then Mino knows that she will transport the goods to the ship's rail at her own risk and cost. When the goods cross the ship's rail, risk as well as the cost of freight and insurance pass to him. He also knows that he is responsible for nominating the ship that will be used. And so on. One term covers a great deal of decision-making.With patterns of trade, means of transportation, and communications changing so rapidly, usage of terms of trade naturally develops differently in different parts of the world; international trade, however, needs agreed, standardized terminology. These standards are provided by the International Chamber of Commerce in Paris in its set of 13 Incoterms (International Commercial Terms) issued most recently in 1990.13

--------------------------------------------------------------------------------------------------------------------------------------11 For more information on these problems, see Section 4 of this chapter and Chapter 2 on payment12 For detailed information, sec Section 5 below. 13 For detailed information, see Section 6 below

CASE STUDYAgreed on Paper

Study the scenario, and then answer the questions.

Verbena Paper makes disposable paper plates, cups and napkins for hot-dog and hamburger stands. John Merrit, the factory manager, is negotiating for raw paper to be delivered to his factory for manufacture into paper products. The supplier is Wendell Paper Industries of Esperanza. Wendell and Verbena Paper have agreed in principle a trial delivery of 40 tons of raw paper.Which of the following decisions should the two parties make in negotiating the delivery clause? (If the issue raised is not an aspect of delivery as outlined above, the answer is No.)

1. The quality of the paper. No.2. The place of delivery. Yes3. The transfer of risk. Yes4. What to do if the ship named by buyer does not arrive. Yes5. Whether or not to ship goods in a container. Yes6. What delays in delivery will be excusable. Yes7. When payment is due. No8. Who must insure the goods up to what point. Yes9. How disputes will be settled. No10. An Incoterm. Yes11. What means of transport will be used. Yes

12. The transfer of title. Yes

25-36(I) 2 . TIMING

THE PROBLEMNaming a delivery date is the first step in negotiating the timing of an export deal. Complex issues concerning coming into force, delay and compensation for delay must also be negotiated. What are the main considerations in drafting provisions about timing and delay?

THE PRINCIPLEBecause exports are often subject to official approvals, the delivery date in many contracts depends on the receipt of the last approval. If delivery is late, the delay is classified into one of two categories, excusable and non-excusable. Excusable delay often involves a grace period and is nearly always subject to a force majeure provision 14 . Any losses to the buyer caused by non-excusable delay must be compensated. The amount of compensation is usually set in advance in a so-called “liquidated damages” provision.

IN MORE DEPTHGetting the delivery date right is a matter of managerial know-how: the exporter must know how long it takes to obtain supplies, manufacture the goods, package them, arrange pre-shipment inspection and transport them to the agreed point of delivery. First time exporters often set delivery dates that are hopelessly optimistic – and pay a heavy penalty for their

mistake. The buyer, for his part, must know exactly whenthe goods are needed: too early a date ties up money in unused goods, while delivery too late may mean big losses, especially if the goods are to be resold.

As far as the contract is concerned, the delivery date triggers many contract events: at this time, the exporter fulfills his primary duties under the contract; payment normally becomes due: risk, and often title, pass to the buyer: delay—as well as any compensation to be paid by the exporter—is reckoned from the planned date of delivery. What should the exporter know about this key date?

Naming the DateThe simplest way to fix delivery is to use a straightforward calendar date: 13th August 1995, for example. Export contracts are not always so simple, however. For example, let's say Aziz and Mino meet in Verbena in December and agree that Aziz will sell shampoo to Mino. Already it is clear to them both that a certain amount of government red-tape is unavoidable: an export license, a foreign exchange permit, and a certificate of origin are necessary. Because shampoo is a health-care product, special certification is necessary in the buyer's country. How long will it take to obtain the necessary documentation? Because nobody is sure, the parties often plan for the contract to come into existence in two steps: step one is on signature (the signature date): step two is when all the preconditions for the sale have been met (the date of coming into force).

The date of coming into force is not usually a calendar date, but the date on which the last precondition is met. Common preconditions are:

♦ Receipt of import and/or export approval;♦ Receipt of foreign exchange approval from a central bank;♦ Issuance of a letter of credit or bank guarantee;♦ Making of a down-payment by the buyer;♦ Issuance of an insurance policy:♦ Issuance of a certificate of origin;♦ Delivery by the buyer of plans, drawings or other documentation.

Negotiators often agree a cut-off date: if the contract has not come into force within a certain time, for example three months from signature, then it becomes null and void.-----------------------------------------------------------------------------------------------------------------14 The terms "grace period" and "force majeure" are explained in the following pages

A cut-off date is common in fixed-price contracts: a long delay can make the price unrealistic. A typical wording:Coming Into ForceThis agreement shall come into force after execution by both parties on the date of the last necessary approval by the competent authorities in the country of the Seller and the Buyer.If the contract has not come into force within ninety days of execution, it shall become null and void.

How does the date of coming into force affect the delivery date? The delivery date is normally fixed for a certain number of days after the contract has come into force. Let's return to our example: the central bank in Mino's country, Esperanza, often takes months to allocate foreign exchange for imports. Let's say it takes Aziz four weeks to schedule production, manufacture and ship an order. (Let's also assume that Aziz cannot supply Mino's shampoo from stock because he wants a special color.) Naturally Aziz is reluctant to begin manufacturing Mino's shampoo until his order is definite. Accordingly she fixes the date of delivery four weeks (her manufacturing period) after the date of coming into force. That way. she knows exactly where she stands. So Aziz' contract reads:The date of delivery shall be twenty eight days after the date of coming force of the contract.

Timing and "Time is of the Essence" ClausesHow important is strict adherence to the agreed deliver) date.' Sometimes, punctuality is essential. If you order a birthday cake to be delivered on your birthda;. —28th June—and the cake arrives on the 29th. it is too late. You no longer want the cake, and you can legitimately refuse to accept it. In a contract requiring absolute punctuality, lawyers sa\ that "time is of the essence of the contract"—if the time is not kept, the buyer has the right to send back the goods and refuse payment.Is time normally "of the essence" in commercial life? Most legal systems say "No." Late delivery is a nuisance, but it is rarely fatal to the buyer's purposes. This is so, even if the contract contains a clause such as:Time is and shall be of the essence of this contract.

Despite this clear wording, a judge may decide that time is not of the essence and that the buyer cannot terminate the contract. But late delivery still has expensive results for the exporter, as we shall see in a moment.One other point is worth making on the precise meaning of delivery dates. Let's say a contract comes into force on 25th November: delivery is fixed thirty days after coming into force—Christmas Day in many places! Must the exporter deliver on a public holiday? Normally not. Delivery takes place, under most legal systems, on the next working day after the agreed time. The parties can change this if they wish, but few contracts do so.In some contracts the exporter has the further duty to notify the buyer that delivery has taken place. The exact form of this notification varies from contract to contract, depending in part on the place of delivery, on the method of payment, and on the needs of the buyer.

Excused Delay and the Grace PeriodAziz and Graham, a customer in Nonamia, have done business together for some years. In their regular contracts is this clause15 on late delivery:

For each week of late delivery the Seller shall pay the Buyer 0.1% cf the contract price.

At present, Aziz and Graham are negotiating delivery of 400 cartons of hair conditioner. Graham wants delivery on 20th May. Aziz doubts that she can achieve this date and offers 20th June. Aziz won't give an earlier date because she risks paying the agreed "penalty" if she is late. Graham is reluctant to accept the later date; he wants the earliest delivery possible. As skillful negotiators, Aziz and Graham decide to fix the earlier date as the delivery date, but to waive the payment of a penalty for a month— creating a one-month grace period.

15 There is a full explanation of such "penalty" clauses below.Their contract now reads:If delivery is not effected within one month of the agreed delivery date, then the Seller shall pay the Buyer 0.1% of the contract price.

The effect of a one-month grace period is not at all the same as a delivery date set for one month later: the exporter has an early, good-faith target to meet, and the buyer can exert considerable moral pressure before the mechanism of the "penalty" takes over. And there are clear advantages to both sides if early delivery is possible: the buyer gets the goods—and the exporter receives payment—up to a month earlier than planned. These advantages are achieved—unusually—without additional risks.Excused Delay and Force MajeureGood faith is essential in business life—but it does not always assure success. If disaster strikes in the form of a hurricane or an earthquake, the exporter may be unable to deliver on time, or at all. Such natural disasters are sometimes called "acts of God" and, by long tradition, acts of God excuse performance of a contract. In recent times, lawyers have argued that other unavoidable events should also excuse performance: war, for example, fire, or new government regulations. Most recently, some contracts have added strikes, lockouts and labor unrest to the list. Taken together, all such unavoidable circumstances are called force majeure (a French expression meaning a superior power). The principle behind force majeure is clear: if the exporter shows absolute good faith but simply cannot deliver the goods, then his duties under the contract can be suspended or perhaps terminated altogether. A typical contract wording:If either party is prevented from, or delayed in, performing any duty under this contract by an event beyond his reasonable control, then this event shall be deemed force majeure, and this party shall not be consider in default and no remedy, be it under this contract or otherwise, shall be available to the other party.Force majeure events include, but are not limited to: war (whether war is declared or not), riots, insurrections, acts of sabotage, or strikes, or other labor unrest; newly introduced laws or Government regulations; delay due to Government action or inaction; fire, explosion, or other unavoidable accidents; flood, storm, earthquake, or other abnormal natural event.

The force majeure clause, like other contract provisions, is negotiable; the parties can decide what excuses and what does not excuse performance. In monsoon countries, for example, contracts often include the statement:Force majeure events do not include monsoon rains

Any problems the two sides foresee can be mentioned in the contract as excusing, or not excusing, performance.If a force majeure condition continues for months, life becomes difficult for both sides, so contracts often regulate the force majeure period, in particular the right of one (or both) parties to terminate the contract.If either party is prevented from, or delayed in, performing any duty under this Contract, then this party shall immediately notify the other party of the event, of the duty affected,and of the expected duration of the event.If any force majeure event prevents or delays performance of any duty under this Contract for more than sixty days, then either party may on due notification to the other party terminate this Contract.

The diagram below shows three possible outcomes of force majeure:

Two outcomes here are satisfactory: resumption of delivery, and orderly termination of the contract. But the situation is unclear and risky for both sides if they failed to regulate their rights in the event of force majeure.

UNEXCUSED DELAY AND BUYER’S REMEDIESWe must now make some difficult, but important, legal distinctions and see how different legal systems cope with the problem of giving the buyer some remedy for any unexcused delay he suffers.

First, the generally accepted principle: if one party to a contract causes harm or loss to the other, then the law will find a way to redress this harm or loss. When an exporter delivers late, this normally causes some loss or damage to the buyer; maybe the buyer cannot use a piece of equipment as soon as expected or must keep one of his own customers waiting. The law provides two remedies for such damage.

- The court may order the exporter to fulfill his obligayions: this means issuing a decree of specific performance requiring the exporter to make a delivery as agreed or

- The court may require the exporter to pay the buyer compensatory damages- a sum of money that will fully and adequately compensate the buyer for any measurable loss.

In addition, the court may allow the buyer to cancel the contract- though this does nothing to enforce his rights.

Which choice is the court likely to make? In the Introduction we saw that no contract is complete in itself—every contract is subject to some national law. National laws fall into two main families16: those that derive from the English common law and those that derive from the Roman civil law. One difference between these families is their choice of remedy: common-law countries (England, the United States, most of the British Commonwealth and ex-Commonwealth) prefer to award damages, while civil-law countries (most other countries) usually enforce performance.

The concept of enforced performance presents no problems: the judge simply orders the party in default to perform as promised. Damages are a more complex issue. Damages are sums of money paid to compensate an injured party for some kind of "damage." In setting a figure for compensatory

damages for late delivery, the courts usually ask three questions, looking for the answer "Yes" in each case:♦ Did the loss provably follow from the breach?♦ Was the loss reasonably close to the breach in the chain of events?♦ Was the loss "mitigated"—in other words, did the buyer take reasonable steps to keep the loss as small as possible?

Let's look at a scenario to see the practical effect of these questions::

Scenario: Aziz has agreed to deliver a consignment of shampoo to Mino on 30th May. By 30th July, she has still not delivered. This delay causes problems for Mino: he has a contract to deliver the shampoo to a chain store in Esperanza in early June. The chain store writes angrily to Mino demanding some explanation. Mino does not reply. In mid-July the chain store writes to Mino again saying that his failure to deliver the shampoo is the latest in a long chain of failures, and that they want no more dealings with him. The loss of this customer costs Mino $300,000 a year. Mino consults a lawyer about claiming damages from Aziz. The lawyer explains that to claim damages from Aziz, Mino will have to show that the loss of the $300,000 was due to Aziz' failure to deliver (which it was in small part), that the loss of the customer was closely and immediately connected with Aziz' failure to deliver (which is arguable), and that he did everything in his power to mitigate the loss (which he did not). It is not likely that a court would order Aziz to pay a large sum in compensatory damages.

Court proceedings to claim compensatory damages, especially internationally, are expensive, the results are uncertain, and law suits destroy the working relationship between the parties. Accordingly most international contracts specify the consequences of typical breaches such as late delivery. The two sides simply negotiate a "lump-sum" that the exporter will pay if delivery is late. This sum is sometimes called liquidated damages and sometimes penalty. What is the difference between these terms?(For further information on the families of law, see Chapter 4, Section 2.)

Liquidated Damages Normally the exporter and the buyer agree a fair figure, a lump sum to be paid per day (week or month) of late delivery. This "best guess" is called liquidated damages. If delivery is sixty days late, the exporter pays sixty-days damages—no questions asked. That is the principle behind such clauses: payment of liquidated damages avoids expensive discussion. Two what-if questions arise about lump sums, however: first, what if the buyer's losses are much lower than anticipated? Nothing changes: the exporter must still pay. And what if the buyer's losses are much higher? Again, in principle, nothing changes: the exporter pays the agreed sum, and the matter is settled.

Sometimes courts raise or lower obviously unjust figures. For example, the Chinese Foreign Economic Contract Law empowers a court or arbitral agency to reduce or increase in an appropriate amount the amount of liquidated damages...if it is substantially more or less than the resulting loss; French law allows a change if the figure is "manifestly excessive or ridiculously low."

PenaltiesDamages are paid to compensate one pany for a loss—a real loss in the case of compensatory damages, a pre-esgmated loss in the case of liquidated damages. There is. in practiced, a third possibility: sometimes a buyer tries to force the exporter to deliver punctually by imposing an agreed penalty. A penalty clause simply says: "Deliver on time, or you will be punished." Sometimes the figure fixed for the penalty is very high. The distinction is clear: the purpose of a penalty is not to compensate but to punish, or, more correctly, to use the threat of punishment to achieve acceptable performance.

This distinction between a penalty and a provision for payment of liquidated damages is important in common-law thinking; Most common-law countries classify lump-sum clauses include of three types according to the motive behind them. How does this work? In reviewing a late delivery clause, the judge asks if it is (a) a fair pre-estimate (liquidated damages); (b) an attempt to terrorize (a penalty); or (c) an attempt by the exporter to fix a

compensation figure so low that, in effect, it relieves him of responsibility for late delivery (the quasi-indemnity). If it is a penalty,the common-law judge simply refuses to enforce it. If it is a liquidated damages provision, the common-law judge (like his civil-law counterpart) enforces the clause. If it is a quasi-indemnicy, the common-law judge uses some discretion: a seller who uses his power over the buyer (perhaps he is a monopoly supplier) to fix an outrageously low figure is behaving immorally—or "unconscionably" as lawyers express it. The courts will not enforce a clause they consider to be "unconscionable." The three motives in summary form:

LIQUIDATED DAMAGES PENALTY QUASI -INDEMNITY

MOTIVE: To compensate the buyer fairly for any delay in delivery

MOTIVE: To terrorize the exporter into punctual delivery

MOTIVE: To relieve the exporter of liability for deiay in delivery

Enforceable everywhere but subject to increase or decrease in some legal systems

Not enforceable in English law or other common law systems

Enforceable everywhere but open to challenge as"unconscionable’

To be practical: how do you know, as an exporter, if a clause in your contract with your customer is an enforceable liquidated damages provision or an unenforceable penalty? Let's see how an English (or common-law) judge might proceed in a specific case. First the clause:

Liquidated DamagesIf the Seller fails to supply any of the Goods within the time period specified in the Contract, the Buyer shall notify the Seller that a breach of contract has occurred and shall deduct from the Contract Price per week of delay, as liquidated damages, a sum equivalent to one half percent of the delivered price of the delayed Goods until actual delivery up to a maximum deduction of 10% of the delivered price of the delayed Goods.To decide if this provision is a penalty or a liquidated damages clause, the common-law judge first studies the wording. The heading is "Liquidated Damages" and "liquidated damages" is mentioned in the text, but this is not decisive. The judge then asks some questions: Was the figure—0.5% per week up to a maximum of 10%—agreed as a fair and reasonable estimate of the loss the buyer might suffer? How was the figure calculated? Did the two sides discuss or debate it? If the figure is fair, the judge enforces the clause; if it is unfairly high, the judge will decide that its real purpose is to "terrorize" the exporter and refuse to enforce the clause.

CONCEPT REVIEWMAIN FORCE

Read this Coming Into Force provision; then answer the question.This contract shall come into force after approval by the governments of the Seller and the Buyer, however at the latest by 31st December 2007.

Does this provision mean:A. That the contract will come into force on 31st December 2007 even if the two governments have not approved it? OrB. That the contract will become null/ nil/ nought and void if it has not come into force by 31st December 2007?

A B

The answer is B. A contract cannot come into force without government approval if such approval is required by public law.

CASE STUDYA Fine Contract

Study the conract clause below, and then answer the questions.Fine Payable

If the Seller fails to deliver the Goods at the fixed date, a fine shall be imposed upon him for the period of delay, until delivery is completed. The fine shall be as follows:

2% for the first week, or any part of it. 4% for the second week, or any part of it. 6% for the third week, or any part of it.8% per week for the fourth week, or part of it, and for all succeeding weeks.

The fine shall be calculated'on the total contract value.1. The clause uses the word "fine." Does that tell you for certain what kind of clause you are looking at? (Penalty clause or liquidated damages clause?) YES NO 2. After how long a delay does the exporter lose 100% of the contract price?

.......WEEKS 3. Do you think this clause is a penalty clause or a liquidated damages clause?

PENALTY LIQUIDATED DAMAGES4. If an English judge applying English law looks at this clause, will it be enforceable?

YES NO

1. The word “fine” suggests, but does not prove, that the clause seeks to impose a penalty.2. 14 weeks.3. Penalty clause. The sum bears no relation to any anticipated loss.4. No. English judges do not- in principle- enforce penalty clauses. (But some caution is needed:

the judge will decide according to all the merits of the cause.)

CASE STUDYForce Majeure

Verbena Jute makes sacks, sackcloth, and other jute products. Its standard contract includes this definition of an event:

If either party is prevented from, or delayed in, performing any duty under this Contract by an event beyond his reasonable control, then this event shall be deemed force majeure...

The word “control” needs some thought. An event is beyond the control of the exporter (a) if he could not have foreseen it; (b) if he could not have influenced it, and (c) if he could not have taken reasonable steps to avoid the problems that were likely to arise.1. A volcanic eruption buries the factory in ash. (Yes)2. The annual flooding of the River Vero ruins some of the jute intended for use in making sacks. (No)3. A ban is issued on the export of jute products by a newly elected government. (Yes)4. A ban is issued on the export of jute products by a government that has been preparing legislation on this subject for five years. (Questionable)5. The workforce at the factory go on strike. (Questionable)6. The dock workers in Port Verbena go on strike. (Yes)7. A lockout (Background: The workers have been striking for one day or a week. The management locks the workers out of the factory until they agree to end the strikes. (Probably no)8. Shortage of supplies (Background: The exporter cannot get the raw jute he needs from the supplier because of a shipping delay.) (No)9. Shortage of supplies (Background: The exporter cannot get the raw jute he needs from the supplier because the Central Bank will not give him foreign exchange to pay the supplier. (Yes)10. A fire burns down the factory. (Yes)

3. Place of DeliveryTHE PROBLEMIn normal speech, the word "delivery" means the arrival of goods at their destination, but this is not the accepted meaning in contract language. Considerable confusion can arise if the parties fail to clarify what they mean by the place of delivery.THE PRINCIPLEThe place of delivery is the point at which the exporter passes responsibility for the goods to the buyer. This is usually in the country of the exporter; if sea transport is used, delivery normally takes

place at the docks; in the case of land or container transport, delivery normally takes place when the goods are handed over to the carrier. Delivery also takes place in the country of the exporter in the case of CIF and CIP contracts,19 even though the exporter must bear the costs of freight and insurance through to the named destination.IN MORE DEPTHWe saw in the introduction to this chapter that delivery can take place at a number of places between the manufacturer's factory and the buyer's warehouse. If the buyer sends a truck to collect the goods from the factory, delivery takes place at the factory. If the manufacturer puts the goods on his own truck and drives them to the buyer's warehouse, delivery takes place at the warehouse. Both of these arrangements are, however, rare in international trade. Normally delivery takes place at some intermediate place along the line of transportation. It is useful, in this context, to ask what the law says if the parties agree nothing between themselves. Under most national laws, a contract for the sale of goods abroad—assuming transportation by ship—is normally considered as an FOB (Free on Board) contract: delivery takes place when the goods cross the rail of the ship nominated by the buyer. This is perfectly reasonable: from the buyer's point of view it is often cheaper to arrange sea transportation with a carrier and an insurer in his own country; from the exporter's viewpoint, he has no control over the goods once they are on board the ship chosen by the buyer, so he should have no responsibility. It is also fair that the exporter, who has money tied up in the goods, should be paid when the goods leave his country. But the matter is disposive: the parties can make any arrangement they wish. If an FOB contract is agreed, then the contract contains wording such as:

The terms FOB, CIF and so on—the thirteen Incoterms—are the subject of Section 6 below.Delivery of the Goods shall be made FOB (Mombasa).The term FOB is always followed, as in this example, by the name of the port where delivery will take place. (The name of the port is sometimes generalized into, for example, "Kenyan port" or "English east-coat port.")One common arrangement causes considerable confusion internationally—the so-called CIF contract. CIF stands for Cost, Insurance and Freight. In a CIF contract, the exporter must pay the full costs plus the freight charges plus insurance up to the named place of destination, usually a port. For example:Delivery of the Goods shall be made CIF (Durban).The exporter pays all the costs up to the port of arrival, Durban. But where does delivery take place? Delivery takes place when the goods cross the ship's rail in the port of shipment, exactly as in an FOB contract. The point is forcefully made in the ICC handbook dealing with Incoterms:Since the point for the division of costs refers to the country of destination, the "C"-lerms are frequently mistakenly believed to be arrival contracts, whereby the seller is not relieved from any risks or costs until the goods have actually arrived at the agreed point. However, it must be stressed over and over again dial the 'C'-terms are of the same nature as the "F"-terms in that the seller fulfills the contract in the country of shipment or dispatch. Thus, the contracts of sale under the "C"-tcrms, like the contracts under the "F"-terms, fall under the category of shipment contracts -:1

The issue is crucial—on delivery, risk (as well as ownership in main cases) passes and payment usually falls due. The point is so often misunderstood, that many contracts include additional wording on the place of delivery. For example, the Model Contract suggested in this book uses the following wording for CIF contracts:

Delivery of the Goods shall be made [INCOTERM]. The scheduled date of delivery shall be [DATE OF DELIVERY]. Risk and title to the Goods shall pass from the seller to the buyer on delivery.The place of delivery under this Contract is [PORT OF SHIPMENT].

One final consideration on the subject of place. What happens if the ship named by the buyer is late? The goods are ready, but the exporter, through no fault of his own, cannot deliver. The careful exporter makes a special provision to cover this problem.21 For example:-------------------------------------------------------------------------------------------------------

20 Incoterms 1990. p. 1 1. There is a full discussion of the Incoterms in .Section 6 below, 21 If payment in such a case is made by Letter of Credit, il is very important for die exporter thai ihe let the Letter of Credit allow subslitution of the warehouse receipt for the bill of lading

If the vessel named by the Buyer fails to arrive on or before the agreed delivery date, then the Seller may at his discretion deliver the goods to a bonded warehouse in the port of Mombasa, and shall be deemed to have fulfilled his delivery obligations under this contract.

CASE STUDYDead on Time

In preliminary talks, Bangladesh Steel Exporting agrees with All Africa Metal to deliver goods to Lagos on or before 13th August 1995. When the contract is drafted, it mentions the date as agreed—13th August 1995. Because the Nigerian company has no shipping agent in Bangladesh, it asks for a CIF contract under Incoterms 1990. The delivery terms are accordingly agreed in the contract as follows:Delivery CIF (Lagos) on or before 13th August 1995.Trouble is now almost certain. Why?Trouble is likely because under this contract delivery will take place on or before August 13th in Bangladesh – not, as the buyer evidently intended, in Lagos. The expression CIF (Lagos) means that, in addition to making delivery in Bangladesh, the exporter must pay the cost of insurance and freight on to Lagos.

What You Should Know1. The place (and time) of delivery must be unambiguously agreed because many contract events (including payment and transfer of risk and title) are tied to delivery.2. The place of delivery should not be confused with the destination of the goods.3. Delivery of goods under most export contracts takes place in the country of the exporter, at the docks in the case of sea transport, and when the goods are handed over to the carrier in most other cases.4. CIF and CIP contracts are especially confusing since they name the point of destination, e.g., CIF (Lagos). Lagos, in this example, is the point up to which the exporter is responsible for costs, not the place of delivery.

5. TRANSPORTATION: Vận chuyểnMC: Good morning, ladies and gentlemen.First of all may I say thank you for coming.Our group takes great pleasure to talk about transportation, especially about the transportation in foreign trade.First, Mr Thang and Miss Thoa will discuss the problem in transportation. Next Mr Hao and Miss Tam will explain some solutions to the problem. And finally, Miss Mai and Mr Hoang will discuss some case studies involved.Now, to begin, Mr Thang and Miss Thoa please.

THE PROBLEM For the exporter, transportation has two aspects: the physical safety of goods – which means appropriate packaging and correct marking – and correct documentation. Unless the shipping documents are in perfect order, prompt payment under a letter of credit is difficult or impossible. What are the dangers?

Vấn đề Nhà xuất khẩu trước vấn đề vận chuyển cần chú ý đến hai khía cạnh: an toàn hàng hóa – cụ thể là đóng gói và ghi ký mã hiệu – cũng như bảo đảm bộ chứng từ phải khớp với nhau. Nếu các chứng từ vận chuyển không trùng khớp và xếp theo thứ

tự thì việc thanh toán sẽ kéo dài và có khi không thể thực hiện. Vì vậy rủi ro sẽ là gì?

THE PRINCIPLEThe parties should state in their contract what packaging should bear. The exporter must follow the agreement scrupulously or payment may be delayed. The exporter should ensure that the shipping documents correspond exactly with the conditions of the letter of credit and that the bill of lading is “clean,” otherwise, again, payment can be seriously delayed.Once the mode of transport (road, rail, air or ship) has been negotiated, three aspects of transportation feature in the contract: packaging, shipping marks, and shipping documents.

First, packaging. One primary duty of the exporter is to ship the goods in suitable packaging. Most national laws don't say clear rules for this. Rather than rely on the law, the exporter and the buyer usually specify the contract what packaging they consider adequate. A typical clause:

NGUYÊN TẮC Các bên cần ghi rõ trong hợp đồng trên bao bì phải ghi những gì. Nếu nhà xuất khẩu không thực hiện đúng theo hợp đồng, thanh toán có thể bị trì hoãn. Nhà xuất khẩu phải đảm bảo rằng các chứng từ vận chuyển phải khớp với thư tín dụng và vận đơn phải "sạch", nếu không, ngân hàng sẽ có cớ trì hoãn thanh toán. Một khi đàm phán xong phương thức vận tải (đường bộ, đường sắt, đường hàng không, tàu biển), chúng ta cần phải chú trọng đến ba nội dung liên quan đến vận chuyển ghi trong hợp đồng: bao bì, ký mã hiệu, và các chứng từ vận chuyển. Đầu tiên, đóng gói. Một trong những nhiệm vụ chính của người xuất khẩu là vận chuyển hàng được đóng gói phù hợp. Nhiều quốc gia không có luật lệ rõ ràng về quy cách đóng gói. Thay vì dựa vào pháp luật, nhà xuất khẩu và nhập khẩu thường cụ thể hóa đóng gói trong hợp đồng. Điều khoản tiêu biểu sẽ như sau đây:

"Goods are to be packed in new, strong, wooden cases suitable for long-distance ocean transport and are to be well protected against dampness, shock, rust, or rough handling. The SELLER shall be liable for any damage to or loss of the Goods attributable to improper or defective packaging."

Hàng hóa phải được đóng gói trong thùng gỗ mới, chắc chắn và phù hợp cho vận chuyển hàng hải đường dài và phải có bọc, lót chống ẩm. sốc, hoen rỉ hay bốc dỡ không cẩn thận. Người bán phải chịu trách nhiệm trước mọi tổn thất hàng hóa do đóng gói không phù hợp hay thiếu sót.

This wording makes the requirements clear, and it puts the blame firmly on the shoulders of the exporter if packaging is inadequate.Three packaging problems are worth mentioning here even though they are matters of public law and outside the direct scope of the contract:♦ Packaging of dangerous goods is subject to special regulations in all countries. The exporter should ask for instructions from the buyer if dangerous goods are in question.♦ Some national laws require fumigation of all containers entering the country.♦ Agriculture-based, developed economies (such as that of Australia) tend to place severe restrictions on packaging materials. Hay, straw and rice husks are often forbidden; wooden packaging must often be fumigated. If in doubt, the exporter should consult the buyer or the consulate of the importing country.

Shipping MarksShipping marks, like the address on an envelope,

Ngôn ngữ phải nêu thật rõ yêu cầu, và nếu bao bì không đúng quy cách, nhà xuất khẩu chính là người phải gánh hết trách nhiệm. Ba vấn đề liên quan đến đóng gói cần được đề cập ở đây mặc dù đó là những vấn đề liên quan đến công pháp và không thuộc lĩnh vực hợp đồng: ♦ Bao bì của hàng nguy hiểm phải tuân thủ các quy định của nhà nước ở tất cả các quốc gia. Nhà xuất khẩu nên nhờ người nhập khẩu chỉ dẫn cụ thể nếu mình chưa biết rõ hàng hóa đó quy định chặc chẻ về bao bì hay không. ♦ Một số luật quốc gia yêu cầu xông khói khử trùng của tất cả các container nhập cảnh. ♦ Các nền kinh tế phát triển dựa trên nông nghiệp (như Australia) có những hạn chế rất nghiêm ngặt về vật liệu đóng gói. Cỏ khô, rơm rạ và trấu thường bị cấm; vật liệu đóng gói bằng gỗ phải được xông khói khử trùng. Nếu nghi ngờ, xuất khẩu nên tham khảo ý kiến của người mua hoặc lãnh sự quán của nước nhập

must be tightly controlled. The two sides should discuss exactly what is required. A typical list of marks in all export contract looks like this:

khẩu. Vận chuyển Marks nhãn hiệu vận chuyển, giống như địa chỉ trên phong bì, phải được kiểm soát chặt chẽ. Hai bên cần thảo luận về chính xác những gì là cần thiết. Một danh sách điển hình của các nhãn hiệu trong hợp đồng xuất khẩu ail trông như thế này:

On the surface of each package delivered under this Contract shall be marked: the package number, the measurements of the package, gross weight, net weight, the lifting position, the letter of credit number, the words THE RIGHT SIDE UP, HANDLE WITH CARE, KEEP DRY, and the marks DNP/ 36/Q.

Trên mỗi kiện hàng được giao theo hợp đồng này phải ghi ký mã hiệu bao gồm số thứ tự, kích thước, trọng lượng thô, trọng lượng tịnh, vị trí nâng của kiện hàng, số L/C, thêm những từ phổ biến khác như XIN ĐỂ ĐÚNG CHIỀU, CẨn THẬN KHI BỐC Dỡ, CẦN ĐỂ NƠI KHÔ RÁO, và những mã số như DNP/ 36/Q.

Some of these marks are concerned with identifying the goods, some with handling (e.g , weight and "Right Side l'p"). and some with government regulations (e.g., Indonesian practice requires that goods sold under a letter of credit must bear the number of the credit on the packaging; payment under the letter of credit may be difficult if this is not done.) Once agreement has been reached, the exporter should be scrupulously careful about printing all the necessary marks: otherwise, as we shall see in the next section, the bank may refuse to pay under the letter of credit.

Một số các nhãn hiệu có liên quan với xác định các hàng hoá, xử lý (ví dụ, trọng lượng và "Right Side l'p"). và một số quy định của chính phủ (ví dụ như Indonesia thực hành yêu cầu hàng hoá bán ra theo thư tín dụng phải có số lượng tín dụng trên bao bì, thanh toán theo thư tín dụng có thể khó khăn nếu điều này không được thực hiện.) Sau khi thỏa thuận đã được đạt, xuất khẩu phải được nghiêm ngặt cẩn thận về việc in tất cả các dấu hiệu cần thiết: nếu không, chúng ta sẽ thấy trong phần tiếp theo, ngân hàng có thể từ chối trả tiền theo thư tín dụng.

Shipping DocumentsWe must now glance ahead and discuss briefly payment by letter of credit. The exporter has fulfilled his major duties under most export contracts when he passes to the carrier correct contract goods. At this point, he is entitled to payment. The problem is, of course, that goods are usually passed to a carrier in the exporter's own country weeks, or months, before the importer has the chance to examine them. To allow payment at this early stage, international commerce has developed the letter of credit. How does the letter of credit work?24 In brief, the buyer arranges with a bank in the exporter's country to pay a certain sum of money (usually the total invoice price) as soon as the goods are shipped. Obviously the exporter must prove to the bank that shipment has taken place as agreed with the buyer. As proof the bank accepts the shipping documents. The text of the letter of credit contains a list of shipping documents, sometimes a very detailed list. After the bank is satisfied that the shipping documents tendered by the exporter are exactly in order, it pays the agreed sum. What, then, are these shipping documents?

Vận chuyển tài liệu Chúng tôi bây giờ phải lướt qua trước và thảo luận về một thời gian ngắn thanh toán bằng thư tín dụng. Nhà xuất khẩu đã hoàn thành nghĩa vụ theo hầu hết các hợp đồng xuất khẩu lớn của ông khi ông chuyển hàng hoá vận chuyển hợp đồng chính xác. Tại thời điểm này, ông có quyền để thanh toán. Vấn đề là, tất nhiên, hàng hoá thường được thông qua cho hãng trong tuần đất nước của bên xuất khẩu, hoặc vài tháng, trước khi nhập khẩu có cơ hội để xem xét. Để cho phép thanh toán ở giai đoạn này đầu, thương mại quốc tế đã phát triển của tín dụng thư. Thư tín dụng làm việc như thế nào? 24 Tóm lại, người mua thu xếp với một ngân hàng ở nước xuất khẩu phải trả một số tiền nhất định (thường là giá tổng hoá đơn) ngay sau khi hàng hoá được vận chuyển. Rõ ràng là nhà xuất khẩu phải chứng minh cho ngân hàng rằng lô hàng đã được thực hiện theo thoả thuận với người mua. Một bằng chứng, ngân hàng chấp nhận các tài liệu vận chuyển. Các văn bản của tín dụng thư có chứa một danh sách chứng từ vận chuyển, đôi khi một danh sách rất chi tiết. Sau khi ngân hàng được hài lòng rằng các tài liệu vận chuyển đấu thầu của nhà xuất khẩu là chính xác theo thứ tự, nó trả tiền số tiền đã thỏa thuận. , Sau đó, các tài liệu này vận chuyển?

---------------------------------------------------------------------------------------24 Chapter 2, Section 4 deals with the letter of credit in detail

The most important shipping document is issued by the carrier when the exporter hands over the goods ior transportation—it goes under many names, but in general we can call it the waybill. Waybills fall into two groups with slightly different rules attached to them. The first type is the traditional marine bill of lading which is used for transport by ship. The second type includes shipping documents issued by airlines (the air waybill), by railways (the rail consignment note), and by road hauliers (the road consignment note). Since many goods today are containerized, and since containers move by road, rail, ship and air, a combined transport bill of lading is used to cover multi-mode transport. On the next pages you will see a blank example of each type of document mentioned above.

A Marine Bill of Lading (p. 45)Most marine bills of lading today use the dual purpose form (marine/combined transport) shown below rather than the traditional form reserved purely for ships. (For a completed marine bill of lading, see the Concept Review: Barnacle Bill below.)

An Air Waybill (p.46)The air waybill is issued by an airline when it takes over the goods from the exporter.

A Rail Consignment Note (p. 47)If goods are shipped by rail, the railroad company issues a rail consignment note. Although there is a standard international form (the so-called CIM form), most rail consignment notes in developing countries look more like the example shown.

A Road Consignment Note (p. 48)A trucking company issues a road consignment note on taking over the goods. Of all the shipping documents, the road consignment note is the least standardized. The example below shows the typical entries.

A Combined Transport Bill of Lading (p. 49)"Combined transport" is the most common term for shipment in a container since trucks, trains, ships and planes can all handle containers.

An Airway Bill

A rail Consignment Note

A Road Consignment Note

A Combined Transport Bill of Lading

The Marine Bill of Lading and Other Transport DocumentsThe distinction between marine bills of ladding and the other transport documents is sometimes important as we shall now see. The marine bill of ladding is the traditional document used for shipment by sea. A marine B/L must indicate that the goods have been loaded on board a named vessel, a stamp on the face of the B/L confirms this:

The marine bill of lading is special: if the parties so wish, it can be made a negotiable document (in other words, it can be sold or bought). Why would anyone buy a bill of lading? Simply because the person who holds a bill of lading owns (or has title to) the goods described. This is an important aspect of commodity trading: a cargo – for example, the cargo of an oil tanker loaded in the Gulf – may be sold several times during its voyage. If such a sale is foreseen, the parties make the bill of lading negotiable; if, however, the consignee (i.e., in most cases the buyer) intends to receive the goods personally, there is no reason for a negotiable bill of lading.In practice, how do you make a bill of lading negotiable? And how can you tell if a bill is negotiable or not? The answer lies in the first few lines of document. First an example of a negotiable bill of lading (Typing the word “Order” or “blank” in the Consignee box makes the bill of lading negotiable. Incidentally, the use of the word “Order” means that the shipper must endorse the bill (sign it on the back). But when you write the name of a person or an organization in the Consignee box, the bill is not negotiable. )

Then the first few lines of a non-negotiable bill:

The difference lies simply in the use of the word "Order" in the Consignee box. Typing the word "Order" makes the bill of lading negotiable. Incidentally, the use of the word "Order" means that the shipper must endorse the bill (sign it on the back).

Clean Shipping document.Export goods are examined frequently on their journey from buyer to seller. There is often a pre-shipment inspections; customs officers examine the goods at every border. A carrier, of course, examines not the goods themselves, but their packaging and general appearance. If anything is wrong, the carrier notes the deficiency on the face of the bill of lading or other shipping document. The carrier might note, for example

Contents leakingPackaging soiled by contentsPackaging broken/ holed / torn/ damagedPackaging contaminatedGoods damaged/ scratched Goods chafed/ torn/ deformedPackaging badly dentedPackaging damaged – contents exposedInsufficient packaging

What effect does such a note have? In 1989 the International Chamber of Commerce issued a pamphlet entitled Clean Transport Documents (Publication No. 473). This pamphlet distinguishes between cleun documents and claused (or unclean) documents. The remarks in a claused document make it unacceptable to a bank; a letter of credit will not be paid against a claused shipping document.Sec Chapter 3, Sections 1 and 2 for detailed information on inspectionNot all notes, however, are considered to be "clauses." For example:

Second-hand/reconditioned packaging materials used Packaging repaired/mended/resewn/coopered Unprotected Unboxed

Such remarks are not enough make the bill of lading "unclean." To avoid disputes, the two sides to the contract often agree that the letter of credit will specify "clauses" that, in their particular line of business, would be unacceptable. For example, in shipping iron products, the parties might agree that no rust at all is allowed; thus the clause "Some rust spots" would result in an unclean transport document.One situation that sometimes arises is dangerous for the exporter. The carrier is taking over goods at the exporter's factory. The carrier examines the packaging critically and decides to write the clause "Insufficient packaging." An argument breaks out. To resolve the argument, the exporter offers the carrier an "indemnity"—a sum of money (or a promise of such a sum)

to cover any losses the carrier might incur if the buyer complains about the condition of the goods when they arrive. This is very close to a bribe. Clean Transport Documents comments:Courts in several countries have ruled that the carrier who accepts such an indemnity...is an accomplice in deceit or fraud on the buyer and the indemnity itself is illegal and void (p. 7).The payment of an "indemnity" could result in prosecution for fraud.

CASE STUDYBarnacle Bill

Study the Bill of Lading below and then answer the questions below.

1. If a letter of credit required a "Marine Bill of Lading," would this document be acceptable?□ YES □ NO2. If YES, how do you know? .................................................................It is stamped with a “shipped on board” stamp, and a vessel is named. 3. A marine bill of lading is sometimes negotiable. If this is a marine bill of lading, is it negotiable? '□ YES □ NO □ IT IS NOT A MARINE BILL OF LADING4. If YES or NO, how do you know? .........................................................The consignee box in a negotiable B/L is made out “To Order”.

What You Should Know

1. The contract should specify the type of packaging and the shipping marks agreed by the parties.2. On delivery, the exporter receives from the carrier the most importan all the shipping documents, the bill of lading (or consignment note). 3. Each mode of transport has a characteristic shipping document: the marine bill of lading, the air waybill, the rail consignment note, and tl road consignment note are the most common. Combined transport (container transport) uses a combined transport bill of lading. 4. Under certain circumstances, a marine bill of lading can be made intc negotiable document.

5. The marine bill of lading, to be acceptable as a shipping document under a letter of credit, must bear the notation that the goods have been shipped on board a named vessel.6. Payment under a letter of credit depends largely on the correctness i the shipping documents.7. Payment under a letter of credit may be delayed if the letter of credit repeats exactly the contractual packaging requirements but the exporter has failed to meet them.8. The carrier will note any defects in the packaging, weight or general appearance of the goods on accepting them from the exporter. (The carrier does not inspect the goods themselves, only the packaging.) be acceptable under a letter of credit, all shipping documents must b "clean," i.e., free of notes about defects.

55-645. RISK, TITLE AND INSURANCE

THE PROBLEMRisks to one’s property must be insured, but insurance of exported goods is a difficult field for the layman. The exporter must be able to decide what kind of policy or insurance cover is necessary, and what risks must be covered.

THE PRINCIPLEMost exporters prefer an open cover arrangement, with the goods valued and insured from point-to-point. The exporter should consult a broker to ensure that all expected risks are covered.

MORE DEPTHWe have already said that risks usually pass on delivery. Two risks are involved in the sale of goods: the risks of goods injuring a third party and the – more significant – risk of loss or damage. These risks are normally covered by insurance.

Transfer of TitleOwnership (title) is a complicated problem. National laws do not agree on a point when ownership of goods passes from exporter to buyer. The range is wide: from signature of contract to final payment. The matter is, however, disposive Many exporters like to keep legal ownership of goods until full payment is made, seeing ownership as security for pay-ment. Many "hire purchase" agreements work like that: the buyer pays in installments, but owns the goods only when the last installment is paid. In international trade, however, ownership is of doubtful value. If Aziz sends shampoo to Elsperanza and the invoice is not paid, ownership is of little practical value: she is unlikely to recover the goods since they must pass through two sets of customs on their trip home: if she sells the goods in Esperanza, she will get little for them. In any case, her costs will probably exceed the money she recovers. Accordingly, since ownership is of little practical value, many contracts specify that:

Insurance: Who Should Insure?Marine insurance is first found in Italy in the 1300's. Originally, it covered only

transport in ships (still called adventures by insurers). Today, however, most marine insurance policies include the Transit Clause which covers the goods from the exporter's warehouse to the buyer's warehouse -often with a long stretch overland at each end of the journey. Since merchandise is at risk at all times during its journey, it is advisable to insure the goods at every stage. Two players are involved here: exporter and buyer. Which is responsible for arranging insurance cover?

In deciding who should insure, there are two schools of thought. The first sees the point of delivery as decisive; up to delivery the exporter insures: after delivery the beyer does. The second approach lies behind C Term (CIF, CIP): the buyer often has problem insuring for goods that may not yet exist and that, in many cases, are located in a distant country. It is often easier for the exporter to arrange insurance: first, many exporters have a standing arrangement with an insurance company; secondly, they can readily declare to an insurer the necessary details of their products.

The choices are clear—it is up to the two sides to reach agreement on the terms that best meets their needs. One important note, however:

The buyer should note that under the CIF term the seller is only required to obtain insurance on minimum coverage.26

"Minimum coverage" is the so-called Cargo Clause C discussed below. Cargo Clause C is designed for insuring bulk cargo—not machinery, textiles, paper or other high risk cargoes. A buyer who wants more than minimum coverage must negotiate this with the exporter.Normally insurance cover under CIF (and CIP) contracts is for the value of the goods plus 10% (the extra 10% allows for the expected profit of the buyer); cover is generally in the currency of the contract.-------------------------------------26 Incoterms 1990, p.50.

In a CIF (or CIP) contract, the goods are delivered to the buyer at the port (or place) of shipment. On delivery, the goods enter the buyer's area of risk. The insurance cover held by the exporter runs to the port or place of arrival. This is a problem: how does an insurance policy held by the exporter help the buyer if the goods are damaged or lost during shipment? The answer is assignment. By endorsing the certificate of insurance, the exporter can assign (transfer) the full rights to the buyer. If necessary, this can be done even after goods are lost.27

Policy, Certificate, or Letter of Insurance?An insurance policy is a familiar document to most people: fire insurance, vehicle insurance, life insurance—most of us have such policies. For international trade, however, the full policy presents certain problems:

The preparation of a policy of insurance lakes some little (= considerable, Ed.) time, particularly if there arc a number of underwriters or several insurance companies, and when documents require to be tendered with promptness on the arrival of a steamer in order thai expense may not be incurred through delay in unloading..., it is not always practicable to obtain actual policies of insurance. In order to facilitate business in circumstances such as these, buyers arc accordingly in ihe habit of accepting brokers' cover notes and certificates of in insurance instead of insisting on policies.28

What is a "certificate of insurance"? Many exporters have an agreement with an insurance company covering all their shipments over a period of time. Hach individual shipment is covered by a certificate of insurance, not by a full policy. (A full policy can normally be issued for an individual consignment if the buyer wants this.) A certificate of insurance:

♦ States in outline the cover offered;♦ Gives the details of the individual shipment.

Under English law at least, the effect of a certificate of insurance is virtually identical with that of a full policy. In addition to the certificate of insurance, there is also the so-called letter

of insurance. This is simply a letter from the exporter to the buyer stating that the goods are insured. It has no legal force except as evidence in a law suit against the exporter.

Types of Insurance policy: Floating Policy and Open Cover. Sometimes an exporter deal is unique – special equipment is built and shipped in an unusual way to an unfamiliar destination. In such a situation, the exporter (usually with the help of a broker) negotiates a special insurance policy. Normally, however, an exporter with many similar contracts finds it time-consuming and expensive to arrange a new insurance policy for each consignment. One answer to this problem is the floating policy, another is the open cover.

Let’s look first at what the floating policy and open cover have in common. Both offer the exporter insurance cover on all shipments over a period of time. In both cases a ceiling is set on the overall figure – for example $1 million. As each individual shipment is made, the exporter declares the value of the shipment, and the ceiling is automatically reduced by that amount. Thus 10 shipments worth $100,000 each would reduce a $1 million cover to zero.As each shipment is made, it is covered by a Certificate of Insurance. Often the exporter has a pad of these certificates and simply fills out a new one for each shipment.-------------------------------------------------------------------------27 In some countries, the policy bought by the exporter names the buyer as the insured party. 28 Judgment in Wilton, Holqaie & Co. v. Belgian Grain and Produce Co (1920) 2 KB l.8

Insurers have various ways of limiting claims under such cumulative agreements. Generally claims are kept down by:

- A limit per bottom ( A “bottom” is a ship);- Limit per locality. (the expoter’s warehouse is a “locality”. A warehouse may contain

several consignments awaiting shipment. If they are all destroyed, the locality limit will probably bite).

Insurance companies also generally add the Institute Maintenance of Class Clauses: this requires that all ships used by the exporter are in a certain class in the shipping register.

In terms of the insurance cover offered, the floating policy and the open cover are, in effect, identical. The logistical differences between the two kinds of cover, however, have led the business community today to prefer the open cover. The first advantage of the floating policy is that it is set up for a particular time and automatically expires unless renewed; the open cover is open-ended: it does not expire, although there are provisions for cancellation on due notice. Thus the open cover is marginally more convenient. The second difference is more fundamental: an open cover is not an insurance policy at all – it is an agreement by an insurance company to issue an insurance policy if the insured asks for one. Normally the insured does not ask for a full policy; he simply creates a Certificate of Insurance with the knowledge that if he wants a policy he can get one at any time – including, and this is very important, after a loss. This arrangement is less formal and less time-consuming but extremely reliable: that is its attraction for the exporter.

Types of Insurance Policy: Valued and UnvaluedWhen the exporter insures goods, does he declare their value to the insurer or not? In practice, he may or he may not: both alternatives are possible. If the value is not stated (the unvalued policy), then the value can be established after a loss; naturally, the exporter must prove his figures precisely. As long as the figure does not exceed the total cover under the policy, the insurer will pay. The alternative is the valued policy: the exporter states the value of the goods on the insurance document. This has a decisive advantage: the pre-stated figure can include not only the cost of the goods but also the profit the exporter hoped to make on them. For this reason, valued policies are most in favor today.

There is a problem here though: what happens if the exporter seriously overvalues the goods-—must the insurance company pay the declared value? The answer is "No." The exporter must behave with the utmost good faith or the policy is void. A classic case from 1874: an English company sent goods to Russia and valued them at three times their cost, knowing that the goods would sell at a huge profit in Russia. The company said nothing to the insurer about the wide margin between cost and stated value. The goods were lost at sea. Was the insurance company obliged to pay? The court ruled that the exporter should have disclosed the wide margin to the insurer—the exporter had not acted with the utmost good faith and did not recover under the policy.29 The lesson for the exporter is clear: the insurer must be told everything of special significance about each shipment. The penalty for not disclosing important information is no coverage at all.

Types of Insurance Policy: Time and VoyageGoods can be insured between two dates <a time policy) or between two places (a voyage policy). Most exporters prefer the voyage approach. Insurers, however, dislike insuring goods for an unlimited time period: a shipment intended to start in January and finish in February might drag on until December. For this reason, most policies are "mixed"—the goods are

insured between two places but only within a given time frame. The time frame can usually be extended, but only against a higher premium.

-------------------------------------------------------29 Ionides v. Pender (1874) LR 9QB 531

A Marine Insurance Policy: What Does It Cover?Most modern insurance policies are based on the Lloyd's Marine Policy. This document is simply a schedule that lists: the policy number; the names of the assured (insured) and the ship; the voyage and/or period of insurance; the goods insured (and possibly their value); the sum insured; the premium; special conditions and warranties; and a list of clauses to be attached. It is this attached list of clauses that specifies the cover provided. Of greatest importance among the "clauses attached" is the Cargo Clause. It has three versions: A, B, and C.Cargo Clause A works reductively. It starts with a 100% cover—"all risks"—but steadily reduces this cover by means of various exclusions. Cargo Clauses B and C, on the other hand, work cumulatively. They start with little or no cover and specifically add risks that are covered.Whichever version is chosen, the so-called General Exclusion Clause excludes a number of risks, in particular:Willful misconduct of the assured. The results of any wrong act deliberately carried out by the assured are not covered.Ordinary leakage, loss of weight or normal wear and tear. If a volatile oil normally loses 10% of its volume in a month, this loss—and any similar, normally anticipated loss—is not covered.

Improper packaging. Damage resulting from improper packing or preparation is not covered. To discover what is improper, the courts usually refer to what is customary in a particular trade.Inherent vice in the goods. Some goods are inherently dangerous. A cargo of hay, for example, may catch fire because of spontaneous combustion. That is an "inherent vice" and the loss of the hay is not covered.Delay. In general, losses caused by delay are not covered.Insolvency of the owners (etc.) of the vessel. If a journey ends prematurely because the shipping line goes bankrupt, extra costs (further shipment for example) are not covered.Use of Nuclear Weapons. If cargo is damaged through the use of nuclear weapons, the insured will probably be worrying about more than his cargo. Even so, this risk to the goods is not covered.In addition, all three Cargo Clauses contain the Unseaworthiness and Unfitness Exclusion Clause. This clause says that goods shipped in an unseaworthy vessel are not insured. Since few laymen can know if a ship is seaworthy or not, the clause is softened: cover is withdrawn only if the insured knew about the unseaworthiness.Losses resulting from war, from strikes or from terrorism are also excluded, but here the difference between a reductive and a cumulative approach is important. If the War Exclusion Clause (or the Strike Exclusion) clause is deleted from Cargo Clause A, then these risks are covered. For Cargo Clauses B or C it is necessary to add the so-called Institute War Clauses or Institute Strikes Clauses to the policy if these risks are to be covered. We should now look at Cargo Clauses B and C to see what exactly they cover:Cargo Clause B covers:1.1 Loss of or damage to the subject-matter insured attributable to:1.1.1 fire or explosion,1.1.2 vessel or craft being stranded, ground, sunk or capsized,1.1.3 overturning or derailment of land conveyance,1.1.4 collision or contact of vessel craft or conveyance with any external object other than water,1.1.5 discharge of cargo at a port of distress,1.1.6 earthquake, volcanic eruption or lightning.1.2 Loss of or damage to the subject-matter insured caused by:1.2.1 general average sacrifice,30

1.2.2 jettison or washing overboard.

-----------------------------------------------------------------------------------------------------30 General average sacrifice refers to a situation in which a ship must make a "sacrifice" (e.g., throwing part of the cargo in the sea) in order to preserve the ship and the rest of the cargo. The cost of such a sacrifice is shared by all the parties involved. (See Schmillhoff, p. 520+.)

1.2.3 entry of sea-, lake-, or river-water into vessel, craft, hold, conveyance, container, liftvan or place of storage.

1.3 Total loss of any package lost overboard or dropped whilst loading on to, or unloading from, a vessel or craft.

Cargo Clause C covers:1.1 Loss of or damage to the subject-matter insured attributable to:

1.1.1 fire or explosion,1.1.2 vessel or craft being stranded, grounded, sunk or capsized,1.1.3 overturning or derailment of land conveyance,1.1.4 collision or contact of vessel craft or conveyance with any external object other than water,1.1.5 discharge of cargo at a port of distress,

1.2 Loss of or damage to the subject-matter insured caused by:1.2.1 general average sacrifice, 1.2.2 jettison.

Below paying a claim for loss, insurers study the circumstances fully.They examine the insurance document to check that the lost or damaged goods were correctly described. If the description and the goods are materially different, the insurer may refuse to pay. In one famous case, an exporter bought leather flying jackets from the British government. The jackets were twenty years old, but they had never been used. The exporter described the goods as "new men's clothing in bales." When the goods were stolen, the insurer refused to pay because of material misdescription. The court agreed: the description was inaccurate.31 In general, the insured must disclose any fact "which would influence the judgment of a prudent insurer in fixing the premium or accepting the risk."32

Some policies allow for innocent misdescription with a "held covered" clause: under given conditions, the goods are held (= considered) to be covered. An example: an exporter bought second-hand machinery in order to export it. On the insurance document the goods were described simply as "machinery." When the goods were lost, the insurer refused to pay, pleading material misdescription. The policy contained, however, a "held covered" clause: "held covered at premium to be arranged”. The court ordered the insurance company to pay, but allowed it an extra premium.33

In summary, always remember the cardinal principal of insurance:A contract of marine insurance is a contract based upon the utmost good faith, and, if the utmost good faith be not observed by either party, the contract may be avoided by the other party.34

-------------------------------------------------------------------------------------31 Anglo-African Merchants v. Bay ley (1970) 1 QB 311, 319-320. 32 Schmiuhoff, p. 503.33 Greenock SS. Co. v. Maritime Insurance Co. (1903) 1 KB. 367. 34 Marine Insurance Act. (UK) 1907, § 17.

CASE STUDYTAKE OVER

Pacific Exports is a new company founded in Verbena to export textiles. The company anticipates sales of about $500,000 during its first year of operations, with most orders between $1,000 and $30,000. Since Verbena is an island, consignments of goods always travel by ship. The company wants advice on the best kind of insurance for its CIF contracts. What would you recommend among the choices below? In each case be ready to give your reasons.1. □Tailor-made policies □Floating policy □Open cover...Because there is no need for a full insurance policy to be negotiated for each order.2. □Valued policy □Unvalued policy...Because this allows claims for the loss of expected profit if the goods are destroyed or damaged.3. □Voyage policy □Time policy □Time and voyage policy...Because this policy maintains insurance cover on the goods even if there is a delay.4. □Cargo Clause A (All risks) □Cargo Clause B □Cargo Clause CDebatable. Because for the exporter, Cargo Clause C is cheapest. Furthermore, nothing more is required under CIF contracts. However, the buyer may be very unhappy if the texttiles are lost and the insurance arranged by the exporter fails to offer the expected compensation. The exporter and the buyer should discuss this issue.5. Institute War Clauses □YES □NO □depends on __Depends on route and political situation. 6. Institute Strikes Clauses □YES □NO □depends on __Depends on social and political situation. Normally cover against strikes is recommended.

6. TERMS OF TRADE: INCOTERMS

THE PROBLEMAlthough the purpose of ICC Incoterms is to standardize terms of trade worldwide, many business people do not know what these terms mean or the nature of their rights and duties under an Incoterm contract.

CÁC VẤN ĐỀ Mặc dù mục đích của ICC Incoterms là để tiêu chuẩn hóa các điều khoản thương mại trên toàn thế giới, nhiều doanh nhân không biết những điều khoản này có nghĩa là tính chất của các quyền và nghĩa vụ của mình theo một hợp đồng Incoterm.

THE PRINCIPLEThe ICC publication, Incoterms 1990, gives full and clear information about the rights and duties of buyer and exporter in Incoterm contracts. Ignorance of these terms can be expensive.

NGUYÊN TẮC ấn phẩm ICC, Incoterms 1990, cung cấp thông tin đầy đủ và rõ ràng về quyền và nghĩa vụ của người mua và xuất khẩu trong hợp đồng Incoterm. Không biết các điều khoản này có thể tốn kém.

IN MORE DEPTHWorld trade depends to an increasing extent of standardization: international weights and measures are metric: many contracts are priced in U.S. dollars; letter of credit follow standard rules. Misunderstandings can be expensive: anything that makes them likely less likely is welcome.

Sâu hơn về Thương mại thế giới phụ thuộc vào một mức độ ngày càng tăng của tiêu chuẩn: trọng lượng quốc tế và các biện pháp được số liệu: nhiều hợp đồng có giá bằng đô la Mỹ, thư tín dụng theo quy tắc tiêu chuẩn. Sự hiểu lầm có thể tốn kém: bất cứ điều gì mà làm cho họ có thể ít có khả năng được chào đón. Incoterms Mười ba Một nguồn tin gây nhầm lẫn quốc tế là điều kiện giao hàng. Chúng

The Thirteen IncotermsOne source of international confusion are delivery conditions. We have already looked at a number of problems and seen how national laws vary in their preferred solutions. To clarify the situation, the International Chamber of Commerce (ICC) issued as early as 1936 standardized terms- the so-called International Commercial Terms or Incoterms. Over the years, the ICC has updated the Incoterms as the nature of commerce has changed- increased use of aircraft, the introduction of containers, electronic document transfer and so on.- all have required new or revised terms. The latest issue of Incpterms is the 2010 revision.

tôi đã xem xét một số vấn đề và nhìn thấy như thế nào luật pháp quốc gia khác nhau trong các giải pháp ưa thích của họ. Để làm rõ tình hình, Phòng Thương mại quốc tế (ICC) ban hành sớm nhất là 1936 về tiêu chuẩn hóa cái gọi là thương mại quốc tế điều khoản này hoặc Incoterms. Trong những năm qua, ICC đã cập nhật Incoterms như bản chất của thương mại đã thay đổi tăng sử dụng tàu bay, việc giới thiệu các thùng chứa, chuyển giao tài liệu điện tử và vv. Tất cả đều có yêu cầu mới hoặc được sửa đổi, bổ sung các điều khoản. Các vấn đề mới nhất của Incpterms là bản sửa đổi 2010.

In establishing the 13 Incoterms, the ICC has looked at the most common variations in an arrangement for delivery and established for each variation the exact duties of the exporter and the buyer. In setting up the 13 terms, the ICC has taken into account three variables:- Where along the transportation route

delivery takes place;- What means of transport is used; and- What costs the exporter might pay after

the point of delivery. The 13 terms are grouped in four categories: E-terms, F-terms, C-terms and D-terms. The E-term deals with deliveries at the exporter’s factory. The F-terms all concern delivery within the exporter’s country. The C-terms involve delivery in the exporter’s country, with extra costs for the exporter after delivery. D-terms take care of delivery outside the exporter’s country. A table gives us an overview:

QUESTION: Explain EXW, CFR, DDUEXW is one of the E-terms in the Incoterms. It stands for Ex-work, a method of delivery, where the exporter is free from charge when exporter notifies buyer of availability of goods at exporter’s premises (factory or warehouse). Then the exporter is not responsible for transport or any other costs.

CFR is one of the C-terms in the Incoterms. It stands for Cost and Freight, a method of delivery, where the exporter is free from charge when the goods pass the ship’s rail. Then the exporter is responsible for ship transport and freight.

Thành lập 13 Incoterms, ICC đã xem xét các biến thể phổ biến nhất trong một sự sắp xếp giao hàng và thiết lập cho mỗi biến thể các nhiệm vụ chính xác những nước xuất khẩu và người mua. Trong việc thiết lập trong 13 thuật ngữ, ICC đã đưa vào tài khoản ba biến: - dọc theo tuyến đường vận chuyển giao hàng diễn ra - phương tiện vận tải được sử dụng; và chi phí xuất khẩu có thể trả tiền sau khi các điểm giao hàng. 13 thuật ngữ được nhóm lại thành bốn loại: các điều kiện điện tử, các điều kiện nhóm F, C điều kiện và điều kiện D. Các giao dịch E-dài với việc giao hàng tại nhà máy xuất khẩu. F-về tất cả các mối quan tâm phân phối trong nước xuất khẩu. C-thuật ngữ liên quan đến phân phối trong nước xuất khẩu, với chi phí thêm cho các nhà xuất khẩu sau khi giao hàng. D điều kiện chăm sóc cung cấp bên ngoài nước xuất khẩu. Một bảng cho chúng ta một cái nhìn tổng quan: CÂU HỎI: Giải thích EXW, CFR, DDU EXW là một trong các điều khoản E trong Incoterms. Nó là viết tắt của Ex công việc, một phương pháp giao hàng, xuất khẩu là miễn phí từ phí khi xuất khẩu thông báo cho người mua sẵn có của hàng hoá tại cơ sở xuất khẩu (nhà máy hoặc kho). Sau đó, xuất khẩu không chịu trách nhiệm vận chuyển, hoặc bất kỳ các chi phí khác.

CFR là một trong những C-điều khoản trong Incoterms. Nó là viết tắt của Chi phí vận tải, một phương pháp giao hàng, xuất khẩu được miễn phí khi hàng hóa vượt qua lan can tàu. Sau đó, xuất khẩu chịu trách nhiệm đối với tàu vận tải và vận chuyển hàng hóa.

THE PROBLEMAlthough the purpose of ICC Incoterms is to standardize terms of trade worldwide, many business people do not know what these terms mean or the nature of their rights and duties under an Incoterm contract.

THE PRINCIPLEThe ICC publication, Incoterms 1990, gives full and clear information about the rights and duties of buyer and exporter in Incoterm contracts. Ignorance of these terms can be expensive.

IN MORE DEPTHWorld trade depends to an increasing extent of standardization: international weights and measures are metric: many contracts are priced in U.S. dollars; letter of credit follow standard rules. Misunderstandings can be expensive: anything that makes them likely less likely is welcome.

The Thirteen IncotermsOne source of international confusion are delivery conditions. We have already looked at a number of problems and seen how national laws vary in their preferred solutions. To clarify the situation, the International Chamber of Commerce (ICC) issued as early as 1936 standardized terms- the so-called International Commercial Terms or Incoterms. Over the years, the ICC has updated the Incoterms as the nature of commerce has changed- increased use of aircraft, the introduction of containers, electronic document transfer and so on.- all have required new or revised terms. The latest issue of Incpterms is the 2010 revision.

In establishing the 13 Incoterms, the ICC has looked at the most common variations in an arrangement for delivery and established for each variation the exact duties of the exporter and the buyer. In setting up the 13 terms, the ICC has taken into account three variables:- Where along the transportation route delivery takes place;- What means of transport is used; and- What costs the exporter might pay after the point of delivery. The 13 terms are grouped in four categories: E-terms, F-terms, C-terms and D-terms. The E-term deals with deliveries at the exporter’s factory. The F-terms all concern delivery within the exporter’s country. The C-terms involve delivery in the exporter’s country, with extra costs for the exporter after delivery. D-terms take care of delivery outside the exporter’s country. A table gives us an overview:

QUESTION: Explain EXW, CFR, DDUEXW is one of the E-terms in the Incoterms. It stands for Ex-work, a method of delivery, where the exporter is free from charge when exporter notifies buyer of availability of goods at exporter’s premises (factory or warehouse). Then the exporter is not responsible for transport or any other costs.

CFR is one of the C-terms in the Incoterms. It stands for Cost and Freight, a method of delivery, where the exporter is free from charge when the goods pass the ship’s rail. Then the exporter is responsible for ship transport and freight.

TERM TYPE

SHORT FORM

FULL FORM

POINT OF DELIVERY TRANSPORT

COST AFTER DELIVERY

E-TERMS

EXW Ex-work When exporter notifies buyer of availability of goods at exporter’s premises, he is free from responsibility

None None

F-TERMS FCA Free Carrier When goods are handed over to the carrier

Any None

FAS Free Alongsi-de Ship

When goods are alongside the ship, ready for loading

Ship None

FOB Free On Board

When the goods pass the ship’s rail at the port of loading

Ship None

C-TERMS

CFR Cost and Freight

When the goods pass the ship’s rail at the destination

Ship Freight to destination

CIF Cost, Insurance and Freight

When the goods pass the ship’s rail

Ship Freight and Insurance to destination

CPT Carriage Paid To

When the goods are handed over to the carrier

Any Freight to destination

CIP Carriage and Insurance Paid

When the goods are handed over to the carrier

Any Freight and insurance to destination

D-TERMS

DAF Delivered At Frontier

When the goods are cleared for export at a named frontier

Any None

DES Delivered Ex-Ship

When the ship carrying the goods arrives at the port of destination

Ship None

DEQ Delivered Ex-Quay

When the goods are on the quay at the port of destination, and cleared for import

Ship None

DDU Delivered Duty Unpaid

When the goods are available to the buyer at a named destination, duty unpaid

Any None

DDP Delivered Duty Paid

When the goods are available to the buyer at a named destination, duty paid

Any None

Incoterms obviously save a great deal of work in contract drafting. Compare the two versions of the delivery clause below:The equipment listed in Annex 1 shall be delivered FOB (Beira) (Incoterms 1990).For the equipment listed in Annex 1 the price is for delivery free on board the carrying vessel designated by the Buyer at the port of Beira including the cost of packing, as well as expenses incurred before loading the equipment on board the carrying vessel.The first wording—using an Incoterrrt—is more than simple shorthand: it incorporates six pages of the ICC booklet Incoterms 1990 specifying numerous duties of both buyer and exporter. The exporter, for example, must "Deliver the goods on board the vessel named by the buyer..." and 'pay all costs relating to the goods until such time as they have passed the ship's rail."36

A word of caution on Incoterms: the 1990 Incoterms are radically new. Some old terms have disappeared: FOT and FOR (Free On Truck and Free on Rail) have been replaced by FCA; C&F has been renamed CFR. Further, some traditional terms now have very restricted meanings: FOB, for example, applies only to transport by ship; for other means of transport, the correct "FOB equivalent" is now FCA. Also remember that Incoterms apply only to international trade; for trade within a country, Incoterms are not appropriate.Two questions often arise about Incoterms: first, is it necessary to state in the contract that FOB, CIF, and so on are Incoterms? And secondly, what happens if the "small print" of Incoterms 1990 conflicts with a provision of the contract? Let's look at these issues.

Incoterms rõ ràng là tiết kiệm rất nhiều công việc soạn thảo hợp đồng. So sánh hai phiên bản của các điều khoản giao hàng dưới đây: Các thiết bị được liệt kê trong Phụ lục 1 được giao FOB (Beira) (Incoterms 1990). Đối với các thiết bị được liệt kê trong Phụ lục 1, giá giao hàng miễn phí trên tàu thực hiện theo chỉ định của người mua tại cảng Beira bao gồm cả chi phí đóng gói, cũng như chi phí phát sinh trước khi tải các trang thiết bị trên tàu thực hiện.

Incoterms obviously save a great deal of work in contract drafting. Compare the two versions of the delivery clause below:The equipment listed in Annex 1 shall be delivered FOB (Beira) (Incoterms 1990).

For the equipment listed in Annex 1 the price is for delivery free on board the carrying vessel designated by the Buyer at the port of Beira including the cost of packing, as well as expenses incurred before loading the equipment on board the carrying vessel.The first wording—using an Incoterrrt—is more than simple shorthand: it incorporates six pages of the ICC booklet Incoterms 1990 specifying numerous duties of both buyer and exporter. The exporter, for example, must "Deliver the goods on board the vessel named by the buyer..." and 'pay all costs relating to the goods until such time as they have passed the ship's rail."36

A word of caution on Incoterms: the 1990 Incoterms are radically new. Some old terms have disappeared: FOT and FOR (Free On Truck and Free on Rail) have been replaced by FCA; C&F has been renamed CFR. Further, some traditional terms now have very restricted meanings: FOB, for example, applies only to transport by ship; for other means of transport, the correct "FOB equivalent" is now FCA. Also remember that Incoterms apply only to international trade; for trade within a country, Incoterms are not appropriate.Two questions often arise about Incoterms: first, is it necessary to state in the contract that FOB, CIF, and so on are Incoterms? And secondly, what happens if the "small print" of Incoterms 1990 conflicts with a provision of the contract? Let's look at these issues.Specifying IncotermsIs the specification, "Incoterms 1990," really needed? In fact, it is necessary because FOB and CIF are also common terms in many countries with different commercial traditions, for example in the United States.37 Unfortunately, American and ICC usage of the terms do not agree: for example in the U.S.:The term FOB or "free on board," may be used with reference to the seller's city, the buyer's city, or an intermediate city. It may also be used with reference to a named carrier, vessel, car or other vehicle.38

-------------------------------------------------------------------------------------36 Incoterms pp. 138-140.37 See UCC §2-320 to 322. The UCC is the Uniform Commercial Code of the United Slates. It will be referred to many times in the following pages. For more information on the Code, see Chapter 4. Section 2. 38 Anderson, p. 349.

FURTHER READINGINCOTERMS 2010

The new INCOTERMS® 2010 became effective January 1, 2011.

Incoterms--which is an abbreviation for International Commercial terms--are a series of sales terms.

They are published by the International Chamber of Commerce (ICC) and are widely used in commercial transactions.

In addition to providing a set of rules for the interpretation of commonly used trade terms, INCOTERMS® 2010 accomplish the following:

(a) significantly revises Group D listed in INCOTERMS® 2000;

(b) reduce Incoterms from four groups to two groups, allowing trade experts to choose the most

INCOTERMS 2010

INCOTERMS 2010 có hiệu lực từ ngày 1 -1- 2011. Incoterms - đó là một từ viết tắt với các điều kiện thương mại quốc tế - là một loạt các điều khoản bán hàng. Incoterms được công bố bởi Phòng Thương mại quốc tế (ICC) và được sử dụng rộng rãi trong các giao dịch thương mại.

Ngoài việc cung cấp một bộ quy tắc để giải thích các điều kiện giao hàng thường được sử dụng, INCOTERMS ® 2010 hoàn thành sau đây: (a) điều chỉnh lại bảng D hợp lý hơn so với INCOTERMS ® 2000,

(b) giảm Incoterms từ bốn nhóm còn hai nhóm, cho phép thương mại các các nhà xuất nhập khẩu để lựa chọn các quy tắc thích hợp nhất liên quan đến phương thức vận tải; và

suitable rule related to the mode of transport; and

(c) reduce the absolute number of Incoterms from 13 to 11.

Moreover, INCOTERMS® 2010 offer additional guidance which assists users in selecting the most appropriate Incoterm for each transaction.

The revised terms also spell out rules regarding the use of electronic procedures; detail information on security-related clearances for shipments; and offer advice with respect to domestic trade.

(c) làm giảm số lượng của Incoterms từ 13 xuống còn 11 điều khoản.

Hơn nữa, INCOTERMS ® 2010 cung cấp hướng dẫn bổ sung này sẽ hỗ trợ người dùng trong việc lựa chọn các Incoterm thích hợp nhất cho mỗi giao dịch. Các điều khoản sửa đổi cũng giải thích rõ ràng các quy tắc liên quan đến việc sử dụng các thủ tục điện tử, thông tin chi tiết liên quan đến an ninh thông quan cho các lô hàng và cung cấp lời khuyên đối với thương mại trong nước.

What are Incoterms?Incoterms or International Commercial terms are a series of sales terms. They are published by the International Chamber of Commerce (ICC) and are widely used in international commercial transactions. The purpose of Incoterms is to provide a set of international rules for the interpretation of commonly used trade terms in international transactions. They closely correspond to the U.N. Convention on Contracts for the International Sale of Goods. The first Incoterms were issued in 1936. The most recent Incoterms were updated in 2010 and became effective January 1, 2011.Who needs to understand Incoterms?Government trade officials as well as many private sector parties should understand Incoterms. Such private sector parties include: exporters, importers, trade finance professionals, export compliance specialists, customs brokers, freight forwarders, insurers, international credit professionals, and sales and purchasing managers.

Incoterms là gì? Incoterms hoặc các điều khoản thương mại quốc tế là một loạt các điều khoản bán hàng. Họ được công bố bởi Phòng Thương mại quốc tế (ICC) và được sử dụng rộng rãi trong các giao dịch thương mại quốc tế. Mục đích của Incoterms là cung cấp một tập hợp các quy tắc quốc tế cho việc giải thích các điều kiện thương mại thường được sử dụng trong các giao dịch quốc tế. Họ chặt chẽ tương ứng của Công ước Liên hợp quốc về Hợp đồng Mua bán Quốc tế Hàng hoá. Incoterms đầu tiên đã được ban hành vào năm 1936. Incoterms gần đây nhất đã được cập nhật trong năm 2010 và trở thành có hiệu lực từ ngày 01 tháng 1 năm 2011. Ai cần hiểu Incoterms? Chính phủ quan chức thương mại cũng như nhiều bên khu vực tư nhân nên hiểu Incoterms. Như vậy bên khu vực tư nhân bao gồm: xuất khẩu, nhập khẩu, các chuyên gia tài chính thương mại, các chuyên gia phù hợp xuất khẩu, môi giới hải quan, giao nhận vận tải hàng hóa, công ty bảo hiểm, các chuyên gia tín dụng quốc tế, và doanh số bán hàng và quản lý thu mua.

What are Incoterms used for?Incoterms assist trade practitioners in interpreting the most commonly used international trade terms. Using correct Incoterms in an international transaction reduces considerably uncertainties arising from the different interpretation of such terms in different countries. They apportion international trade transaction costs and responsibilities between buyers (importers) and sellers (exporters) and reflect modern-day transportation practices. Incoterms assist in significantly reducing misunderstandings among traders and thereby minimizing trade disputes and litigation. However, their scope is limited to matters related to the international rights and obligations of the parties involved in the contract of sale with respect to the delivery of the goods sold. Thus, they apply to the contract of carriage,

Incoterms dùng để làm gì? Incoterms hỗ trợ học viên thương mại trong việc giải thích các điều khoản thương mại quốc tế được sử dụng phổ biến nhất. Sử dụng Incoterms chính xác trong một giao dịch quốc tế làm giảm đáng kể sự không chắc chắn phát sinh từ việc giải thích khác nhau từ ngữ như vậy ở các nước khác nhau. Phân bổ chi phí giao dịch thương mại quốc tế và trách nhiệm giữa người mua (nhập khẩu) và người bán (xuất khẩu) và phản ánh tập quán vận tải hiện đại. Incoterms giúp giảm đáng kể sự hiểu lầm giữa các thương nhân và do đó giảm thiểu tranh chấp thương mại và tranh chấp. Tuy nhiên, phạm vi của họ được giới hạn trong các vấn đề liên quan đến quyền và nghĩa vụ quốc tế của các bên tham gia vào hợp đồng mua bán đối với việc cung cấp các hàng hoá đã bán. Vì vậy, họ áp dụng đối với các hợp đồng vận chuyển, không phải là hợp đồng mua bán.

not the contract of sale.Why were the INCOTERMS® 2000 revised?INCOTERMS® 2010 are the updated version of INCOTERMS® 2000. INCOTERMS® 2010 have been developed as a result of an extensive review of current shipping practices and trends in an effort to keep up with the rapid expansion of world trade. The key drivers for this update include: a need for improved cargo security, changes to the Uniform Commercial Code in 2004 that resulted in a deletion of U.S. shipment and delivery terms, and new trends in global transportation.

Tại sao các INCOTERMS ® 2000 sửa đổi? INCOTERMS ® 2010 là phiên bản cập nhật của INCOTERMS ® 2000. INCOTERMS ® 2010 đã được phát triển như là kết quả của một sự xem xét mở rộng hoạt động vận chuyển hiện tại và xu hướng trong một nỗ lực để theo kịp với sự mở rộng nhanh chóng của thương mại thế giới. Các trình điều khiển cho bản cập nhật này bao gồm: một nhu cầu để cải thiện an ninh hàng hóa, thay đổi luật thương mại thống nhất vào năm 2004 dẫn đến việc xóa một lô hàng của Mỹ và các điều khoản giao hàng, và xu hướng mới trong giao thông vận tải toàn cầu.

How do INCOTERMS® 2010 differ from INCOTERMS® 2000?In addition to providing a set of rules for the interpretation of commonly used trade terms, INCOTERMS® 2010 significantly revise Group D listed in INCOTERMS® 2000. The five INCOTERMS® 2000 listed in Group D included the following:DAF Delivered At FrontierDES Delivered Ex ShipDEQ Delivered Ex QuayDDU      Delivered Duty UnpaidDDP       Delivered Duty PaidINCOTERMS® 2010 contain the following categories:DAT        Delivered At TerminalDAP        Delivered At PlaceDDP        Delivered Duty PaidMoreover, INCOTERMS® 2010 reduce the number of Incoterm groupings from four to two, allowing trade experts to choose the most suitable rule related to the mode of transport. The 13 INCOTERMS® 2000 contained four essential categories of Incoterms. They were:Group E – Departure Group F – Main carriage unpaid Group C – Main carriage paid Group D – Arrival.The two main categories of INCOTERMS® 2010 are now organized by modes of transport. Used in international as well as in domestic contracts for the first time, the new groups aim to simplify the drafting of contracts and help avoid misunderstandings by clearly stipulating certain obligations of buyers and sellers.Group 1. Incoterms that apply to any mode of transport are:EXW       Ex WorksFCA         Free CarrierCPT         Carriage Paid ToCIP          Carriage And Insurance Paid ToDAT        Delivered At TerminalDAP        Delivered At PlaceDDP        Delivered Duty Paid

Làm thế nào để INCOTERMS ® 2010 khác nhau từ INCOTERMS ® 2000? Ngoài việc cung cấp một tập hợp các quy tắc cho việc giải thích các điều kiện thương mại thường được sử dụng, INCOTERMS ® 2010 đáng kể xem xét lại bảng D được liệt kê trong INCOTERMS ® 2000. Năm INCOTERMS ® 2000 được liệt kê trong bảng D bao gồm những điều sau đây: DAF Giao tại biên giới DES Delivered Ex Ship DEQ Delivered Ex Quay DDU Delivered Duty DDP chưa trả INCOTERMS Delivered Duty Paid ® 2010 bao gồm các loại sau: DAT Giao Tại ga DAP Giao Tại Nơi DDP Delivered Duty Paid Hơn nữa, INCOTERMS ® 2010 giảm số lượng các nhóm Incoterm 4-2, cho phép các chuyên gia thương mại để lựa chọn các quy tắc thích hợp nhất liên quan đến phương thức vận tải. 13 INCOTERMS ® 2000 có bốn loại thiết yếu của Incoterms. Đó là: Tập đoàn E - F Tập đoàn khởi hành - vận chuyển chưa thanh toán chính nhóm C - vận chuyển trả Nhóm D - Lượt. Hai loại chính của INCOTERMS ® 2010 được tổ chức theo các phương thức vận tải. Được sử dụng trong quốc tế cũng như trong hợp đồng lần đầu tiên trong nước, các nhóm mới nhằm mục đích đơn giản hóa việc soạn thảo hợp đồng và giúp tránh những hiểu lầm bằng cách quy định rõ nghĩa vụ nhất định của người mua và người bán.

Nhóm 1. Incoterms mà áp dụng cho bất kỳ phương thức vận tải là: EXW Ex Works FCA CPT nhà cung cấp miễn phí vận chuyển trả tiền vận chuyển CIP và bảo hiểm trả tiền DAT Giao Tại DAP ga Giao Tại Đặt DDP Delivered Duty Paid Nhóm 2. Incoterms có áp dụng đối với biển và vận tải đường thuỷ nội địa chỉ: FAS miễn phí Cùng với tàu FOB Free On Ban CFR Chi phí và vận tải chi phí CIF, bảo hiểm, và vận tải Hơn nữa, hai nhóm được liệt kê ở trên lưu ý giảm số lượng Incoterms 13-11 . Cuối cùng, INCOTERMS ® 2010 cung cấp thêm hướng dẫn hữu ích và làm rõ nghĩa vụ. Ví dụ, các điều khoản sửa đổi cũng giải thích rõ ràng quy định về việc sử dụng các thủ tục điện tử, thông tin chi tiết liên quan đến an ninh thông quan cho các lô hàng và cung cấp lời khuyên đối với thương mại trong nước.

Group 2. Incoterms that apply to sea and inland waterway transport only:FAS          Free Alongside ShipFOB         Free On BoardCFR         Cost And FreightCIF          Cost, Insurance, and FreightFurther, the two new groupings listed above note a reduction of the number of Incoterms from 13 to 11. Finally, INCOTERMS® 2010 provide additional helpful guidance and clarify obligations. For instance, the revised terms also spell out rules regarding the use of electronic procedures; detail information on security-related clearances for shipments; and offer advice with respect to domestic trade.Can I still use the INCOTERMS® 2000?According to the International Chamber of Commerce, all contracts made under INCOTERMS® 2000 remain valid even after 2011. In addition, although the ICC recommends using INCOTERMS® 2010 after 2011, parties to a contract for the sale with respect of the delivery of goods can agree to use any version of Incoterms after 2011. It is important, however, to clearly specify the chosen version INCOTERMS® 2010, INCOTERMS® 2000, or any earlier version.Where can I obtain a copy of the new INCOTERMS® 2010?You can purchase a copy of the new INCOTERMS® 2010 from the ICC website. Where can I learn more about the new Incoterms?There are a number of private sector and government organizations that offer workshops, webinars, and seminars related to the new Incoterms. For webinars and other events related to Incoterms and many other topics of tradecraft education that are being offered by the U.S. Commercial Service and its partners in support of the President’s National Export Initiative, you may visit our Trade Events Search Database.

Tôi có thể vẫn sử dụng INCOTERMS ® 2000? Theo Phòng Thương mại quốc tế, tất cả các hợp đồng được thực hiện theo INCOTERMS ® 2000 vẫn có hiệu lực ngay cả sau năm 2011. Ngoài ra, mặc dù ICC khuyến cáo sử dụng INCOTERMS ® năm 2010 sau khi năm 2011, các bên tham gia hợp đồng bán hàng đối với việc giao hàng có thể đồng ý sử dụng bất kỳ phiên bản của Incoterms sau năm 2011. Điều quan trọng là, tuy nhiên, quy định rõ INCOTERMS phiên bản lựa chọn ® 2010, INCOTERMS ® 2000, hoặc bất kì phiên bản nào trước đó. Tôi có thể có được một bản sao của INCOTERMS mới ® 2010? Bạn có thể mua một bản sao của INCOTERMS mới ® 2010 từ trang web của ICC. Tôi có thể tìm hiểu thêm về Incoterms mới? Có một số của khu vực tư nhân và các tổ chức chính phủ cung cấp hội thảo, hội thảo, hội thảo liên quan đến Incoterms mới. Đối với các hội thảo và các sự kiện khác liên quan đến Incoterms và nhiều chủ đề khác tradecraft giáo dục đang được cung cấp bởi thương mại Hoa Kỳ và các đối tác trong hỗ trợ của Sáng kiến xuất khẩu quốc gia của Tổng thống, bạn có thể truy cập vào cơ sở dữ liệu thương mại Sự kiện Tìm kiếm của chúng tôi.

INCOTERMS AND THE EXPORTER International Commercial Terms, known as “Incoterms”, are internationally accepted terms defining the responsibilities of exporters and importers in the arrangement of shipments and the transfer of liability involved at various stages of the transaction. Incoterms do not cover ownership or the transfer of title of goods. It is crucial to agree on an Incoterm at the start of a negotiation/quotation of a sale, as it will affect the costs and responsibilities involved in shipping, insurance and tariffs. The new Incoterms 2010 rules were revised by the

INCOTERMS VÀ CÁC hiện xuất khẩu thương mại quốc tế, được gọi là "Incoterms", được quốc tế chấp nhận các điều khoản xác định trách nhiệm của các nhà xuất khẩu và nhập khẩu trong việc bố trí các lô hàng và chuyển giao trách nhiệm tham gia ở các giai đoạn khác nhau của giao dịch. Incoterms không bao gồm quyền sở hữu hoặc chuyển giao quyền sở hữu hàng hoá. Điều quan trọng là đồng ý trên Incoterm một sự khởi đầu của một cuộc thương lượng / báo giá bán, vì nó sẽ ảnh hưởng đến chi phí và trách nhiệm tham gia bảo hiểm, vận chuyển và thuế quan. Các Incoterms 2010 quy định được sửa đổi, bổ sung do Phòng Thương mại quốc tế và sẽ trở thành có hiệu lực từ ngày 1 tháng 1 năm 2011. Bốn điều kiện đã được loại bỏ (DAF, DEQ, DES, DDU) và hai được thêm vào: Giao tại Place (DAP) và Giao tại Terminal (DAT).

International Chamber of Commerce and will become effective January 1, 2011. Four terms were eliminated (DAF, DEQ, DES, DDU) and two were added: Delivered at Place (DAP) and Delivered at Terminal (DAT). The modifications affect obligations, risk transfer, and cost sharing for the seller and buyer, resulting in better clarification and application of the eleven (11) Incoterms, and consistent with the way global trade is actually conducted since the last update in 2000.

In any sales transaction, it is important for the seller and buyer to agree on the terms of sale and know precisely what is included in the sale price. Exporters should choose the Incoterm that works best for their company, but also be prepared to quote on other terms. See VEDP FastFacts- Responding to Inquiries Inexperienced exporters may want to use the Incoterm “Ex Works” (EXW), because this term carries the least burden for them. Under EXW, an exporter’s responsibility ends at their facility’s loading dock, which includes making the goods available for pick up and providing any product information needed for filing the Electronic Export Information (EEI). The importer’s agent (i.e. their designated U.S. freight forwarder) will arrange and pay for the pre-carriage, shipping, insurance and any additional costs from the exporter’s door. A sale based on the Incoterm “CIF”, on the other hand, requires the exporter to arrange and pay for the pre-carriage, shipping, and insurance to a named port. In this case, the sale price (invoice) includes not only the (C)ost of goods, but also (I)nsurance and (F)reight costs that the importing buyer pays the exporting seller.

When designating the Incoterm on a commercial invoice or a quotation to the buyer, the term should be followed by the city or port of load/discharge, such as “EXW Factory, Richmond, VA” or “CIF Rotterdam”. Using the actual address is better to avoid any confusion or misinterpretation. Communication throughout the entire process is crucial. For example, under Ex Works, the shipper should notify the importer when the goods are ready and after they have been picked up by the importer’s selected carrier. The exporter’s freight forwarder often provides the vessel and sail

Các thay đổi ảnh hưởng đến nghĩa vụ, chuyển giao rủi ro, và chia sẻ chi phí cho người bán và người mua, kết quả là làm rõ và ứng dụng (11) Incoterms mười một, và phù hợp với thương mại toàn cầu là thực sự thực hiện kể từ khi cập nhật cuối cùng trong năm 2000.

Trong bất kỳ giao dịch bán hàng, điều quan trọng là người bán và người mua đồng ý về các điều khoản của bán hàng và biết chính xác những gì được bao gồm trong giá bán. Xuất khẩu nên chọn Incoterm làm việc tốt nhất cho công ty của họ, nhưng cũng được chuẩn bị để trích dẫn các điều khoản khác. Xem VEDP FastFacts-Đáp ứng Yêu cầu xuất khẩu thiếu kinh nghiệm có thể muốn sử dụng "Ex Works" Incoterm (EXW), bởi vì thuật ngữ này mang gánh nặng cho họ. Theo EXW, trách nhiệm của xuất khẩu kết thúc tại dock tải cơ sở của họ, trong đó bao gồm hàng hoá có sẵn để nhận và cung cấp bất kỳ thông tin sản phẩm cần thiết cho việc nộp đơn Thông tin xuất khẩu điện tử (EEI). Các đại lý nhập khẩu (tức là chỉ định Mỹ giao nhận vận tải hàng hóa) sẽ sắp xếp và chi trả cho tiền vận chuyển, bảo hiểm, vận chuyển và các chi phí bổ sung từ cửa xuất khẩu. Bán dựa trên Incoterm "CIF", mặt khác, đòi hỏi nhà xuất khẩu để sắp xếp và trả tiền cho việc vận chuyển tiền, vận chuyển và bảo hiểm cho cảng. Trong trường hợp này, giá bán hàng (hoá đơn) bao gồm không chỉ là ost (C) của hàng hoá, nhưng cũng có (I) nsurance và (F) reight chi phí mà người mua nhập khẩu trả tiền cho người bán xuất khẩu.

Khi chỉ định Incoterm trên hoá đơn thương mại hoặc báo giá cho người mua, thời hạn phải được theo sau bởi thành phố hoặc cảng nạp / xả, chẳng hạn như "Nhà máy EXW, Richmond, VA" hay "CIF Rotterdam". Sử dụng địa chỉ thực tế là tốt hơn để tránh bất kỳ sự nhầm lẫn hoặc hiểu sai. Thông tin liên lạc trong suốt toàn bộ quá trình là rất quan trọng. Ví dụ, trong tác phẩm Ví dụ, người gửi hàng phải thông báo cho nhà nhập khẩu khi hàng hoá đã sẵn sàng và sau khi họ đã được chọn bởi nhà cung cấp dịch vụ lựa chọn của nhập khẩu. Giao nhận vận chuyển hàng hóa của người xuất khẩu thường xuyên cung cấp tàu và ngày đi thuyền, hoặc dịch vụ vận chuyển hàng hóa không sử dụng, và hóa đơn bất kỳ đại dương của vận đơn hoặc số hóa đơn đường hàng không để các bên thông báo các thỏa thuận và tình trạng lô hàng (mặc dù về mặt kỹ thuật theo Ex Works các nước xuất khẩu của trách nhiệm kết thúc tại bến tàu bốc xếp,). Incoterm nặng nề nhất đối với xuất khẩu là Delivered Duty Paid (DDP), bởi vì tất cả các thỏa thuận và chi phí của nhà xuất khẩu chịu, thường là với sự hỗ trợ của các đại lý (chuyển hàng hóa và các nhà môi giới hải quan).Với DDP, xuất khẩu phải chịu mọi rủi ro và chi phí vận chuyển, bao gồm cả nhiệm vụ và thuế quan, cho đến khi nhận hàng thì người nhập khẩu, thường là tại nhà máy hoặc kho của nhà nhập khẩu. Kể từ khi DDP đại diện cho các nghĩa vụ tối đa cho người bán, nó không được khuyến cáo cho các công ty mới để xuất khẩ

date, or air cargo service used, and any ocean bill of lading or airway bill number to keep the parties informed of the arrangements and status of the shipment (even though technically under Ex Works the exporter’s responsibility ends at their loading dock). The most burdensome Incoterm for the exporter is Delivered Duty Paid (DDP), because all arrangements and costs are borne by the exporter, usually with the assistance of agents (freight forwarders and customs house brokers). With DDP, the exporter bears all risks and costs of transportation, including duties and tariffs, until the goods are received by the importer, usually at the importer’s factory or warehouse. Since DDP represents the maximum obligation to the seller, it is not recommended for companies that are new-to-export.

Case Study TERMS OF TRADE

Which of the following terms are correctly used according to Incocerms 19907 If your answer is "No," give your reasons. (Note: .There may be more than one correct answer in each section. 1. A contract requiring the exporter to send the conntact goods by road from Kenva to Zambia with freight paid by the exporter. a. C&F Lusaka YES NO b. CFR Lusaka YES NO c. CPTLusaka YES NO d. CFR Nairobi YES NO e. FOT Nairobi YES NO

2. A contract requiring an exporter in Mozambique to deliver the contract goods in Beira. Mozambique, for shipment by sea to Dares Salaam, Tanzania.a. FAS Beira YES NO b. FOB Beira YES NO c. FCA Beira YES NO d. FOB Dares Salaam YES NO

3. A contract requiring an exporter in Ethiopia to send the contract goods by air for delivery in Windhoek, Namibiaa. CIF Windhoek YES NOb. CIP Windhoek YES NOc. DDU Windhoek YES NOd. DES Windhoek YES NO

1. a. No. Not a 1990 Incoterm b. No. Ship term only c. Yes d. No. CFR is not to Nairobi e. No. Not an Incoterm2. a. Yes b. Yes c. Yes d. No. Shipment is in Beira3. a. No. Shipment only term b. Yes c. Yes d. No. Ship only term

Delivery where?

Translate into VietnameseSample 2. CONTRACT FOR LUBRICANTS.

CONTRACT No 01292Singapore December 29th, 19..This contract is made between Vietnam National Petroleum Export Import Corporation

(PETROLIMEX) 1, Kham Thien, Hanoi (Socialist Republic of Vietnam) Cable address: "Petrolimex Hanoi" (hereinafter reference to as BUYER) and AGIP PETROLI S. p. A. – Singapore Branch (reference to as SELLER) whereby it is agreed as follows:

1. Object of the Contract SELLER undertakes to deliver lo BUYER in Vietnam .on CFR basis the following lubricants:

Item Lubricants Quantity CFR HCM CFR HP 01 GRMU3 858 DRUMS x 850 180 KG USD/MT (154.44 MT) 02 CRMU3 858 DRUMS x 870USD/MT 180 KG (154.44 MT)

The above prices are expressed in US dollars per metric ton net CFR port of Vietnam, deliveries as per Art. 6 below, and remain fixed during the term of this contract and provided that an Irrevocable L/C in respect thereof has been notified to Seller by Singapore Indosuez Bank prior to 31/10/19 .. 2. Specification of LubricantsThe specification of lubricants in drums supplied under this Contract shall conform to the specifications set out in Appendix 1 attached to hereto, which is an integral part of this Contract; Origin of products will be Italy, Holland or Singapore at SELLER'S option.

3. PackagingPackaged products will be delivered in AGIP standard new steel drums, of about 1.2/1.0 mm thickness. The drums will be filled at 180 kg not weight.4. Payment4.1. SELLER will be paid by .Irrevocable L/C opened by Vietcombank'Hanoi and advised to Seller through Indosuez Bank in Singapore payable at sight against first presentation of full set of shipping documents4.2 SELLER shall effect first shipment within 30 days from date SELLER receives notification of irrevocable L/C 4.3. All costs of L/C in Singapore shall be for SELLER'S account4.4. All L/C amendment's cost (if any) caused by the failure of the Buyer to follow the terms and conditions of payment will be for BUYER'S account4.5. The under mentioned documents will be forwarded to BUYER'S Bank immediately after loading datea) Signed commercial invoice in 3 originalsb) Clean "Shipped on Board" Ocean Bill of Lading in complete set of at least 3 original 3 non- negotiable copies signed made out to order of "Vietcombank" Hanoic) Quality/Quantity certificate issued by the Chamber of Commerce in triplicated) Packing List in triplicatee) Confirmation of cable advise for shipment in triplicatef) Receipt of shipmaster acknowledging due receipt of all documents in triplicate non - negotiable copies of each document, for handing same over to PETROLIMEX Haiphong or PETROLIMEX Hochiminh City5. PenaltiesIn case of delay in payment (if any), BUYER shall remit to SELLER interest calculated from the date of presentation of documents to the bank in Singapore to the date of effective receipt of due amount. The interest will be calculated at LIBOR RATE (6 months) plus 1.5 per cent6. DeliveriesProducts will be delivered in partial shipments to be agreed upon. In case of, transshipment SELLER shall give to BUYER all necessary detail and information 7. Insurance Insurance shall be effected by BUYER.8. Delivery TermsCFR Vietnamese ports as per Art. 1. Goods to be delivered in partial shipments accordance with Art. 69. ClaimsIn case of non - conformity of the quality of the products actually delivered by SELLER with the Contract specifications, any claim concerning the quality of the goods must be presented to SELLER within three months from the date of delivery.No claims shall be accepted by SELLER party after expiry of the above period20. ContingenciesShould any circumstances arise which prevent the complete or partial fulfillment by any of the parties of their respective obligations under this contract, namely: fire, ice conditions or any other acts of the elements, war, military operations of any character, blockade, prohibition of export or import or any other circumstances beyond the control of the parties, the time stipulated for the fulfillment of the obligations shall be extended for a period equal to that during which such circumstances last.If the such circumstances last for more than 20 days, any delivery or deliveries which are to be performed under this contract within that period may be cancelled on the declaration of either party, and if the above circumstances last for more than. 40 days, neither party shall have the right to make a demand upon the other Party for compensation for any possible damage.A party unable to meet its obligations under this Contract shall immediately advise the other party the time of commencement and the termination of the circumstances preventing the fulfillment of its obligations.Certificates issued by the respective Chamber of Commerce of SELLER'S or BUYER'S country shall be sufficient proof of such circumstances and their duration.11. Arbitration

All disputes and differences which may arise out of the present contract or in connection with it shall be settled, if possible, in an amicable way.In the event that it is not possible to settle them in an amicable way, the parties shall refer the matter to Arbitration in the International Chamber of Commerce in Paris12. Other Conditions12.1 Neither Party is entitled to transfer is right and obligations under the present Contract to a third party without the other Party's previous written consent 12.2 After the signing of the present Contract, all previous negotiations and correspondence between the Parties in connection with it shall be considered null and void12.3 All amendments and additions to the present Contract are valid only if they are made out in writing and signed by both Parties12.4 All taxes, customs and other duties levied in Vietnam on the contracted Products shall be for BUYER'S account.SELLER: BUYER:AGIP PETROLI S.p.A PETROLIMEX(Signed) (Signed)Patrick FOK Nguyen ManhLubricants Manager Vice General Director

APPENDIX 1Product: Agip Gr Mu3NLGI consistency: 3Worked penetration: 230 dmmASTM dropping point: 195 C degrees.

CHAPTER 2: NEGOTIATING PRICE & PAYMENT

2.1. Export Pricing Strategies

THE PROBLEMIn many negotiations, as soon as the exporter states a price, the buyer begins to demand concessions about delivery time, method of payment, and so on. Concessions that can quickly make the deal unprofitable. How can the exporter avoid the "price trap"?

Trong

THE PRINCIPLEThe exporter must perceive and preserve the interdependence of every aspect of an export negotiation. A price quotation is based on a set of assumptions about delivery, payment and warranty terms. The contract price must reflect any change in. or renegotiation of, these assumptions.

Nhà

IN MORE DEPTHExporting is not difficult; the problem is making money at it. Sometimes first-time exporters fail to understand how the many terms of a contract relate to each other: a longer warranty period, fur example, creates higher costs—the contract price should reflect these costs. An extension of the payment period creates higher costs— again the contract price should reflect the extension. In fact. virtually every problem that the two sides normally negotiate has a bearing on price. Mostly the buyer's suggestions tend to raise the price, but a lowering of the price is possible too. Let's use an example to study this relationship between price and other contract terms in more detail.

Scenario: Verbena Electric hopes to export its best-selling product: small domestic electric fans, from Verbena to Esperanza. A market study in Esperanza shows that fifteen brands of fan

are available in Esperanza, none of them made in Esperanza itself. Models range from expensive, electronically controlled fans imported from Europe to cheap plastic products imported from Nonamia. In every case, the price strikes the export manager of Verbena Electric, John Royalstone as high: his own fans will be competitive. Royalstone begins discussions with the purchasing manager or Esperanza Electrical Importing, Alice Smart. Smart is particularly interested in one of Royalstone's products, a three-speed, 180 o revolving tan with a graceful, modem design. Negotiation begins.Early on, Smart introduces the question of price: “What’s the price of a fan like that?” Royalstone is an old hand at negotiation: he knows that when he states a price, it must be for precisely denned goods delivered under precisely defined circumstances. He offers a unit price of $22 and makes it clear that this price is based on the following assumptions:• The size of the order is 3.000 items:• The specification of the fan is identical—except for color: 1.000 will be delivered in sold. 1.000 in black. 1.000 in red. ..• No additional packaging or safely warnings are required beyond what is normal in Verbena;• Delivery is FOB (Port Verbena):• Payment is by irrevocable, confirmed, at-sight letter of credit;• Delivery takes place three weeks from the dale that Royalstone receives advice that the letter of credit has been opened;• The warranty period on the fans is three months from the date of delivery.Smart sees that she is dealing with an experienced exporter. She begins to discuss the items on Royalstone's list.

Order SizeSmart is not sure she can handle 3,000 fans: she would prefer to order fewer, test the market, and order more later if things go well. Royalstone makes two points: first Smart's transport costs will increase on a smaller.order, because 3,000 units is one container load; second, the unit price will increase on a smaller order. An order of 1.000 fans for example would cost $25 each—not $22.

SpecificationsSmart likes the color range, but she wonders if the price would be lower if she ordered only one color. Royalstone is ready to cut his price by 50c per fan if the whole order is the same color. Packaging Unfortunately, Esperanza has strict rules about packaging and safety: labeling of electrical products. Smart shows Royalstone the regulations. After a few phone calls, Royalstone calculates that meeting Esperanzan standards will add at least 40c to the cost of each fan.

Incoterm Smart says that she would prefer CIF delivery, Esperanza City. Royalstone tells her that the cost of insurance and freight between Pon Verbena and Esperanza City is $520 on an order of 3,000 items: somewhat less on an order of 1,000. Smart also wonders what the effect would be of collecting the fans ex works; The EXW price, loaded in a coniainer is $21.75—a small saving,

Terms of Payment Smart says that she dislikes letters of credit and prefers to trade on open account—30 days net, with a 2% discount for payment within ten days. Royalsione explains to her how trading on open account will increase his costs: he will need export credit insurance, and he will have to wait for Smart's check to clear. Based on experience, clearance will lake 45 days. His price will rise to $26 per fan on an order for 3,000, FOB Port Verbena.Smart is unhappy both about the cost of the letter of credit and about Royalstone's additional price if she refuses to open one. She suggests that she pays 25% of the price with order, and the remaining 75% on open account. Royalstone has no ready answer to that proposal. He quickly recalculates his price: it would be below $26, probably by $1.10.

Date of Delivery When Smart questions delivery three weeks after the opening of the letter of credit—Royalstone again replies with figures: if she wants the goods sooner, he can arrange it—but only by working an exrra shift with extra costs involved. His price would have to be somewhat higher.

Warranty PeriodRoyalstone is not worried about the quality of his fans, but he knows from experience thai a three-month warranty on an FOB delivery produces very few claims for defects—about two claims per thousand fans. A six-month warranty, however, is more costly—about ten claims per thousand fans. His normal policy is to mail a replacement fan in the event of a claim—which costs him about $40 for the fan, the packing and the postage. If Smart asks for a six-month warranty, it will add 30c per fan to Royalstone’s costs.

In this lengthy example, all negotiating decisions bear directly on the price of the product. Naturally other points are open to negotiation; this is just a sampling. But the general point is clear: a manager like Royalstone who knows his product and who has thoroughly analyzed his costs is unlikely to lose money on an export deal—unless, of course, he decides to do so. If Royalstone is eager to win Smart as a regular customer, he may be ready to sell to her at a loss first time around. Or his factory may be so short of work that he is prepared to accept any job—even a loss-maker. Or the Verbenan government may make exporting so attractive with export incentives that Royalstone can trade at a loss but still show a profit at the end of the day. The general point is this: a good manager knows that almost every decision made during a negotiation influences price—an excellent manager can put a dollars--and-cents figure on this influence.

CASE STUDYIn a Jam

Gorm Trading exports canned foods from Verbena. Gorm is negotiating of 600 cases of apricot jam by road to a neighboring country. Gorm’s price per case is $20. The price is based on delivery FCA with no special packaging or labeling. The jam has a six-month expiry date stamped on the label. Payment will be by irrevocable, confirmed, at-sight letter of credit. Delivery date is two days after the opening of the credit. Decide what influence each change listed below will have on the price per case.(A) NO CHANGE (E) MINIMAL DECREASE(B) MINIMAL INCREASE (F) APPRECIABLE DECREASE(C) APPRECIABLE INCREASE (G) LARGE DECREASE(D) LARGE INCREASE1. Reduction of the order from 600 cases to 300 cases.2. Delivery EXW (Exporter must have the goods ready for collection in his warehouse.)3. Replacement of single flavor (apricot jam( by a range of 10 flavors, some of which are “exotic.”4. Change of labeling to show exact nutritional values and ingredients (not normally specified by Gorm).5. Change of payment from letter of credit to open account payment due 45 days from date of invoice.6. Replacement of a single delivery with delivery in ten installments of 60 cases over a period of one year.7. Increase of the expiry period from six months from date of manufacture to two years.

1. C. 2. E 3. B-C 4. C 5. C 6. C 7. C

Translate into VietnameseFORM 3: ABC’S CONTRACTABC CORPORATION, as SELLER, confirms having sold to BUYER the following goods by contract made on the date below and on the terms and conditions SET FORTH HEREUNDER AND ON THE REVERSE SIDE HEREOF.BUYERDATECONTRACT NOBUYER'S REFERENCE NO.GOODSQUANTITY UNIT PRICE TOTAL AMOUNT

SHIPMENT:Time of Shipment Transshipments permitted/not permittedPort of Loading Partial shipments permitted/not permittedPort of DestinationPACKING: MARKING:PAYMENT: The letter of credit shall bear this Contract's number as referenceINSURANCE

To be covered by Buyer/SellerInsured Amount Condition

INSPECTION:OTHER TERMS & CONDITIONS:ACCEPTED ON ....................20...

BY:.............................................(BUYER)...;.......................(SELLER)

Please sign and return one copy.SEE TERMS AND CONDITIONS ON REVERSE SIDE

1.October ABC'S CONTRACTGENERAL TERMS AND CONDITIONS

1) Shipment or delivery Giao hàngThe obligations of Seller to ship or deliver the goods specified on the face of this Contract ("Goods") by the time or within the period specified on the face of this Contract shall be subject to the availability of the vessel or the vessel's space. Trách nhiệm của bên Bán chuyển giao hàng được ghi trong Hợp đồng (gọi là “hàng hóa”) đúng hay trong thời hạn quy định trong hợp đồng tùy thuộc vào tình hình thuê tàu hay diện tích chỡ hàng trên tàu. If, under the terms of this Contract, Buyer is to secure or arrange for the vessel or vessel's space, Buyer shall secure or arrange for the necessary vessel or vessel's space on berth terms basis and give Seller shipping instructions within a reasonable time prior to shipment, including but not limited to the name and detailed schedule of the vessel. Theo điều kiện hợp đồng, nếu bên Mua lo việc thuê tàu hay mua chỗ trống trên tàu, thì phải bảo đảm giữ chỗ để hàng sát thành tàu và không chen với hàng hóa của người khác, đồng thời phải báo cho bên bán biết các chi tiết vận chuyển trong khoảng thời gian hợp lý trước khi chuyển hàng, trong đó bao gồm tên, lịch chi tiết của tàu biển, vv… If Buyer fails to give such instructions within a reasonable time prior to shipment, Seller may, at its sole discretion and at Buyer's risk and account, arrange for the vessel or the vessel's space and make shipment of the Goods, without prejudice and in addition to any other rights and remedies Seller may have under this Contract or at law or in equity or otherwise. Nếu bên mua không thông báo các thông tin vừa nói trong thời hạn hợp lý, bên bán có thể tùy nghi, và Bên mua sẽ chịu mọi rũi ro, chi phí, thuê tàu hay đặt chỗ trên tàu và vận chuyển hàng, mà bên kia không được khiếu nại và đòi thêm quyền hạn khác để bù đắp mà theo hợp đồng này hay theo luật định hay theo tập quán, vv…. bên bán có thể có.

Trong trường hợp chuyển giao hàng từng phần, bất cứ trường hợp trễ nải hay không giao một phần thì sẽ không bị xem là vi phạm hợp đồng này và không được suy ra là bên mua có quyền hủy hợp đồng hay từ chối chấp nhận toàn bộ những lần giao hàng khác. In case of shipment or delivery installments, any delay or failure in shipment of one installment shall not be deemed a breach of this Contract giving rise to a right of Buyer to cancel this Contract or refuse to accept performance with respect to other installments. 2) PaymentIf payment for the Goods shall be made by a letter of credit, Buyer shall establish, in favor of Seller, an irrevocable letter of credit through a prime bank of good international repute immediately after the conclusion of this Contract in a form and upon terms satisfactory to Seller. If Buyer fails to make any due payment, to establish a letter of credit or otherwise to perform its obligations hereunder, Seller may demand that Buyer provide, within a reasonable time, adequate assurance satisfactory to Seller of the due performance of this Contract and may delay delivery until such assurance is given. Nếu thanh toán được thực hiện bằng L/C, bên mua phải mở L/C không thể hủy ngang mà bên bán là người thụ hưởng tại 1 ngân hàng hạng nhất có tiếng trên quốc tế ngay sau khi ký kết hợp đồng này theo hình thức và điều kiện đúng theo yêu cầu của bên bán.Nếu bên mua không chịu thanh toán đúng hạn, mở tín dụng thư, hay nói cách khác, thực hiện những nghĩa vụ dưới đây, bên bán có thể yêu cầu bên mua, trong thời hạn hợp lý, cung cấp sự bảo đảm đầy đủ theo yêu cầu của bên bán và bên bán có thể hoãn giao hàng cho đến khi nào bên mua thực hiện bảo đảm thanh toán như đã nói.Buyer shall pay the price specified on the face of this Contract without set-off counterclaim, recoupment or other similar rights which Buyer may have against Seller and which shall be exercised in separate proceedings between Buyer and Seller. Bên mua phải thanh toán giá ghi cụ thể trên hợp đồng này không được trả giá để thoái thác, hay những trường hợp tương tự mà bên mua có thể thực hiện để gây khó khăn cho bên bán, và những quyền này bên bán và bên mua chỉ được sử dụng trước khi ký kết hợp đồng mà thôi. Any new, additional or increased freight rates, surcharges (bunker, currency, congestion or other surcharges), taxes, customs duties, export or import surcharges or other governmental charges, or

insurance premiums, which may be incurred by Seller with respect to the Goods after the conclusion of this Contract shall be for the account of Buyer and shall be reimbursed to Seller by Buyer on demand. Nếu có thêm khoảng tăng giá cước vận chuyển, phụ thu (ụ để hàng, đổi ngoại tệ, tắc đường hay những phụ phí khác), thuế, thuế quan, phụ thu XNK hay các loại lệ phí đóng cho chính phủ, hay mua bảo hiểm liên quan đến hàng hóa, mà bên bán phải trả sau khi có hợp đồng này, mà lẻ ra bên mua phải chịu và phải được bên mua hoàn lại cho bên bán theo yêu cầu. If Buyer fails to pay for the Goods in accordance with this Contract, Buyer shall pay to Seller as liquidated damages and not as a penalty overdue interest at the rate of the lower of eighteen percent (18%) per annum or the maximum interest rate permitted by the laws of Buyer's country, calculated from the date for such payment until the actual date of payment calculated on the 360 day-a-year basis for the actual number of days elapsed. Nếu bên mua không thanh toán theo đúng hợp đồng này, bên mua phải chịu bồi thường trên cơ sở hợp lý và không được phạt có tính chất răn đe hay phạt chiếu lệ theo kiểu ấn định mức phạt thấp hơn lãi suất 18% năm tính trên lãi suất thanh toán nợ quá hạn hay mức lãi suất tối đa mà luật pháp của nước người mua cho phép, tính kể từ ngày phải thanh toán cho đến ngày thực sự thanh toán theo năm lịch 360 ngày để biết số ngày thực tế quá hạn thanh toán. 3) Force MajeureIf the performance by Seller of its obligations hereunder is directly or indirectly affected or prevented by force majeure, including but not limited to Acts of God, flood, typhoon, earthquake, tidal wave, landslide, fire, plague, epidemic, quarantine restriction, perils of the sea, war declared or not or threat of the same civil commotion, blockade, arrest or restraint of government, rulers or other labor dispute, explosion, accident or breakdown in whole or in part of machinery, plant, transportation or loading facility, governmental request, guidance, order or regulation, unavailability of transportation or loading facility, bankruptcy or insolvency of the manufacturer or supplier of the Goods, or any other causes or circumstances whatsoever beyond the reasonable control of Seller or manufacturer or supplier of the Goods, then Seller shall not be liable for loss or damage, or failure of or delay in performing its obligations under this Contract and may, at its option, extend the time of shipment or delivery of the Goods or terminate unconditionally and without liability the unfulfilled portion of this Contract to the extent so affected or prevented.4) Default

Because S + V …Because of Noun phraseBecause the consignment was delayed, the seller had to be liable for compensation.Because of the delayed consignment, the seller had to be liable for compensation.

In case that the consignment was delayed, the seller would be liable for compensation.In case of the delayed consignment, the seller had to be liable for compensation.

In case of (i) Buyer's failure to perform any provision of this Contract; (ii) Buyer's inability to pay its debts generally as they become due; (iii) Buyer's bankruptcy or insolvency or (iv) appointment of a trustee, receiver or liquidator of Buyer of any material part of Buyer's assets or properties ("Events of Default"), Seller may, at its sole discretion, (i) terminate this Contract or any part thereof; (ii) declare all obligations of Buyer immediately due and payable; (iii) resell the Goods; (iv) hold the Goods for Buyer's account and risk; (v) pospone the shipment of Goods; or (vi) stop the Goods in transit, and Buyer shall reimburse Seller for all losses, damages arising directly or indirectly from such Events of Default.The rights and remedies of Seller hereunder are cumulative and in addition to Seller's rights, powers and remedies existing at law or in equity or otherwise.5) Intellectual property rightsNothing herein contained shall be construed as transferring any patent, trademark, utility model, design, copyright, mask word or any other intellectual property rights in the Goods, as such rights being expressly reserved to the true and lawful owners thereof.Seller shall be neither responsible nor liable for any infringement or unauthorized use with regard to any patent, trademark, utility model, design, copyright, mask work or any other intellectual property rights.6) Warranty, claim

Unless expressly stipulated on the face of this contract, seller makes no warranty or condition, expressly or impliedly, 'as to the fitness or suitability of the goods for any particular purpose or use or the merchantability thereof.If any warranty exists. Seller's liability shall be limited to replacement or repair of the defective Goods.Any claim by Buyer of whatever nature arising under or in relation to this Contract shall be made by registered airmail within thirty (30) days after the arrival of the Goods at the port of destination, or solely in respect to a claim alleging the existence of a latent defect in the Goods, within six (6) months after the arrival of the Goods at the port of destination, and any such claim shall contain full particulars with evidence certified by an authorized surveyor.7) Limitation

Seller shall not be responsible, whether in contract or warranty, tort or on any other basis, to Buyer for any special, incidental, consequential, indirect or exemplary damages, and in no event shall Seller's total liability on any or all claims from Buyer exceed the price of the Goods.8) General(1) All disputes, controversies or differences arising out of or in relation to this Contract or the breach thereof which cannot be settled by mutual accord without undue delay shall be settled by arbitration in Tokyo, Japan, in accordance with the rules of procedure of the Japan Commercial Arbitration Association; the award of arbitration shall be final and binding upon both parties, and judgment on sucli award may be entered in any court or tribunal having jurisdiction thereof; this Contract shall be, in all respects, governed by and construed in accordance with the laws of Japan; the trade terms herein used, such as FOB, CFR and CIF, shall be interpreted in accordance with "INCOTERMS 2000".(2) The failure of Seller at any time to require full performance by Buyer of the terms hereof -shall not affect the right of Seller to enforce the same; the waiver by Seller of any breach of any provision of this Contract shall not be construed as a waiver of any succeeding breach of such provision or waiver of the provision itself.(3) This Contract constitutes the entire agreement between the parties hereto and supersedes all prior or contemporaneous communications, agreements or undertakings with regard to the subject matter hereof; this Contract may not be modified or terminated except by a written agreement of Seller and Buyer.(4) Buyer shall not transfer or assign this Contract or any part thereof without Seller's prior written consent.

2.2 THE FIVE STEPS IN NEGOTIATING PAYMENT

THE PROBLEMFor the exporter, the great fear is non-payment. Most developed countries offer export-insurance, to cover this and other risks, but such insurance is rare in developing countries. How can the exporter create payment terms that ensure payment?THE PRINCIPLEPayment is a more orderly process than delivery. Every successful payment provision stipulates the flow: When and Where of payment. In addition it specifies what delay in payment, if any, is excusable, and the consequences of unexcusabie delay.

Thanh toán cần phải tiến hành theo đúng trình tự hơn giao hàng. Tất cả các quy định về thanh toán cần phải nêu rõ chi tiết: Thời gian và điểm thanh toán. Ngoài ra cũng cần phải ghi cụ thể khả năng thanh toán trễ, những trường hợp nào được miễn trừ trách nhiệm, và không miễn trừ trách nhiệm.

IN MORE DEPTHIn negotiating payment, the sxporter should keep five Steps in mind, five issues that the export agreement must adequately cover.

STEP 1MODE OF PAYMENT

STEP 2TIMING

What is the date of

STEP 3PLACE OF PAYMENT

Where must the money be before

STEP 4DELAY

What delay in payment

is excusable?

STEP 5RESULT OF DELAYWhat are the results of non-excusable delay in payment

How will payment be made

payment? payment is considered complete?

Step 1. Mode of PaymentMost international trade is conducted on a cash basis—goods against cash. Sometimes, however, goods are traded against goods (barter trade), and sometimes the exporter gives the buyer a credit—the buyer can pay by installments over a period of time. Barter and credit transactions are a subject in themselves. Here we shall look only at cash transactions.

Trade within a country is based on a mixture of trust and the close proximity of courts of law. International business is not so blessed: trust is rare, and courts are far away and unpredictable. Payment is. therefore, tightly controlled. Four approaches to payment are common:

♦ Payment on open account with no security;♦ Payment on open account secured by export credit insurance;♦ Payment on open account secured by a payment guarantee; and♦ Payment by letter of credit.In private life, small purchases (in a supermarket, for example) are sold cash on delivery. If you buy household furniture, you will usually receive the invoice with a certain amount of time to pay it—cash against invoice. Cash against invoice is the typical open account transaction. If, however, the furniture store distrusts you, it will ask for a 100% prepayment as security—cash with order: that way they are completely safe.

All these transactions have exact equivalents in export trade. Obviously, however, the word "cash" in the international context does not usually mean coins and notes. (Occasionally, perhaps, a buyer pays for goods by giving the exporter a briefcase full of money, but such payments generally reflect a wish to escape scrutiny by the central bank or other authorities.) To the exporter cash normally means checks (cheques) or bank transfers.

Exporters who are paid on open account are seriously at risk. The problem is obvious: if anything goes wrong—if the check is not honored by the bank for example, or if the buyer files for bankruptcy or simply disappears—the exporter is in a poor position to claim payment. One solution is to ask for 100% prepayment—as in the furniture store example above. The buyer, however, is unlikely to agree to this arrangement.

There are two common approaches to providing the exporter with an acceptable level of security: one approach is to persuade a third party to pay the epxorter if the buyer fails to do so. A typical third party is a bank which may issue a bank guarantee, paid for by the buyer. An alternative third party is an insurance that issues an export credit insurance policy covering the risk of non-payment: in this case, the exporter pays the costs. The second approach is to position the money the money with a bank in the country of the xporter by means of letter of credit, and to allow the exporter collect the money when the goods are

delivered. The letter of guarantee, export credit insurance, and the letter of credit – each of these approaches is complex enough to require a section in its own right.

Step 2. TimingIn negotiating any cash-against-invoice payment- whether secured or not- it is important to consider the time/payment structure. Payment against invoice is rarely made immediately. Most buyers wait a while before paying: the delay gives them use of what is, in fact, the exporter’s money. The exporter, of course, suffers from delay: he must borrow money, perhaps at a high rate of interest, until he is paid. To speed up payment, most exporters offer a discount for early payment, for example 1% discount if payment is made within 30 days of the date of invoice. This discount is often attractive for both buyer and exporter: the buyer saves on the invoice price, while the exporter substantially, improves his cash flow. If the parties say nothing at all, then payment is due, in most jurisdictions on delivery.The date of payment for a single sale is simply regualated. In an ongoing contract- delivery involving partial shipments, periodic shipments, or a spare parts supply contract, for example- the aprties must negotiate a chain of dates. These are calendar dates (for example, 30th June) or interval times (for example, within 30 days of the date of invoice).

Step 3. Place of PaymentWhen Tony Mino instructs his bank in F.speranza to pay Double-A Ltd. in Verbena, he begins a chain of events that often takes months to complete. Perhaps the National Bank of Esperanza has no funds to make foreign transfers; perhaps inefficiency delays payment. To avoid the dangers of slow payment, exporters try to protect themselves with a clause like this:

Payment shall be deemed to have been made only when the contract is paid into the seller’s bank account and is at the seller’s full disposal.

In fact, this is not unreasonable: under the Vienna Sales Convention, for example, payment is normally deemed to be made onl\ when the cash is available at "the seller's place of business" (Article 57) Negotiators must work this out carefully -the conflicts of interest are clear:

POINT AT WHICH MONEY IS DEEMED TO BE PAIDWhen the buyer instructs the bank to pay?

When the buyer pays the money into his bank ?

When the buyer’s bank transfers funds?

When funds reach the seller’s bank account?

BUYER PREFERS SELLER PREFERS

The decision is important because late payment is subject to payment of interest: the cost of any delay along the payment route properly belongs to the buyer.

Step 4. DelayAs with delivery, delay in payment might be excused during a grace period, though this is unusual. More commonly, a force majeure event excuses delay. In fact, the force majeure excuse for delay seldom makes sense in the context of payment; most exporters try to resist it. In principle, any payment made after the agreed date of payment is in delay.

Step 5. Results of Delay.What happens when payment is late? It is generally agreed in most legal systems that the exporter has a right to be compensated for losses due to late payment. What happens in practice depends on the payment agreement negotiated by the parties. Let's start with the worst case: payment on open account, with no security and with no agreement on late payment. In this case, the exporter tries to exert pressure on the buyer— but this is difficult. The exporter writes letters, makes telephone calls, waits and hopes. Every day that payment is late costs money—losses that the exporter can, in practice, do little about—without

beginning legal action. Considerably better is the situation of the exporter whose contract with the buyer regulates late payment. A typical contract clause:Delayed PaymentIf payment of any sum payable is delayed, the Buyer shall be entitled to receive interest on the amount unpaid during the period of delay. The interest shall be at an annual rate three percentage points above the discount rate of the central bank in the Seller's count ry.When the exporter is finally paid, the interest payable is simply added to the outstanding sum.For force majeure, sec Chapter 1, Section 2. The force majeure clause suggested by the International Chamber of Commerce, for example, states that payment of interest on overdue sums payable to the seller is not excused by force majeure.

Even better for the exporter is an agreement with the buyer to strengthen the payment provisions with a payment guarantee. This guarantee, as you will see in Section 3 below, obliges a bank to pay if the buyer is more than a given time, say two months, in delay.

The best solution, of course, is to create a payment regulation which makes late payment impossible—the confirmed, irrevocable, at-sight letter of credit. Nothing is better for the exporter.

What You Should Know1. Payment should be negotiated so that the exporter secures prompt, correct payment.2. Payment on open account is often timed so that early payment secures a discount for the buyer; this benefits the exporter by improving cash flow.3. The exporter prefers the place of payment to be his own bank account; payment is not deemed to be made until the money is at his disposal.4. In most contracts nothing, not even force majeure, excuses late payment.5. Late payment causes harm to the exporter—the bank interest he must pay while waiting For his money. This interest should be compensated to him by the buyer under the terms of the contract.

CASE STUDYMissing Terms

Study the price and payment clause below. It is taken from an export contract that lost the exporter a great deal of money. What is missing?The price payable for the Contract Goods as specdified in Annex A is $400,000.

1. Does the clause specify how payment will be made? YES NO2. Does the clause specify when payment is due? YES NO3. Does the clause say where the money must be before the buyer is deemed to have paid?

YES NO4. Does the clause define delay in payment? YES NO5. Does the clause mention the consequences of delay? YES NO6. What is payment due if the parties say nothing in their agreement?

The answer to questions 1-5 is “No.” A contract like this relies heavily on the applicable law to fill in the gaps: the exporter often finds himself very unhappy with the decisions that the law makes.Question 6: If the parties say nothing, payment is usually due on delivery.

CONCEPT REVIEWBelow is the first part of a payment guarantee issued in standard bank form. Study it, and then answer the questions.

Payment Guarantee No. 76542/92 Reference is made to the order No. WEX 344 K placed with you as suppliers by Multi-Import for the supply of integrated circuits. According to the conditions of this order, the Buyer has to furnish a payment guarantee in the amount of USD 500,000. By order of the Buyer, we, Big Bank of Euroland, hereby establish this guarantee and undertake irrevocably to pay to you without request or inspection any outstanding amount not exceeding USD 600,00. We say United States Dollar six hundred thousand only upon your first written demand stating that the Buyer has failed to effect the outstanding payment at maturity. Our liability under this guarantee will expire as soon as this document is returned to us,

latest however, by 31st December 2006.

GIẤY BẢO ĐẢM THANH TOÁN Số 76542/ 92Giấy bảo đảm này được phát hành căn cứ vào đơn đặt hàng số WEX 344 K đã gửi cho quý Ngài, mà Multi-Import là nhà cung cấp vi mạch cho thân chủ của chúng tôi. Theo các điều kiện của đơn đặt hàng này, bên mua phải cung cấp giấy bảo đảm thanh toán có giá trị 500,000 USD. Theo lệnh của bên mua, ngân hàng Big Bank of Euroland của chúng tôi nay phát hành giấy bảo đảm này và đảm trách không được thoái thác việc thanh toán cho quý ngài đối với bất cứ khoản tiền đáo hạn không vượt quá 600 USD mà không được thắc mắc hay tìm cớ trì hoãn. Cụ thể văn bản yêu cầu đầu tiên thanh toán số tiền sáu trăm ngàn USD phải nêu rõ bên mua đã không thực hiện thanh toán khi đáo hạn. Tuy nhiên giấy bảo đảm này sẽ hết hiệu lực ngay khi chứng từ này được trả lại cho chúng tôi chậm nhất là ngày 31/12/2006.1. Who is the principal? SELLER BUYER BANK2. Who is the guarantor? SELLER BUYER BANK3. Who is the beneficiary? SELLER BUYER BANK4. Is this a “demand” guarantee? YES NO5. If the buyer fails to pay, is payment secure? YES NO

1. The buyer (Multi-import) 2. The bank (Big Bank of Euroland)3. The exporter (unnamed) 4. Yes 5. Yes

Translate into VietnameseA Example 4.

CONTRACT FOR GARMENT PROCESSINGGENERAL TERMS

AND CONDITIONS

ON BASIS OF C.M.P.

No: 08/GEN-ELLEN/19 ..Party A: VIETNAM NATIONAL GENERAL EXPORT-

IMPORT CORPORATION (GENERALEXIM)

46, Ngo Quyen Street Hanoi, S.R of VietnamHereinafter called

"Party A"

Party B: ELLEN CO. LTD

1508 - 1510 Star House,Salisbury Road, Kowloon, Hongkong

Hereinafter called

"Party B"

HỢP ĐỒNG GIA CÔNG MAY MẶC

A. The Contract

1. Party A undertakes to manufacture the garments specified in the separate contract or appendix of the contract (to be) signed by both the parties in accordance with the present general terms and conditions also for the delivery time stated in the above mentioned contract or its appendix.

A. Hợp đồng

1. Bên A chịu trách nhiệm sản xuất hàng may

mặc được ghi rõ trong 1 hợp đồng riêng hay phụ

lục của hợp đồng do 2 bên ký kết theo đúng các

điều khoản và điều kiện chung, trong đó có ấn

định thời gian giao hàng.

2. Party A shall be responsible for the delivery time provided that all materials and accessories to be supplied by party B arrive at Haiphong port in reasonable time prior to starting production of a new style3. Any factories to be used for production of orders by Party A shall be approved/accepted by Technicians from Steilmann.

B. Material supply1. Party B and Steilmann will be responsible for supplying all the fabric materials (shell / lining / Acrylic Boa / pocketing lining) and accessories in due time for starting production together with the following extra items:

- Fabric materials 2%- Zipper, shoulder pad and special label 1.0%- Fusing 2%

- Buttons, eyelet, stopper and padding 3.0%- Size label, Hangtags, thread 5.0%- Others items not mentioned above and the wastage will be confirmed later.

All the above-mentioned fabric material's and accessories' wastage are only for replacement of any defective items. After the factory fulfils all the orders and quantity, these wastage percentages can be retained by the factory.2. Party B shall be responsible for sending the import documents 3 days before vessel carrying the goods referred to in A3 hereof ETA; as soon as the materials/accessories have arrived in the port, part A shall be responsible for applying for the import-license the tax-free permit, and take the goods out of Customs to the factory within 10 days3. After the arrival of the materials in Party A's factories, the factories should inform Party B and then both parties shall jointly check the contents of each carton and bale within one week and shall prepare the Checking Report - which should be signed by both parties and passed to Party B immediately.4. Party A shall be responsible for the fabrics and accessories from the date of receipt until the date of shipment and shall compensate party B the full invoice value for any loss or damage (Force majeure excepted)

C. Sewing instruction and inspection1. Party B will supply the original samples, sketches, sewing instructions and paper patterns to party A's factories from 5 to 7 days before Party A starts production of each style/order enabling the factories to make a sample.2. Party A's factories should make 3 counter samples based on supply instruction and paper pattern and send for Party B's technician to evaluate.3. Party A's factories should show Party B's technician the marker for each style and must have the said technician's approval before cutting.4. In case of more or less consumption of shell material or lining, accessories, the technician's consent in writing is required before cutting is made; otherwise party B will charge back all the value in the absence of the technician's consent aforesaid5. Any problem against paper pattern and sewing should be advised to B's technician immediately before production proceeds.6. An authorized representative from party B will come to inspect the goods during production and before shipment.

7. Party A's factories shall inform party B and their technician that they may make the final inspection 2 days before Shipping; if after inspection is made garments have been rejected, factories still have time to repair and maintain the delivery date.8. After finished garments delivery, Party A's- factories should send 2 samples (small size) of each style to Party B as shipment samples9. In the event Party A produce an unacceptable quality standard, or damage the fabric which has been delivered by Steilmann, it is herewith agreed that party A should pay for the fabric and accessories cost against the full invoice value; the quality standards are based on the approved; sample confirmed by Party B or the Steilmann technician (in this case technician shall give technical guidance)D. Shipment1. Delivery time of each style shall be within 30- 45 days (depending on the quality of each style/order to be processed) after Party A's factories receive fabric materials/accessories in complete sets.2. Party A shall inform Party B of the estimated time the finished products will be ready for loading 7 days prior to such estimated time.3. For appointed Air Forwarder : SchenkerAll the original shipping documents including original Air Way bill, original certificate of origin; original invoice and packing-list should be sent to Schenker at the time when goods depart.4. For appointed sea forwarder: Eac-Saigon Shipping Service Ltd.; All the shipping documents included inspection certificate issued by Steilmann technicians.E. PaymentAll the payments shall be made by irrevocable Letter of Credit at sight. The Letter of Credit must be established 30 days before shipment.F. Arbitration1. The two parties shall amicably settle all the disputes arising during the performance of the contract. Should no settlement of disputes or such difference of opinion be made amicably, then the disputes and difference of opinion shall be settled in accordance with the Arbitration Regulations of the Foreign Trade Arbitration Organization of a third country mutually agreed by the parties.2. The decision of the said arbitration shall be final and binding upon both parties.This General terms and conditions of basis of C.M.P is made in English in six copies. Each party keeps three copies of equal validity with effect from the signing date; party A should send one copy to its factories for reference.Made in Hanoi, on the 5th, August, 19 ..FOR/AND ON BEHALF OF SIDE A FOR/AND ON BEHALF OF SIDE B

Ellen Co. LTD Generalexim

(Signed) (Signed/sealed)

D. Ellen Thanh Tung

General Manager Dep-General Director

Annex no: 01TO THE GENERAL TERMS

AND CONDITIONS ON BASIS OF C.M.P

No: 08/Gen-ELLEN/19 ..Party A: VIETNAM NATIONAL. GENERAL EXPORT-IMPORT

CORPORATION (GENERALEXIM)46, Ngo Quyen street.Hanoi, S.R. of Vietnam (Hereinafter called "Party A")Party B: ELLEN CO.LTD

1508-1510 Star House,

Salisbury Road, Kowloon, Hongkong (Hereinafter called "Party B")Today 5th, Aug., 19 ..., the two Parties have agreed to sign this Annex to the above-mentioned Contract on the following terms concerning the materials and accessories for the processing of the commodity:

Article I: MATERIALS.AND ACCESSORIES FORTHE PROCESSING OP THE COMMODITY

Side B shall supply all the materials and accessories to side A as following calculation (Based on CIF HAIPHONG or C1F NOIBAI)

- Fabric: 100,000 Metres- Accessories: worth 100,000.00 USD

Article II: TIME OF DELIVERYAll the materials and accessories supplied by Side B must be delivered at Haiphong Port 10 days prior to starting production for each style, from the end of September, 19 .. to the end of November 19 .. and to address:

- Consignee and Notify party:VIETNAM NATIONAL GENERAL EXPORT IMPORT CORPORATION,46, NGO QUYEN STREET, HANOI. S.R. OF VIETNAM

Other conditions not mentioned in this annex are to be performed as those in the contract No: 08/GEN-ELLEN/19 ..FOR/AND ON BEHALF OF SIDE A FOR/AND ON BEHALF OF SIDE B

Annex no: 02TO GENERAL TERMS

AND CONDITIONS ON BASICS OF C.M.P

No: 08/Gen - Ellen/19...

Party A: . Vietnam National General ExportImport corporation 46, Ngo Quyen Street, Hanoi-Vietnam(Hereinafter called "Side A")

Party B: Ellen Co.LTD

1508-1510 Star House

Salisbury Road, Kowloon, Hongkong (Hereinafter called "Side B")Today 5th. August, 19..., the two Parties have agreed to sign this annex to the above mentioned

contract on the following terms and conditions concerning the commodity and quantity, price and time of delivery1. Article I:Commodity Quantity C.M.P price Amount Jacket Style No:

3% (USD/FOB Haiphong or Noibai)

54011-2 3,270 2,40 7,848.0054011-5 3,357 2,40 8,056.8054423 2,758 2,10 5,791.80Total 9,385 Pieces USD 21,696.60(CMP price side A undertakes for packing such as: outer carton, plastic bands and or/PE bag/ctn sticky tape only)2. Article II: Time of delivery

Shipment time of finished products from November 19 ... to end of December 19 ....3. Article III: Country of destination: Germany

Other conditions not mentioned in this annex are to Be performed as those in the Contract No: 08/GEN - ellen/19 ...FOR/AND ON BEHALF OF SIDE A FOR/AND ON BEHALF OF SIDE B

Translate into EnglishCỘNG HÒA XÃ HỘI CHỦ NGHĨA VIỆT NAM

Độc lập – Tự do – Hạnh phúcHỢP ĐỒNG GIA CÔNG ĐẶT HÀNG

Số: /HĐGC 

- Căn cứ Pháp lệnh HĐKT ngày 25-9-1989 của Hội đồng Nhà nước.- Căn cứ Nghị định số 17 ngày 16-1-1990 của Hội đồng bộ trưởng quy định chi tiết việc thi

hành Pháp lệnh HĐKT.- Căn cứ............. (chế độ, thể lệ của ngành tiểu, thủ công nghiệp).Hôm nay, ngày........ tháng........ năm ........Tại.......................................... (Địa điểm ký kết).Chúng tôi gồm có:Bên A (Bên đặt hàng):- Tên doanh nghiệp (hoặc cơ quan): ........................................................................................- Địa chỉ: ......................................................................................................................- Điện thoại: ................................................................................................................- Tài khoản số:........................................ Mở tại ngân hàng: ...................................................- Đại diện là Ông (bà):............................................ Chức vụ: ....................................- Giấy ủy quyền số:...................................................................................................... (nều có).Viết ngày...................... Do............................. chức vụ............................................... ký.Bên B (bên sản xuất gia công):.................................................................................................- Tên doanh nghiệp (hoặc cơ quan): ......................................................................................- Địa chỉ: ....................................................................................................................- Điện thoại: ..............................................................................................................- Tài khoản số:................................... Mở tại ngân hàng: ......................................................- Đại diện là Ông (bà):....................................... Chức vụ: ......................................................- Giấy ủy quyền số:.................................................................................................. (nều có).

Viết ngày.......................... Do................ chức vụ ........................................ký.Hai bên thống nhất thỏa thuận lập hợp đồng với nội dung như sau:Điều 1: Đối tượng hợp đồng:1. Tên sản phẩm hàng hóa cần sản xuất: .....................................................2. Quy cách phẩm chất:- ..............................................................................................- .............................................................................................-............................................................................................. Điều 2: Nguyên vật liệu chính và phụ:1. Bên A có trách nhiệm cung ứng nguyên vật liệu chính gồma- Tên từng loại:................ Số lượng: .....................chất lượng; ....................................b- Thời gian giao:.................. Tại địa điểm: .................................(Kho bên B)c- Trách nhiệm bảo quản: bên B chịu mọi trách nhiệm về số lượng, chất lượng các nguyên liệu

do bên A cung ứng và phải sử dụng đúng loại nguyên liệu đã giao vào sản xuất sản phẩm.2. Bên B có trách nhiệm cung ứng các phụ liệu để sản xuất:a- Tên từng loại:............... số lượng:.............. đơn giá(hoặc quy định chất lượng theo hàm

lượng, theo tiêu chuẩn).b- Bên A cung ứng tiền trước để mua phụ liệu trên. Tổng chi phí

là: .................................................

Điều 3: Thời gian sản xuất và giao sản phẩm:1. Bên B bắt đầu sản xuất từ ngày ............................Trong quá trình sản xuất bên A có quyền kiểm tra và yêu cầu bên B sản xuất theo đúng mẫu

sản phẩm đã thỏa thuận bắt đầu từ ngày đưa nguyên liệu vào sản xuất (nếu cần).2. Thời gian giao nhận sản phẩm:Nếu giao theo đợt thì:a- Đợt 1: ngày........................... Địa điểm: ............................b- Đợt 1: ngày.......................... Địa điểm: .............................c- Đợt 1: ngày........................... Địa điểm: ............................

Nếu bên A không nhận đúng thời gian sẽ bị phạt lưu kho là: Nếu bên B không giao hàng đúng thời gian, địa điểm sẽ phải bồi thường các chi phí:..............................

Điều 4: Các biện pháp bảo đảm hợp đồng (nếu cần)Điều 5: Thanh toán:Thỏa thuận thanh toán toàn bộ hay từng đợt sau khi nhận hàng.Thanh toán bằng tiền mặt hay chuyển khoản: .....................................................Điều 6: Trách nhiệm do vi phạm hợp đồng:1. Vi phạm về chất lượng: (làm lại, giảm giá, sửa chữa, bồi thường nguyên vật liệu v.v…).2. Vi phạm số lượng: nguyên vật liệu không hư hỏng phải bồi thường nguyên liệu theo giá hiện

thời 3. Ký hợp đồng mà không thực hiện: bị phạt tới 12% giá trị hợp đồng.4. Vi phạm nghĩa vụ thanh toán: bồi thường theo tỷ lệ lãi suất ngân hàng v.v…Điều 7: Thủ tục giải quyết tranh chấp hợp đồng1. Hai bên cần chủ động thông báo cho nhau biết tiến độ thực hiện hợp đồng, nếu có vấn đề bất

lợi phát sinh các bên kịp thời báo cho nhau biết và chủ động bàn bạc giải quyết trên cơ sở thương lượng đảm bảo hai bên cùng có lợi (có lập biên bản).

Article 7: Procedure for dispute settlement1. The two sides should inform each other of progresses achieved while executing the contract.

If there is any trouble arising, either side should be notified and discuss with the other side about the resolution on the basis of mutual benefit (the minutes should be transcribed).

2. Trường hợp có vấn đề tranh chấp không tự thương lượng được, hai bên thống nhất chuyển vụ việc đến tòa án là cơ quan có đủ thẩm quyền giải quyết những vụ tranh chấp này. In case that there is any dispute that cannot be settled, it is agreed that the case will call for the court’s authority. 3. Các chi phí về kiểm tra, xác minh và lệ phí trọng tài do bên có lỗi chịu. Expenses for verification and arbitration shall be at the faulty side’s account.

Điều 8: Các thỏa thuận khác (nếu cần)Điều 9: Hiệu lực của hợp đồng:Hợp đồng này có hiệu lực từ ngày.................... đến ngày .......................Hai bên sẽ tổ chức họp và lập biên bản thanh lý hợp đồng sau đó.................. ngày. Bên A có

trách nhiệm tổ chức vào thời gian, địa điểm thích hợp.Hợp đồng này được làm thành bản có giá trị như nhau, mỗi bên giữ......... bản. 

ĐẠI DIỆN BÊN AChức vụ:

Ký tên(Đóng dấu)

ĐẠI DIỆN BÊN BChức vụ:

Ký tên(Đóng dấu)

3. Third-Party Security for PaymentTHE PROBLEMAccepting a personal check or trading on open account—both are dangerous for the exporter. What kind of third-party security reduces the exporter's risk?

THE PRINCIPLEThird-party security takes two forms: export credit insurance allows the exporter to recover the major part of the contract price if the buyer fails to pay after, say, six months. The buyer may also approach a bank and ask for a bank guarantee—the bank will pay the contract price if the buyer fails to do so.

IN MORE DEPTHRisk and cost—they rise and fall together. Some risks are simply too high to be acceptable. For example, let's say Red Bean Exports has an export order for 2,000 tons of red beans. If this represents 0.1% of annual turnover and the buyer fails to pay, Red Bean will not go bankrupt. If, however, 2,000 tons is 40% of turnover, failure of the buyer to pay could destroy the company. Where risks are significant, the exporter seeks ways to minimize them—even though costs will rise.

A classic strategy for reducing risk is to spread it by means of a third party—an insurance company, for example. Export credit insurance is one route to security; the bank guarantee is another.Export Credit InsuranceInternational trade is fiercely competitive. Exporters compete not only on quality, price and delivery terms; they also compete in the area of credit: "If you buy from me, I will allow you 180 days to pay." Such an offer can make or break a deal. However, extending credit in this way is risky. The buyer may go bankrupt, or he may sell the goods he receives and disappear. Political difficulties too can block payment: civil war, famine, lack of foreign exchange, and so on—the list is a long one.To stimulate exports and protect the exporter against major risks, some countries set up a special type of insurance: it does not insure goods, but it insures the exporter against the risk of non-payment. Most traditional exporting nations—the European countries, for example—offer such in-surance. Zimbabwe is an example of a developing country that helps its exporters in this way. (It is worth stressing that export credit insurance is not a charity but a commercially viable proposition; export credit insurance companies commonly report up to 15% profit on their business.)To buy such insurance, the exporter explains the details of the business to an insurance company and receives a quotation. Sometimes the insurer refuses to quote. This may mean that the insurer has used its network to run some checks on the buyer and found the buyer uncreditworthy. This is a sign to the exporter that the business is risky. (It might also mean that the insurer has checked on the exporter and found some problems: a criminal record, perhaps, or a history of unpaid insurance premiums.)Export insurance premiums vary according to the type of goods exported, the creditworthiness of the buyer, the political stability of the buyer's country, and so on. Figures mentioned to the author by the Zimbabwe Credit Insurance Corporation are attractive, however—a typical policy costs between 0.5% and 1% of the invoice price.Attractive as it is, export credit insurance has certain clear limitations: there is always a long wait between the time when the buyer fails to pay and the time when insurance company compensates the exporter—six months is typical. And when compensation is paid, it is unlikely to cover 100% of the original invoice price. However, with export credit insurance, the exporter is covered against the worst.If your country offers export credit insurance, you should certainly consider using it for trade with customers you know only slightly and for single transactions that represent a high proportion of your turnover. Further, many buyers are reluctant to spend money on a payment guarantee or to tie up money in a letter of credit—in a buyer's market, export credit insurance may give the exporter a competitive edge.

Payment GuaranteeWhat is a "guarantee"? Let's say I promise to pay you S 1,000. You are not sure that I have the money, so you tell me to find a friend, a guarantor (in the export trade normally a bank), to make a second promise: the guarantor will pay the beneficiary (you) if the principal (me) fails to keep the original promise. If you do not get the SI,IKK) from me, you will get it from the hank. The relationship is a triangle.

The terminology of guarantees is confused. A guarantee (in the present sense) is sometimes called a bond or a surety. There are technical differences among the three terms, but you can normally ignore them. Another problem is that the word guarantee is commonly used to mean warranty or defects liability—when you buy a watch it may come with a so-called "guarantee." In general, try to avoid this confusion by using the word guarantee only within the triangular relationship shown above.

Guarantees are commonly used in four business situations; in each case one party is particularly at risk—he has performed but the other side has not yet responded. Of particular interest here is the payment guarantee, but you will often meet the other guarantees in export business.

Risk 1: Non-payment—Payment GuaranteeFor the exporter there is one major risk: not being paid. A payment guarantee simply commits the bank to pay if the buyer defaults. The payment guarantee is usually for 100% of the contract price.

Risk 2: Revocation—Tender GuaranteeProcurement contracts, especially at government level, are put up for tender or bid. An exporter may well bid on a contract to supply goods or materials to a government department or agency. Invariably this department asks for a tender guarantee (or bid bond). If the would-be exporter withdraws his tender, then the tender guarantee is forfeit. This guards the department against the risk of a project falling behind because a tender is withdrawn.44 A normal figure for a tender guarantee is between 1.5% and 5% of the contract price.Risk 3: Non-Performance—Performance GuaranteeIf you are selling goods on an FOB basis, you are unlikely to meet the performance guarantee. If, however, you offer services as well as goods, the performance guarantee can be important. It simply says that if you work badly or not at all, then the guarantor will pay, within stated limits, the costs of your failure to perform. A normal figure for a performance guarantee is between 5% and 10% of the contract price.Risk 4: Losing Prepayment—Prepayment GuaranteeManufacturers often ask for an advance payment, especially if items are custom-made for the buyer. Making this prepayment is a risk for the buyer until the items arrive in working order. The advance payment guarantee promises the buyer that the bank will return advance payments if the exporter fails to deliver. The guarantee is normally for 100% of the prepayment, decreasing as deliveries are made.In most guarantees, the bank agrees to pay "on first demand" and "without demur or objection" (or a similar wording). This promise can be taken literally: the moment that the beneficiary demands payment under the guarantee, the bank will pay. (Naturally the bank will immediately withdraw the money it has paid from the account of the principal.) Such guarantees are called "demand guarantees": there are no serious, objective conditions the beneficiary must meet before claiming payment of the guarantee. This can quickly lead to abuse, and many court cases arise from demand guarantees. Let's take a typical scenario. 44 Under the laws of many countries that derive their legal thinking from England, an offer can be withdrawn at any time before acceptance. See Chapter 4, Section 3 for more information.

Scenario: Esperanza Trading, the buyer, asks Big Bank to issue a payment guarantee in favor of Office Enterprises, the exporter. The bank complies. Two days after the agreed payment date, Esperanza Trading has not yet paid. Office Enterprises accordingly asks the bank to pay the money. The bank first notifies Esperanza Trading that it is about to pay. Esperanza says that the goods were defective and tells the bank to withhold payment. The bank looks again at the text of the guarantee: "We undertake to pay you on your first written demand without cavil or demur...." The bank says it will pay, regardless of the quality of the goods. Angrily, Verbena Trading asks a judge for an injunction (= an order forbidding something) to forbid the bank from , making payment. Judges normally refuse to grant such injunctions. A I demand guarantee is exactly that—a guarantee paid on demand.The problem of a beneficiary falsely or improperly demanding payment is also a serious one. If the bank has agreed to pay, it will pay unless there is evidence of blatant fraud. If demand guarantees are so risky, perhaps a conditional guarantee would be preferable.A conditional guarantee contains serious, objective conditions that must be met before payment by the bank is possible. These conditions cannot refer to the condition of delivered goods—the bank has no way of evaluating such things. The ICC tried in two pamphlets. Uniform Rules for Contract Guarantees (1978) and Model Forms for Issuing Contract Guarantees (1982) to set up objective conditions that a bank might find workable. It suggested three. The bank would pay if the claim were supported by:♦ A decision of the court of first instance (a decision by a judge);♦ An arbitral award (a decision by a court of arbitration);♦ The approval of the Principal in writing to the claim.

It is not likely that any beneficiary would agree to objective conditions as harsh as this—and so most bank guarantees are of the "demand" kind. In fact, because guarantees run into trouble so often, and because they are expensive to set up, few exporters ask for them as security for payment: the letter of credit is much preferred.45

The most recent thinking on demand guarantees suggests a "counter-guarantee" that works like this. If I, as exporter, demand payment of a guarantee issued by the buyer's bank for, let's say SIOO.OOO, I must at the same time post a countcrguarantee, also for SIOO.OOO in favor of the buyer. The buyer can collect this money if it can be proved that I collected the original guarantee improperly. For details, see ICC Publication No. 458, Uniform Rules for Demand Guarantees.

CASE STUDYStand and Deliver

Below is the first part of a payment guarantee issued in standard bank form. Study it, and then answer the questions.Payment Guarantee No. 76542/92Reference is made to the order No. WEX 344 K placed with you as suppliers by Multi-Import for the supply of integrated circuits.According to the conditions of this order, the Buyer has to furnish a payment guarantee in the amount of USD 600,000. By order of the Buyer, we, Big Bank of Euroland, hereby establish this guarantee and undertake irrevocably to pay to you without demur or objection any outstanding amount not exceeding USD 600,000say United States Dollar six hundred thousand onlyupon your first written demand stating that the Buyer has failed to effect the outstanding payment at maturity. Our liability under this guarantee will expire as soon as this document is returned to us, latest however, by 31st December 1996.1. Who is the principal? □ SELLER □ BUYER □ BANK2. Who is the guarantor? □ SELLER □ BUYER □BANK3. Who is the beneficiary? □ SELLER □ BUYER 3BANK4. Is this a "demand" guarantee? □ YES □ NO5. If the buyer fails to pay, is payment secure? □ YES □ NO

What You Should Know1. Export credit insurance covers the risk of non-payment.2. Guarantees are designed to reduce contractual risks.3. The payment guarantee reduces the risk of non-payment. The tender guarantee reduces the risk of the revocation of an offer; the performance guarantee reduces the risk of non-performance or inadequate performance by the exporter; the advance payment guarantee reduces the risk of losing prepayments.4. If a bank issues a "demand guarantee," it must pay the guarantee sum on first demand without question. Since most payment guarantees are of this type, they are dangerous for the principal (the buyer) and are seldom used; the letter of credit is far more common.

2.4. LETTER OF CREDIT (p.87)

PROBLEMLetters of credit are issued in many forms for many purposes. Some offer first class security for the exporter: some are little belter than a personal check. What letter of credit terms should the exporter try to negotiate?

PRINCIPLEMost Lellers of credit are irrevocable—they cannot be withdrawn. Exporters prefer the letter of credit to be confirmed (i.e., payable by a local bank on first presentation of correct shipping documents) and payable at sight (i.e., payable immediately).

Hầu hết L/C thuộc loại không hủy ngang – nghĩa là bên mua không thể thay đổi. Nhà xuất khẩu thường đề nghị L/C xác nhận (nghĩa là ngân hàng ở nước xuất khẩu chịu trách nhiệm thanh toán ngay khi xuất trình bộ chứng từ hợp lệ lần đầu) và có thể trả ngay.

IN MORE DEPTH

The ideal type of payment from the epxorter’s point of view is the irrevocable confirmed, at-sight letter of credit. The first attempt to standardize them was made in 1933 when the International Chamber of Commerce issued the Uniform Customs and Practice for Documentary Credits (UCP). Parties to a contract can agree to use the UCP rules, and many do. Typically a contract stipulates

Phương thức thanh toán lý tưởng đối với nhà XK là L/C không hủy ngang, xác nhận và trả ngay. Vào năm 1933 ICC lần đầu tiên đã tiêu chuẩn hóa bằng UCP.Các bên ký kết hợp đồng có thể thỏa thuận sử dụng UCP, và có nhiều người đã làm như thế. Tiêu biểu một hợp đồng có thể quy định:

The Buyer, on receipt of the Confirmation of Order from the Seller, shall at least 20 days prior to the date of delivery open a confirmed, irrevocable letter of credit. This credit shall be subject to Uniform Customs and Practice for Documentary Credits, 2006 Revision, ICC Publication No. 600.

20% of the credit shall be available against the Seller’s draft accompanied by invoice; the remaining 80% shall be available against the Seller’s draft accompanied by the shipping documents.

Bên mua, ngay khi nhận được thư chấp nhận đơn đặt hàng của bên bán, trong thời hạn tối thiểu 20 ngày trước ngày giao hàng, phải mở L/C không thể hủy ngang, xác nhận.L/C này theo đúng UCP 600, ấn hành năm 2006.

20% sẽ được thanh toán ngay khi bên bán xuất trình hối phiếu kèm với hóa đơn; 80% còn lại sẽ được thanh toán ngay khi bên Bán xuất hối phiếu kèm theo bộ chứng từ.

A letter of credit is a binding agreement by a bank to pay a certain sum of money when the exporter presents the necesiary documents to the bank. In a supermarket purchase, goods are exchanged for money; in a letter of credit situation documents are exchanged for money—that is why letters of credit are formally called documentary credits. The letter of credit is issued by an issuing bank at the request of the buyer. The issuing bank is in the country of the buyer, so it normnlly instructs a bank in the country of the exporter- the advising bank- to advise the exporter that the letter of credit has been opened. The advising bank will also handle all the necessary paperwork when the exporter tries to collect payment.

The process of issuing a letter of credit takes place as follows- Exporter and buyer sign a contract- The buyer asks a local bank to open a letter of credit- The issuing bank asks a bank in the exporter’s country to advise the exporter that the letter of credit has been opened- The advising bank advises the exporter that the letter of credit has been opened.- In the next step, the exporter ships the goods. When the exporter passes the goods to the carrier, he receives shipping documents. - He presents these documents to the bank as evidence that the goods have been shipped. - The advising bank checks the correctness of the documents and sets the payment procedure in motion. The payment procedure depends on the type of credit: sometimes the advising bank merely sends the documents to the issuing bank and acts as a channel for payment; in other cases, the advising (or confirming) bank pays immediately “over the counter.”- The advising bank notifies the issuing bank that the credit has been presented and forwards the shipping documents- The issuing bank transfers necessary funds to the advising bank.Two principles serve tomake the letter of credit safer:: (autonomy, and (b) strict compliance.

Autonomy (p.90)The letter of credit is an agreement by a bank to pay money against documents: it is a separate agreement from the sales contract and is unconnected with it. The ICC Uniform Custom and Practice for Documentary Credits (UCP) makes this clear:Credits, by their nature, are separate transactions from the sales or other contract(s) on which they may be based and banks are in no way concerned with or bound by such contract(s) even if any reference whatsoever to such contract(s) is included in the credit … In credit operations all parties concerned deal in documents, and not in goods, services and/or other performances to which the documents may relate.This means that the bank is obliged to pay—whatever the disputes between the buyer and the exporter. For example, in one leading case, Discount Records bought phonograph records from an exporter. Payment was by letter of credit issued by Barclays Bank. The exporter delivered a mix of

cassettes, eight-track cartridges and other non-contractual goods. Discount Records tried to get an injunction to stop Barclays from paying under the letter of credit. The court refused.A Ietter of credit is like a bill of exchange given for the price of goods. It ranks as cash and must be honored. No set off or counterclaim is allowed to detract from it. The exporter will be paid—although later action in the courts may oblige him to make good any damage he has caused the buyer.

Strict ComplianceThe buyer also has a safeguard: the bank will pay only if the shipping documents are exactly in line with the buyer's instructions. For example, let's say an FOB sales contract agrees that the exporter can deposit the goods in a warehouse if the ship arrives late and that this counts as delivery. This agreement has no direct bearing on the letter of credit: if the letter of credit requires a bill of lading and makes no mention of a warehouse receipt, then the bank simply cannot pay against a warehouse receipt. Banks must follow their instructions strictly, as is shown in another landmark case. Dawson bought vanilla beans from Indonesia. Dawson instructed an American bank to open a letter of credit. One of the required shipping documents was a certificate of quality issued “by experts." The bank paid the exporter. The beans, when they arrived, were rubbish. The certificate of quality was signed, however, by only one "expert." Thus, because the bank had not strictly followed the instructions from Dawson, it could not collect from Dawson the money it had paid to the exporter—an expensive mistake for the bank. How often do banks refuse payment? According to Bradgate, "over 50% of documents presented to banks under documentary credit transactions are rejected on first presentation". Figures quoted to the author by banks in some African countries go much higher: some banks report rejecting 90% of first applications for payment under letter of credit. What happens when a bank refuses to pay under a letter of credit?First the bank will cite a "discrepancy," some aspect of the documentation that is not in line with the terms of the credit. A checklist of commonly cited discrepancies makes depressing reading. Once the bank has indicated the discrepancies, the exporter can proceed in one of three ways:- Provide the missing paperwork or correct errors;- Ask the buyer to instruct the bank to change the terms of the Ietter of credit- i.e., to issue an amendrnent;- Ask the bank to process the letter of credit with the discrepancies but to pay only when (and if) the issuing bank permits payment.If, as often happens, the letter of credit is near its expiry date. There may be no time for the exporter to provide the missing prices. In this case, the exporter (or the advising bank) must contact the buyer asking the buyer to instruct the issuing bank to extend the date of the credit. Whenever an amendment is necessary, the purpose of the letter of credit is largely defeated-—the buyer is now firmly in control of payment. Extra bank costs are a further burden on the exporter. In general, the exporter is advised to exercise scrupulous care in providing the documentation called for by the letter of credit.

Discrepancies Reported by Banks (p.92)Problems with the Letter of Credit* Documents required by the credit are missing.* Documents required to be signed are not signed.* The credit amount is exceeded. * The credit has expired. -* Documents are not presented within the required time. * Shipment was short.* Shipment was late.Problems with the Bill of Lading * The bill of lading is "unclean"—it has comments on it relating to damage to or other deficiencies in the goods. * A marine bill or lading is required, but the bill does not state that the goods were "shipped on board" a named vessel. * The bill of lading shows shipment between ports other than those specified in the credit.* The bill of lading shows that the goods were shipped on deck. This is normally forbidden unless the credit expressly allows ii.* The bill of ladding offers no evidence that freight was paid by the exporter (if this was required).* There is no endorsement (if endorsement is necessary).Problems with Insurance

* The insurance document is not of the type specified in the credit (e.g., a certificate of insurance is produced while the credit calls for a policy). * The insurance risks are not those specified in the credit. This is forbidden unless the credit expressly allows it. * The sum insured is below the figure required.* Insurance cover does not begin on or before the date of the transport document.Inconsistencies among the Documents * Discription of the goods on the invoice and in the credit are differrent. * Weights differ beetween two documents. * Marks and numbers differ between two documents.

THE LETTER OF CREDIT: Confirmed and UnconfirmedThe mechanism of the simplest letter of credit is this:- Buyer instructs an Issuing Bank to issue a Letter of Credit in favor of the SELLER.

Because the advising bank is normally in the buyer’s country, the exporter likes the issuing bank to instruct the advising bank in the exporter’s own country to make actual payments under the letter of credit.- Buyer instructs an Issuing Bank to instruct an Advising Bank to pay under a Ltter of Credit in favor of the SELLER.

If the advising bank knows the exporter well, it may pay all of the value of the credit “over the counter.” But such payments are always made with recourse. With recourse? Let’s say that the issuing bank finds a problem with the documents and refuses to send funds to the advising bank to cover payment; in that case, the advising bank has recourse to the exporter. In plain words: the advising bank gets its money back from the exporter. A confirming bank is in a different position. It is asked to confirm the credit.

- Buyer instructs an Issuing Bank to instruct a Confirming Bank to pay under a Letter of Credit in favor of the SELLER.

Under this arrangement, the bank in the exporter’s country confirms the credit. A confirming bank has an absolute obligation to pay the exporter according to the terms of the credit. If the credit is payable at sight, the bank pays must pay at sight without recourse. What happens, though, if the bank pays the exporter, and the issuing bank finds something wrong with the documents? Then the confirming bank- not the exporter- has a problem: it has paid the money to the exporter and has no way of recovering it. Exporters prefer this arrangement for obvious reasons; among the traditional trading nations of the world, it is the norm.Unfortunately, problems can arise when very small banks or banks in countries with severe foreign currency shortages try to instruct a bank in the exporter’s country to confirm a letter of credit. Let’s say the Frudge and Gurgle Bank in Nonamia asks Superbank International in New York to confirm a letter of credit in favor of an American exporter of computers. If Superbank advises the exporter that the letter of credit has been opened, and confirms the credit, then Superbank must pay the exporter as soon as the computers leave New York bound for Nonamia.What happens when Superbank forwards the documents to Fudge and Gurgle and asks for funds to cover the payment? Perhaps nothing at all. Or perhaps there is a delay of months or even years before the funds arrive. For this reason, banks are sometimes reluctant to confirm letters of credit, especially those from obscure banks. Or they may ask for “reconfirmation”: in our example, Fudge and Gurgle must find a well-known bank to confirm to Superbank that funds will be transferred- if not by Fudge and Gurgle, then by the “reconfirming bank.” The costs of such reconfirmation can be high.

How can the exporter be sure that the letter of credit is confirmed by the bank in his own country? When the text of the letter of credit arrives, it comes with a covering letter. The stand-by letter of credit should also be mentioned at this stage. This originated in the U.S. because banking law in some states forbids banks to issue payment guarantees. Under a payment guarantee a bank agrees to pay if the buyer fails to do so. The stand-by letter of credit is set up in exactly the same way: the buyer agrees to pay in the normal way- if the payment is not made, the exporter can be apid under the stand-by letter of credit.

THE AT-SIGHT LETTER OF CREDIT AND THE ALTERNATIVESWhen a letter of credit is issued, the terms under which it can be paid are stated. UCP offers four choices, the first of which is clearly preferable for the exporter.

SETTLEMENT BY SIGHT PAYMENTIn this variation, the exporter presents the necessary documents to the paying bank (normally a confirming bank); the bank checks the documents. If they are in order, the bank pays the full face value of the letter of credit. This is usually what the exporter wants. Theo thể loại này, nhà XK xuất

trình các chứng từ cần thiết cho ngân hàng thanh toán (thường là ngân hàng xác nhận); ngân hàng này sẽ kiểm tra chứng từ. Nếu các chứng từ sắp xếp đúng thứ tự và đúng các chi tiết, ngân hàng sẽ thanh toán toàn bộ giá trị ghi trên tín dụng thư. Đây chính là loại mà nhà XK mong đợi.

SETTLEMENT BY DEFERRED PAYMENTIn settlement by deferred payment, the letter of credit is not payable until a number of days (180 days perhaps) after delivery. Payment is safe, but it delayed. The letter of credit cannot be paid, but it has an obvious value: if the exporter needs ready money, he can realize some part of this value- probably most of it. The exact figure he can discuss with any bank. On the face of it, this arrangement is less advantageous for the exporter than settlement by payment, but circumstances may make such a deal necessary. THANH TOÁN TRẢ CHẬM. Thanh toán bằng phương thức trả chậm là loại LC phải chờ đến một số ngày (180 ngày) sau khi giao hàng chẳng hạn. Thanh toán như thế an toàn nhưng thường phải mất thời gian chờ đợi. LC chưa thanh toán nhưng nó vẫn có giá trị: nếu nhà XK cần tiền ngay, anh ta có thể có được một phần giá trị - có khi được cả toàn bộ. Con số chính xác là bao nhiêu còn tùy vào khả năng thuyết phục của anh ta. Nhìn thoáng qua, cách thu xếp này ít có lợi cho nhà XK hơn so với thanh toán ngay, nhưng có một số hoàn cảnh cần thiết phải thanh toán chậm.

SETTLEMENT BY ACCEPTANCEThe procedure takes place as follows:- The seller presents to the accepting bank the documents and a bill of exchange (time draft) drawn usually on the buyer.- The accepting bank agrees to pay the bill when it matures.- If the seller needs money immediately, he can exchange the letter of credit for cash (at a discount) with any agreeable bank.So far the bank has paid cash to the exporter against the documents. Another approach is to use a bill of exchange. A bill of exchange is like a check (cheque); it allows the beneficiary (the exporter) to make a draft for a given sum of money on me buyer. In international trade, this bill of exchange is usually a time draft — it can be collected only after a certain date. That is obviously a danger for the exporter. Accordingly the accepting bank will “accept” the bill of exchange and agree to pay it at full face value when it falls due. A bill of exchange that is accepted can be “negotiated,” i.e., sols at a discount to any bank if the exporter needs ready money.

SETTLEMENT BY NEGOTIATIONThe seller presents to the negotiating bank the documents and a bill of exchange drawn usually on the buyer.The negotiating bank negotiates the bill (i.e., pays it at a discount)In this final method of settlement, the bank with whom the exporter deals is called the negotiating bank. In settlement by negotiation a bill of exchange again allows the exporter to make a draft on the buyer, but this bill must be negotiated- the advising (or other) bank has no authority to pay it at its full face value. This kind of settlement is the least satisfactory for the exporter, and in practice it is rarity.

The Letter of Credit and Its Associated DocumentationThere are no rules as to what documents a letter of credit may or rnay not require. The bank must simply check that the documents specified in the letter of credit are in perfect order—it does not question the necessary or value of the documents—nor is it interested in the question of why the buyer wanted a particular document presented in a particular form. The bank is scrupulous, however, in checking that the documents are correct; this is the doctrine of strict compliance.'The letter of credit contains a list of the documents that the exporter must present. Each document should be carefully and correctly named— "Marine Bill of Lading" not simply "BL" or “Bill of Lading." The number of originals and the number of copies required should be stipulated. For example, "3/3 Marine Bill of Lading" means that the exponer must produce three originals and three copies of the marine bill of lading. Unless the letter of credit expressly states otherwise, the bank expects all documents to be originals. (It is "sometimes difficult with modern documentation to decide what is an Original and what is a copy. Any document which is authenticated and which states that it is an original is usually accepted.)The ICC suggests that documents are listed in a certain order:

Commercial invoice Transport document Insurance document Other documents such as: certificate of origin, certificate of analysis, packing list, weight list,

phytosanitary cerrificate. etc.Let us now look at each of these documents, in a little more detail to see what the banks are looking for.

Commercial InvoiceA commercial invoice must be made out to the applicant for the letter of credit (normally the buyer), unless otherwise stated in the letter of credit.The description of the goods on the invoice must conform with the description in the letter of credit. To avoid conflicts in description, it is good practice to keep the description in the letter of credit as short as reasonably possible. The amount shown on the invoice should not be more than the amount permitted by the letter of credit: if it is, the bank may refuse to accept the invoice. Sometimes the buyer requires that an invoice must be certified or notarized; if so, the lener of credit should state exactly what is meant, for example, what. kind of certification made by whom. The following is an example of a commercial invoice using the SITPRO (United Kingdom Simplification of International Trade Procedures Board) standard form.Transport DocumentWhen the exporter passes over the goods to the carrier, the carrier issues a transport document appropriate for the particular means of transport involved. The main types are:• Sea transport: Marine bill of lading (or sea waybill's)• Air transport: Air waybill• Rail transport: Railway consignment note • Road transport: Road consignment note• Combined transport: Combined transport bill of ladingThe letter of credit should state the type of document required. If alternative means of transport or partial shipments are allowed perhaps by different modes of transport, the letter of credit should have the words "or" (or "and/or") between the names of the transport documents.• e.g.: "Marine Bill of Lading and/or Road Consignment Note."Some special problems associated with particular transport documents can be briefly highlighted here.

Shipment by Sea: Some types of sea transport are not allowableunless the parties agree on them and letter of credit is worded accordingly. In particular, transport on the deck of a ship or in a pure sailing ship are not allowed. Thus, if the bank sees from a marine bill of lading that transport will take place on deck, and if the letter of credit does not allow this, the bank will reject the shipping document.Often a marine bill of lading—which is negotiable (sellable) document -is not necessary: usually the buyer does not plan to resell the goods during- shipment. In this case, the carrier often issues a sea waybill, which is similar to the familiar road or rail consignment note. Shipment by Air: The form of the air waybill (air consignment note) has been standardized by IATA. (International Air Transport Association). The air waybill is issued in three originals and nine copies. Only the second original goes to the consignee (the buyer).Sometimes a letter of credit calls for "a full set of original air waybills"; this is obviously a mistake—(he exporter cannot provide the complete set; The bank, however, will follow the wording of the letter of credit exactly and refuse an "incomplete set” of waybills. Another incorrect requirement is that the air waybill show the date of the flight: a correctly completed waybill cannot show this information —but again the bank must insist on strict compliance.Shipment by Rail: As with the air waybill, letters of credit calling for a rail consignrnent note occasionally make impossible demands. The "original consignment note" does not come into the possession or the exporter, so a letter of credit demanding the original is certain to cause delay in payment.The Insurance Document

If shipment is made on CIF or CIP terms, the letter of credit will call for an insurance policy or certificate. The exact risks to insured are also normally stated. (If shipment is under Incotcrms other man CIF or CIP, the buyer may still ask the exporter to arrange some aspects of the insurance for him. In such cases, the letter of credit calls for documents to prove that the exporter has taken the agreed steps.)Unless the letter of credit states otherwise, insurance coverase on a CIF or CIP shipment must be for 110% of the CIF (or CIP) value of the goods; if it is not, banks often refuse the insurance document.Other DocumentsCertificate of Origin: By-far the most common of the "Other documents" is the certificate of origin. This is required for imports into the buyer's country under a preferential tariff or other agreement. Procedures for obtaining certificates of origin vary from country to counntry.A Chamber of Commerce or carrier can advise you.Certificate of Inspection: Many countries, for example Indonesia, have found that the passage of imported goods through their own customs is easier il" the soods are inspected and valued in the country of the exporter. A number of international inspection companies, specialize in: such work." The Societe Generate de Surveillance (SGS) is one example. If SGS inspection is required, the parties should make a note of this effect in their conract and adjust in the delivery schedule to allow time for inspeciion. Obviously the details on the inspection certificate must correspond exactly with the details in the transport document and the commercial invoice. Discrepancies will almost certainly delay in payment.Special Requirements: Many countries require containers to be fumigated before shipment; others have special requirements about packaging material: for certain kinds of products — foodstuff in particular – a health inspection is necessary; some African countries place severe restrictions on the import or export of wildlife or wildlife products. These are only examples—the list is endless. In each case the exporter and the buyer should issue it. The details must appear in the letter of credit: vague requirements such as "appropriate wildlife certificates” are likely to cause delay in payment- the bank and the exporter may have different views on what is “appropriate”.SummaryPrompt paymenr of the letter of credit depends on the exporter presenting correct documentation. Remember- up to 90% of the applications for payment are rejected because of discrepancies.

Negotiating the Terms of a Letter of CreditIt is one of the buyer's main duties to provide the letter of credit. In fact, if an agreed letter of credit is not issued on time, the exporter often has the right to cancel the contract because of a fundamental breach by the buyer.Unfortunately, many exporters pay little attention to the exact terms of the letter of credit until it is too late. Usually exporters leave it to the buyer to apply to his house bank for a letter of credit: the buyer provides the bank with outline information about the deal, and leaves the bank to draft the letter of credit as it sees fit. This procedure meets the interests of the buyer and the bank, but it often leaves the exporter with serious headaches. How can the exporter best protect his interests? The first step is for exporter and buyer to agree exactly what documentation is required. Some items are discretionary, for instance the nature of the transport document or the terms of insurance. Other items are a matter of government regulation: the phytosanitary certificate or certificate of origin, for example. The two parties may have to talk to their Chambers of Commerce, to their banks or to the carrier to establish the complete list. The first step then is Agreement.

Once the list of documents has been agreed. Step 2 is incorporation of the list into the contract. There are many ways of doing this, one of which is particularly effective. The ICC has published a form that the buyer can use to apply for a letter of credit. In addition to the form, the ICC has offered detailed notes on how to complete it. The exporter and the buyer can complete this application form during their negotiations, and append a copy of the form to their contract. This form can then be passed to the bank as Specification of the required letter of credit. Thus, the credit, when issued, should be exactly as agreed by the parties with no nasty surprises for the exporter. We will discuss the form in detail when we have mentioned the remaining two steps.The verification step is an obvious precaution: as soon as the exporter receives advice that the letter of credit has been opened, he should check that it complies with the agreernent he negotiated with the buyer. The danger here is that when the bank drafts the letter of credit, it lists documents or makes requirements that the exporter either does not understand or has not agreed to. Immediate discussion with the advising/confirming bank is essential since amendments are always time consuming. If the problem is spotted early enough, however, payment should not be delayed.And finally Compliance. It cannot be said often enough that timely payment depends on exact compliance by the exporter with the terms of the credit.

STEPS IN NEGOTIATING A LETTER OF CREDITAGREEMENT. The exporter and the buyer discuss and list all required documentation.

INCORPORATION. The list is corporated into the contract.SPECIFICATION. The buyer applies for the letter of credit specifying the agreed documentation.VERIFICATION. The exporter checks the credit to see that required documentation isas agreed.COMPLIANCE. The exporter rigorously checks documentation and submits it to the bank. Let us then turn to the form used to apply for a letter of credit. In practice, most banks have a form of their own, but it seldom differs widely from the ICC standard.Segment 1: ApplicantThe full name and address of the applicant (buyer), including normally the buyer’s account number with the issuing bank. Segment 2: Issuing bankThe name of the issuing bank. This can be left blank. If you obtain an application form from a bank, the name is often preprinted.

Segment 3: Application Date/ Date of this application.The date on which the application form is submitted to the bank. In negotiationg your contract, you can leave this blank.

Segment 4: Date and Place of ExpiryAll credits stipulate an expiry date: i.e., the last date for presentation of documents to the bank. This should be carefully negotiated. The buyer will want an early date to save bank charges; the exporter will want enough time after delivery to present the documents and to correct any discrepancies that may be discovered by the bank. A “stale” (expired) letter of credit will not be paid without an amendment.This timing decision should obviously be coordinated with the other timing decisions on the credit: Segment 14, latest date for shipment, and Segment 18, the period allowed after shipment for presentation of documents to the bank.The place of expiry is often “At the counters of the confirming bank.

Segment 1: BeneficiaryThe full name and address of the beneficiary- the exporter in most cases. (The buyer is normally suspicious of anyone other than the exporter being named as beneficiary.) In addition to the postal address, telephone, telex and fax numbers are sometimes included, especially if Segment 6 requests teletransmission.

Segment 6: Method of Issue Issue by (air)mail Issue by teletransmission (which shall be the operative credit instrument) With brief advice by teletransmission.

This segment deals with the method of issuing the letter of credit. In effect there are two choices: issue by mail and issue by teletransmission (normally telex). The choice depends on the time available to the parties: issue by mail is likely to be much slower than issue by telex. If the exporter wants the best of both worlds, he can cross two boxes: Issue by mail and Brief advice by teletransmission. The “brief advice” is a notification by telex that the credit has been issued and is on its way by mail. On this advice, the exporter might, perhaps, begin preparations for delivery.

Segment 7: Transfer of the CreditA transferable credit is one which allows the first beneficiary (the exporter) to request the confirming bank to pay a third party. The effect is that the buyer will not necessarily know who is the actual supplier of the goods- will it be ythe exporter of the as yet unknown third party. In principle a letter of credit is not “transferable,” but it can be made so by crossing the appropriate box.

Segment 8: ConfirmationThis is a crucial issue for the exporter. Will the bank in his country merely handle the paperwork, or will it make payment itself and recover the funds from the buyer’s bank? Exporters greatly prefer confirmation.

Segment 9: AmountThe amount of the credit should be expressed both in figures and in words. The currency of the credit should be stated using the ISO (International Standards Organization) currency code, e.g., USD for United States dollars, GBP for pounds sterling, or DEM for deutsche mark.

It is sometimes difficult to know exactly what the final invoice figure will be. Accordingly, many credits use words such as "about" or “aporoximately." In this case actual payment can be 10% more or 10% less than the stated amount. (See UCP Article 39.) Another common phrase is "up to" or "not exceeding." This is useful when partial shipment (and therefore partial payment) is not allowed, but when the final invoice may be for considerably less than the stated amount of the credit.

It is sometimes the case that some part of the contract price is to be paid by letter of credit and the rest by some other means—prepayment perhaps, or perhaps the buyer will retain a part of the price until the warranty period is over. In this case, the application should state (in Segment 19) what percentage of the invoice price is covered by the credit.

Segment 10: Partial ShipmentIn principle, partiat shipments are allowed unless the “not allowed” box is crossed. You should distinguish carefully between partial shipments and shipment in installments. Shipment in installments means that an agreed schedule has been set up (e.g., three equai shipments in March. August and October 2007.) This schedule should be noted in ''Additional Instructions" (Segment 19). A partial shipment is simply an incomplete shipment with some part of the goods to follow later. Unless the buyer has some clear reason for wishing all the goods to arrive together, partial shipment should be "allowed."

Segment 11: TransshipmentTransshipment means moving the goods from one conveyance to another. Container transport ("combined transport) obviously presumes transshipment. It is only when goods travel by sea under a sea. waybill or marine bill of lading that it makes sense to forbid transshipment- and even then there would have to be special reasons for the prohibition: extreme fragility of the goods would be one example. Normally transshipment is allowed.

Segment 12: AvailabilityCredit available wilh by sight payment by acceptance by negotiation by deferred paymentagainst the documents detailed herein and beneficiary's draft at …on ……

"Credit available with..."— this is sometimes followed by the name of the advising bank chosen by the exporter. More often it is left blank. In this case, the issuing bank is free to decide which bank will act for it in the exporter'scountry.The various types of payment are discussed above. For the exporter, "by sight payment" is most advantageous: as soon as the bank has "sight" of the documents, i.e.. as soon as the exporter presents them, it pays.Sometimes, though not often, the beneficiary (exporter) must make a draft on the bank to collect the money. In this case the box "and beneficiary’s draft is crossed, the word "at" is followed by "sight" (or possibly some number of days); the word "on" is followed by "nominated bank."

Segment 13: Insurance Covered by the Buyer insurance will be covered by us

This box is "for infonnation only"—it simpiy clarifies that insurance is taken care of "by us," i.e., by the buyer. The box is normally checked when the delivery terrn is FOB, CFR or some other term where the exporter is not required to present an insurance document.

Segment 14: Transport Information Loading on board/ dispatch, taking in charge at/ from not later than for transportation to:

This segment includes the "dispatch from...for transportation to..." information and the latest date of shipment.In stating where the goods will travel from and where they will travel to, the parties should agree precise places—harbors, airports, and so on.Generalized references such as "US East Coast Port" are sometimes used. After "no later than," the parties should enter a final delivery date. If they do not , then the date of expiry of the credit is. taken to be the final delivery date. Sometimes the formula "nor later than" does noc adequately state the agreed delivery time. In that case, the words should be deleted and others substituted, such as "during May 2007" or "not before 20th May 2007 and not after 28th June 2007." This timing decision should be coordinated with the other timing decisions on the credit Segment 4; dare of expiry, and Segment 18, the period allowed after shipment for presentation of documents to the bank.

Segment 15: Description of the Goods Goods (brief description without excessive detail) .

The goods description should be kept as brief as possible. The more complicated the description, the more chance there is of a discrepancy with some other document—the inspection certificate or the commercial invoice, for example. . Quantities are sometimes stated in specific terms: "30 x 8-gallon drums," for example. In this case the bank checks the documents to ensure that the exact quantity has been shipped. If the terms are less specific (“50 tons of grade 3 sand," tor example), then the bank allows a tolerance or 5% either way unless the credit expressly excludes all tolerances. Even more vague, the credit may state the quantity as "about 50 tons” or “nearly 50 tons." In this case the bank allows a 10% tolerance before refusing payment.To date, use of the Standard International Trade Classification Code of the Harmonized System Code which allocate code numbers to specific products is rare in letters of credit.

Segment 16: Incoterm(s) FOB CFR CIF Other terms: …….

Three boxes here specify the most common terms or trade: FOB, CFR and CIF. In each case, the name of a place must be added in parenrtheses. If any Incoterm is used, it should be given in full. For details see Section 6 above.

Segment 17: DocumentsThe application form leaves the space where documents are to be listed without a heading of any sort. (The reason tor this omission is not clear.)Documents should be listed in the recommended order. If there is not enough space, additional pages may be added. • Commercial Invoice• Transport Document• Insurance Document• Further documents

Segment 18: Presentation PeriodAfter the transport document is issued (i.e.. after the goods are shipped, the exporter needs sometime to collect the required documents, to prepare them and to present them to the bank. Most buyers fix a maximum time between shipment and presentation. If this box is left empty, the UCP (Article 43) automatically allows 21 days, and that may be taken a a normal figure.This timing decision should be coordinated with other timing decisions: Segment 4, date of delivery, and Segment 14, latest date for shipment.

Segment 19: Additional Instructions

Typical "additional instructions" include a statement of the percentage ofthe invoice price covered by the credit if this is less than 100% (addinonal to Segment 9), or the delivery schedule if delivery is in installments (additional to Segment 14).

Segment 20: Authorization to DebitWe authorize you to debit our account

This segment is the buyer's responsibility alone. Normally nothing is added here. If, however, the buyer's account number is not mentioned under "applicant" in Segment 1, it may be stated after the word "account."

Segment 21: SignatureName, stamp and authorized signature(s) of the applicant

The buyer signs and stamps the form.

CASE STUDY: GETTING PAID

In each situation below, decide the most appropriate method of payment.(A) Confirmed L/C (B) No security open account(C) Bank guarantee open account (D) Export insurance open account1. Sale of a bale (roll) of cloth costing $200 to a nearby tailor’s shop with whom you have done business for 20 years.

2. A new small customer in a Pacific island republic much given to political disturbances. The order is for $10,000 worth of assorted textiles.3. A contract for supply of cloth worth $5,000 per month to the government of Oceanea- a prosperous country. Duration of the contract: two years, but renewable. Contract represents 25.5% of turnover.4. The same deal as (3) except that the contract represents only 0.5% of your turnover.

1. Open account, no security 2. Confirmed L/C3. If possible a bank guarantee. Otherwise export credit insurance.4. Export credit insurance is advisable. Selling on open account with no security at all is also possible.

EXHIBIT 8.1. The export flow: decision chart (pp. 168-9)

FURTHER READING

INCOTERMS 2010

The new INCOTERMS 2010 became effective January 1, 2011. Incoterms--which is an abbreviation for International Commercial terms--are a series of sales terms. They are published by the International Chamber of Commerce (ICC) and are widely used in commercial transactions.

In addition to providing a set of rules for the interpretation of commonly used trade terms, INCOTERMS 2010 accomplish the following: (a) significantly revises Group D listed in INCOTERMS 2000; (b) reduce Incoterms from four groups to two groups, allowing trade experts to choose the most suitable rule related to the mode of transport; and (c) reduce the absolute number of Incoterms from 13 to 11.

Moreover, INCOTERMS 2010 offer additional guidance which assists users in selecting the most appropriate Incoterm for each transaction. The revised terms also spell out rules regarding the use of electronic procedures; detail information on security-related clearances for shipments; and offer advice with respect to domestic trade.

What are Incoterms?Incoterms or International Commercial terms are a series of sales terms. They are published by the International Chamber of Commerce (ICC) and are widely used in international commercial transactions. The purpose of Incoterms is to provide a set of international rules for the interpretation of commonly used trade terms in international transactions. They closely correspond to the U.N. Convention on Contracts for the International Sale of Goods. The first Incoterms were issued in 1936. The most recent Incoterms were updated in 2010 and became effective January 1, 2011.Who needs to understand Incoterms?Government trade officials as well as many private sector parties should understand Incoterms. Such private sector parties include: exporters, importers, trade finance professionals, export compliance specialists, customs brokers, freight forwarders, insurers, international credit professionals, and sales and purchasing managers.What are Incoterms used for?Incoterms assist trade practitioners in interpreting the most commonly used international trade terms. Using correct Incoterms in an international transaction reduces considerably uncertainties arising from the different interpretation of such terms in different countries. They apportion international trade transaction costs and responsibilities between buyers (importers) and sellers (exporters) and reflect modern-day transportation practices. Incoterms assist in significantly reducing misunderstandings among traders and thereby minimizing trade disputes and litigation. However, their scope is limited to matters related to the international rights and obligations of the parties involved in the contract of sale with respect to the delivery of the goods sold. Thus, they apply to the contract of carriage, not the contract of sale. Why were the INCOTERMS 2000 revised?INCOTERMS 2010 are the updated version of INCOTERMS 2000. INCOTERMS 2010 have been developed as a result of an extensive review of current shipping practices and trends in an effort to keep up with the rapid expansion of world trade. The key drivers for this update include: a need for improved cargo security, changes to the Uniform Commercial Code in 2004 that resulted in a deletion of U.S. shipment and delivery terms, and new trends in global transportation. How do INCOTERMS 2010 differ from INCOTERMS 2000?In addition to providing a set of rules for the interpretation of commonly used trade terms, INCOTERMS 2010 significantly revise Group D listed in INCOTERMS 2000. The five INCOTERMS 2000 listed in Group D included the following:DAF Delivered At FrontierDES Delivered Ex ShipDEQ Delivered Ex QuayDDU      Delivered Duty UnpaidDDP       Delivered Duty PaidINCOTERMS® 2010 contain the following categories:DAT        Delivered At TerminalDAP        Delivered At PlaceDDP        Delivered Duty PaidMoreover, INCOTERMS® 2010 reduce the number of Incoterm groupings from four to two, allowing trade experts to choose the most suitable rule related to the mode of transport. The 13 INCOTERMS® 2000 contained four essential categories of Incoterms. They were:Group E – Departure Group F – Main carriage unpaid Group C – Main carriage paid Group D – Arrival.The two main categories of INCOTERMS® 2010 are now organized by modes of transport. Used in international as well as in domestic contracts for the first time, the new groups aim to simplify the drafting of contracts and help avoid misunderstandings by clearly stipulating certain obligations of buyers and sellers.

Group 1. Incoterms that apply to any mode of transport are:EXW       Ex WorksFCA         Free CarrierCPT         Carriage Paid ToCIP          Carriage And Insurance Paid ToDAT        Delivered At TerminalDAP        Delivered At PlaceDDP        Delivered Duty PaidGroup 2. Incoterms that apply to sea and inland waterway transport only:FAS          Free Alongside ShipFOB         Free On BoardCFR         Cost And FreightCIF          Cost, Insurance, and FreightFurther, the two new groupings listed above note a reduction of the number of Incoterms from 13 to 11. Finally, INCOTERMS® 2010 provide additional helpful guidance and clarify obligations. For instance, the revised terms also spell out rules regarding the use of electronic procedures; detail information on security-related clearances for shipments; and offer advice with respect to domestic trade.Can I still use the INCOTERMS® 2000?According to the International Chamber of Commerce, all contracts made under INCOTERMS® 2000 remain valid even after 2011. In addition, although the ICC recommends using INCOTERMS® 2010 after 2011, parties to a contract for the sale with respect of the delivery of goods can agree to use any version of Incoterms after 2011. It is important, however, to clearly specify the chosen version INCOTERMS® 2010, INCOTERMS® 2000, or any earlier version.Where can I obtain a copy of the new INCOTERMS® 2010?You can purchase a copy of the new INCOTERMS® 2010 from the ICC website. Where can I learn more about the new Incoterms?There are a number of private sector and government organizations that offer workshops, webinars, and seminars related to the new Incoterms. For webinars and other events related to Incoterms and many other topics of tradecraft education that are being offered by the U.S. Commercial Service and its partners in support of the President’s National Export Initiative, you may visit our Trade Events Search Database.INCOTERMS AND THE EXPORTER International Commercial Terms, known as “Incoterms”, are internationally accepted terms defining the responsibilities of exporters and importers in the arrangement of shipments and the transfer of liability involved at various stages of the transaction. Incoterms do not cover ownership or the transfer of title of goods. It is crucial to agree on an Incoterm at the start of a negotiation/quotation of a sale, as it will affect the costs and responsibilities involved in shipping, insurance and tariffs. The new Incoterms 2010 rules were revised by the International Chamber of Commerce and will become effective January 1, 2011. Four terms were eliminated (DAF, DEQ, DES, DDU) and two were added: Delivered at Place (DAP) and Delivered at Terminal (DAT). The modifications affect obligations, risk transfer, and cost sharing for the seller and buyer, resulting in better clarification and application of the eleven (11) Incoterms, and consistent with the way global trade is actually conducted since the last update in 2000. In any sales transaction, it is important for the seller and buyer to agree on the terms of sale and know precisely what is included in the sale price. Exporters should choose the Incoterm that works best for their company, but also be prepared to quote on other terms. See VEDP FastFacts- Responding to Inquiries Inexperienced exporters may want to use the Incoterm “Ex Works” (EXW), because this term carries the least burden for them. Under EXW, an exporter’s responsibility ends at their facility’s loading dock, which includes making the goods available for pick up and providing any product information needed for filing the Electronic Export Information (EEI). The importer’s agent (i.e. their designated U.S. freight forwarder) will arrange and pay for the pre-carriage, shipping, insurance and any additional costs from the exporter’s door. A sale based on the Incoterm “CIF”, on the other hand, requires the exporter to arrange and

pay for the pre-carriage, shipping, and insurance to a named port. In this case, the sale price (invoice) includes not only the (C)ost of goods, but also (I)nsurance and (F)reight costs that the importing buyer pays the exporting seller. When designating the Incoterm on a commercial invoice or a quotation to the buyer, the term should be followed by the city or port of load/discharge, such as “EXW Factory, Richmond, VA” or “CIF Rotterdam”. Using the actual address is better to avoid any confusion or misinterpretation. Communication throughout the entire process is crucial. For example, under Ex Works, the shipper should notify the importer when the goods are ready and after they have been picked up by the importer’s selected carrier. The exporter’s freight forwarder often provides the vessel and sail date, or air cargo service used, and any ocean bill of lading or airway bill number to keep the parties informed of the arrangements and status of the shipment (even though technically under Ex Works the exporter’s responsibility ends at their loading dock). The most burdensome Incoterm for the exporter is Delivered Duty Paid (DDP), because all arrangements and costs are borne by the exporter, usually with the assistance of agents (freight forwarders and customs house brokers). With DDP, the exporter bears all risks and costs of transportation, including duties and tariffs, until the goods are received by the importer, usually at the importer’s factory or warehouse. Since DDP represents the maximum obligation to the seller, it is not recommended for companies that are new-to-export.

DDP Example: Four palletized drums of chemicals at US$ 40,000, DDP 123 Main St., Santiago, Chile. In the DDP example, for $40,000 total, the exporter arranges and pays for all transit costs, including delivery to a designated facility at 123 Main Street, Santiago, including any insurance coverage and duties/tariff charges. While these costs are added to the product’s price and are sometimes itemized on the commercial invoice, the exporter takes full responsibility for the added logistics costs and potential headaches, such as delays at customs, demurrage or detention, or changes in inland or ocean transportation costs. Shipping DDP should only be used by the most experienced exporters. Many details must be considered, such as trade barriers, duties, currency exchange, reputability of service providers, and delivery to the final destination. For example, if your product is a large, custom-made piece of machinery for a factory: Are there local out-of-gauge, heavy lift service providers? Does the road to the factory allow access by an oversized truck? What are the dimensions and capability of the buyer’s receiving dock? How will you repair any damage that may occur during transit?

INCOTERM DEFINITIONS/CHANGES The 11 Incoterms consist of two groups and are listed below in order of increasing risk/liability to the exporter. Under the revised terms, buyers and sellers are being urged to contract precisely where delivery is made and what charges are covered. This should avoid double-billing of terminal handling charges at the port of discharge. References to “ship’s rail” were taken out to clarify that delivery means “on-board” the vessel. Insurance, electronic documentation, and supply chain security are addressed in more detail, and gender-neutral language is now used. Rules for Sea and Inland Waterway Transport: FAS - Free Alongside Ship: Risk passes to buyer, including payment of all transportation and insurance costs, once delivered alongside the ship (realistically at named port terminal) by the seller. The export clearance obligation rests with the seller. FOB - Free On Board: Risk passes to buyer, including payment of all transportation and insurance costs, once delivered on board the ship by the seller. A step further than FAS. CFR - Cost and Freight: Seller delivers goods and risk passes to buyer when on board the vessel. Seller arranges and pays cost and freight to the named destination port. A step further than FOB. CIF - Cost, Insurance and Freight: Risk passes to buyer when delivered on board the ship. Seller arranges and pays cost, freight and insurance to destination port. Adds insurance costs to CFR. Rules for Any Mode or Modes of Transportation: EXW - Ex Works: Seller delivers (without loading) the goods at disposal of buyer at seller’s premises. Long held as the most preferable term for those new-to-export because it represents the minimum liability to the seller. On these routed transactions, the buyer has limited obligation to provide export information to the seller. FCA - Free Carrier: Seller delivers the goods to the carrier and may be responsible for clearing the goods for export (filing the EEI). More realistic than EXW because it includes loading at pick-up, which is commonly expected, and sellers are more concerned about export violations.

CPT - Carriage Paid To: Seller delivers goods to the carrier at an agreed place, shifting risk to the buyer, but seller must pay cost of carriage to the named place of destination. CIP - Carriage and Insurance Paid To: Seller delivers goods to the carrier at an agreed place, shifting risk to the buyer, but seller pays carriage and insurance to the named place of destination. DAT - Delivered at Terminal: Seller bears cost, risk and responsibility until goods are unloaded (delivered) at named quay, warehouse, yard, or terminal at destination. Demurrage or detention charges may apply to seller. Seller clears goods for export, not import. DAT replaces DEQ, DES. DAP - Delivered at Place: Seller bears cost, risk and responsibility for goods until made available to buyer at named place of destination. Seller clears goods for export, not import. DAP replaces DAF, DDU. DDP - Delivered Duty Paid: Seller bears cost, risk and responsibility for cleared goods at named place of destination at buyers disposal. Buyer is responsible for unloading. Seller is responsible for import clearance, duties and taxes so buyer is not “importer of record”. INCOTERMS DO NOT… Determine ownership or transfer title to the goods, nor evoke payment terms. Apply to service contracts, nor define contractual rights or obligations (except for delivery) or breach of contract remedies. Protect parties from their own risk or loss, nor cover the goods before or after delivery. Specify details of the transfer, transport, and delivery of the goods. Container loading is NOT considered packaging, and must be addressed in the sales contract. Remember, Incoterms are not law and there is NO default Incoterm! 3 VEDP International Trade · www.exportvirginia.org · clientservices@yesvirginia.org · (804) 545-5764

Translate into VietnameseSALES AGENCY AND SERVICES AGREEMENT

BY AND BETWEENSIEMENS MEDICAL SOLUTIONS USA, INC.,

CTI MOLECULAR IMAGING, INC.,AND

CTI PET SYSTEMS, INC.May 1, 2004

SALES AGENCY AND SERVICES AGREEMENT

THIS AGREEMENT (this "AGREEMENT") is entered into and effective as of the 1st day of May, 2004 (the "EFFECTIVE DATE") by and between SIEMENS MEDICAL SOLUTIONS USA, INC., a corporation duly organized and existing under the laws of the State of Delaware (hereinafter "SIEMENS"), CTI MOLECULAR IMAGING, INC., a corporation duly organized and existing under the laws of the State of Delaware (hereinafter "CTI"), and CTI PET SYSTEMS, INC., a corporation organized and existing under the laws of the State of Tennessee (hereinafter "CPS").Hợp đồng này (gọi là “Hợp đồng”) được ký kết và có hiệu lực kể từ ngày 1/5/2004 (gọi là "Ngày có hiệu lực") giữa một bên là SIEMENS MEDICAL SOLUTIONS USA, INC., Tổng công ty có đăng ký hợp pháp và hoạt động theo luật pháp của Tiểu bang Delaware (gọi là "SIEMENS"), tập đoàn CTI MOLECULAR IMAGING, INC., có đăng ký hợp pháp và hoạt động theo luật pháp của Tiểu bang Delaware (gọi là "CTI"), và bên kia là CTI PET SYSTEMS, INC., có đăng ký hợp pháp và hoạt động theo luật pháp của Tiểu bang Tennessee (gọi là "CPS").

PREAMBLE Phần mở đầu WHEREAS, CTI Group, Inc., CPS, Dr. Terry D. Douglass, Dr. Ronald Nutt, Michael C. Crabtree and J. Kelly Milam and Siemens entered into a stock purchase, reorganization and joint venture agreement (the "JOINT VENTURE AGREEMENT") dated as of December 9, 1987; Xét vì CTI Group, Inc., CPS, Ts. Terry D. Douglass, Ts. Ronald Nutt, Michael C. Crabtree và J. Kelly Milam cùng Siemens ký kết các hợp đồng mua cổ phần, tái tổ chức các công ty và liên doanh (gọi là "HĐ Liên doanh") kể từ ngày 9 / 12 / 1987;

WHEREAS, Siemens entered into an Amended Distribution Agreement with CPS effective March 1, 2002 pursuant to which Siemens has the right to distribute certain of the products manufactured by CPS (the "DISTRIBUTION AGREEMENT");

WHEREAS, CTI entered into a Distribution Agreement with CPS effective March 1, 2002 pursuant to which CTI has the right to distribute certain of the products manufactured by CPS (the "CTI DISTRIBUTION AGREEMENT" and together with the Distribution Agreement, the "DISTRIBUTION AGREEMENTS"); WHEREAS, CPS is engaged in the development, manufacture, assembly, selling and licensing of hardware, software, systems and equipment, and parts and components thereof, used in the position emission tomography ("PET") business for human imaging; WHEREAS, CTI possesses the necessary expertise and marketing organization to promote sales of, and to solicit and obtain purchase orders for, such products and to provide other related services to Siemens in connection therewith; WHEREAS, Siemens is willing to appoint CTI, and CTI is willing to accept its appointment, as the non-exclusive sales representative of Siemens for the sale of those products manufactured by CPS in the United States upon the terms and conditions set out in this Agreement; and WHEREAS, the service and maintenance contracts with customers for CPS Products sold under this Agreement shall be assigned between CTI and Siemens in accordance with the principles set out in this Agreement;Xét vì các hợp đồng dịch vụ và bảo trì cho khách hàng đối với các sản phẩm của CPS được bán theo hợp đồng này phải được giao cho CTI và Siemens thực hiện tuân theo những nguyên tắc nêu trong hợp đồng này; Nay căn cứ vào những thỏa ước đã có kèm theo đây, các bên đồng ý ký kết hợp đồng này theo những điều kiện và điều khoản sau đây:

ARTICLE 1APPOINTMENT

1.1 Appointment. During the term of this Agreement and upon the terms and conditions set forth herein, Siemens appoints CTI as its non-exclusive sales representative to solicit purchase orders ("PURCHASE ORDERS") to be entered into by Siemens with customers for the sale of CPS Products (as defined in Section 1.3) throughout the United States (the "TERRITORY"), and CTI accepts such appointment and agrees to conduct such activities in accordance with the terms and provisions of this Agreement.

Have you ever written diaries in English?How many contracts have you collected?How many terms have you got in your list of glossaries?Do you have any evidence for them?1.2 Authority. Hereunder: this/ these under; under this contract given that …….(a) CTI's authority hereunder shall be to solicit Purchase Orders within the Territory, provided that all such Purchase Orders shall be subject to acceptance by Siemens as provided in Section 3.3 hereof. (b) Except as set forth in Section 3.1 and Section 7.1 hereof, CTI and its employees, agents or contractors shall have no authority, and each shall not represent that it has the authority to make, execute or enter into any agreement or to incur any indebtedness on behalf of Siemens. (c) Except as set forth herein, CTI and its employees, agents or contractors shall make no payment, rebate, offer of rebate, or other remuneration, directly or indirectly, to any customer or third party, including, without limitation, any buyers, brokers, or employees or agents thereof from any compensation or other consideration paid to or provided to CTI by or on behalf of Siemens. 1.3 CPS Products. Subject to the terms of this Agreement, CTI shall have the right to sell throughout the Territory the products manufactured by or offered for sale by CPS from time to time (the "CPS PRODUCTS"), including but not limited to any software embedded therein or otherwise described therewith, and spare and replacement parts and accessories for those CPS Products.

The parties agree that at all times CTI shall have the right to sell, on behalf of Siemens, all products that Siemens is permitted to distribute on behalf of CPS pursuant to the terms of the Distribution Agreement. Subject to Section 5.1 of this Agreement, all CPS Products shall be marketed under the Siemens brand.

1.4 Sales Force. As soon as reasonably practicable after the Effective Date, Siemens and CTI jointly shall appoint a Sales Management Committee (the "SALES MANAGEMENT COMMITTEE") which shall be composed of six members, with three representatives each from Siemens and CTI. The presence of two Siemens representatives and two CTI representatives shall constitute a quorum for meetings of the Sales Management Committee. Through the Sales Management Committee, the parties shall determine the appropriate composition, reporting structure and the assignment of regions into which their respective sales forces shall be combined.

ARTICLE 2GENERAL OBLIGATIONS OF CTI, SIEMENS AND CPS

2.1 CTI Sales Activities. At all times during the term of this Agreement CTI, as Siemens's non-exclusive sales representative, shall: (a) diligently promote sales of the CPS Products in the Territory; (b) maintain in the Territory an adequately trained sales force knowledgeable of the CPS Products as is reasonably necessary to perform its obligations hereunder, and manage its sales force personnel as "product sales engineers" (as that term is understood by Siemens on the Effective Date) in support of Siemens's account executives; (c) participate, as is appropriate and in compliance with applicable legal requirements, in appropriate sales, promotion, marketing or merchandising programs in the Territory prepared or undertaken by or on behalf of Siemens; (d) participate in, and consult with Siemens and its designated agents, regarding trade shows and exhibitions in the Territory where such participation will promote the CPS Products; (e) as applicable, refer prospective customers to the designated Siemens representative to obtain financing for the purchase of CPS Products, subject to the provisions of Section 2.6 below. 2.2 Documentation and Reports. CTI shall prepare or cause to be prepared, keep, maintain and provide Siemens with the following documentation and reports in a form and format reasonably acceptable to Siemens: (a) periodic (though no less often than quarterly) reports of sales activities of CTI within the Territory identifying, among other things, actual purchasers of the CPS Products and active prospective purchasers, actual or pending orders, contact and other relevant lead information for each customer and active prospect, and any other information or data as mutually agreed upon from time to time by Siemens and CTI; (b) non-confidential business records customarily maintained by CTI with respect to CTI's solicitation of Purchase Orders; (c) information, in such reasonable detail as requested by Siemens, regarding market conditions and product performance; (d) a forecast for the number and type of units that will be sold the following fiscal year, by no later than May 15 of each year; and (e) such other matters as reasonably requested by Siemens. 2.3 License to Product Technology. Subject to the terms and conditions of this Agreement, CPS grants to CTI a non-exclusive license in the Territory to use the Product Technology (as defined below) to the extent reasonably necessary for CTI to promote and solicit Purchase Orders for the Products and to service and support the Products in order to allow CTI to fulfill its obligations under this Agreement. This license is royalty-free and non-transferable except as permitted by Section 14.3. "PRODUCT TECHNOLOGY" shall mean all computer software code (in object code format and including all associated tool sets) and other technology and know-how comprised within the Products as well as any service manuals and user documentation that is generally provided by CPS to its customers and similarly situated distributors. All rights in and to the Product Technology not expressly granted in this license shall be retained by CPS. 2.4 Obligations of Siemens. At all times during the term of this Agreement, Siemens shall support marketing of the CPS Products by: (a) Providing product managers to support the combined CTI-Siemens sales force (created pursuant to Section 1.4 of this Agreement) with regard to technical matters within their expertise;

(b) Providing product demonstrators to demonstrate CPS Products, including both software and hardware aspects of them; (c) Developing sales tools and sales aids, including, among other things, case studies, cost analyses, and competitive analyses; (d) Promoting the unique capabilities of CPS Products using LSO HI-REZ technologies and other pertinent technologies that may be developed (and, if necessary, approved by the FDA) for use in CPS Products during the term of this Agreement; (e) Promoting the use of CPS Products in relevant medical disciplines including, but not necessarily limited to, oncology, cardiology, and neurology (the "KEY DISCIPLINES"), and further development of each Key Discipline as a market for CPS Products and other CTI and Siemens products and services; (f) Placing advertisements in applicable journals and publications, emphasizing those journals and publications pertaining to the Key Disciplines; (g) Attending and participating in appropriate trade shows pertaining to the PET industry or any of the Key Disciplines; (h) Ensuring equal representation of CTI and Siemens personnel and shared presentation space at all trade shows attended, unless otherwise agreed by the parties; (i) Together with CPS, developing medical advisory boards for each of the three Key Disciplines; (j) Together with CPS, developing luminary and reference-site accounts for PET and PET/CT; (k) Participating in research projects with luminaries, including commitments to make research contributions to luminaries from time to time in connection with such research projects, subject to applicable legal requirements and Siemens internal policies governing the funding of research grants; and

(l) Supporting and promoting to Siemens customers and Siemens corporate accounts, in accordance with Article 9 of this Agreement, the products and services manufactured, distributed, and/or provided by CTI and its subsidiaries (including P.E.T.Net Pharmaceuticals, Inc., a Tennessee corporation ("PETNET")), including radiopharmaceuticals (as defined in Section 9.1 below), cyclotrons, sources, and REVEAL(TM) Marketing and Network Solutions worldwide. 2.5 Obligations of CPS. During the term of this Agreement, CPS shall use commercially reasonable efforts to support Siemens marketing of the CPS Products by: (a) Providing product managers to support Siemens' product managers or, in lieu of providing product managers, providing adequate access for Siemens product managers to CPS' engineering and research personnel; (b) Providing product demonstrators to demonstrate CPS Products, including both software and hardware aspects of them, to Siemens product managers and training personnel; (c) Providing sufficient technical information, operational details and technical analyses for Siemens to develop competitive arguments, sales tools and promotional materials for sales of CPS Products; (d) Continuing to develop competitive products or features to further advance the technology or address competitive pressures created by the technology or features developed by competitors; (e) Maintaining adequate product planning processes, soliciting comments or feedback on development needs from Siemens and, if determined appropriate by CPS after consultation with Siemens, responding to or implementing such comments or feedback; (f) Maintaining good quality standards and order completeness, including review of quality records with Siemens periodically; (g) Providing adequate training, tools and methods to facilitate deployment and installation of and applications training for the CPS Products by Siemens personnel; (h) Providing support for research projects with luminary and reference site accounts designated by CPS, including financial support in an amount and to the extent deemed necessary or appropriate to further the interests of CPS; and

(i) Evaluating requests from Siemens from time to time to provide support to facilitate development of e.soft(TM) applications and integration and connectivity of scanner data with other e.soft(TM) and e.soft@LEONARDO(TM) workstations or other Siemens products or applications;

provided, that any such support will be provided by CPS to Siemens only upon their mutual agreement (and in each party's respective exercise of its sole discretion) and subject to availability of resources and other matters relating to the feasibility of providing such support. 2.6 Product Financing. Siemens shall have the right of first refusal to provide financing arrangements to purchasers of the CPS Products from CTI pursuant to this Agreement; provided, that the financing terms and productoffering shall be no less favorable to the CTI sales team than Siemens provides to its own sales team. If Siemens is unwilling or unable to provide financing on a timely basis for a prospective purchaser, CTI will be permitted to refer such customer to alternative financing sources. 2.7 Initial Transfer Price Reductions. For all orders for CPS Products received by CPS after the Effective Date, the parties agree that (i) the component prices for which CTI supplies LSO and Siemens supplies CTs to CPS shall be reduced by the amounts set forth on Schedule 2.7 attached hereto, and (ii) such component price reductions shall be passed to Siemens in their entirety by reducing the Transfer Prices (as that term is defined in the Distribution Agreement) by the sum of such amounts, as also set forth on Schedule 2.7. The parties agree that Exhibit D to the Distribution Agreement shall be substituted with a revised Exhibit D in substantially the form of Schedule 2.7.1 reflecting the initial transfer price reductions. 2.8 Additional Transfer Price Reductions. Following the initial transfer price reductions contemplated in Section 2.7 above, CPS agrees to further reduce the transfer prices for the Siemens/CPS PET/CT products in its product line in the amount of $* per system as reflected on Schedule 2.8 attached hereto (the "ADDITIONAL TRANSFER PRICE REDUCTIONS"), subject to the receipt by CPS of an additional transfer price reduction of $* per unit from the Siemens CT division (i.e. $* from CPS and $* from Siemens CT). The Additional Transfer Price Reductions will become effective with the order of the * unit from Siemens to CPS after October 1, 2003 which shall include CPS Products ordered from CPS to fill Purchase Orders generated by CTI after May 1, 2004 pursuant to this Agreement.* Omitted information is the subject of a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been filed separately with the Securities and Exchange Commission. 2.9 Scope. The initial transfer price reductions and the Additional Transfer Price Reductions contemplated in Sections 2.7 and 2.8 above shall apply to Siemens global sales of CPS Products. 2.10 Periodic Transfer Price Review. Upon Siemens's written request given not more frequently than *, CPS and Siemens shall review CPS's Transfer Prices (as that term is defined in the Distribution Agreement). Following such review, Siemens shall have the right to provide its recommendations as to appropriate adjustments to such Transfer Prices. All determinations regarding the setting or the changing of Transfer Prices shall be made by CPS as provided in the Joint Venture Agreement, and no provision of this Section 2.10 shall restrict CPS's discretion in making such determinations.

ARTICLE 3ORDERS FOR CPS PRODUCTS

3.1 Purchase Orders. CTI shall solicit Purchase Orders solely on the basis of the terms and conditions of sale (the "TERMS OF SALE") by utilizing the established standard sales processes of Siemens. In order to determine the price to customers, CTI's sales agents shall use the list prices as published in the Siebel quote system utilizing the same prizing authorities and escalation processes as the Siemens personnel. Siemens shall implement its pricing policies fairly between the Siemens and CTI sales organization so that neither party is disadvantaged in pursuing opportunities in the marketplace. Where appropriate, CTI shall inform each prospective customer that consummation of the sale is subject to Siemens' acceptance of the Purchase Order. 3.2 Submission of Purchase Orders to Siemens. Within one (1) business days after CTI has obtained a signed Purchase Order from a prospective customer, CTI shall submit the Purchase Order to Siemens for review and approval. CTI shall include any additional information regarding the prospective customer or the order that Siemens reasonably may request. 3.3 Acceptance of Purchase Orders. All Purchase Orders submitted by CTI are subject to acceptance in writing by Siemens in accordance with its corporate policy. Siemens shall determine whether or not it will accept a Purchase Order within two (2) business days of receiving the Purchase Order and any additional information from CTI. Siemens promptly thereafter shall deliver notice of its decision in writing to CTI. Siemens shall be obligated to accept all Purchase Orders submitted

by CTI that have been approved through the Siemens standard order acceptance process, which applies for all business conducted by Siemens in the Territory. If the Purchase Order requires financing, then the Purchase Order will be conditionally accepted based on financing approval. * Omitted information is the subject of a request for confi ential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been filed separately with the Securities and Exchange Commission. 3.4 Sales Revenue. Sales revenue under this Agreement shall accrue to Siemens in full, in accordance with generally accepted accounting principles. 3.5 Installation and Training. Siemens shall be responsible for installation and initial applications training through formal customer acceptance of the sold CPS Products. CTI agrees to provide installation support and initial applications training during the first six (6) months of the term of this Agreement, at a price to be mutually agreed by CTI and Siemens. Pricing shall be comparable to current pricing presently offered by CTI and/or Siemens. Wherever possible during the first six (6) months of the term of this Agreement, the party awarded the Service Contract for a CPS Product under the provisions of Article 7 will perform installation and training; and, if such party is CTI, then Siemens will pay to CTI $* per CPS Product, equal to the first-year warranty labor credit extended to Siemens under the provisions of the Distribution Agreement. 3.6 Backlog. The completion of firm Purchase Orders which have been executed by the customer prior to the Effective Date but for which delivery has not yet taken place (the "BACKLOG ORDERS") shall be carried out by Siemens or hCTI, whichever originally entered into the Purchase Order. 3.7 Sales Funnel. On or before June 1, 2004, representatives of CTI and Siemens shall review all unexpired quotes that are in the course of being negotiated by CTI that were outstanding as of the Effective Date (the "FUNNEL ORDERS"). CTI shall enter into all Funnel Orders, from time to time after the Effective Date, in the ordinary course of business. Based on its review of the Funnel Orders with CTI, Siemens shall select such of the Funnel Orders as meet Siemens' standards for acceptance, whereupon CTI and Siemens shall work together to effect a transition of the relationship from CTI to Siemens in a manner that meets the individual needs of the customer. CTI shall carry out all Funnel Orders (a) not selected by Siemens in accordance with the foregoing, or (b) selected by Siemens, but as to which a transition approach acceptable to the customer is not achieved.

ARTICLE 4EXPENSES

4.1 Expenses. (a) Not later than one hundred fifty (150) days prior to the end of each CTI fiscal year, CTI shall prepare and present to Siemens a proposed annual operating and capital budget (the "BUDGET") for the expenses to be reimbursed by Siemens pursuant to Section 4.1(b) hereof ("REIMBURSABLE EXPENSES") during the following CTI fiscal year. Siemens shall have thirty (30) days in which to review the Budget and communicate any material objections or requested changes to the Budget in writing to CTI in reasonable detail. CTI and Siemens shall work together to promptly respond to any objections and requested changes submitted by Siemens. Siemens and CTI shall mutually agree upon a Budget by no later than June 20 of each year; provided, that if Siemens and CTI are unable to approve a Budget by the beginning of CTI's fiscal year, then until an agreement is reached the Budget for the prior year shall be deemed to be adopted as the Budget for the current year, with each line item, as applicable, in the Budget increased by the percentage increase in the Consumer Price Index - All Urban Consumers (CPI-U) U.S. City Average All Items 1982-84=100 from August of the prior year to August of the current year.* Omitted information is the subject of a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been filed separately with the Securities and Exchange Commission (b) Siemens shall reimburse CTI for all direct expenses incurred by CTI with respect to the Account Managers employed by CTI who assist in the sales, marketing and account management for the CPS Products and related administrative support personnel (the "ACCOUNT MANAGERS"), including without limitation (i) payroll, wages, salaries and benefits; and (ii) travel, lodging and related expenses; except employment taxes, which will be paid as provided in Section 6.2.

(c) On the tenth (10th) day following the end of each month during the term of this Agreement, CTI shall submit to Siemens an invoice identifying the amount of Reimbursable Expenses incurred in the previous month. Within thirty (30) business days following the date of such invoice, Siemens shall pay to CTI in cash via wire transfer to an account designated by CTI the amount set forth on such invoice. (d) The expenses to be incurred by Siemens pursuant to this Section 4.1 shall not exceed $* for the period from the Effective Date to September 30, 2004. (e) Contemporaneously with the execution of this Agreement, CTI has provided to Siemens, and Siemens has approved, a budget for the fiscal year from October 1, 2004 to September 30, 2005 reflecting annual expenses of not more than $*. 4.2 Evaluation of CRPs. (a) The Parties agree that the average customer realized prices for the CPS Product configuration set forth on Schedule 4.2 hereof (the "CRPS") will be reviewed no later than October 31, 2004 for the five months ending September 30, 2004 (the "REVIEW PERIOD") in order to determine whether, over the ReviewPeriod, the CRPs on sales of CPS Products in the United States exceed the following target CRPs for substantially similar product configurations: 2-slice PET/CT . . $* 6-slice PET/CT . . $* 16-slice PET/CT . . $*The Parties agree that the analysis of sales during the Review Period will include only those transactions that were entered into after the transfer price reductions became effective, regardless of shipment date. In the event the average CRPs exceed the target CRPs set forth above for CPS Products installed in the United States, Siemens and CTI shall each receive 50% of such excess with such payment, if any, to be made within thirty (30) days of the turnover and acceptance by customer. A similar review will be conducted each fiscal quarter during the term of this Agreement commencing October 1, 2004. The parties agree that the target CRPs will be reduced dollar-for-dollar with any transfer price reductions implemented after the initial transfer price reduction referred to in Sections 2.7 and 2.8 hereof.* Omitted information is the subject of a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been filed separately with the Securities and Exchange Commission (b) Transfer Price Relief to Luminaries. Siemens and CPS acknowledge that certain sales to key accounts and other key market opportunities ("luminaries") may from time to time necessitate a further reduction in CRPs for commercial reasons. The parties agree that CPS shall be free to reduce its transfer prices within the limited scope of making sales to such luminaries, such decision to be based upon reasonable business factors. Accordingly, the parties agree that CRPs arising from such transactions shall be excluded from the calculation contemplated in Section 4.2(a) above. The CRPs for all sales of PET and PET/CT products in multi-modality deals where the CPS volume is less than *% of the total order volume also will be excluded from the calculation contemplated in Section 4.2(a) above. The Parties shall designate one representative from each of their finance organizations to evaluate and agree on those transactions that should be excluded from the foregoing calculation. In the event the finance teams fail to agree, the disputed transactions shall be escalated to the President of each Party for a decision, prior to submission to arbitration in accordance with Section 12.1 of this Agreement. In order to facilitate proactive decision making, once per fiscal quarter the combined Siemens and CTI sales forces will develop a list of the luminary accounts to be targeted, as a 12-month rolling forecast. 4.3 Inspection. CTI shall have the right, exercisable twice per fiscal year upon five (5) business days notice to Siemens, to inspect at Siemens' headquarters for a period of no longer than three (3) business days the customer account information, financial records, service contracts, books, reports, and other documents prepared, maintained or retained by Siemens that support the calculation of CRPs contemplated in Section 4.2 hereof and the additional payments, if any, to be made, as well as the allocation of service contracts contemplated in Section 7.1 below. If Siemens reasonably determines that the dates initially chosen by CTI to perform the inspection would unreasonably interfere with Siemens's business, then Siemens and CTI shall select new dates for the inspection by mutual agreement. CTI agrees that it shall hold in confidence and treat as confidential all confidential information received from Siemens pursuant to this Section

4.3 and shall only use and disclose such information on a need-to-know basis in connection with the business relations between CTI and Siemens, for financial and planning purposes, to resolve disputes between the parties regarding the allocation of Service Contracts or the amount owed to CTI pursuant to Section 4.2 of this Agreement.

ARTICLE 5TRADEMARKS

5.1 Siemens Brand. The CPS Products sold by CTI pursuant to the terms of this Agreement shall be marketed and sold under Siemens trademarks, service marks, logos, trade names, labels and/or other materials; provided, however,* Omitted information is the subject of a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been filed separately with the Securities and Exchange Commission. that those CPS Products sold by CTI in fulfillment of Backlog Orders pursuant to Section 3.6 of this Agreement or in fulfillment of Funnel Orders not entered into and completed by Siemens pursuant to Section 3.7 of this Agreement shall be sold under CTI trademarks, service marks, logos, trade names, labels and/or other materials. Nothing herein contained shall give or be deemed to give CTI or its employees, agents or contractors any right, title or interest in any trademark, service mark, copyright or other intellectual property right held or used by Siemens. CTI shall not knowingly take any action, or knowingly fail to take any action where such action or failure would, directly or indirectly, have an adverse effect upon the trademarks, service marks, copyrights or other intellectual property rights of Siemens. 5.2 CTI Products. All CTI Products shall be marketed and sold under CTI trademarks, service marks, logos, trade names, labels and/or other materials. Nothing herein contained shall give or be deemed to give Siemens or its employees, agents or contractors any right, title or interest in any trademark, service mark, copyright or other intellectual property right held or used by CTI. Siemens shall not knowingly take any action, or knowingly fail to take any action where such action or failure would, directly or indirectly, have an adverse effect upon the trademarks, service marks, copyrights or other intellectual property rights of CTI. 5.3 CPS. The parties hereto agree that nothing contained in this Agreement is intended (i) to limit or restrict CPS' right to label or use its trademarks, service marks, logos and trade names in any manner necessary to maximize the growth of its business, or (ii) to amend or modify any term or provision of the Joint Venture Agreement or the rights of the parties thereunder. With respect to the CPS Products shipped with the Siemens logo or under the Siemens brand, CPS agrees that it will not also place a CPS logo on the equipment, other than the CPS manufacturer label on the lower right rear corner, without the prior approval of Siemens. For purposes of this Agreement, the parties agree that CPS shall not be considered an "affiliate" of either CTI or Siemens, but shall be deemed an independent business enterprise subject to the oversight and control of its Board of Directors and the terms of the Joint Venture Agreement.

ARTICLE 6TAXES, IMPORT, EXPORT

6.1 Sales and Related Taxes. In the event any governmental entity imposes any tax on the sale of CPS Products, Siemens shall either pay the amount of such tax directly, or cause the customers to pay the amount of such taxes directly, to such governmental entity. CTI shall have no obligation to pay any taxes on the sale of the CPS Products and Siemens agrees to indemnify and reimburse CTI for any such taxes imposed on CTI by any governmental entity, except that Siemens shall not be obligated to pay sales or related taxes on sales of any CPS Products for which Siemens does not get sales credit under the terms of this Agreement. 6.2 Employment Taxes. The parties acknowledge and agree that the Account Managers will be employed by CTI and will under no circumstances be considered employees of Siemens. CTI shall be responsible for all withholding, payroll and similar taxes related to its employment of the Account Managers none of the Account Managers shall be entitled to any benefits afforded to the employees of Siemens. CTI agrees that: (i) Siemens will not withhold on behalf of the Account Managers any sums for income tax, unemployment insurance, social security, or any other withholding pursuant to any law or requirement of angovernmental body; and (ii) all of such taxes, payments and withholdings, if any, are the sole responsibility of CTI. CTI agrees to indemnify and reimburse Siemens for any income tax, unemployment withholding or other employment taxes with respect to the Account Managers that are imposed on Siemens by any governmental entity.

ARTICLE 7SERVICE AND WARRANTY

7.1 Service Contracts. (a) For purposes of this Article 7, the term "SERVICE CONTRACT" means a service contract covering a CPS Product for which formal customer acceptance is received (i) at the time of sale of the CPS Product, regardless of whether the CPS Product is sold as a new unit or as a used unit, or (ii) at any time after such sale until the date which is eleven (11) months after formal customer acceptance of installation of the CPS Product. (b) As soon as reasonably practicable after the Effective Date, the parties shall form a committee (the "SERVICE MANAGEMENT COMMITTEE") which shall be composed of six representatives as follows: three representatives each from Siemens and CTI with two representatives from each party from the service organization and one from the finance group. The presence of two Siemens representatives and two CTI representatives shall constitute a quorum formeetings of the Service Management Committee. The Service Management Committeeshall meet on a monthly basis, and may meet by telephone conference. At eachmeeting, Siemens shall submit to the Service Management Committee a list of allService Contracts received by Siemens since the previous meeting. The list of Service Contracts shall include a summary of all information the Service Management Committee deems necessary for the selection of such contracts by the Parties. The selection of such contracts by CTI and Siemens shall take into consideration certain parameters, including, but not limited to, predominant geographic coverage in the customer's region, pre-existing business relationships, and contract value. At the initial meeting of the Service Management Committee, Siemens shall have the right to select the first Service Contract it desires to maintain, then CTI shall have the right to select one Service Contract, and thereafter the parties shall alternate selections until all Service Contracts have been divided between them as closely as possible to the revenue split contemplated in Section 7.2 below. The selection sequence will continue to alternate at subsequent Service Management Committee meetings, such that the party that did not have the last selection at the prior meeting shall have the right to select first at the next meeting. Within thirty (30) days of the end of each fiscal quarter, the chief financial officer of Siemens or the chief financial officer of its Nuclear Medicine Group shall certify that all Service Contracts required to be submitted to the Service Management Committee under this Agreement have been submitted as required hereunder and that the summaries of such service contracts as provided by Siemens are true and correct in all material respects. 7.2 Service Contract Transfers. As a result of the selections made by the representatives of the Service Management Committee under Section 7.1 hereof, Siemens and CTI shall each enter into or otherwise effect the transfer or assignment of such initial Service Contracts to ensure that the aggregate revenues to be derived respectively by Siemens and CTI thereunder shall be substantially equal. Siemens shall ensure that the agreements executed by the customer authorize the transfer or assignment of such Service Contracts to CTI as contemplated in Section 7.1 above. 7.3 Service Contract Disputes. In the event the Service Management Committee is unable to resolve any dispute or controversy, the matter shall be promptly submitted to the President of each organization for resolution prior to submission of the dispute to arbitration in accordance with Section 12.1 of this Agreement. The parties agree to work in good faith to resolve any such dispute expeditiously in a manner consistent with the spirit of this Article 7. 7.4 First Year Warranty. First year warranty service shall be provided by the party that receives the Service Contract, with such party also receiving the first-year parts credit from CPS. If CTI provides first-year warranty labor, Siemens shall pay CTI the applicable lump-sum labor reimbursement amount set by Schedule 7.4 attached hereto. For all CPS Products, whether sold as new units or used units, not covered by a Service Contract at the time of formal customer acceptance of installation, the responsibility for providing first-year warranty labor on such CPS Products shall be allocated equally between CTI and Siemens by the Service Management Committee at the last monthly meeting before formal customer acceptance of installation. Any Service Contract later executed with respect to any such CPS Product shall be allocated in accordance with Section 7.1 above. 7.5 Existing Service Contracts; Installed Base.

(a) Except as provided in Article 8 of this Agreement, all contracts in force on the Effective Date between either CTI or Siemens and any third party for extended warranty service on any CPS Product shall be retained after the Effective Date by the party which originally entered into them. (b) Notwithstanding the other provisions of this Article 7, but subject to the provisions of Article 8, Siemens and CTI shall have the right independently to pursue any and all service contracts for CPS Products that, if entered into, would not meet the definition of "Service Contract" set forth in Section 7.1(a) above; and CTI nor Siemens shall be obligated to submit any such service contract to the Service Management Committee.

ARTICLE 8INTERNATIONAL EXPANSION

8.1 Assignment of Service Contracts. (a) CTI shall assign to Siemens all scanner service contracts for the service of any CPS Products to which CTI or any of its affiliates is a party in any international market other than Korea or Japan. A list of the applicable service contracts to be assigned is attached hereto as Schedule 8.1. In connection with such assignment, Siemens agrees to assume all remaining first year warranty labor obligations applicable to such CPS Products, as well as installation and first-year warranty labor obligations as to those CPS Products covered by Backlog Orders to be installed at any international location after the Effective Date. CTI agrees to credit Siemens for the unused prorated portion of the first-year parts warranty for those CPS Products contemplated in the immediately preceding sentence, up to the amount set by CPS. The parties agree that in no event shall such credit exceed the aggregate unused prorated portion of the first-year parts warranty applicable to such assigned service contracts. (b) In consideration for the assignment of service contracts pursuant to this Section 8.1, Siemens shall pay CTI $2,200,000, in immediately available funds, to the account designated by CTI. CTI reserves the right to direct that some or all of these funds be paid directly to CTI's wholly owned European subsidiaries. (c) CTI shall be responsible for all severance and other costs associated with the cessation of its international sales and service business with respect to the sale and service of the CPS Products. Siemens shall have the right to interview, solicit and hire those CTI employees currently engaged in CTI's international sales and service operations for the CPS Products. 8.2 Limitation. In consideration of the assignment set forth in Section 8.1 above, CTI hereby agrees that, during the term of this Agreement, it shall not enter or re-enter the United States market or any international market with respect to the sale or service of CPS Products, either directly or indirectly, alone or in cooperation with any third party other than CPS, except as may be otherwise agreed in writing by the parties hereto or as follows: (a) In Korea, CTI shall continue its focus on sales based on the fee/scan business model and the service of such equipment. (b) From and after the Effective Date, the parties acknowledge and agree that CTI shall retain the existing Distribution Agreement for CTI PET Products dated January 22, 2003 (the "CMI AGREEMENT") between CTI and Kabushiki Kaisha CMI ("CMI") in Japan, which has an initial term of three (3) years; provided, that (i) upon the termination or expiration of the CMI Agreement, CTI shall not replace CMI with another distributor in Japan or extend the CMI Agreement with respect to the sale or service of CPS Products, and (ii) during the term of the CMI Agreement, CTI will not enter into any new agreements regarding the distribution of CPS Products in Japan. 8.3 Restrictive Covenant. In consideration of the payment of theconsideration provided for in Section 8.1(b) of this Agreement, during the termof this Agreement neither CTI nor any entity in which CTI owns 50% or more ofthe voting securities, other than CPS (collectively, the "CTI RESTRICTED PARTIES"), shall engage in the business of selling, servicing, maintaining, or repairing PET or PET/CT scanners in the United States market or any international market other than Korea and Japan. 8.4 Termination of Restrictions. The limitations and restrictive covenants set forth in Sections 8.2 and 8.3 above shall terminate and become of no further force and effect immediately upon CTI's receipt of any notice of non-renewal of this Agreement given by Siemens pursuant to Section 10.1 below in order to allow CTI to prepare to re-enter the markets at or after the effective date of termination.

ARTICLE 9SALE OF CTI PRODUCTS

9.1 Siemens as Representative. CTI hereby appoints Siemens, and Siemens hereby accepts appointment, as CTI's non-exclusive representative to offer for sale to Siemens' customers products manufactured and/or distributed by CTI andits subsidiaries (collectively, the "CTI PRODUCTS"), including but not limited to: (a) positron-emitting molecular probes used in PET procedures, whether for diagnosis of disease or for research purposes ("RADIOPHARMACEUTICALS"), distributed by PETNET; (b) cyclotrons; (c) REVEAL(TM) Marketing and Network Solutions; and (d) sources; provided, with respect to Section 9.1(d) above, that regulatory requirements for CPS sources are met and that offers are made by Siemens in a good faith basis. 9.2 Exclusivity. (a) Subject to the expiration or termination of any existing agreements to which Siemens is a party regarding the provision to Siemens customers of cyclotrons or radiopharmaceuticals, Siemens hereby agrees that during the term of this Agreement it shall offer exclusively CTI cyclotrons, PETNET radiopharmaceuticals, and CPS sources for sale to Siemens customers interested in purchasing cyclotrons, radiopharmaceuticals, or sources. It is a condition to Siemens' obligations under this Section 9.2 that the cyclotrons, radiopharmaceuticals, or sources be competitively priced, and that (with respect to radiopharmaceuticals), PETNET be able to timely deliver the radiopharmaceuticals to the customer site. Siemens agrees to review and pursue the early termination of any such conflicting agreement or relationship if Siemens can do so without cost to itself and such termination will not adversely affect Siemens's existing business operations. (b) Siemens and CTI agree that the provisions of this Article 9 do not impose any restriction on (i) CTI's right to distribute the CTI Products itself or through others, (ii) Siemens's rights to distribute its products itself or through others, or (iii) CPS's right to distribute any CPS Products itself or through others. 9.3 Procedures. CTI and Siemens shall cooperate to develop procedures for the sale of CTI Products pursuant to this Article 9; provided, that all sales of CTI Products shall be made in accordance with CTI's standard terms and conditions of sale and pursuant to orders accepted by CTI. 9.4 Packaging of CTI Products with Siemens Products. CTI Products offered by Siemens under this Article 9 may be included as an option to the customer as part of a package with the CPS Products and Siemens' own products. In no event shall Siemens be obligated to package CTI Products with any other Siemens products, nor shall any customer be forced to purchase any such package. Any such packaged offering shall comply with all Federal, state and local laws. 9.5 Commission. The commission that the Siemens sales representatives will receive for the sale of the CTI Products shall be consistent with the commission paid by CTI to its PET tomography sales representatives for the sameproducts. 9.6 Mirada License. As additional consideration for CTI's execution of this Agreement, Siemens shall execute and enter into that certain Fusion7D(R) Software License Agreement dated as of the Effective Date (the "MIRADA LICENSE") between Siemens and Mirada Solutions Limited, a wholly owned subsidiary of CTI incorporated under the laws of England and Wales. 9.7 Further Cooperation. The parties will work together to identify other potential areas in which they may collaborate in furtherance of their respective businesses. Siemens also acknowledges its desire to enter into a separate agreement with Concorde Microsystems, Inc. ("CONCORDE") for the distribution of its microPET(TM) product line, on terms to be mutually agreed upon between Siemens and Concorde.

ARTICLE 10TERMINATION

10.1 Term. The initial term of this Agreement shall be two (2) years from the Effective Date and shall automatically be extended for additional one (1) year periods unless either party provides not less than 180 days prior written notice of its election not to renew for such additional term or this Agreement is earlier terminated pursuant to Sections 10.2, 10.3, 10.4, or 10.5 hereof.

10.2 Termination for Cause. At any time during this Agreement, this Agreement may be terminated for cause: (a) By any party, upon thirty (30) days' written notice to the other parties, upon the occurrence of any one or more of the following events: (i) a material breach by any other party of this Agreement if such other party shall have failed to cure such breach within ninety (90) days' of receipt of written notice thereof from the terminating party describing with specificity the factual basis constituting the material breach; (ii) an adjudication of bankruptcy of any party under any bankruptcy or insolvency law; or (iii) the commission by any party of a receiver for business or property, or the making of any general assignment for the benefit of Creditors (b) By CTI, in the event that total unit sales of CPS Products represent less than *% of total unit sales of new PET and PET/CT scanners in the United States for two consecutive fiscal quarters as reported by the National Electronics Manufacturers Association (in either dollar volume or number of orders), if such reduction is not directly attributable to a decline in the quality of the CPS Products, non-competitive pricing or transfer pricing issues not attributable to the Transfer Prices paid for CTs to Siemens by CPS, adverse action by the U.S. Food and Drug Administration (the "FDA") related to CPS or the CPS Products, work stoppage or labor unrest at CPS that results in missed shipments, or similar events adversely affecting CPS's business operations in a manner that erodes total market share. (c) By CTI, if Siemens terminates the Mirada License for any reason. (d) By CTI, if Siemens is in breach or default of any of its payment obligations set forth in this Agreement and such breach or default continues for thirty (30) days or more after receipt of written notice thereof, upon written notice to Siemens, with such termination to be effective on the date of receipt by Siemens of such termination notice. 10.3 Termination Upon a Force Majeure Event. If a Force Majeure Event (as defined in Section 14.2) continues for a period of six (6) months or longer, then the entirety of this Agreement may be terminated by any party whose own performance is not delayed or prevented by the Force Majeure Event (the "UNAFFECTED PARTY") immediately thereafter by providing notice to the other parties.* Omitted information is the subject of a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been filed separately with the Securities and Exchange Commission. 10.4 Termination by Mutual Agreement . This Agreement may be terminated at any time during the term hereof the mutual written agreement of the parties hereto. 10.5 Termination Upon Exercise of Option. Either party shall have the right to terminate this Agreement at such time as Siemens attains an 80% or greater interest in CPS pursuant to the closing of the additional purchase and sale rights set forth in Section 14 of the Joint Venture Agreement (the "OPTION"). 10.6 Obligations Upon Termination. (a) Except as provided, CTI agrees that upon the termination of this Agreement for any reason whatsoever CTI shall: (i) cease all marketing and promotion of CPS Products and the solicitation of Purchase Orders on behalf of Siemens; and (ii) on or before the effective date of termination, assist Siemens in preventing any disruption of service or supply to customers of CPS Products located within the Territory, by providing Siemens with a complete and accurate list and description of all unfulfilled Purchase Orders from customers for the CPS Products submitted to CTI on or before the effective date of the termination. (b) Upon termination of this Agreement, Siemens shall reimburse CTI for all expenses for which Siemens is obligated to reimburse CTI and which were incurred on or before the effective date of termination. 10.7 Distribution of CPS Products. (a) Upon the termination or non-renewal of this Agreement by Siemens for any reason, CTI shall have the right to distribute CPS Products on substantially the terms set forth in the CTI Distribution Agreement, as suchagreement may be amended from time to time by the parties.

(b) Upon the termination or non-renewal of this Agreement by CTI for any reason other than a payment default by Siemens in accordance with to Section 10.2(d) above, CTI shall not have the right to be a distributor of the CPS Products; provided, however, that Siemens and CTI may enter into discussions regarding an appropriate OEM relationship to further the commercial interests of the parties.

ARTICLE 11LIMITS ON DAMAGES AND INSURANCE

11.1 Limitation of Damages. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR LOSS OF ANTICIPATED PROFITS, OR FOR ANY INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES ARISING OUT OF THIS AGREEMENT OR THE SALE OR USE OF THE CPS PRODUCTS. 11.2 Insurance. CTI and Siemens each agrees to maintain during the term hereof liability insurance for personal injury and property damage, including product liability and contractual coverage, as set forth herein. Coverage for personal injury shall be not less than One Million Dollars ($1,000,000) aggregate annual liability. Coverage for property damage shall be not less than Two Million Dollars ($2,000,000) per occurrence. CTI and Siemens agree that all liability insurance obtained by CTI and Siemens shall include CTI and Siemens as named insureds reasonably acceptable to CTI and Siemens. CTI and Siemens further agree, as a continuing obligation after the term hereof, to maintain such insurance with no less than the coverage specified above in full force and effect for the full life of the CPS Products sold hereunder. CTI and Siemens shall supply each other with a Certificate of Insurance upon written request by Siemens or CTI.

ARTICLE 12DISPUTE RESOLUTION

12.1 Arbitration. Except for (i) claims resulting from an alleged breach of a party's confidentiality obligations hereunder or infringement of a party's technology or software, or (ii) situations in which a party may suffer irreparable harm, any controversy or claim between the parties arising out of or relating to this Agreement which cannot be settled by mutual agreement of the parties in lieu of the institution of legal proceedings by either party shall be submitted to binding arbitration on the terms set forth in the Joint Venture Agreement. 12.2 Release of Siemens by CTI. For and in consideration of the promises made by Siemens set forth herein, the adequacy and sufficiency of which hereby is acknowledged, CTI hereby does release, acquit, remise and forever discharge Siemens, all of its past and present servants, agents, employees, shareholders, officers, directors, partners, associates, principals, attorneys, successors, predecessors, insurers, and assigns, and any parent, subsidiary or affiliated entities from any and all claims, causes of action, liabilities, obligations, responsibilities, agreements, damages, actions, costs, and expenses of any nature whatsoever, including attorneys' fees, arising out of or relating to violations or alleged violations of Section 12.2 the Joint Venture Agreement related to the sale of PET image display or image analysis workstations, spare parts or sources, from the beginning of time to the Effective Date. No portion of this Section 12.2 shall apply to matters arising pursuant to this Agreement after the Effective Date. 12.3 Release of CTI by Siemens. For and in consideration of the promises made by CTI set forth herein, the adequacy and sufficiency of which hereby is acknowledged, Siemens hereby does release, acquit, remise and forever discharge CTI, all of its past and present servants, agents, employees, shareholders, officers, directors, partners, associates, principals, attorneys, successors, predecessors, insurers, and assigns, and any parent, subsidiary or affiliated entities from any and all claims, causes of action, liabilities, obligations, responsibilities, agreements, damages, actions, costs, and expenses of any nature whatsoever, including attorneys' fees, arising out of or relating to violations or alleged violations of Section 11.4 of the Joint Venture Agreement related to the sale of PET image display or image analysis workstations, spare parts or sources, from the beginning of time to the Effective Date. No portion of this Section 12.3 shall apply to matters arising pursuant to this Agreement after the Effective Date. 12.4 Release by CPS. For and in consideration of the promises made by CTI and Siemens set forth herein, the adequacy and sufficiency of which hereby is acknowledged, CPS hereby does release, acquit, remise and forever discharge CTI and Siemens, all of their respective past and present servants, agents, employees, shareholders, officers, directors, partners, associates,

principals, attorneys, successors, predecessors, insurers, and assigns, and any of their respective parent, subsidiary or affiliated entities from any and all claims, causes of action, liabilities, obligations, responsibilities, agreements, damages, actions, costs, and expenses of any nature whatsoever, including attorneys' fees, arising out of or relating to violations or alleged violations of Sections 11.4 or 12.2 of the Joint Venture Agreement related to the sale of PET image display or image analysis workstations, spare parts or sources, from the beginning of time to the Effective Date. No portion of this Section 12.4 shall apply to matters arising pursuant to this Agreement after the Effective Date. 12.5 Denial of Admissions. The parties hereby agree that the releases set forth in Sections 12.2, 12.3, and 12.4 of this Agreement shall not be deemed to be an admission by any party of any violation of any provision of the Joint Venture Agreement. 12.6 Sale of Workstations. The Parties hereby agree to amend the Joint Venture Agreement to provide that future sales of PET image display and image analysis workstations (as opposed to those workstations that provide PET reconstruction or image correction capability, which shall continue to be excluded as part of the CPS Business) by either CTI or Siemens pursuant to the terms of this Agreement shall not constitute a breach of the covenant not to compete contained in the Joint Venture Agreement.

ARTICLE 13ADDITIONAL COVENANTS

13.1 Further Assurances. CTI, CPS, and Siemens shall cooperate reasonably with each other in connection with any steps required to be taken as part of their respective obligations under this Agreement, and shall i) furnish upon request to each other such further information; ii) execute and deliver to each other such other agreements, certificates, documents, and instruments; and iii) do such other acts and things, all as any other party to this Agreement reasonably may request for the purpose of carrying out the intent of this Agreement and the transactions contemplated hereby. 13.2 Assignment of Contracts. In the event that the transactions contemplated by this Agreement require the sale, assignment, assumption, transfer, conveyance, or delivery by any party hereto (the "ASSIGNOR") to another party hereto (the "ASSIGNEE") of any contract to which the Assignor is a party, and if either (x) the provisions of such contract (the "RESTRICTED CONTRACT") prohibit such assignment, or (y) the provisions of the Restricted Contract require the consent of any other party to such sale, assignment, assumption, transfer, conveyance, or delivery and such other party withholds, unreasonably delays, or unreasonably conditions such consent, then: (a) Notwithstanding any other provision hereof, neither this Agreement nor any other document related to the consummation of the transactions contemplated hereby shall constitute a sale, assignment, assumption, transfer, conveyance, or delivery or an attempted sale, assignment, assumption, transfer, conveyance ,or delivery of the Restricted Contract; and (b) The Assignor and the Assignee shall cooperate with each other in any reasonable and lawful arrangements designed to provide to the Assignee the benefits of use of the Restricted Contract for the term thereof (or any right or benefit arising thereunder, including the enforcement for the benefit of the Assignee of any and all rights of the Assignor against a third party thereunder); and (c) The Assignor and the Assignee shall use their respective best efforts, and shall cooperate with each other, to obtain the consent to the assignment of the Restricted Contract as quickly as practicable. Once consent for the sale, assignment, assumption, transfer, conveyance and delivery of a Restricted Contract is obtained, the Assignor promptly shall assign, transfer, convey, and deliver the Restricted Contract to the Assignee, and the Assignee shall assume the obligations under the Restricted Contract assigned to the Assignee from and after the date of assignment to the Assignee.

ARTICLE 14MISCELLANEOUS

14.1 Relationship. Nothing in this Agreement shall be construed to render any party the employer or employee of any other party, the agent or principal of any other party, or a joint venturer or member of any other party. No party shall have the right to bind any other party, to exercise control of any other party, or to conduct any other party's business, except as expressly set forth in this Agreement.

14.2 Force Majeure Provision. No party hereto shall be liable for any delay arising from unanticipated catastrophic circumstances beyond its reasonable control including, but not limited to, acts of God, war, riot or civil commotion, fire, flood, terrorism, drought or act of government ("FORCE MAJEURE EVENTS"); provided, that the party seeking to be excused shall make every reasonable effort to minimize the delay resulting therefrom. Each party shall keep the other parties fully informed of any such circumstances. During the period that the performance by one of the parties of its obligations under this Agreement is been suspended by reason of a Force Majeure Event, all parties to this Agreement shall cooperate and use their commercially reasonable best efforts to continue the business contemplated by this Agreement; provided, that any Unaffected Party may (but shall not be required to) suspend performance of all or part of its obligations hereunder to the extent that such suspension is commercially reasonable. The parties agree to resume their performance under this Agreement as soon as possible upon the passing of the Force Majeure Event. 14.3 Assignment. No party shall have the right to assign or otherwise transfer its rights and obligations under this Agreement except with the prior written consent of the other parties; provided, however, Siemens and CTI shall each be entitled to assign any or all of its rights and obligations hereunder to any of its controlled subsidiaries, provided that both Siemens and CTI, as applicable, shall remain fully liable for the performance of all its obligations hereunder; and further provided that a successor in interest by merger, by operation of law, assignment, purchase or otherwise of the entire business of either party shall acquire all rights and obligations of such party hereunder. Any prohibited assignment shall be null and void. 14.4 Notices. All notices or other communication which are required or permitted hereunder shall be in writing and sufficient if delivered by hand, by facsimile or telecopier transmission (and a transmission confirmation is received by the sender), or by a recognized international or overnight courier, to the persons at the addresses set forth below (or at such other address as may be provided hereunder), and shall be deemed to have been delivered as of the date so delivered.Siemens: Siemens Nuclear Medicine Group 3501 North Barrington Road Hoffman Estates, Illinois 60195 Facsimile: (847) 304-7080 Attention: President, Siemens Nuclear MedicineWith copies to: Siemens Medical Solutions USA, Inc. 51 Valley Stream Parkway Malvern, PA 19355 Facsimile: Attention: President & CEO and Associate General Counsel Siemens Legal Department J-16 51 Valley Stream Parkway Malvern, PA 19355CTI: CTI Molecular Imaging, Inc. 810 Innovation Drive Knoxville, TN 37932 Fax No.: 865/218-3016 Attention: PresidentWith a copy to: CTI Molecular Imaging, Inc. 810 Innovation Drive Knoxville, TN 37932 Fax No.: 865/218-2760 Attention: General CounselCPS: CPS Innovations 810 Innovation Drive Knoxville, TN 37932 Fax No.: 865/218-2878 Attention: PresidentWith a copy to: Kilpatrick Stockton LLP Suite 900 607 14th Street

Washington, DC 20005-2018 Fax No.: 202 585 0002 Attention: David A. Stockton 14.5 Entire Agreement. This Agreement, including the schedules attached hereto and incorporated as an integral part of this agreement, constitutes the entire Agreement of the parties with respect to the subject matter hereof, and supersedes any and all previous Agreements by and between CPS, Siemens and CTI with respect to the subject matter hereof, if any, as well as any and all proposals, oral or written, and all negotiations, conversations or discussions heretofore had between the parties related to this agreement. 14.6 Amendment. This Agreement shall not be deemed or construed to be modified, amended, rescinded, canceled or waived, in whole or in part, except by written amendment signed by the parties hereto. 14.7 Publicity. This Agreement is confidential and no party shall issue press releases or engage in other types of publicity of any nature dealing with the commercial and legal details of this Agreement without the other parties' prior written approval, which approval shall not be unreasonably withheld. However, approval of such disclosure shall be deemed to be given to the extent such disclosure is required to comply with governmental rules, regulations or other governmental requirements. In such event, the publishing party shall promptly furnish a copy of such disclosure to the other parties. Notwithstanding the foregoing, CPS, Siemens and CTI shall be permitted to file this Agreement and to disclose the terms of this Agreement in their respective filings with the U.S. Securities and Exchange Commission or any similar state agency. 14.8 Severability. In the event that any of the terms of this Agreement are in conflict with any rule of law or statutory provision or are otherwise unenforceable under the laws or regulations of any government or subdivision thereof, such terms shall be deemed stricken from this Agreement, but such invalidity or unenforceability shall not invalidate any of the other terms of this Agreement and this Agreement shall continue in force, unless the invalidity or unenforceability of any such provisions hereof does substantial violence to, or where the invalid or unenforceable provisions comprise an integral part of, or are otherwise inseparable from, the remainder of this Agreement. 14.9 Counterparts. This Agreement shall be executed in three or more counterparts, and each such counterpart shall be deemed an original hereof. 14.10 Waiver. No failure or delay by any party to take any action or assert or exercise any right or remedy hereunder shall operate or be deemed to be a waiver of such right or remedy in the event of the continuation or repetition of the circumstances giving rise to such right; nor shall any single or partial exercise of such right or remedy preclude any other or further exercise thereof or of any other right or remedy. No provision of this Agreement may be waived except in a writing signed by the party granting such waiver. Quyền từ bỏ thực hiện. Không có điều khoản nào trong hợp đồng này cho phép từ bỏ nếu không được bên kia chấp thuận bằng văn bản.

14.11 Authorization and Execution. By executing this Agreement each party represents and warrants to the other parties (i) that the entry into and execution and performance of this Agreement has been fully and duly authorized by all required corporate action, and (ii) that the person signing this Agreement on behalf of a party has been fully authorized by all required corporate action to execute this Agreement on behalf of the party for which such person is signing. 14.12 Confidentiality. Each party hereto agrees not to disclose to others the technical and business information of the other parties hereto ("CONFIDENTIAL INFORMATION"), and agrees to use the other parties' Confidential Information only for the implementation of this Agreement and to hold the other parties' Confidential Information confidential using at a minimum the same care it would exercise to protect its own Confidential Information but in no event less than a reasonable degree of care. The receiving party further agrees to disclose the Confidential Information of the disclosing party only to the receiving party's employees and agents who have a need to know and only to those employees and agents who have agreed in writing to confidentiality obligations substantially similar to those in this Section 14.12. The receiving party shall not permit any of its personnel to remove any proprietary or other legend or restrictive notice contained or included in any Confidential Information provided by the disclosing party, and the receiving party shall not permit any of its personnel to reproduce or copy any such Confidential Information except as expressly authorized under this Agreement. Provided, however, that such confidentiality obligation shall not apply to any information which (a) is now or hereafter becomes

a part of the public domain, other than by act or omission of the receiving party, (b) was independently developed by the receiving party or its affiliates; (c) information that was in such party's possession prior to disclosure by the other party, (d) is hereafter furnished to the receiving party by a third party, as a matter of right and without restriction on use or disclosure, who lawfully possesses such information and did not acquire it directly or indirectly from the other party, (e) is disclosed in any U.S. or foreign patent, or published patent application, whether owned by the other party or any third party, or (f) is required to be disclosed to a government agency or pursuant to a judicial proceeding, but only to the extent so required and provided that the receiving party gives the disclosing party advance notice of such disclosure and reasonably cooperates with the disclosing party (at the disclosing party's expense) to contest such disclosure. The duration of this confidentiality obligation shall be for the term of this Agreement and for two (2) years thereafter with respect to any Confidential Information that does not constitute a "trade secret" under applicable law, and for Confidential Information that does constitute a trade secret under applicable law, these confidentiality obligations shall last in perpetuity. Nothing in this Section is intended by the parties to abrogate any rights or obligations of the parties under common law or statutory law with respect to the use and disclosure of confidential information or trade secrets.

14.13 Survival. The provisions in Section 14.12 shall survive the expiration or termination of this Agreement indefinitely. 14.14 Governing Law. This Agreement shall be governed by, construed under, and interpreted in accordance with the laws of the State of Delaware, U.S.A, applicable to contracts made and performed entirely within that state.

[SIGNATURE PAGE FOLLOWS] IN WITNESS WHEREOF, the parties have caused this Agreement to beexecuted as of the Effective Date.

CTI MOLECULAR IMAGING, INC.By: /s/ Ronald Nutt ----------------------------------- Ronald Nutt, Ph.D. President

SIEMENS MEDICAL SOLUTIONS USA, INC. By: /s/ Thomas N. McCausland ----------------------------------- Thomas N. McCausland President

CTI PET SYSTEMS, INC.By: /s/ R. Gregory Brophy

----------------------------------- R. Gregory Brophy President

Chapter 3 (P. 115)NEGOTIATING INSPECTION AND DEFECTS LIABILITY

1. Exporting and the Problem of QualityTHE PROBLEM Export markets are often far away. When things go wrong with products, repair and replacement can be ruinously expensive. What special steps can the exporter take to minimize the risk of the goods being rejected or of heavy defects liability claims?

Thị

THE PRINCIPLE The first steps an exporter should take are to ensure that all exported goods meet or exceed the quality specified, that marking and packaging are correct, and that delivery is on time. Secondly, the agreement between the parties should contain specific quality specifications; detailed specification reduces the chance of a dispute because it provides a clear and objective standard that the goods must meet.

IN MORE DEPTHNo manufacturer produces perfect products every time. Even so, quality is a key issue, and customer satisfaction is essential to successful business. Many companies have quality assurance programs to ensure that customers get what they pay for. Until things are going well in the local market, it makes little sense to export, because quality assurance and customer satisfaction are much rougher issues when the customer is in another country, and when distance makes communication, transport, inspection, payment, and verification of claims expensive and time consuming. Before looking in detail at inspection, defects liability and the other issues, let's trace the course of an exported product from manufacture through to the end of the defects liability period and see where the exporter is at risk.

Scenario: Verbena Electric is selling lightweight headphones with a built-in AM/FM radio. The equipment runs on a single AAA battery. The customer is Euroeast Impex, a purchasing house in an East European country with a huge market for modern, high quality equipment- provided the price is right. The two sides have agreed an FOB (Port Verbena) price of $2.78 per unit, excluding battery.

Quality is an issue from the start of negotiations. Euroeast wants a product it can sell in tens of thousands. But, despite the low price, this is not a throw-away product- the end user wants headphones that will last at least six months. How does Euroeast get the quality it wants.

CONCEPT REVIEW: Close Knit

Verbena Knils is selling 5,000 sweaters to an importer in Nonamia, a country 4,000 miles away. The Monamian buyer agrees to pay by letter of credit, but not by confirmed letter of credit. Delivery is to be made DDP (Port Nemo). As to specifications, the buyer’s general conditions of purchase state: "The quality of all deliveries shall be in accordance with the customs of the trade as practiced in the Republic of Nonamia." And further, “Clearly defective goods may'be rejected on arrival-and returned to exporter at the exporter's risk and cost." The buyer wants to buy from Verbena Knits on these loose and somewhat informal terms.Where do you see danger for the exporter? If there is "Some Danger" or "GreatDanger,” what is the danger you foresee ?

1. In the terms of the letter of credit? .......................................................... NO DANCER SOME DANGER GREAT DANGER

2. In the DDP delivery?.......................................................................... NO DANCER SOME DANGER GREAT DANGER

3. In the lack of detailed quality specification?................................................ NO DANCER SOME DANGER GREAT DANGER

4. In the "rejection on arrival" provision? ...................................... .... NO DANCER SOME DANGER GREAT DANGER

.5. In the unusually geographical distance between exporter and buyer?…...... NO DANCER SOME DANGER GREAT DANGER

1. Some danger. An unconfirmed letter of credit is liable to severe delay in payment; the buyer's bank (and therefore to some extent the buyer) take control of payment. 2. Some danger. The exporter bears the risk of the goods not only during theirvoyage but also through customs and during transportation in the buyer'scountry. This can cause problems. 3. Great danger. The right of the buyer to return "clearly defective" goods needsclose definition: full specificadon is the only way. 4. Some danger. The buyer has the right to reject defective goods undermostapplicable laws. The problem, as with question 3, is to define "defective."5. Some danger. If anything goes wrong, the cost of putting things right increases with distance. :

What You Should Know 1. Delivery of poor quality products to export markets is particularly dangerous because the cost of curing defects is high.2. To guard against high costs, the exporter should be particularly careful about quality assurance. 3. In negotiating quality clauses, the exporter should pay special attention to detailed, realistic specification of the goods.4. Inspection provisions both before and after delivery must be negotiated with care. 5. The final quality hurdle is the defects liability period during which the exporter is liable to cure defects that come to light in the goods.

(Page 121) 3.2 INSPECTION, ACCEPTANCE AND REJECTIONTHE PROBLEMWhen goods are delivered, the buyer inspects them. What are the buyer’s rights of rejection? Under what circumstances can the buyer cancel the contract?PRINCIPLEThe buyer has the right to inspect the goods and to reject them if they do not conform with the contract. Under certain circumstances, the buyer may cancel the contract, though normally the exporter takes or (has the right to take) corrective action.IN MORE DEPTHAn exporter agrees to deliver goods of a certain quantity and quality. Any deviation is, essentially, a breach of contract. Everyone knows, however, that delivered goods are seldom “perfect.” Somehow the buyer must be protected against inferior goods, and the exporter must be protected against cancellation of the contract for trivial or insufficient reasons. The defects liability provision (or warranty) provides this double protection; the exporter says, in effect: “I promise to deliver perfect goods, but, if I break this promise, I still have a contract because I will fix the problem.”

Translate into VietnameseCONTRACT FOR DISTRIBUTORSHIP AGENCY: DISTRIBUTORSHIP AGREEMENTTHIS AGREEMENT dated the last day of January 2010 . by and between AGIP PETROLI SPA Singapore branch having a place of business at 302 Orchard Road 14-02 to 14-04 Tong Building, Singapore 0923 ("AGIP")And " xxxxxxxxxxxxxxxxxxx whose registered office isxxxxxxxxxxx ("DISTRIBUTOR") ' ,Witnesseth:AGIP and DISTRIBUTOR hereby covenant and agree as follows:1. DefinitionsAs used in this Agreement the following terms shall have the meaning set forth hereafter:a) "Products" shall mean AGIP Lubricants for Automotive and Industrial application and Special Products as listed in the First Schedule for the distribution by Distributor in Consumer Packages (as hereinafter defined) carrying the registered AGIP trademarks and/or getting up; it is agreed by the parties hereto that AGIP or AGIP Affiliates (as hereinafter defined) may from time to time without assigning any reasons thereto make improvements to or changes in the Products during the currency of this Agreement; such improvement or changes even if resulting in a change in the characteristics of the Products shall not affect the status of the Products as the Products and AGIP shall notify DISTRIBUTOR of such improvement or changesb) "Territory" shall mean the Socialist Republic of Vietnamc) '"Consumer Packages" shall • mean such original standard packages from time to time adopted by AGIPd) "Affiliate" shall mean any entity which is controlled by or in control of or under common control with another specified entity "Control" shall mean' a 25% or larger ownership of issued and outstanding voting securities or common officers or directors or a contractual relationship allowing one entity to assume orsubstantially influence the management or operations of another.2. Appointment

a) Subject to the terms and conditions in this Agreement AGIP hereby grants to the Distributor the sole right during the continuance in force of this Agreement to purchase for distribution and resale in the Territory those of its Products exclusively for Automotive and Industrial Application (excluding international marine application) specified in the First Scheduleb) This appointment shall take effect on ../../19 .. and shall subsist for a period of .. years from that date unless otherwise terminated in accordance with the provisions of this Agreement and shall continue thereafter until terminated by either party giving tothe other at any time six (6) months' notice in writingc) Provided always that the Distributor is not in breach of any of its obligations and terms whatsoever hereunder AGIP will not appoint any other distributor for the Products in the Territory during the term of this Agreement; however AGIP may during the period of six (6) months prior to the termination hereof appoint the Distributor's successor (if any) and allow AGIP and such successor to make itself known as AGIP's future distributor appointed to do business after the termination of this Agreement3. Distributor's undertakingsa) The Distributor shall during the continuance of this Agreement purchase all its requirement of the Products from AGIP and shall diligently and faithfully serve AGIP as its distributor in the Territory and shall improve and promote the sale of the Products for Automotive and Industrial application (excluding international marine application) to customers through the Territory and to ensure the best possible display of the Products inall marketing and sales outletsb) The Distributor shall ensure in all events that the minimum order for the Products for delivery to the Distributor shall be that set out in clause 6 (0 hereinafter set out in the Second Schedule heretoc) The Distributor shall ensure that to conform with all legislation rules, regulations and statutory requirements relating to the importation storage distribution and sale of the Products in the Territory from time to time.d) The Distributor shall not alter or treat in any way whatsoever the content and Consumer Packages of the Products and will supply Products only in Consumer Packages form and get up in which they are supplied to the Distributor by AGIP; the Distributor shall procure similar undertaking from all its marketing and sales outlets accordingly and shall be responsible for and stand liable for the compliance thereofe) The Distributor shall maintain sales records in .respect of in its outlets and supply each month a sales and stocks return and such other further records and reports all in the English Language as may be specified by AGIP from time to timef) The Distributor shall ensure that its salesmen visit regularly the business premises of present and potential marketing and sales outlets/customers for the Products in the Territory and in addition to visit attempt to obtain orders for the Products from any persons to whom they may be directed by GIPg) The Distributor shall be responsible for ensuring that the Products reach the consumer in the best possible condition and shall take all positive precautions to avoid contamination or alteration of the Products and the Consumer packages and shall educate and procure similar undertaking from all its salesmen and marketing and sales outlets accordingly and shall be responsible for and stand liable for the compliance thereofh) The Distributor shall promptly resolve satisfactorily any complaints relating to the promotion sale or provision of technical information and all other matters whatsoever in respect of the Products arising within the Territory; the Distributor shall promptly notify AGIP of any complaints or unusual comments whether favorable or unfavourable or by way of requests for information) it may receive pertaining to the Products or of any defective Products; it is understood that AGIP shall not be in anyway responsible for or liable to any complaints whatsoever and the Distributor hereby agrees to fully indemnify AGIP accordingly. The Distributor shall keep AGIP regularly and continuously informed of the progress and development of the market in the Territory for the Products and for all goods similar thereto or competitive therewith and of all laws 'and regulations affecting the

import distribution labelling packaging advertising and sale of the Products and of such goods in the Territory and of all matters whatsoever affecting or relevant to AGlP's business in the Territory.j The Distributor shall not distribute similar product in the Territory or enter into any business transaction in competition with AGIPk The Distributor will keep full proper and up-to-date records in the English Language showing clearly all enquiries, transactions and proceedings relating to the distributorship and shall at all times permit AGIP or its representatives full access theretol) The Distributor hereby acknowledges that the Agreement is personal and shall not assign or purport to assign the benefit of this Agreement without the prior consent in writing of AGIP, of which consent shall not be unreasonably withheld without prejudice to the foregoing; it is understood that an amalgation or reconstruction or change in control and change in ownership of up 25% equity and above are deemed an assignment for which AGIP prior written consent must be procuredm) The Distributor shall in selling the Products be bound by AGIP's conditions of sale as from time in force and any modification thereto made by AGIP either generally or in respect of anyparticular purchase and in selling shall contract on like terms to those conditions as from time to time in force together with any general or particular modifications as respects any particular sale and shall not make any promises representations warranties or guarantees with reference to the Products except such as are consistent with those conditions or as one expressly authorised by AGIP in writingn) The Distributor shall not directly or through any agent sell any of the Products outside the Territory or knowingly or having reason to believe that they would be so resold sell the Products to any person or body corporate or incorporate within the Territory with a view to their resale outside the Territoryo) The Distributor shall not directly or through any agent sell any of the Products for marine application or knowingly or having reason to believe that they would be resold, sell the Products to any person or bod}' corporate or incorporatep) The Distributor acknowledges that it is not competent to and will not incur any liability on behalf of AGIP or in any way pledge or purport to pledge AGIP's credit or accept any order or make any contract binding upon AGIPq) The Distributor shall present a draft annual marketing advertising and promotion plan to AGIP for comment and approval prior to its implementation. It is understood that approval by AGIP does not amount to an acceptance of liability whatsoever or howsoever thereunder and the Distributor undertakes to fully indemnify AGIP at all times accordinglyr) The Distributor undertakes that its marketing advertising and promotional activities in respect of the Products shall at all times comply with the applicable law and the industry standardss) Distributor shall conduct its business in a manner that will reflect favorably on AGIP and AGIP Affiliates, the Products and the good name and reputation of the foregoing and shall foster consumer confidence in the Products. Distributor shall not engage in any deceptive or. misleading promotion or advertising or indulge or partake in or condone any unethical trade practicest) The Distributor shall fully indemnify and keep AGIP fully indemnified and harmless at all times and from time to time and against any and all loss damage claim penalties whatsoever and howsoever or liability or expense (and if solicitor's fees on a solicitor and client's basis to be taxed) suffered or incurred by AGIP resulting from a breach of any of the terms herein by the Distributor or otherwise whatsoever and howsoever in relation to or arising out of this Agreement.4. Principal's undertakings a) AGIP shall use its best endeavour to supply the Distributor with the Products ordered by the Distributorb) AGIP warrants to Distributor that the Products will comply with the given characteristics as amended from time to time as contemplated herein provided always any claim for breach of the foregoing warranty must be submitted in writing by Distributor to AGIP within 5 (five) days after the date in which such claim is made, failing which such claims shall not be considered or allowed; it is further provided that AGIP's liability in respect of any breach of the foregoing warranty shall be

limited in all events to the Distributor's purchase price of the Products involved plus the cost of transportation of such Products approved in writing by AGIP prior to the time that such cost is incurredc) Subject to AGIP prior written approval of the marketing advertising and promotional plan and the budget thereof and subject always to the strict compliance thereof AGIP agrees toreimburse the Distributor half the aforesaid budget spent or actual spending whichever is the lesser. The approval by AGIP does not amount to an acceptance of liability whatsoever or however thereunder and the Distributor- undertake to fully indemnify AGlP at all times accordinglyd) No warranty or warranties expressed or implied including but not limited to any implied warranty of merchantability or fitness for any purpose! whatsoever are given by AGIP in respect of the Products excepting only that warranty given to Distributor pursuant above which is subject to the terms conditions and limitations therein set forthn) AGIP warrants that information furnished by AGIP to Distributor for advertising or other promotional purposes in respect of the products will be as far as practicable accurate at the time of publication5. Agip's reservationsAGIP reserves to itself notwithstanding anything to the contrary herein contained the following rights: a) To decline or to accept any order form the Distributor and by so declining shall not incur any liability whatsoever to the Distributor if the Distributor is in breach of any one of the terms whatsoever of this Agreementb) Without prejudice to the generality of this Agreement and without assigning any reason there to and without prior notice vary the First Schedule hereto defining the Products either by withdrawing therefrom a class or classes of Products named therein or by the addition thereto after notice to the Distributor of a further class or further classes of products of AGIP and as set to in Clause 1(a) abovec) If the Distributor is not at any time producing adequate sales coverage throughout the whole of the Territory and the region thereof and without prejudice to any of its right under this Agreement AGIP may either exclude from this Agreement such part or parts of the Territory and/or exclude from this Agreement such one or more of the Products herein defined or to take both these courses of action save that neither such course of action shall be taken under this clause without prior notice to the Distributord) To take such step itself as may seem necessary or expedient (including and without prejudice to the generality of the reserved right to appoint a representative in the Territory) to promote the Sale of the Products in the Territory and to notify the Distributor of any persons, firms or bodies corporate carrying on business in the Territory who appear to it to be in a position to enhance the sale of the Productse) To enter upon manufacture or market research or distribution of any products whatsoever without consulting the Distributor or remunerating the Distributor in any way for any of such products may be sold in the Territory f) AGIP may sell and supply directly without prior consent or approval of the Distributor the Products to AGIP Affiliate and such person or companies in which EN1 or companies belonging to ENI own a share of not less than 30% and to take part in in government's tenders from time to time for the supply and sale of the Products without remunerating the Distributor in any way6. Prices, delivery and conditions of salea) Prices quoted to the Distributor for any of the Products are set out against the Products in the First Schedule hereto and are subject to change by AGIP at any time prior to Distributor's firm orderb) AGIP shall have no liability whatsoever for any delay in delivery or performance caused by war, industrial disputes, fire, force majeure or any other circumstances whatsoever beyond its controlc) Without prejudice to any other rights under this Agreement AGIP shall be entitled to withhold further supplies without liability whatsoever while payment of any sums due from the Distributor remains outstanding

d) Distributor shall submit its estimated requirements for the Products during successive four months’ periods to AGIP at least two months prior to the commencement of each such periode) For shipments of the Products to Distributor under this Agreement Distributor shall submit its firm orders with irrevocable confirmed Letters of Credit established and received and further acceptance by AGIP as follows- not later than the 10th (tenth) day of the month preceding the month in which order is to be shipped for Products to be supplied ex-Singapore plant- not less than 60 (sixty) days prior to the desired delivery dale for Products to be supplied ex-ItalyThe terms of the irrevocable confirmed Letters of Credit shall be prescribed and approved by AGIP from time to timef) The first Contract Year of this Agreement shall commence' on the effective date hereof and subsequent Contract Years shall commence on anniversaries of said effective date; during successive Contract Years Distributor shall purchase from AGIP no less than the quantity of the Products set out in the Second ScheduleMinimum quantities for subsequent renewal terms shall be agreed upon between the Parties hereto no less than 6 (six) months prior to the commencement of the renewal term in question or if not so agreed shall be the minimum quantity for the immediately preceding Contract Year or the actual quantity sold during such year whichever is the higher to be increased by 10% every subsequent renewal year up to 19 ..g) Distributor orders for the products may specify delivery at one time but no requested delivery shall be for less than 1 (One) Container of Productsh) AGIP reserves for itself and the AGIP Affiliates the right to discontinue the manufacture or sale of any Products or to make changes in its composition at any time without any liability to Distributor apart from that of notifying Distributori) Delivery of the Products shall be made within 60 days from the date of the receipt and acceptance by AGIP of the irrevocable confirmed Letter of Credit for Products to be supplied ex-Italy and within 30 days for Products to be supplied ex-Singaporej) If for any reasons whatsoever the Distributor shall fail to neglect to take delivery of the Products within 1 day of schedule date (inclusive) the AGIF shall be entitled to treat the order as cancelled and invoice the Distributor for all costs and expenses incurred or dispose of the Products within 14 days thereafter and invoice the Distributor for all costs and expenses incurred by AGIP and any diminution in the sale price7. Passing of Risk/Titlea) Unless otherwise agreed the risk to the Products shall pass to the Distributor as soon as or when the Products or part thereof are deemed delivered or ready for delivery to the Distributor and/or the Products or part thereof are deemed to be in the Distributor'spossessionb) Notwithstanding the aforesaid and without prejudice thereto the Title to the Products only pass to the Distributor upon full payment of the price of the Products to AGIPc) Until full payment and prior to the Distributor's sale of the Products the Distributor shall keep and/or store the Products in such manner consistent with AGIP's ownership and manifested to all third parties8. Payment terms a) The Distributor agrees to pay for all Products of AGIP ordered by way of irrevocable confirmed Letters of Credit through a bank payable at sight to AGIP in United States Dollars payable in Singapore or elsewhere as AGIP may determine from time to timeb) All amounts required to be paid by the Distributor shall be paid without deduction or abatement whatsoever

9. Stocks

The Distributor shall at all times during the continuance of this Agreement carry stocks of no less than one month's supply of the Products and ensure that all orders received by the Distributor's marketing and sales outlets are supplied without due delay; the Distributor shall take all reasonable steps to ensure that the stocks are properly stored at all times and that a continuous stock rotation policy is maintained for all stocks in all warehouses to ensure the quality of the Products is preserved

10. Trademarks and patents a) It is agreed that all rights in the trade marks appearing upon or used in relation to the Products and of the goodwill attaching thereto are and shall remain the exclusive property of AGIP or its associated companies; the Distributor shall only use the said trade marks in conjunction with the Products and in accordance with the provisions of this Agreement; the said trademarks shall not be used in any manner liable to invalidate the registration or lessen the value thereof; the right to use the said trade marks in connection with the Products is only granted to the extent that.AGIP is able to do so without endangering the validity of the registration or lessening the value. The Distributor shall immediately inform AGIP of any and every improper or wrongful use or any actual or potential infringement in the Territory of AGIP's patents trademarks, designs, models, or similar industrial or commercial monopoly rights which come to the Distributor's notice and shall provide full co-operation to AGIP at all timesb) The Distributor shall not do or omit to do anything by which the goodwill and reputation associated with the trade marks might or diminished or jeopardised and shall include in, all printed matter on which any of the trade marks of AGIP (or one of its associated companies as the case may be) the form thereof to be determined by AGIPc) Distributor is authorised to use AGIP's registered names logos and trademarks related to the Products during the existence of and in the course of operating under this Agreement; but nothing contained herein shall be construed as granting or shall grant to Distributor any rights, title or interest in the above said names and trademarks or other industrial property right owned or being used by AGIP or any AGIP Affiliate. Distributor shall take no steps to register any AGIP or AGIP Affiliate trademark, trade name brand or logo or any other word(s) or symbol(s) deemed deceptively similar thereto by AGIP. Distributor shall have no right to use any such word(s) or symbol(s) as or as part of its corporate or trade named) Upon expiration of this Agreement Distributor shall forwith cease all use of AGIP's or any AGIP Affiliate's industrial property rights and shall not thereafter use any such right or any trademark name brand or logo deemed deceptively similar thereto by AGIP except in connection with the sale of such quantities of the Products as Distributor may have in stock at the time of expiration or termination11. Confidentialitya) The Distributor shall not at any time during or after the term divulge or allow to divulge to any persons any confidential information relating to this distributorship or to AGIPb) Any technical commercial and confidential information given in order to assist the Distributor to carry out its obligations in this Agreement is only to be used for the said purposes only c) The Distributor shall ensure that its employees and dealers and marketing and sales outlets are aware of and observe the provisions of this clause both during the subsistence of this Agreement and thereafterd) All written material embodying information designated by AGIP as confidential and all copies thereof are to be returned to AGIP on the termination of this Agreemente) The Distributor acknowledges that all information concerning the Products identified by AGIP or any AGIP Affiliate as trade secret which Distributor has obtained or shall obtain in consequence of this Agreement whether from AGIP and AGIP Affiliate or otherwise are solely for the purposes of tills Agreement; distributor undertakes to use the same degree of care as in preserving the secrecy of its own secret business information and shall procure similar undertaking from its own employees and dealers and marketing and sales outlets accordingly and Distributor shall be responsible for and stand liable for the compliance thereof. The obligations of this Section shall not apply however to information which:

i) prior to the transmittal thereof to'Distributor was of general public knowledge; orii) becomes subsequent to the time of transmittal to Distributor a matter of general public knowledge otherwise than as a consequence of a breach by Distributor of its obligation under this Section; oriii) is made public by AGIP; oriv) was in the possession of Distributor in documentary form prior to the time of Disclosure thereof to Distributor by AGIP and was not acquired directly or indirectly fro AGIP and is held by Distributor free of any obligation of confidence to AGIP or any third party; orv) is received in good faith from a third party to disclose it who to the best of Distributor's knowledge did not obtain the same from AGIP and who imposes no obligation of secrecy on Distributor with respect to such information

12. Independence of the partiesIt is agreed by the parties hereto that the Distributor is operating and will continue to operate for its own account and nothing in this Agreement is intended or shall be constructed to authorise the Distributor without the prior written approval of AGIP to create or assume any liability or indebtedness of any kind in the name of or on behalf of AGIP or to give any warranty of make any representation in the name of or on behalf of AGIP and this Agreement shall not be construed as constituting the Distributor as agents of AGIP for any purpose whatsoever or to constitute a partnership between the parties hereto13. Force majeurea) In the event that AGIP shall be unable to continue the commercial production of the Products by reason of causes beyond its control including by way of illustration (but specifically not limited to fire, flood, explosion, action of elements, acts of God, accidents, epidemics, strikes, lockouts or other labour troubles or 'shortages, inability to obtain or shortage of material, equipment or transportation, insurrections riots, or civil commotion, war, enemy action, acts, demands or requirements of any government or by other causes which it could not reasonably be expected to avoid then it shall not be responsible for any loss whatsoever to the Distributor howsoever arising. Thereafter AGIP shall use its best endeavours to resume the commercial production of tlie Productsb) In case of the extension of the circumstances of force mnjeure throughout a prolonged period of time whereby the performance of the respective obligation could not be carried out this Agreement shall be terminated at the request" of either party and'' this Agreement shall be treated as frustrated whereupon:i) without demand all money due to AGIP shall be paid immediately without deduction; and ii) the Distributor shall cease to distribute the Products of AGIP immediately14. Termination

This Agreement shall terminate

a) on expiry date; or

b) if:

i) any encumbrance shall take possession of any of the property of either party; orii) either party shall become insolvent; oriii) the Distributor shall become bankrupt or to go into liquidation either voluntary or compulsory unless as part of a bona fide scheme of reconstruction or amalgamation approved by AGIP or to be dissolved compound with its creditors or have a receiver appointed in respect of the whole or any part of its assets; oriv) a receiver is appointed in respect of one whole or any of the assets or undertaking or other process shall be issued against any property of the Distributor; orv) the Distributor shall cease or threaten to cease to carry on the whole or any substantial part of its business other than in the course of reconstruction or amalgamation approved by AGIP hereto; or

vi) If the Distributor commits or allows to be committed a breach, of any of its obligations herein stated and does not remedy such breach within fourteen (14) days after written notice has been given to it by AGIP; orvii) If the Distributor commits or is charged with the commission of a criminal or unlawful act or by commission has committed or charged with a criminal or unlawful act; orviii) If the Distributor engages in any conduct prejudicial to AGIP or AGIP's Affiliates generally or the marketing of the Product generally.Then in any such event AGIP may be written a notice forthwith terminate this Agreement but without prejudice to any other rights of the parties hereto.15. Effects of terminationIf this Agreement terminates for any reason whatsoever and without prejudice to any other rights:a) Without demand all money due to AGIP shall be paid immediately without deductionb) The Distributor shall cease to distribute the Products of AGIP immediatelyc) AGIP shall have the discretion and option to regard any unexecuted orders placed by the Distributor and accepted by AGIP before such termination as cancelled excepted those in respect of which the Distributor shall have furnished documentary evidence to the satisfaction of AGIP within thirty (30) days from the notice of the Products ordered to third parties prior to the termination of this Agreementd) The Distributor shall if requested by AGIP forthwith return to AGIP or elsewhere as AGIP may direct at the expense of AGIP all goods or Products belonging to AGIP in its possession or under its control and all advertising and promotional matters relating to the Products in its control. In case of default AGIP shall be entitled without notice to enter at any time upon the premises where the said goods or Products may be for the time being and to remove the samec) All Products remaining unsold which in the mutual opinion of AGIP and Distributor are not in good condition shall be forthwith disposed of by the Distributor as directed by AGIPf) The Distributor shall return to AGIP all samples and publicity promotional and advertising material and technical material and copy thereof used in the distributorshipg) The Distributor shall return to AGIP all originals and copies of all documents and information in any form containing or covering in any way part of the Intellectual Property and technical specifications and literatureh) In the event of termination of this Agreement AGIP shall have the option to repurchase from Distributor any or all of the Products purchased from AGIP and owned by Distributor on the date Distributor receives written notice of AGIP's intention to exercise the repurchase shall be the invoice price thereof actually paid by Distributor plus verified transport cost paid by Distributor; in the event of the exercise of this repurchase option by AGIP Distributor shall promptly deliver the Products to AGIP in conformity with all laws and requirements which may be necessary or proper to transfer good title to such Products to AGIP free andclear of any charge lien or encumbrance; AGIP shall pay Distributor for such product promptly after Distributor has complied with all of its obligations hereunderi) Distributor recognizes and agrees that it is fully compensated for its activities in developing the market for. the Products in promoting the name and reputation of the Products and in building goodwill in respect of the Products by way of revenues derived from re-sales of the Products during the currency of this Agreement; consequently in no event shall termination of tins Agreement for any reasons whatsoever and howsoever. Give rise to any right ofaction by Distributor to recover additional compensation of loss or damage from AGIP

16. Non-Competition During the term of this Agreement the Distributor shall not distribute manufacture develop or occupy itself in any other way directly or indirectly with goods of a nature competitive with the Products in- or outside the Territory without prior written consent from AGIP

17. Appointment of sub-distributorsa) The Distributor shall have the right to appoint Sub-Distributors and outlets to store and distribute the sales of the Products within the Territory on behalf of Distributor b) The Distributor shall also ensure that all Sub-Distributors and outlets shall at all times observe and comply with the terms and conditions as stated in this Agreement which are applicable to themselves as distributors and the Distributor shall be responsible and stand liable for the compliance thereof

18. Non-WaiverIt is understood and agreed that the failure of delay on the party of AGIP to require performance or compliance of the Distributor of any provisions of this Agreement shall not affect AGIP's right to require performance or compliance has been waived in writing

19. AssignmentThis Agreement shall be binding on the successors and assigns of each of the..parties hereto; provided however that this Agreement shall not be assigned, transferred or sold in whole or in part by Distributor unless the terms and conditions of such assignmenttransfer or sale are approved in writing by AGIP

20. Savings of termsa) Notwithstanding termination herein the terms conditions warranties undertakings and indemnities contained or referred to herein shall continue to subsist and bind the parties and each individual thereof insofar as same or any part thereof remain unfulfilled or to be performed or outstanding or for the purpose of giving effect to each and every one of themb) The several undertakings of the parties shall survive and shall be treated as in full force and effect notwithstanding any change in shareholding and directorship or the constitution of AGIPc) If anyone or more of the provisions contained herein or any documents or records executed in connection herewith shall be invalid illegal or unenforceable in any respect under any applicable law, the validity legality and enforceability of the remaining provisions or part thereof contained herein shall not in any way be affected or impaired

21. ArbitrationAll disputes arising in connection with the present agreement shall be finally settled- under the provisions of the Singapore Arbitration Act and any modifications thereof from time to time.Arbitration proceedings shall take place in Singapore; Singapore law shall be applicable

22. Entire Agreementa) This Agreement embodies the entire understanding of the parties and overrides and supercedes any prior promises representations understandings or implicationsb) Any amendment hereto must be in writing and signed by the duly authorised representatives of AGIP and Distributor. No amendment to this Agreement shall be effected by the acknowledgement or acceptance by AGIP of purchase orders, invoices, shipping instruction forms or, others similar documents which contain terms or condition at variance with or in addition to those set forth herein unless such acknowledgement or acceptance specifically states that it is intended to amend this Agreement

23. Interpretationa) Any reference to any of the parties herein include their assignees and/or successors-in-title and/or personal representativesb) Words importing the singular tense include the plural tense' and vice-versa

c) Words importing the masculine gender include the feminine gender and neuter gender and vice-versad) Person(s) includes a Corporation and vice-versa

e) The Clause headings in this Agreement are for ease of reference only and will not affect the interpretation hereof

24. NoticesAny notices required to be served hereunder shall be sufficiently given if forwarded by registered post recorded delivery cable telex or telegraph to the address set out at the head of this Agreement or such other address as may have been notified in writing to the other party for such purposes

25. ExecutionThis Agreement may be executed in any number of counterparts, any single counterpart or a set of counterparts executed in either case by all the parties hereto shall constitute full and original agreement for all purposes

IN WRITNESS WHEREOF the parties hereto have caused this Agreement to be executed in counterpart original by their duly authorised representatives on the day and year first set forth above

SIGNED by SIGNED byOn behalf of On behalf ofAGIP FETROLI SPA DISTRIBUTOR

(Page 126) 3.3 WARRANTY AND GUARANTEE

THE PROBLEMAre a warranty and a guarantee the same thing? Why do some contracts replace a warranty with a defects liability provision”?THE PRINCIPLEA guarantee is a promise about somebody else’s performance; a warranty is a promise about your own. When businessmen speak of the “seller’s guarantee” or “warranty” they mean the exporter’s liability for defects; to avoid confusion, many drafters today use the term “Defects Liability Provision.”IN MORE DEPTHA warranty is a promise you make about your own performance. The word is used in many contexts. A warranty of title, for example, is a promise to a buyer that the exporter really owns the contract goods. A product warranty is a promise by the exporter to cure defects in his products.

There are two parties to a warranty: buyer and seller. A guarantee, on the other hand, involves three parties, as the diagram shows. The guarantor makes a promise to one party at the request of another. There is a major confusion of terminology. Black’s Law Dictionary comments:

Internationally, the distinction between warranty and guarantee is often blurred. First, businessmen loosely use the words as though they mean the same thing. Another common belief is that a warranty covers materials and workmanship, while guarantee covers specifications. This is not true. Does it matter? In fact, yes. Confusion between warranty and guarantee can be dangerous. When?

Let’s say a contract is written in English, but German law applies. German law makes a clear distinction between a “seller’s warranty” and a “seller’s guarantee” – the seller’s obligations are more extensive under a “guarantee.” So loose English will get the exporter into trouble if German law, or any closely related law applies to the contract.

As a general rule, incorrect use of “guarantee” causes trouble; use the word only if you mean a third party guarantee.

p.127-148

When businessmen speak of the “seller’s guarantee” or “warranty” they mean the exporter’s liability for defects; to avoid confusion, many drafters today use the term Defects Liability Provision. A defects liability provision (or warranty) covers defects that are present at the moment of delivery. Normally quality control prevents products with obvious defects from leaving the factory; in the next step, products with obvious or “patent” defects are identified during open package inspection and rejected. The defects that give rise to the most serious problems between exporter and buyer are hidden or latent defects.Defects may be (a) in workmanship, (b) in materials, or (c) in design. However, fair wear and tear and misuse by the buyer are not covered by the provision.The defects liability period is the period during which the exporter is liable for- and must make good- defects that are apparent on delivery or that come to light later. The buyer, of course, must prove that the defect was present in the goods at the date of delivery- often a difficult task. It is important for both sides in a contract negotiation to understand that a defect is a fault provably present in the goods on delivery- nothing more. In principle, under most laws, the exporter is liable only for problems that arise from defects.

CONCEPT REVIEW: GET WEAVINGVerbena Textile is replacing twenty of its looms. The looms are thirty years old, and spare parts are hard to find. The factory engineer chooses the best of the old looms and cannibalizes the others to make twelve looms in good working order. Verbena Textile negotiates to sell these looms to Esperanza Cotton Mills. Esperanza Cotton wants twelve-month warranty with the looms; Verbena Textile is prepared to sell them on “as is.”1. What arguments are the two sides likely to put forward in negotiating the warranty (defects liability)?…………………………………………………………………………………………………………………………………………….2. Which side do you think is “in the right”?…………………………………………………………………………………………………………………………………………….

1. Second-hand machinery is usually sold internationally "as is.” From the buyer's point of view this has an obvious disadvantage—if the machine goes wrong, repair may be expensive or impossible. However, it makes little sense for the seller to offer a warranty. Firstly he is not in the business of selling or repairing machines. Secondly, assuming he is prepared to offer a warranty, the cost would be prohibitive—in some cases the total cost might be more than the cost of a brand-new machine using the latest technology.

2. Both sides have a point. The most common solution is for the buyer to check the machines carefully for full functionality before buying them- and then to accept the sale without warranty.

Translate into VietnameseABC'S CONTRACT

GENERAL TERMS AND CONDITIONS

1) Shipment or deliveryThe obligations of Seller to ship or deliver the goods specified on the face of this Contract ("Goods") by the time or within the period specified on the face of this Contract shall be subject to the availability of the vessel or the vessel's spaceIf, under the terms of this Contract, Buyer is to secure or arrange for the vessel or vessel's space, Buyer shall secure or arrange for the necessary vessel or vessel's space on berth terms basis and give Seller shipping instructions within a reasonable time prior to shipment, including but not limited to the name and detailed schedule of the vessel. If Buyer fails to give such instructions within a reasonable time prior to shipment, Seller may, at its sole discretion and at Buyer's risk and account, arrange for the vessel or the vessel's space and make shipment of the Goods, without prejudice and in addition to any other rights and remedies Seller may have under this Contract or at law or in equity or otherwise.

In case of shipment or delivery installments, any delay or failure in shipment of one installment shall not be deemed a breach of this Contract giving rise to a right of Buyer to cancel this Contract or refuse to accept performance with respect to other installments.

2) PaymentIf payment for the Goods shall be made by a letter of credit, Buyer shall establish in favor of Seller - an irrevocable letter of credit through a prime bank of good international repute immediately after the conclusion of this Contract in a form and upon terms satisfactory to Seller.If Buyer fails to make any due payment, to establish a letter of credit or otherwise to perform its obligations hereunder, Seller may demand that Buyer provide, within a reasonable time, adequate assurance satisfactory to Seller of the due performance of this Contract and may with old shipment or delivery of any all of the undelivered Goods until such assurance is given.Buyer shall pay the price specified on the face of this Contract without set-off counterclaim, recoupment or other similar rights which Buyer may have against Seller, which rights shall be exercised in separate proceedings between Buyer and Seller.Any new, additional or increased freight rates, surcharges (bunker, currency, congestion or other surcharges), taxes, customs duties, export or import surcharges or other governmental charges, or insurance premiums, which may be incurred by Seller with respect to the Goods after the conclusion of this Contract shall be for the account of Buyer and shall be reimbursed to Seller by Buyer on demand.If Buyer fails to pay for the Goods in accordance with this Contract, Buyer shall pay to Seller as liquidated damages and not as a penalty overdue interest at the rate of the lower of eighteen percent (18%) per annum or the maximum interest rate permitted by the laws of Buyer's country, calculated from the date for such payment until the actual date of payment calculated on the 360 day-a-year basis for the actual number of days elapsed.

3) Force MajeureIf the performance by Seller of its obligations hereunder is directly or indirectly affected or prevented by force majeure, including but not limited to Acts of God, flood, typhoon, earthquake, tidal wave, landslide, fire, plague, epidemic, quarantine restriction, perils of the sea, war declared or not or threat of the same civil commotion, blockade, arrest or restraint of government, rulers or other labor dispute, explosion, accident or breakdown in whole or in part of machinery, plant, transportation or loading facility, governmental request, guidance, order or regulation, unavailability of transportation or loading facility, bankruptcy or insolvency of the manufacturer or supplier of the Goods, or any other causes or circumstances whatsoever beyond the reasonable control of Seller or manufacturer or supplier of the Goods, then Seller shall not be liable for loss or damage, or failure of or delay in performing its obligations under this Contract and may, at its option, extend the time of shipment or delivery of the Goods or terminate unconditionally and without liability the unfulfilled portion of this Contract to the extent so affected or prevented

4) DefaultIn case of (i) Buyer's failure to perform any provision of this Contract; (ii) Buyer's inability to pay its debts generally as they become due; (iii) Buyer's bankruptcy or insolvency or (iv) appointment of a trustee, receiver or liquidator of Buyer of any material part of Buyer's assets or properties ("Events of Default"), Seller may, at its sole discretion, (i) terminate this Contract or any part thereof; (ii) declare all obligations of Buyer immediately due and payable; (iii) resell the Goods; (iv) hold the Goods for Buyer's account and risk; (v) pospone the shipment of Goods; or (vi) stop the Goods in transit, and Buyer shall reimburse Seller for all losses damages arising directly or indirectly from such Events of Default.The rights and remedies of Seller hereunder are cumulative and in addition to Seller's rights, powers and remedies existing at law or in equity or otherwise.

5) Intellectual property rights

Nothing herein contained shall be construed as transferring any patent, trademark, utility model, design, copyright, mask word or any other intellectual property rights in the Goods, as such rights being expressly reserved to the true and lawful owners thereof.Seller shall be neither responsible nor liable for any infringement or unauthorized use with regard to any patent, trademark, utility model, design, copyright, mask work or any other intellectual property rights.6) Warranty, claim

Unless expressly stipulated on the face of this contract, seller makes no warranty or condition, expressly or impliedly, 'as to the fitness or suitability of the goods for any particular purpose or use or the merchantability thereof.

If any warranty exists. Seller's liability shall be limited to replacement or repair of the defective Goods.Any claim by Buyer of whatever nature arising under or in relation to this Contract shall be made by registered airmail within thirty (30) days after the arrival of the Goods at the port of destination, or solely in respect to a claim alleging the existence of a latent defect in the Goods, within six (6) months after the arrival of the Goods at the port of destination, and any such claim shall contain full particulars with evidence certified by an authorized surveyor.

7) LimitationSeller shall not be responsible, whether in contract or warranty, tort or on any other basis, to Buyer for any special, incidental, consequential, indirect or exemplary damages, and in no event shall Seller's total liability on any or all claims from Buyer exceed the price of the Goods.

8) General(1) All disputes, controversies or differences arising out of or in relation to this Contract or the breach thereof which cannot be settled by mutual accord without undue delay shall be settled by arbitration in Tokyo, Japan, in accordance with the rules of procedure of the Japan Commercial Arbitration Association; the award of arbitration shall be final and binding upon both parties, and judgment on sucli award may be entered in any court or tribunal having jurisdiction thereof; this Contract shall be, in all respects, governed by and construed in accordance with the laws of Japan; the trade terms herein used, such as FOB, CFR and CIF, shall be interpreted in accordance with "INCOTERMS 2000".(2) The failure of Seller at any time to require full performance by Buyer of the terms hereof -shall not affect the right of Seller to enforce the same; the waiver by Seller of any breach of any provision of this Contract shall not be construed as a waiver of any succeeding breach of such provision or waiver of the provision itself.(3) This Contract constitutes the entire agreement between the parties hereto and supersedes all prior or contemporaneous communications, agreements or undertakings with regard to the subject matter hereof; this Contract may not be modified or terminated except by a written agreement of Seller and Buyer.(4) Buyer shall not transfer or assign this Contract or any part thereof without Seller's prior written consent.

(page 149) CHAPTER 4: THE LEGAL FRAMEWORK1. The Big PictureTHE PROBLEMMany exporters are gifted salesmen, and their contracts reflect this emphasis on sales. Unfortunately, there are a number of legal loose ends that must be tied down if a good sales technique is to mature into a profitable way of doing business.THE PRINCIPLE

Like the other phases of an export negotiation, the legal framework can be negotiated in clear steps- in this case six.IN MORE DEPTHA contract is not merely a list of ideas agreed by the exporter and the buyer during negotiation: it is an enforceable, legal instrument. The two sides ignore the legal dimensions of the contract at their peril.STEP 1. THE APPLICABLE LAW: choice of lawSTEP 2. CONTRACT OR NO CONTRACT? Meeting of minds, capacity, legality, consideration.STEP 3. ENTIRE AGREEMENT. Whereas recital, contract documents, definitions.STEP 4. THE PARTIES. Identity, naming, notices, assignment.STEP 5. STATUS OF THE CONTRACT. Termination, cancellation, recission, language.STEP 6. SETTLEMENT OF DISPUTES. Amicable settlement, arbitration, litigation.The first question about the legal framework of the contract is always: what law have the two sides chosen to fill the gaps in their agreement (Step 1). Then the question arises is the document the parties are signing really a contract, or is just a piece of paper (Step 2)? If it is a contract, is it the entire agreement? And if it is the entire agreement, how do the two sides ensure that it includes everything they want it to include (Step 3)?Once the full legal nature of the contract is established, it is time to turn to the parties signing it. Are the parties all they seem to be? And will they remain the same during the lifetime of the contract (Step 4)?Good relations usually prevail during the negotiation of a contract. Later, however, things can go wrong. A good contract allows for this by foreseeing circumstances under which the parties might wish to end their agreement (Step 5). If a dispute arises, some means of settling things should be agreed beforehand: that way at least some goodwill might be preserved and the cost of the dispute minimized (Step 6).

CHOOSING AN APPLICABLE LAWWhat considerations should an exporter bear in mind when negotiating an applicable law?

Although national laws differ greatly in detail, most laws belong to one of two families: Anglo-American or Continental. The Anglo-American family is based on case-law (the law develops over centuries through court decisions); the Continental family is based on a legal code (the law is expressed in a code). The two systems work in different ways and produce different kinds of contract.

Anglo-American contract law is case law: judges decide cases on their merits (the rights and wrongs of the cases; decisions create precedents. A precedent is binding: future judges (subject to complex rules( are obliged to follow it. After a while, so many precedents exist that even the best judges become confused. The case-law principle has a remarkable result: nobody knows the law in a given case until the judge reaches a decision. The Anglo-American lawyer can suggest the outcome of a case- but certainly is impossible. Under Continental systems, outcomes are more predictable: judges simply apply the code- they are not required to use their sense of justice to seek the fairest solution to the case.

Scenario: Nonamia was until recently, a socialist country with-no developed commercial law—in fact, the necessary law is still not published. Abet Johnson runs a factory in Nonamia that makes quality jogging shoes. He receives several inquiries from European countries. One customer, Frankimport. is interested enough to suggest some broad contract terms: price, delivery dale, length of defects liability period. Johnson now asks a lawyer in Nonamia to draft a contract.Early in the discussion, the lawyer asks Johnson: "What law applies to the contract?" Johnson has no idea. The lawyer explains the principle: a contract covers many issues; anything left undecided is regulated by the applicable law. The lawyer lists three possibilities: - The exponer's law (the law of Nonamia):- The buyer's law (the law of Germany);- A third-party law (e.g.. the law of Sweden or of England).Each option is radically different: . !

Option 1: Nonamia has no contract law—there is no water round the fish. If there is a dispute, the Nonamian judge must make a decision, " but this decision is unpredictable: To gain some degree of certainty, the parties must write a contract detailed enough to cover most eventualities. This is difficult and expensive; even when it is completed, the Nonamian judge may not enforce it as the parties intended.Option 2: German contract law is codified. The code (the BGB) has been clarified by a hundred years of interpretation in the courts. The contract can be short and to the point—on the other hand using the law, of the buyer's country gives the buyer a perhaps unfair advantage in the event of a dispute. Option. 3: Choosing a third-party law—English law perhaps or Swedish law—gives neither side an advantage. But the law must be chosen carefully. Swedish law is a member of the Continental family. The contract can be short and to the point—Swedish law (we can suppose) will fill gaps in the contract fairly and reasonably. English law, on the other hand, is a member of the Anglo-American family.The advantage of English law is that its principles have been refined over many centuries to deal with international trade: it is internationally familiar and extremely flexible; if the parties draft the contract carefully, they can achieve almost any result they wish. On the other hand, a contract under English law is usually lengthy andderailed: English law is case law, so the parties normally decide many issues ahead of time rather than leaving the judge to make decisions on the basis of precedents.The choice of an applicable law is not easy—but it is wiser to choose a law than to leave the issue open. A summary of the factors involved:

ANGLO-AMERICAN SYSTEMS

CONTINENTAL SYSTEMS

GOAL Justice in the individual case Consistency and uniformity of enforcement

PREDICTABILITY AND CONSISTENCY OF COURT DECISIONS

Unless matters are carefully regulated in the contract, the decision of the judge is not fully predictable. Different judqes may give widely different judgments.

Decisions in all but the most difficult cases are precictable with some accuracy. Decisions are generally consistent from court to court.

LENGTH AND DETAIL OF CONTRACT

To be clear, contracts must regulate many issues, so they tend .to be long and detailed.

Because the law regulates most problems, contracts can be short and lacking in detail.

INTERNATIONAL ACCEPTANCE

English and Amencan law have been refined over the centuries to cope with issues of intemational trade. The principles are widely understood and respected.

Continental laws do not have the prestige of Angto-Arnencan laws in international practice. They tend to focus on national rather than internalionat issues

Sometimes the parties cannot agree an applicable law, so they leave the matter open- the contract contains no provision at all on applicable law. What then? If the contract does not specify an applicable law, then a special branch of law known as “international private law” comes inyo play and decides the law of the contract. In the case of an export contract, especially an E-, F-, or C- term contract, the law chosen is nearly always the law of the exporter. In our Nonamian jogging-shoe scenario above, that means the choice of Nonamian law- and, a great deal of uncertainty.The contract clause that specifies the applicable law should be carefully worded. It should state not only that the chosen law that supplements the provisions of the contract, but also that it regulates some difficult issues- Do the partes actually have a contract? What rules of interpretation shall apply? And so on.

CONCEPT REVIEW 1Swords and Shares

Plough Shares is a Verbenan company making non-mechanical farm equipment. On 3 rd

July 2004 it receives a letter from Wide Horizon Farm Tools in Esperanza. The letter asks Plough Shares to quote its latest price on two of its catalog items; 1005X3 Mattocks and 2068Z2 Shovels. Order size is 500 of each item. The two companies have never done business together. Plough Shares quotes $4,000 for the mattocks and $2,500 for the shovels. On the quotation is clearly stamped: "Our General Conditions of Sale apply to all deliveries.".An order arrives exactly in line with the offer except that it is stamped: "Our GeneralConditions of Purchase apply to this Order." Plough Shares confirms the order, stamping it, as before: "Our General Conduions of Sale apply to all deliveries." The goods are delivered FOB on 4th September; they are inspected and accepted by the buyer on 4th October. The

invoice sent by Plough Shares is also stamped with the familiar stamp. Wide Horizon pays for the goods.Then there is a serious warranty claim: the handles of both the mattocks and the shovels break easily. On 14th March Wide Horizon notifies Plough Shares of the problem. Plough Shares says "Too bad— the defects liability period has expired." Wide Horizon replies: "Not at ail—the period runs for another two weeks." The disagreement arises, as you have probably guessed, because the Seller's general conditions allow a six-month warranty from the date of delivery, and the Buyer's Conditions a six-month warranty from the date of acceptance.1. Is the original letter from Wide Horizon an "offer to buy"?YES NO2. Is the quotation from Plough Shares an offer to sell?YES NO3. Is the order placed by Wide Horizon an offer to buy or is it an acceptance?

OFFER TO BUY ACCEPTANCE4. Is there a clear and full acceptance of an offer at any stage of the negotiation ?YES NO5. Do the two sides have a contract?YES NO LEGAL POSITION NOT CERTAIN6. If yes. who is right on the warranty case?PLOUGH SHARES WIDE HORIZON LEGAL POSITION NOT CERTAIN

1. No. It is a request for quotation. 2. Yes 3. Offer 10 buy. There is a major discrepancy between the terms of the oner and

the "acceptance.” 4. No 5. The legal position is unccertain.6. Again uncertain. If there is a contract, the terms are unclear.

CONCEPT REVIEW 2 Out Of The WindowVerbena Farm Power is taking delivery; of 300 gasoline powered mini-generators (5 kW) for farm use. The supplier is a German company, Supergrid. After signing the concract, Verbena Farm realizes that Supergrid's price is too high: the same equipment is available in the United States at half the price. So Verbena Farm is delighted when a new Government Order prohibits all machines louder than 90 decibels. Verbena Farm argues that since the German machine produces 95 decibels, it is illegal and the contract is null and void. Supergrid offers to thicken the sound insulation on the machine; Verbena Farm refuses this offer. Imagine now three versions of the contract. Version 1 contains this clause:

SeverabilityIn the event that any provision of the Agreement is held to be illegal or otherwise unenforceable, such provision shall be deemed to have been deleted from this Agreement, while the remaining provisions shall be and shall continue in full force and effect.

Version 2 contains this wordingPartial Invalidity If any provision or provisions of this contract are invalid, or become invalid, this has no effect on the validity of the remaining provisions.If any provision of this contract is invalid, or becomes invalid, tne parties have the duty to replace the invalid provision with a new valid provision that fulfills the original intent of the invalid provision

Version 3 says nothing ai all on this subject.

Which version of the contract is most favorable to Verbena Farm's argument? Which version is least favorable? Least favorable: VERSION 1 VERSION 2 VERSION 3Most favorable: VERSION 1 VERSION 2 VERSION 3

Least favorable for Verbena Farm is Version 2: this wording clearly obliges the parties to redraft the disputed clause. The most favorable version is possibly version 3—but everything then depends on the applicable law. Is a partly illegal contract wholly illegal under the law that applies to this contract? If German law applies, for example, the answer in case of doubt is "Yes."

CONCEPT REVIEW 3 Taken into ConsiderationGeneral Supplies, a Verbenan company, trades in food, clothing, household goods, and so on. It has an export contract with Frankimport, a German company, to sell 400 cartons of

pineapple rings in 500 gram cans. Two weeks before delivery is due, Frankimport sends the following fax to General Supplies:

Will you please change our order to 131 cartons of pineapple juice, 110 cartons of pineapple chunks, and 200 cartons of pineapple rings. According to the price list you sent us, the total invoice price is now exactly the same as the original price. Please confirm the new arrangement immediately.

General Supplies confirms the new order with the following fax:We hereby confirm your change of order. We shall now send 131 cartons of pineapple juice, 110 cartons of pineapple chunks, and 200 cartons of pineapple rings. There is no change in the price.

The goods are delivered FOB (Port Verbena) and paid for under a letter of credit. When the goods arrive in Bremen, however, Frankimport finds 400 cartons of pineapple rings. It informs General Supplies immediately that it is rejecting half the consignment, as deviating from the agreement as modified. General Supplies replies that the original contract was never modified according to the law of Verbena, and that Frankimport must accept the whole consignment.1. What is the source of this dispute? ………………………………………………….2. The law of Verbena (which is a member of the common-law family) applies to thecontract. Who is right about the validity of the modification?GENERAL SUPPLIES FRANKIMPORT 3. Section 2-209.1 of the Uniform Commercial Code states:

An agreement modifying a contract..needs no consideration to be binding.If there were a similar regulation in Verbena, how would it affect this dispute?………………………………………………………………………………………………..

1. The dispute arises because ah agreenk'ni to modify a contract requires, under some laws, consideration: both sides must have new risks and duties under the new agreement. In this case. only General Supplies has a new duly and only Frankimport has a new right.

2. General Supplies3. Consideration would not be required, and Frankimport would be justified in relying

on the modification and rejecting the goods.

Translate into VietnameseJOINT VENTURE CONTRACT.Based on: '- The Law on Foreign Investment in Vietnam approved by the National "Assembly of the Socialist Republic of Vietnam" on December 29th, 1987- The Decree 29/HDBT on February 6th, 1991 of the Council of Ministers regulating in detail tliQ implementation of the Law on Foreign Investment in VietnamToday, 1st December, 19 ... the Parties have agreed to sign this contract to establish a Joint Venture Company ("JVC") on the terms and conditions as follows:Article 1: NAMES OF THE PARTIES TO THE JOINT VENTURE'VIETNAMESE PARTNER (PARTY A):DEPARTMENT OF HOME TRADE HANOIHead office at 10 Le Lai Street, HanoiSocialist Republic of VietnamTel: 252578 Fax: (84) 2 -54592Represented by: MR. DUONG DINH - DirectorFOREIGN PARTNER (PARTY B):IMEX PAN - PACIFIC INCA Company registered and incorporated in the Republic of thePhilippines with head office: Ground floor, Corinthian Plaza, Paseade Roxas, Legaspi Village, Makati, Manila, PhilippinesTel: 8104391-94, Tlx: 65714 PHLMPXPN, Fax: 632-810-10-10'Represented by: Mr. JOHNATHAN H. NGUYEN - President

Article 2: NAME, HEAD OFFICE, OBJECTIVE OF JVC . The JOINT VENTURE COMPANY shall be named as:- International Name: Hanoi General Commercial Centre

- Head Office: Hang Bai Street corner Trang Tien StreetHanoi, Socialist Republic of VietnamThe JOINT VENTURE COMPANY shall be a limited companygranted the status of a juridical person subject to Vietnam laws, stipulatedm the Joint Venture Contract and Charter of the Joint Venture . ^- Main objectives of the Joint Venture CompanyBuilding and operating 4 Star Hotel, and Business Centre ofinternational standards to be located at Hang Bai Street on thecorner of Trang Tien Street, Hanoi, Socialist Republic of Vietnam:- The Joint Venture Commercial Centre after completion willhave the following facilities:1) 4 Star Hotel2) Business Centre with office space for rental in accordance with International Standards3) Restaurants, Bars, Discos, Function Rooms, food and beverage facilities and other Hotel related facilities for tourist servicesArticle'3: INVESTED AND LEGAL CAPITAL – CAPITAL CONTRIBUTION INCREASE AND TRANSFER- Project cost: USDxx,000,000.00 (xx million US Dollars)- Legal capital: USDxx,000,000.00 and contributed by the two Parties as follows:USD xx,000,000.00 by party A (30%)USD xx,000,000.00 by party B (70%)-Loan: USD xx,QOQ,000.00 to be borrowed from any financial institution and arranged by Party B for the Joint Venture; terms and conditions of the loan will be mutually agreed on by both partiesThe juridical responsibilities of each party for the third party is within its contributed capital. All legal capital will be contributed in a lump sum or installments at appropriate periods agreed on by both parties and the State Committee for Co-operation and Investment. If either of the two parties does not follow the Schedule of Capital Contribution, that party shall have to inform the other party within 90 days before and shall be responsible for-any losses caused by the such failure CAPITAL CONTRIBUTIONThe capital contributed by Party "A" shall be USD xx,000,000.00 comprising of:- Land rental for xx years- Fees for the retirement and relocation of present employees- Fees for clearing the construction areaThe capital contributed by party B shall be USD xx,500,000.00 comprising of architectural design, materials, equipment, working capital and other expensesCAPITAL INCREASE On the basis of the needs of development during the operation, the Joint Venture Capital can increase its legal capital in the following forms: - Reinvesting the profit share of each party.- Contributing new capitalThe increase of the legal shall be agreed by both parties and be approved by the State Committee for Co-operation and InvestmentCAPITAL TRANSFERDuring operation, either party can transfer its capital contribution to the other party or the third party approved by the State Committee for Co-operation and Investment• Article 4: DURATION OF THE CONTRACTThe stipulated duration of this contract is xx years from the official date of establishment of the Joint Venture and can be extended by the agreement of the Parties hereto together with and subject to the approval of the State Committee for Co-operation and Investment• Article 5: RESPONSIBILITIES OF EACH PARTY .PARTY A'S RESPONSIBILITIES1.. To contribute its capital (as stipulated in Article 3 of this contract)

2. To complete the application formalities to obtain the investment license and other necessary permits for the establishment of the Joint Venture Company3. To obtain all necessary permits for Party B's personnel to stay and work in Vietnam4. To take part in controlling in the Joint Venture5. To do all necessary tasks to facilitate the operation of the Joint VenturePARTY B'S RESPONSIBILITIES 1. To contribute its capital (as stipulated in Article 3 of this contract)2. To take part in controlling the Joint Venture 3. To provide its know-how and management experience to the Joint Venture : 4. To advise on and supply the technical data for 'machinery necessary equipment and materials for the Joint venture so that party A can study their use and supply for an import quota when necessary.5. To study markets and imported commodities such as machinery, equipment, materials, accessories, etc., through its Head Office and/or Branches6. To provide Party A with lists and prices of commodities which are not available in Vietnam7. To ensure capital for building, the foundation of the Hotel and Business Centre8. To ensure the availabilities of the working capital to make the business profitable9. To market the Hotel and Business Centre and use its best endeavours to attract and bring in foreign tourists to patronise the Hotel Business CentreMUTUAL OBLIGATIONS1. On the basis of labour contracts, the Joint Venture Company shall employ, appoint, terminate and supervise the Board of Directors in their employing, appointing, terminating, and supervising other personnel of the Joint Venture2. Salaries and subsidies of all personnel of the Joint Venture shall be paid by the Joint Venture Company3. Salaries and subsidies for foreign personnel shall be paid in foreign currency 4. To further the best interests of the Joint Venture, both parties can request the Board of Management to change or replace personnel; any change or replacement shall not be implemented without proper reasons5. Citizens of Vietnam have priority to be recruited to work for the Joint Venture; the Joint Venture can employ foreign experts for work requiring highly technical skills which cannot be done by the Vietnamese citizens6. Any interest and obligation of Vietnamese personnel working for the Joint Venture shall be ensured by their labour contracts in accordance with Vietnam labour Regulations for enterprises with Foreign Capital7. Salaries and other subsidies for Vietnamese personnel shall be paid in Vietnamese Dong currency8. During operation of the Joint Venture the Board of Directors shall organize regular training programs for Vietnamese personnel of the Joint Venture9. The Board of Directors, during, the operation of the Joint Venture shall arrange the schedule of training and visits for Vietnamese managers working for the Joint Venture10. Both parties shall inform each other of all their major policies which affect the Joint Venture• Article 6: CONTROL AND MANAGEMENTThe Head of the. Company shall be its Board of Management consisting of 9 (nine) members appointed as follows:- Party "A" shall appoint 3 (three) members- Party "B" shall appoint 6 (six) members• The powers, duties, activities, and- terms of this: Board of Management shall be stipulated in the Charter of the Joint VentureBOARD OF DIRECTORS The Board of Directors of the Joint Venture Company shall be appointed by the Board of Management on the basis of the agreement between the two parties .

- The first Board of Directors for the initial period lasting 5 years of the Joint Venture shall be appointed as follows: - General Director and Vice General Director of Finance: By Party B- Managing Director and Chief Accountant: By Party A -• Article 7: FISCAL YEARThe fiscal year of the Joint Venture shall commence on January 1st and terminate on December 31st of the same yearThe first fiscal year shall commence from the official date of establishment to the December 31st of the same year• Article 8: PRINCIPLES OF ACCOUNTINGThe Joint Venture Company shall implement' its accounting system on the basis of Vietnamese Accounting principles and standards and be checked by Vietnamese Financial Organization (as stated in Article 18 of Law on Foreign Investment in Vietnam as aforesaid) • Article 9: YEARLY ACCOUNTING REVIEW 'Every year, the Joint Venture shall be responsible for its accounting review in conformity with regulations of the Vietnam Government; documents of the yearly accounting review 'must be submitted to the relevant authorized organization after approval by the Board of Management• Article 10: INSURANCEBoth parties agree to choose a Vietnamese insurance company to insure the assets of the Joint Venture• Article 11: PROFIT-PROFIT SHARING- ESTABLISHMENT FUNDS The Joint Venture and its foreign partner shall be liable to fulfill their financial obligations to the Vietnam Government as stipulated in the Investment License issued by the State Committee for Cooperation and InvestmentAfter fulfilling all its financial obligations to the Vietnamese Government, the Joint Venture shall use 5% of its profit to set up a reserve fund; Other funds shall be established in conformity with Vietnamese LawsThe reserve fund shall be limited to not more than 25% of the legal capital in accordance with Article 30 of the Law on Foreign Investment; the Board of Directors shall decide the profit share of both parties as follows:Profit sharing for the initial xx years of the Joint - Venture- Party A: 30%- Party B: 70%The profit sharing of both parties shall be as follows:After xx years after xx years after xx yearsParty A: 35% 40% 50%Party B: 65% 60% 50%Party B can remit the following abroad:- Profit from the business . . ,- Receipts from supplying services and technology transfers. - Money from loans and interest of the said loans- Money and other assets officially belonging to Party BForeign personnel working for the Joint Venture can remit their legal income after returning their income tax in conformity with regulations on foreign exchange • control of Vietnam; During operation of the Joint Venture losses of the Joint Venture in any fiscal year shall be compensated by profits in following years but this shall no longer, be valid after five years as stipulated in Article 27 of the law on Foreign, Investment Article 12: EXPENSE FOR ESTABLISHMENT OF THE JOINT VENTURE All expense concerned with the establishment of each partner shall be included in the investment cost of the Joint Venture CompanyArticle 13: OFFICIAL OPERATING DATE : The Joint Venture shall be officially established when the State Committee for Cooperation and Investment approves and issues the Investment license Article 14: DISSOLUTION - BANKRUPCY - FORCE MAJEURE

The Joint Venture can be dissolved before the termination of the contract in the following cases:- Both parties agree and suggest the dissolution to be passed by the Board of Management - The Joint Venture is juridically appraised as a bankrupt company - One of the two parties does not want to continue as a Party in the Joint Venture and wants to transfer its contributed capital without agreement of the other party but the State Committee for Co-operation and Investment permits the dissolution Formalities of bankruptcy declaration shall be carried out in conformity with appropriate international regulations agreed to by the two parties In case of observance of Vietnamese- laws and regulations on bankruptcy declaration, both parties agree to refer this to Vietnam Economic Arbitration or other juridical organization in accordance with the Law on Foreign InvestmentIn case of Force Majeure such as earthquake, storm, flood, fire, war, or any other unforeseen disaster which has occurred beyond the control of any party, that party shall be discharged of its related commitments in this contract provided: - The Force Majeure is the proximate cause which obstructs or delays the execution of the contract- That each party has tried all possible measures to overcome such occurrences- That each party shall immediately, after such occurrence, inform the other party of the same and within 20 days, send the other party a written notice indicating the measures undertaken and the cause which prevents the execution of the Contract duly confirmed by the relevant authorities at the place where the disaster occursArticle 15: LIQUIDATIONIn case of liquidation as stated in Article 14 of this contract, the Board of Management shall appoint a committee to execute the liquidationDuring liquidation, the assets of the company shall first be used to pay for worker's salaries, unpaid taxes, due debts, and liquidation expenses, the other. assets . shall be shared by the two parties according to their rate of capital contribution (both for profits and losses) The Name of activities of the Liquidation Commission shall be stated in details in the Charter of the Joint Venture CompanyIn case of bankruptcy as stated in Article 14 of this contract, the liquidation shall be executed in conformity with Article 19 of Law on Foreign Investment• Article 16: DISPUTE Upon the approval of. the State Committee for Cooperation and Investment, the Joint Venture Contract shall become a juridical document which shall bn respected by both partiesAny one-sided contractual termination is not valid.Any dispute between the two parties arising from the execution of this Joint Venture Contract shall first be resolved through mutual consultations and amicable settlement proceedings; if, however, the two parties fail to reach an agreement, 'the dispute shall be referred to the Singapore Economic ArbitrationAll matters that are not provided for in this Contract but are necessary for the carrying out of the objectives of the Joint Venture ,Company will be carried out by each party in accordance with the Charter of the Joint-Venture Company or-the applicable-InvestmentLaw and Implementing DecreeThis contract is made in 10 copies in English and Vietnamese and comes into effects on the date of issuance of the Investment License, Signed on ...... ...... ...... ......19 ......FOR THE VIETNAMESE PARTY: FOR FOREIGN PARTYDEPARTMENT OF HOME TRADE HANOI IMEXPAN-PACIFIC INCORPORATED

DUONG DINH JOHNATHAN H. NGUYEN

DIRECTOR PRESIDENT

(page 158) CONTRACT OR NO CONTRACTTHE PROBLEMIf a dispute arises about a contract, the lawyers for each side study the text to see if the contract is a binding and enforceable agreement or if there are loopholes: can one side say the "contract" is not worth the paper it is written on? Each applicable law looks at this problem differently. What reasons are common in international cases for deciding that the parties have "no contract"?THE PRINCIPLEUnder most legal systems, a contract is enforceable only if (a) the parties achieve a "meeting of minds" through a process of offer and acceptance, if (b) both sides are capable of entering a contract, and if (c) the purpose of the contract is legal. Theo hầu hết các hệ thống pháp lý, hợp đồng có tính chất ràng buộc chỉ khi nào (a) các bên đạt được sự “thống nhất ý chí” thông qua quy trình đề nghị và chấp nhận, (b) cả hai bên có năng lực ký kết hợp đồng, và (c) mục đích của hợp đồng hợp pháp. An odd twist of Anglo-American law is that the contract must give both sides rights and duties—one-sided contracts are "no contract." Luật pháp Anh- Mỹ vốn rất phức tạp cho rằng hợp đồng phải quy định trách nhiệm và quyền lợi cho các bên – hợp đồng chỉ có một phía đưa ra bị xem là “không phải hợp đồng”. IN MORE DEPTHADVERBIAL CLAUSES OF CONCESSION

1) Though/ Although he is sick, he goes to work.

No matter how sick he is, he goes to work.

However sick he is, he goes to work.

However sick, he goes to work.

Sick as he is, he goes to work.

Despite/ In spite of/ Notwithstanding sickness, he goes to work.Though/ Although sick, he goes to work.

Though/ Although their lines of reasoning are different, Continental laws and Anglo-American laws are both geared to … No matter how different their lines of reasoning are, Continental laws and Anglo-American laws are both geared toHowever different their lines of reasoning are, Continental laws and Anglo-American laws are both geared to

However different their lines of reasoning, Continental laws and Anglo-American laws are both geared toDifferent as their lines of reasoning are, Continental laws and Anglo-American laws are both geared toDespite different lines of reasoning, Continental laws and Anglo-American laws are both geared toTheir lines of reasoning being different, Continental laws and Anglo-American laws are both geared to …

(II) Though he goes everywhere, he always remembers his home.No matter where he goes, he always remembers his home.Wherever he goes, he always remembers his home.Despite any place he goes to, he always remembers his home.(III)Though he says anything, he is a bad manager.

However different their lines of reasoning, Continental laws and Anglo-American laws are both geared to the needs of the international business community: different procedures, different drafting styles, different agreements—but a common purpose and, in many cases, a common result. Dù tư duy có khác nhau, nhưng luật pháp của châu Âu Lục địa và Anh-Mỹ đều nhắm tới đáp ứng nhu cầu của cộng đồng doanh nghiệp quốc tế: quy trình xét xử, cách dự thảo, cách thỏa thuận tuy khác nhau nhưng mục đích vẫn như nhau và trong nhiều trường hợp, kết quả cũng như nhau.

This is particularly true in deciding the issue of contract or no contract. The Anglo-American argues that a contract is an enforceable agreement, and that an "invalid contract" is therefore a contradiction in terms; the Continental lawyer has no trouble with the idea of an invalid contract. For the exporter, it makes no difference if the lawyer tells him he has "no

contract" or an "invalid contract"—either way he is in trouble. What are the most likely causes of such an uncomfortable situation? -

The Meeting of MindsA contract comes about when there is a meeting of minds, when one side says "I make you this offer" and the other side says "I accept." But sometimes there is a written agreement and no "meeting of minds." How can that happen?

DuressIf I hold a pistol to your head and force you to sign a contract, this is duress—undue pressure. A contract never came into existence because there was no meeting of minds. Similarly, if one party has an excessively strong position (a monopoly on the supply of a vital raw material, for example), and if this party uses this position to dictate grossly unfair terms, the agreement is likely to be ruled "unconscionable." An unconscionable agreement is no contract.

Mistake and Fraud A mistake about the goods or a deliberate fraud can mean that there was no meeting of minds. For example, I could have a contract with you to buy the cargo of the Empress of Verbena for $900. Unfortunately there are two ships of this name: I was selling the cargo of one, and you believed you were buying the cargo of the other. Or if I try to cheat you by saying that the cargo consists of new leather jackets when the jackets are unused but thirty years old—in each case there was no meeting of minds and no contract.

Failure to Follow the Rules of Offer and AcceptanceA contract comes into force when an offer is made by one side and accepted by the other. Complex rules govern this process and they are often broken. What are these rules?

Offer and AcceptanceA contract comes into existence when one party (the offerer) makes an offer, and another party (the offeree) accepts it.An offer is not always, in international practice, the first move in forming a contract. Often the buyer first makes an inquiry or, more formally, issues a Request for Tender. In line with this inquiry, the exporter makes a tender or an offer, usually the offer is open for a stated period of time. If the buyer rejects the offer, it is clearly dead; as soon as the buyer says "No," the exnorter is no longer bound by the offer.Normally, of course, buyers do not say “No”- they make a counteroffer: “You want 900. I’ll offer you 600.” In other words, “Yes, if …” What is on the negotiating table now? The counteroffer is a rejection; in effect it kills the original offer. On the table now is not an offer to sell for 900 but an offer to buy for 600. The exporter must now make a choice: accept, reject, or make another counteroffer, for example: “Let’s say 800.” The cycle of offer and counteroffer continues until one side says “I accept” or until negotiations are broken off.When a dispute arises- especially if there is no written contract- lawyers scrutinize the process of offer and acceptance, trying to discover the exact point, if any, at which a contract came into existence. Since most negotiations deal with many issues at the same time- price, payment, delivery, warranty- deciding if the parties really have a contract and, if so, on what terms, can become an expensive nightmare. This is one main reason to put every agreement into writing and sign it.

THE ENTIRE AGREEMENT CLAUSEFor the Anglo-American exporter, signing a contract amounts to saying everything we discussed so far is now dead- this contract is the final form of our entire agreement. This principle derives from an ancient rule of English law known as the Parol Evidence Rule. For the Continental exporter this is not so: a letter that predates the contract, a memo, the minutes of a meeting- all might have some bearing on the contract,

CONCEPT REVIEW: BUTTONED UPVerbena Paintshop makes spray-painting equipment. It sells a unit costing $55.000 to Esperanza Respray, a small company that resprays busses and tracks. Delivery (FOB) takes place on 3rd August 2004. The machine is inspected in Esperanza on 18 th September 2004. On 10th January, Esperanza Respray notifies the exporter that the compressor in the spraying unit has failed, and that the machine cannot be used. Verbena Paintshop sends a replacement compressor by air; it arrives on 5th February, 2005. On 16th September 2005, Esperanra Respray notifies the exporter that the compressor failed for a second tirne on 20th August and asks for a further replacement. Verbena Paintshop refuses.Study the Defects Liability provision below. What arguments are the two two sides likely to put forward in making their cases?

Defects Liability PeriodThe Defects Liability Period shall be a period of six months.If any defect occurs during the Defects Liability Period, the Buyer shall forthwith inform the Seller in writing the details of the defect. The Seller shall be responsible for making good with all possible speed any defect as notified which arises from defective materials, workmanship or design.The provision of this clause shall apply to any goods repaired, replaced or otherwise made good by the Seller, but not so as to extend the Defects Liability Period for more than twelve months from the commencement date of original defects liability period.1. .Arguments likely to be used by Espsranza Respray:………………………………………………………………………………………………………………………………………………………………………….2. Arguments likely to be used by Verbena Paintshop:………………………………………………………………………………………………………………………………………………………………………….3. Points requiring better regulation in this defects liability provision:………………………………………………………………………………………………………………………………………………………………………….

1. Espcranza Respray will argue that the compressor is obviously a poorly made item since it failed twice—there is probably a defect in design. Further it will say that the exporter's liability for defects extends to all replaced items. The second failure occurred—and was notified—within the maximum agreed defects liability period, i.e., twelve months from the commencement of the period. 2. Verbena Paintshop has two arguments: firstly there was a delay of four weeks between the second failure and the required notification: this is not notification "forthwith:" the failure to offer timely notification cancels the seller's duty to cure the defect; Secondly, the defects liability period began with delivery (3rd August 2004); the failure of the compressor thus occurred when it was no longer under warranty. 3. The clause would be clearer if it stated when the defects liability period began. Under most applicable laws the period begins with delivery. More exact specification of the notification period is not common or necessary.

CONCEPT REVIEW: WHO CHOOSES?The defects liability provision below is taken from a set of general conditions in common use by Chinese companies. Read the answer the questions

The Seller warrants that goods are made of the best materials, with first class workmanship, and comply in all respects with the specifications given in Annex B. The Seller warrants that the goods when correctly mounted and properly operated and maintained, shall give appropriate performance for a period of twelve months.If a defect in materials, workmanship or design, or any discrepancy with specifications comes to light during the warranty period, the Seller shall at his own cost satisfy the claim, subject to the agreement of the Buyer in one of the following ways:

a. Agree to the rejection of the goods and refund to the Buyer the value of the goods thus rejected;b. Reduce the price of the goods according to the degree of inferiority, extent of damage, or amount of loss suffered by the buyer;c. Replace the defective goods with new goods which conform to the quality and performance given in Annex B;d. Repair the defective goods to bring them in conformity with the quality and performance specifications given in Annex B;e. Allow the Buyer or a third party appointed by the Buyer to repair the defective goods and to bring them in conformity with the quality and performance specifications given in Annex B at Seller’s risk and cost.

1. Are these general conditions Conditions of Sale or Conditions of Purchase?SALEPURCHASE2. If there is a defect, who chooses the method of cure?BUYER EXPORTER3. Is this a warranty of freedom from defects on delivery or a warranty of durability?FREEDOM FROM DEFECTS DURABILITY

1. Conditions of Purchase. (See answer to question 2)2. The exporter proposes a method, but the buyer must agree to it. Thus the buyer is in control, 3. Durability. Another sign that we are dealing with conditions of purchase.

CONCEPT REVIEW: WHO PAYS?Verbena Medical makes hospital beds and other hospital furniture. It exports 40 beds to South Central Hospital in Espcranza City. The defects liability provision in the contract includes this wording:

The Seller shall indemnify and hold harmless the Buyer against any loss or damage whether direct or indirect suffered by the Buyer as the result of defective or faulty goods delivered by the Seller.

Assume that the coniract is subject to the law of Espcranza which is modelled on U.S. law. During the defects liability period, one of the beds collapses with unfortunate results: 1. The bed itself is unusable and must be replaced;2. The patient who was in the bed is injured, with extra medical costs of $5,000;3. The injured patient, a rich politician, threatens the hospital with a lawsuit for his"pain and suffering"—the. hospital pays the patient $9,000 to avoid the lawsuit;4. Hospital equipment around the bed is damaged—the equipment cost $4,000;5. The ward where the bed was situated is a private ward—it cannot be used for 3days with a loss to the hospital of $3.000:6. Two orderlies at the hospital start a fight over who broke the bed—one of them ishospitalized at a cost of $5,000;7. During the fight, equipment is smashed at a cost of $8,000.

Which costs must Verbena Medical most probably pay?1. 3. 5. 7. 2. 4. 6. :

1. Yes 3 Possibly 5. Yes 7. No2. Yes 4 Yes 6. No

SUMMARY: What You Should Know1. The purpose of the defects liability provision is to allow the exporter to cure defects in delivered goods: the provision'must therefore explain the corrective action he must take.2. The normal options are to repair, to replace, to allow reduction in the price of the goods, allow return of the goods, or to allow the buyer to repair the defect at the exporter's expense.3. The exporter likes to have full discretion over what corrective action he takes; buyers, however, resist this.4. The exporter usually, though not always, pays for curing defects.5. The consequences of a defect can be costly; the panics often negotiate at length to decide who pays for consequential loss or damage.

CONCEPT REVIEW: BUTTONED UPVerbena Paintshop makes spray-painting equipment. It sells a unit costing $55.000 to Esperanza Respray, a small company that resprays busses and tracks. Delivery (FOB)

takes place on 3rd August 2004. The machine is inspected in Esperanza on 18 th September 2004. On 10th January, Esperanza Respray notifies the exporter that the compressor in the spraying unit has failed, and that the machine cannot be used. Verbena Paintshop sends a replacement compressor by air; it arrives on 5th February, 2005. On 16th September 2005, Esperanra Respray notifies the exporter that the compressor failed for a second tirne on 20th August and asks for a further replacement. Verbena Paintshop refuses.Study the Defects Liability provision below. What arguments are the two two sides likely to put forward in making their cases?

Defects Liability PeriodThe Defects Liability Period shall be a period of six months.If any defect occurs during the Defects Liability Period, the Buyer shall forthwith inform the Seller in writing the details of the defect. The Seller shall be responsible for making good with all possible speed any defect as notified which arises from defective materials, workmanship or design.The provision of this clause shall apply to any goods repaired, replaced or otherwise made good by the Seller, but not so as to extend the Defects Liability Period for more than twelve months from the commencement date of original defects liability period.1. .Arguments likely to be used by Espsranza Respray:………………………………………………………………………………………………………………………………………………………………………….2. Arguments likely to be used by Verbena Paintshop:………………………………………………………………………………………………………………………………………………………………………….3. Points requiring better regulation in this defects liability provision:………………………………………………………………………………………………………………………………………………………………………….

1. Espcranza Respray will argue that the compressor is obviously a poorly made item since it failed twice—there is probably a defect in design. Further it will say that the exporter's liability for defects extends to all replaced items. The second failure occurred—and was notified—within the maximum agreed defects liability period, i.e., twelve months from the commencement of the period. 2. Verbena Paintshop has two arguments: firstly there was a delay of four weeks between the second failure and the required notification: this is not notification "forthwith:" the failure to offer timely notification cancels the seller's duty to cure the defect; Secondly, the defects liability period began with delivery (3rd August 2004); the failure of the compressor thus occurred when it was no longer under warranty. 3. The clause would be clearer if it stated when the defects liability period began. Under most applicable laws the period begins with delivery. More exact specification of the notification period is not common or necessary.

CONCEPT REVIEW: WHO CHOOSES?The defects liability provision below is taken from a set of general conditions in common use by Chinese companies. Read the answer the questions

The Seller warrants that goods are made of the best materials, with first class workmanship, and comply in all respects with the specifications given in Annex B. The Seller warrants that the goods when correctly mounted and properly operated and maintained, shall give appropriate performance for a period of twelve months.If a defect in materials, workmanship or design, or any discrepancy with specifications comes to light during the warranty period, the Seller shall at his own cost satisfy the claim, subject to the agreement of the Buyer in one of the following ways:

a. Agree to the rejection of the goods and refund to the Buyer the value of the goods thus rejected;b. Reduce the price of the goods according to the degree of inferiority, extent of damage, or amount of loss suffered by the buyer;c. Replace the defective goods with new goods which conform to the quality and performance given in Annex B;d. Repair the defective goods to bring them in conformity with the quality and performance specifications given in Annex B;e. Allow the Buyer or a third party appointed by the Buyer to repair the defective goods and to bring them in conformity with the quality and performance specifications given in Annex B at Seller’s risk and cost.

1. Are these general conditions Conditions of Sale or Conditions of Purchase?

SALEPURCHASE2. If there is a defect, who chooses the method of cure?BUYER EXPORTER3. Is this a warranty of freedom from defects on delivery or a warranty of durability?FREEDOM FROM DEFECTS DURABILITY

1. Conditions of Purchase. (See answer to question 2)2. The exporter proposes a method, but the buyer must agree to it. Thus the buyer is in control, 3. Durability. Another sign that we are dealing with conditions of purchase.

CONCEPT REVIEW: WHO PAYS?Verbena Medical makes hospital beds and other hospital furniture. It exports 40 beds to South Central Hospital in Espcranza City. The defects liability provision in the contract includes this wording:

The Seller shall indemnify and hold harmless the Buyer against any loss or damage whether direct or indirect suffered by the Buyer as the result of defective or faulty goods delivered by the Seller.

Assume that the coniract is subject to the law of Espcranza which is modelled on U.S. law. During the defects liability period, one of the beds collapses with unfortunate results: 1. The bed itself is unusable and must be replaced;2. The patient who was in the bed is injured, with extra medical costs of $5,000;3. The injured patient, a rich politician, threatens the hospital with a lawsuit for his"pain and suffering"—the. hospital pays the patient $9,000 to avoid the lawsuit;4. Hospital equipment around the bed is damaged—the equipment cost $4,000;5. The ward where the bed was situated is a private ward—it cannot be used for 3days with a loss to the hospital of $3.000:6. Two orderlies at the hospital start a fight over who broke the bed—one of them ishospitalized at a cost of $5,000;7. During the fight, equipment is smashed at a cost of $8,000.

Which costs must Verbena Medical most probably pay?1. 3. 5. 7. 2. 4. 6. :

1. Yes 3 Possibly 5. Yes 7. No2. Yes 4 Yes 6. No(Page 42) TRANSPORTTHE PROBLEMFor the exporter, transportation has two aspects: the physical safety of goods – which means appropriate packaging and correct marking – and correct documentation. Unless the shipping documents are in perfect order, prompt payment under a letter of credit is difficult or impossible. What are the dangers?THE PRINCIPLEThe parties should state in their contract what packaging should bear. The exporter must follow the agreement scrupulously or payment may be delayed. The exporter should ensure that the shipping documents correspond exactly with the conditions of the letter of credit and that the bill of ladding is “clean,” otherwise, again, payment can be seriously delayed.

(Page 169) THE CONTRACT AS THE ENTIRE AGREEMENTTHE PROBLEMAn ancient rule of Anglo-American law states that the final written version of the contract replaces all previous agreements between the parties. What implications does this rule have for the exporter?THE PRINCIPLEMost international contracts – whatever legal system they adopt – include an “entire agreement provision. “This clause has important results: the background of the contract must be established within the contract itself, important letters and memoranda must be listed as “contract documents,” and definitions play an important part in contract drafting.Hầu hết các hợp đồng quốc tế - cho dù đó là hệ thông pháp lý nào đã được vận dụng – đều phải bao gồm điều khoản “hợp đồng hoàn chỉnh.” Điều khoản này có tác động hết sức quan trọng: bối cảnh của hợp đồng phải được nêu rõ trong hợp đồng, các thư từ, memo phải được liệt kê là “chứng từ của hợp đồng”, và định nghĩa cũng rất quan trọng khi soạn thảo.

IN MORE DEPTHWhen an exporter and a buyer sign a contract, are they simply adding the final link to a chain of agreements? Or are they putting into words a final and definitive version of everything agreed so far? The Continental and Anglo-American systems differ widely in their answer to these questions.

THE WHEREAS RECITAL: THE BACKGROUND OF THE CONTRACTIn most exporter deals, the contract is the “entire agreement.” Unfortunately, however, the text of a contract seldom answers important background questions: Why did the parties sign the contract in the first place? What made the deal attractive? How long had the parties known each other? What future business did they hope for? And so on. If a dispute arises, the judge must ask such questions in order to understand the contract fully; often the parties give different answers. How can the court establish the truth? If the contract is the entire agreement, then earlier letters and documents cannot be used as evidence. To overcome this uncertainty, lawyers write the answers to background questions into the contract. Through the whereas-recital. Contracts often begin:

THIS PROCUREMENT CONTRACTbetween

The Styropak Company of Nonamiaand

Verbena Packaging Ltd. Of VerbenaWitnesseth that

WHEREAS the parties have for many years successfully traded together

AND WHEREAS Styropak has recently developed biodegradable styrofoam packaging

The parties hereby agree ……..

The word “whereas” means “because” or “considering that”; in other words whereas-clauses are not provisions, promises or conditions—they are explanations. A typical whereas-recital contains many types of background information. An example from a technology acquisition contract:

- WHEREAS the parties have successfully cooperated in a number of projects in the Republic of Verbena during the last. ten years; (Background of Collaboration)

- WHEREAS the Supplier has wide experience in the supply of electronic products for use in tropical conditions; (Expertise of the parties)

- WHEREAS the parties concluded on 28 May 2007 a Memorandum of Understanding and intend to develop products for Verbena; (Previous Agreements)

- WHEREAS the Supplier has developed and patented an electronic relay under the registered trade-name "Hair Trigger"; (Reference to a Patent)

- WHEREAS both parties are interested in introducing this new technology into the East Asian region; (Mutual Interest)

- WHEREAS the purchaser wishes to incorporate the latest relay-manufacturing technology in its own products; (Goals of the Parties)

- AND WHEREAS the government of the Republic of Verbena actively supports the introduction of pioneer technology (Economic Support Available)

It is hereby agreed that ……

Contracts for the sale of goods seldom contain so much information, but the purpose of any recital is the same: if a dispute arises, the recital allow the court to discover the real meaning of the contract through an understanding of the expectations of the parties when they signed it.Sometimes the exporter is tempted to treat the recital as a chance to promote his skills and the excellence of his products. This is a mistake. If the contract gets into trouble, the buyer will have a "big stick" with which to beat the exporter "You told me you were the

best — and I acted on that belief." If big claims are in the recital in black-and-wnite the exporter is trapped.In a contract written under a Continental Law, a recital (or "preamble") is useful—it prevents misunderstanding—but it is not essential. Continental lawyers often avoid the complicated grammar of the whereas-clause; they prefer simple sentences under the heading Preamble. The legal result is, of course, exactly the same.

DEFINITIONSAnother result of the entire agreement provision is the need for a definitions section. Many terms are discussed during negotiations- faxes and letters andlikely to be exchanged asking “What exactly do you mean by…?”It is common practice to group all definitions in a section of their own near the beginning of the contract. Every word that the two sides discuss during their negotiations is likely to require a definition.

CONCEPT REVIEW 3: MAKING CLAIMS Verbena Leather makes leather carrying cases for cameras, lap-lop computers and other hi-tech personal equipment. It has successfully exported one consignment of its products to Japan, but it has otherwise sold mostly in the local market. A buyer in the United States is interested in making a large purchase. During the negotiations, the American buyer mentions the whereas-recital and offers the wording he wants to include in the contract. Read it and then answer the questions.

Whereas Verbena Leather has a highly trained workforce and the most modern leather-making machinery; And whereas Verbena Leather has wide experience is supplying products to all parts of the world; . .And whereas Verbena Leather is fully familiar with regulations regarding import of leather goods into the United States;The parties nereby agree...

1 Why does the American buyer want this wording in the recital?…………………………………………………………………………………………..2. Why might such high claims be dangerous for Verbena Leather?…………………………………………………………………………………………..3. Does this whereas-recital have any advantages for Verbena Leather? YES NO

1. The wording will help the buyer if the products run into technical or regulatory problems in the United States. The exporter cannot plead ignorance or inexperience.2. An experienced exporter will always run into trouble in new market. If a dispute arises, the judge might well take this fact into account in deciding the case- but not if this wording is in the recital.3. No.

CONCEPT REVIEW 2: Top PriorityThe clause below is taken from a set of tender documents for the supply (and installation) of a lighting system. It has three obvious weaknesses. What are they?

'"Contract Documents" means collectively the completed Tender Documents with possible supplements, the Contract Agreement, Tender Drawings, the Notice of Award, the Performance Bond, the Guarantee for Advance Payment, the Form of Retention Guarantee, the Copy of Policy for Third Party Insurance, the Letter of Power of Attorney and the Joint Venture Agreement (if any) with annexures and appendices included therein and any additions, supplemental agreements, change orders and extra work orders (if any).

1. …………………………………………………………………………………………….………………………………………………………………………………………………..2. …………………………………………………………………………………………….………………………………………………………………………………………………..3. …………………………………………………………………………………………….………………………………………………………………………………………………..

1. The list has no order of precedence: if there is a conf.ict among the documents, nobody will know which prevails.2. The list is carelessly put together—it includes anything that might be important; it should be cut back to essentials. 3. By using the words "if any," the list includes documents which may not even exist.

CONCEPT REVIEW 3: Hide and Seek

Let us stay with the leather goods contract from Concept Review 1, Making Claims. During negotiations the two sides spend a great deal of lime discussing the type of leather to be used. One product, as it is agreed, is to be made of "antelope hide" and the specifications in the contract include that phrase. But what is an antelope? There is a long exchange of faxes on this subject; finally the two sides agree a list of breeds that are "antelopes as far as the contract is concerned. The list is important, and it is signed by both sides. After this the contract is signed.Relying on this signed list, Verbena Leather uses gazelle skin (which is included in the list) for some products. The American buyer objects and tries to reject the delivered goods. The dispute goes before a judge in California.

What are the irnportant considerations in deciding who is right?1. …………………………………………………………………………………………….………………………………………………………………………………………………..2. …………………………………………………………………………………………….………………………………………………………………………………………………..3. …………………………………………………………………………………………….………………………………………………………………………………………………..

The essential question is this: is the list of breeds part of the contract or not? To decide this, we must first ask if the list of breeds is mentioned in the contract as a contract document. If it is, then it is pan of the contract and enforceable. If it is not mentioned as a contract document, then we must ask if the contract contains anentire agreement provision or, failing that, if the applicable law assumes that the contract is the entire agreement. If—for whatever reason—the contract is the entire agreement, then the list of breeds, which was agreed before the contract was signed, has no validity.

SUMMARY: What you Should Know1. The Anglo-American contract is, traditionally, the entire agreement. To avoid confusion, most international contracts contain an "entire agreement" clause (re)stating this position.2. The entire agreement clause means that all documents that predate the concract become invalid when the contract is signed.3. One result is that the background to the contract—often needed by a court to interpret the contract—is provided in the form of a whereas-recital.4. Any important documents (tellers, memo rand-urns, and so on) that predate the contract are listed in the contract as "contract documents." Such documents must be given an order of seniority in case of contradictions.5. Definitions of terms agreed during negotiations are included in a definitions sections in the concract.

TERMINATION“Termination” occurs when either party pursuing power created by agreement or law puts an end to the contract otherwise than for its breach. Thus runs America’s UCC. If the two sides agree in the contract that one of the parties may, under certain circumstances, end the contract, then this is an act to terminate. In practice, there are two kinds of termination: termination for convenience and termination for default. Termination for convenience occurs when one party (usually the buyer) simply decides to drop the contract. No rule is required. This is unusual in a standard export contract, but is common in time-frame contracts. (A time-frame contract is one which allows the buyer to order items at his discretion over a long period of time- two years perhaps.) Termination for default occurs when the contract sees certain defaults which allow one side (usually the buyer to terminate, Contracts within an Anglo-American framework tend to stipulate that on termination (for whatever reason), the “party terminated” has the right to be paid for all supplies or services correctly delivered. Contracts within the Continental framework tend to omit this provision, relying on the applicable law to resolve the issue. To avoid any uncertainty, termination clauses should include such wording as:

In the event of termination for whatever reason, the Seller shall be entitled to receive full payment for all goods and services delivered by the Seller at the date of termination.

An example, then, from an American time-frame contract:Termination for DefaultThe Buyer may by written notice of. default to the Seller, terminate the whole or any part o£ this contract in any one of the following circumstances:

(i) If the Seller fails to make delivery of the Goods within the time specified herein;(ii) If the Seller fails to perform any of the other provisions of this contract, or so fails to make progress as to endanger performance of this contract in accordance with its terms, and in either of these two circumstances does not cure such failure within a period of 10 days.

CANCELLATIONWhen one party breaches a contract, the other has the right to demand cancellation of the contract.'" Cancellation' occurs when either party puts an end to the contract for breach.Note the difference between termination and cancellation. The contract is terminated under a provision of the contract: a contract is cancelled when one side has breached and the other simply refuses to proceed.Docs every breach allow cancellation by the other party? Clearly not. The law dues everything it can to enforce contracts- cancellation on trivial grounds makes no legal sense. Accordingly, most laws see a breach as either fundamental or noi fundamental. A fundamental breach goes ''to the heart of the contract" and allows the other side " to say—"Enough. The contract is over." How can you decide what is and what is not "fundamental breach"? Some cases are easy to decide, but there is a large gray area—under every well-established law, the courts are frequently .askcd to make decisions on hard cases.When a contract is cancelled, a payment problem arises: should the party in breach receive compensation for duties performed so far? Courts worldwide find it difficult to establish a principle on this, and judgment is usually on a case-by-case basis. Naturally the party in breach has a weak case: even so, there is some chance of recovering what has genuinely been earned.

RESCISSIONTermination and cancellation are both one-sided procedures. When the two parties agree to end a contract, the generally used term is rescission. Lei's say, for example, that a supplier of electric cable has difficulty supplying the quality his customer requires, and the customer has meanwhile found a cheaper supplier elsewhere. Both sides now have an interest in dissolving the contract. In legal theory, they enter a new contract to annul the old contract. (The mutual surrender of rights is seen as providing the necessary consideration.) Unfortunately the term rescission is used in other contexts than a mutual agreement to end a contract; international contract drafting would benefit if it were not.

Impossibility and FrustrationOccasionally a contract is discharged because it is impossible or totally pointless to continue with it. The classic cases are a contract to rent a music hall which burns down—no music hall, no contract—and a contract to rent scats along the route of a procession which is cancelled—once again, no procession, no contract. Most legalsystems recognize that sometimes a contract has lost its point and give one of the parties the right to end it. But the courts are reluctant to allow this—contracts are signed to be kept, not to be broken. The exporter is wise to assume that performance will be required.

THE LANGUAGE OF THE CONTRACTWhenever versions of a single document exist in two languages, there areConflicts: no translation is ever perfect. Ideally, the parties should agree on a contract language, making it clear that translations do not have the same authority as the original version in the contract language. What happens, though, if the parties cannot agree? There are two roads: (a) the parties say nothing at all—in a dispute, the judge decides which version to trust; (b) the parties make two (or more) versions equally authoritative; again, the judge decides which version to favor.

CONCEPT REVIEW 1TONGUE TWISTER

Read this status-of-the-contract and assume the contract says nothing else about language.

Copies of the Contract, one in English and one in Swahiti, have been signed by bothe parties. Each party retains one copy in each language.1. What are the dangers of a clause like this?2. Why do you think the two sides accepted it?

1. Translations always produce conflicts; the danger here is that nobody knowswhich version prevails.

2. The reason that two sides accept a loose clause like this is usually laziness — and a hope that problems will not arise. Not the best contract practice.

CONCEPT REVIEW 2Fundamentals

It is seldom easy to decide if a failure to perform by the other side constitutes a"fundamental breach." Remembering that difficult cases often finish up in the courts because the lawyers for the two sides cannot agree, look at each of these situations and make your "best guess." .1. Delivery is two weeks late. The exporter is required under the contract to pay liquidated damages of 0.5% of the contract price per week up to a maximum of 5%. FUNDAMENTAL NOT FUNDAMENTAL NO BREACH2. Same situation, except that delivery is sixty weeks late. FUNDAMENTAL NOT FUNDAMENTAL NO BREACH3. A machine that is of the greatest importance in the buyer's operations breaks down one week after delivery. There is a six month defects liability provision in thecontract. FUNDAMENTAL NOT FUNDAMENTAL NO BREACH4. The buyer agrees to open a letter of credit, but. three months after the agreed date, the letter of credit has still not been opened. FUNDAMENTAL NOT FUNDAMENTAL NO BREACH5. The buyer agrees to open a confirmed letter of credit with the First World Bank of Sheboygan. When the confirmed letter of credit arrives, it is issued by the MoonBank of Verbena. FUNDAMENTAL NOT FUNDAMENTAL NO BREACH

1. No breach. The contract allows late delivery.2. Almost certainly fundamental breach. Sixty weeks delay is fifty weeks longerthan the contract foresaw in the liquidated damaged provision. Such a delaywould, in most cases, go "to the heart of the contract."3. No breach. The contract foresees cure of defects.4. Fundamental breach 5. Probably not fundamental breach—the issuing bank has asked for, and received.confirmation by a bank in the exporter's country. The exporter' s interests are fully covered.

Settlement of DisputesTHE PROBLEMMany disputes are unnecessarily bitter because the parties did not specify a clear and detailed procedure for settling their problems. What procedures are available? What works best in the international context? THE PRINCIPLEMost negotiators prefer to take disputes to arbitration before a specialist court rather than litigation before a local judge. To avoid lengthy and expensive proceedings, a well drafted contract specifies an acceptable arbitration procedure.IN MORE DEPTH'Signing a contract is like a wedding in that few of the people involved foresee the arguments, the disputes—even the quarrels—that generally the ahead. Unlike marriage partners, however, the panics to a contract regulate in advance, either expressly or implicitly, a mechanism for settling their disputes. If the contract says nothing explicit, then the applicable law provides the answer litigation before a judge.LitigationOf the three options available for settling disputes, litigation before the courts is internationally the least attractive: it is public, it is expensive, it is time-consuming, and the results are very legalistic rather than businesslike. For the exporter and the buyer, litigation in a civil court creates special problems: if it sometimes appears difficult to get justice in one's own country-—in a foreign country it may seem impossible. Yet one side must inevitably appear in a foreign court. Since most people are reluctant to accept this serious disadvantage, what are the other choices?Many contracts foresee a two-step process for dispute resolution:* Amicable Settlement;

* Arbitration.The first step—amicable settlement—is not essential, but it is worth considering in any export negotiation.Amicable Settlement and ConciliationThe very word "dispute" suggests an angry confrontation between two sides each of which believes it is in the right—an unhealthy business situation. An amicable settlement clause calls for the friendly settlement of disagreements before they turn into disputes. A typical wording:Resolution of DisputesThe Buyer and the Seller shall make every effort to resolve amicably by direct, informal negotiation any disagreement or dispute arising between them under or in connection with the Contract.

ARBITRATIONIf the two sides cannot reach agreement between themselves, the resolution of their dispute requires a forum. This is a court of law unless the parties specify otherwise. In practice, most contracts do specify otherwise, calling arbitration.Arbitration has a long history. It began with courts set up by medieval trade guilds to settle disputes among guild members. Such members-only courts kept things private and cheap; further the judges were senior practitioners of the craft who understood the business perfectly.

The other advantages of arbitration are:* Its tendency to be quicker than litigation (at least there is no lengthy appeals procedure);* The foreseeability of the costs.On the other hand, costs are extremely high, and many costs- executive time invested in preparing the case, for example- can never be recovered. Even so, most contracts contain a clause specifying arbitration; compared with litigation it is generally seen as the lesser of two evils.In drafting an arbitration clause, four practical questions must be resolved:- How many arbitrators sit in the court?-Where does the court sit?-What is the language of the court?-Who pays court costs?

Does the court of arbitration have the power to enforce its judgement and make others comply? In a direct sense, no. In practice, however, an arbitral award can normally be enforced through the civil courts. Civil courts take necessary steps to order to pay for fine or compensation because most trading countries have accepted the major international convention on the enforcement of awards- the so-called New York Convention. Others have bilateral arrangements or have signed other accords. But a word of caution is in order here: having a right to enforcement and achieving enforcement are two different things. If the buyer comes from a. country which has a. poor reputation for enforcing awards—-or if the country is not a signatory to the Convention—then the exporter should be especially careful to ensure that payment is secure preferably with an al-sight, confirmed letter of credit. Money in hand is always preferable to a right to be paid money in a far-off country.

In ConclusionOverall, the main concern of the two sides should be dispute avoidance, rather than dispute management. Formal dispute resolution is expensive and damaging to business relationships—even if you win.

CONCEPT REVIEWBeyond Dispute

Blue King Beer is a brewery in Verbena that exports about 40% of it production. Blue King is negotiating with a hotel chain in Esperanza to supply a range of "fancy" beers suited to the taste of tourists. The minimum contract price over a period of three years is agreed as $400,000—about 5% of Blue King's turnover. During negotiations the subject of a settlement of disputes clause comes up. How would you advise the two sides when they ask you the following questions? In each case give your reasons in the space provided. 1. Is it reasonable to omit a settlement of disputes clause completely? YES NO ..................................................................................2. If no, should we specify arbitration? Or litigation? ARBITRATION LiTiGATiON .................................................3. Should we add an amicable settlement provision?

YES NO .................................................................................4. If yes, should this provision contain a detailed procedure for amicable settlement? YES NO ..............................................................................5. If a contract specifies arbitration, where is. the best place tor the tribunal to meet? UNSPECIFIED BUYER'S COUNTRY NEUTRAL COUNTRY EXPORTER'S COUNTRY. COUNTRY OF THE DEFENDANT6. Should we state that both sides accept any arbitral award as "final and binding"? YES NO ………………………………………………………….

1. No. A sizable contract should contain a clause on settlement of disputes.2. Arbitration—it is likely to be quicker, cheaper and more businesslike; it will not put one side at a real (or imagined) disadvantage before the national courts of the other. 3. Yes. A serious (and successful) attempt at amicable settlement can save huge sums of money.4. Yes. A procedure ;in support of amicable settlement has been found to save considerable legal costs and management lime.5. Possibly the country of the defendant. This creates extra costs for the side wishing to begin the dispute and thus makes amicable settlement more likely.6. Yes. It is always worth stating this even though such clauses are not always enforceable.

CHAPTER 5: THE EXPORT CONTRACT1. Making the Contract SafeTHE PROBLEMOnce all the commercial and legal decisions have been made and put into contract form, the exporter may still be at risk. How can the last contractual risks be eliminated?THE PRINCIPLEThe contract must be systematically examined for weaknesses before it is signed. The four step process that examines the contract ceilings, special risks that come from the particular circumstances of the contract, risks that come from outside the contract and risks that might be hidden in the applicable law.

IN MORE DEPTHLet’s think of the contract as an old-fashioned castle. How can the exporter make the castle safe? Obviously by looking for weaknesses and by finding ways to strengthen the castle at those points. We will have a tidy four-step approach to making our contracts safe.

STEP 1. CEILING: Are any liabilitites unlimited?

STEP 2. ROADBLOCK: What special risks should be limited?

STEP 3. IRON CURTAIN: How can the exporter limit the effect of the applicable law?

STEP 4. SIGNPOSTS: How can the exporter limit the effect of third party actions?

STEP 1: THE CEILING

The exporter will certainly notice several places where he has agreed to make payments: if he is late, for example; if a machine fails to reach promised specifications; if he is late in curing a defect; or whatever. Each of these liabilities must be capped in some way: a ceiling figure must be set. A full examination of the contract discovers where the exporter has unlimited time or money liabilities: a ceiling clause makes the situation safe.

STEP 2: THE ROADBLOCK

The most familiar roadblocks in export contracts are set up to cover force majeurre and the exporter’s liability for consequential loss or damage incurred by the buyer.

Each individual contract encounters different risks arising perhaps from:

The nature of the product;

The means of transport;

The market situation;

The economic or political situation in the exporter’s or the buyer’s country.

STEP 3: THE IRON CURTAIN

The total agreement between the two sides is their written contract plus the relevant provisions of the applicable law. It has also become clear that the applicable law- especially if it is the law of other side- can contain unwelcome surprises: rights of the buyer against the exporter, duties of the exporter that involve unexpected cost. The situation can be clarified to some extent by the inclusion of an “iron curtain” clause. The iron curtain clause, perhaps, is like a ring-wall, joining all the defensive outposts and roadblocks around Contract Castle. No approach is allowed unless it is through an accepted and understood doorway.

STEP 4: CHANGING THE ROADSIGNS

There are two likely sources of third party interference in the exporter’s contract affairs: the tax office is one, and the other are outsiders who sustain some loss or injury from goods supplied under the contract.

In his own country, the exporter must pay any taxes levied by his government- that is obvious. However, the exporter may find- especially under DDP contracts where part of the work is done and part of the profit is earned in the buyer’s country- that the buyer’s government also wishes to collect taxes from him. Naturally he cannot refuse to pay- but he can at least “change the roadsign.” He can redirect the tax office to the buyer’s address by using the standard clause on taxation.

The exporter tries to limit (or exclude) liability wherever possible. The table below shows the areas where the exporter is most at risk and actions he will try to take to reduce his liability to a foreseeable figure.DELIVERY DEFECTS

LIABILITYTOTAL LIABILITY

OTHER TERMINATION

Define what counts as delay and what does not

Define what counts as a defect and what does not

If possible, pass the buck with an indemnification clause

Search for other danger areas

Limit termination for default to closely defined situations

Define excusable delay, especially force majeure

Limit duties to repairing or replacing goods with latent defects

Try to limit your total liability to your insurance coverage

Define the danger and write a clause that limits or excludes liability

Ensure that you will be paid for work performed up to the date of termination

Try to get a grace period

Exclude liability for consequential loss or damage

Try to exclude payment of damages if termination is allowed

Try to exclude other remedies if carriages are paid

SET A CEILINGADD AN IRON CURTAIN

“All rights and duties not expressly included are excluded.”

(page 203) USING A MODEL CONTRACTTHE PROBLEM

Asking a lawyer to draft a complete contract for each export deal does always make economic sense: the time and money invested are out of proportion to the value of the contract. In such cases, the exporter is tempted to proceed without any kind of contract. Is this dangerous? Why or why not?THE PRINCIPLEA model contract is a half-way house between the dangerous practice of trading without a contract and the expensive practice of asking a lawyer to tailor a contract for each deal. No model contract can regulate every problem, but most important issues can be addressed and reasonable alternatives suggested.

International trade between companies on different continents with different cultures and different concepts of law cannot risk such informal proceedings. For an agreement to be clear, workable and enforceable, it must normally be reduced to a written, signed contract.IN MORE DEPTHUnfortunately, asking a lawyer to draft a contract for each new agreement is costly and time-consuming; many companies simply don’t bother. This is where a “model contract” is helpful. Unfortunately, however, using a model contract is not as easy as it sounds. Many model contracts are too general; with over 150 nations in the world, each with its own law – no model contract can cover them all. Other models are too specialized: a model contract designed for use in England offers offers little guidance to an Ethiopian exporter trying to sell a machine to Vietnam. In every case, a model contract requires adaption before it meets the needs of the two sides.

Translate the following Convention into Vietnamese. The translation given on the right serves as example for you to continue.

ICC MODEL CONTRACT FOR THE SALE OF GOODSH p đ ng M u Xu t nh p kh u Hàng hóa c a Phòng TM Qu c tợ ồ ẫ ấ ậ ẩ ủ ố ế

1. THE CONTRACT IN ENGLISH

CONTRACT FOR THE SALE OF GOODSBETWEEN

...................................... hereinafter called "the SELLER"

AND

...................................... hereinafter called "the BUYER"

PREAMBLE(NOTE: The Preamble is optional) 'The agreement between the parties to this Contract is based on the following understandings:(NOTE: The following clauses are examples only. Delete asappropriate)1. The BUYER is acting partly on its own behalf and partly as a purchasing agent for other companies2. The BUYER is acting as purchasing agent for .....................'3. Both parties understand that Goods made to the BUYER'S special specifications may have no value or very limited value on the open market4. The SELLER understands that the BUYER in specifying the Goods has relied to a large extent on the expertise of the SELLER5. The SELLER understands that the BUYER is under contract to resell the Goods and that if the Goods are defective or non-conforming in quality or quantity, the BUYER may be liable for damages in an amount exceeding .....................(Currency and amount)6. The SELLER understands that the BUYER intends to install the Goods as a component part in equipment to be resold, and that if the Goods are defective or non-conforming in quality or quantity, the BUYER may be liable for substantial damages7. …………………………..(List of additional background understandings between the parties) 1. Applicable LawThis Contract and all questions relating to its formation, validity, interpretation or performance shall be governed by the law of.............(Name of country)

(NOTE: The subclause below is optional)This Contract shall not include, incorporate or be subject to the provisions of the "United Nations Convention on Contracts for the International Sale of Goods"2. DefinitionsIn this Contract the words below have the meanings ascribed to them unless the context otherwise clearly dictates:2.1. Unless expressly modified by the parties, "FOB", "CIF" and other trade terms have the meanings and obligations ascribed to them in Incoterms 2000, Publication 460 of the International Chamber of Commerce, Paris

2.2. "Contract" means this Contract, its preamble and appendices, as well as all documents expressly listed as Contract documents or otherwise expressly mentioned in this Contract2.3. "Goods" means the Goods specified in Clause 4 below2.4. "Price" means the Price as specified in Clause 9 below payable to the SELLER for the Goods2.5. "Delivery" means Delivery as specified in Incoterms 1990 under the Incoterm or Incorterms agreed in this Contract2.6. "Day" means a calendar Day. For the purposes of this Contract, Saturdays, Sundays and all holidays are considered as Days2.7. "Direct" costs and losses are costs and losses arising in immediate connection with any failure to deliver, any delay in Delivery or any defect in Goods delivered under this Contract.Such costs and losses must have an immediate, foreseeable and probably causal connection with the delay or defect. All other costs and losses are deemed by this Contract to be "indirect"; In particular, loss of profit, loss of use, and loss of contract are considered indirect losses2.8. "Government" means national Government, local Government, local authorities, and their agencies. In particular customs and/or excise departments are consideredas Government agencies2.9. "Termination" means the discharge of the Contract by one of the parties under any right expressly granted by this Contract; The discharge of the Contract by any other right arising from the applicable law or any oilier source is deemed to be "cancellation" of the Contract2.10. ........................(list of additional definitions agreed between the parties)

3. Entire Agreement and Contract DocumentsThis Contract constitutes the entire agreement and understanding between the parties. There are no understandings, agreements, conditions, reservations, or representation, oral or written, that are not embodied in this Contract or that have not been supersede by this Contract(NOTE: The subclause and list below are optional)In addition to the text of Contract itself, the documents listed below shall form part of the Contract; All listed documents and the clauses of this Contract shall be read, if possible, so as to be consistent; In the event of conflict, the order of precedence for the provisions and documents which constitute this agreement shall be as follows:(NOTE: The list below contains examples only. Delete as appropriate)a. Any alterations made on the face of the printed Contract

b. The Contract itself

c. Specifications

d. Manufacturing drawings

e. The BUYER'S Special/ General Conditions of Purchase

f. The SELLER'S SpeciaVGeneral Conditions of Sale

g. .....................................................................( Further contract documents).4. Scope of SupplyThe Goods to be delivered under this Contract are specified .......(Use "below" or_the name of the annex where the goods are specified)

5. Delivery5.1. Date, Place and Terms of Delivery

Delivery of the Goods shall be made ...............(agreed Incoterms); the schedule date of Delivery shall be ...............( Agreed date of delivery); Risk and title to the Goods shall pass from the SELLER to the BUYER on DeliveryThe place of Delivery under this Contract is ..............................(Agreed place of delivery. Note: In FOB, FCR, CIF and CIP.(etc.) contract, this is part of shipment).5.2. Naming and Arrival of Vessel(NOTE: This clause is intended primarily for use in FOB and FAS contracts).The BUYER shall advise the SELLER of the name of the vessel not later than ...........(Number of days). Days before the agreed Delivery date

If the vessel named by the BUYER fails to arrive on or before ...................( Date of arrival of ship). then the SELLER may at his discretion deliver the Goods to a bonded warehouse in the port of ................( Port of shipment). and shall be deemed to have fulfilled his Delivery obligations under thisContract; In this event, the SELLER must notify the BUYER of the full circumstances of the Delivery to the warehouse. With Delivery to the warehouse, all costs, including but not limited to cost of storage and insurance are to the BUYER'S account

5.3. Shipping Marks and Packaging(NOTE: The following two subclauses are examples; reword as appropriate).On the surface of each package delivered under this Contract shall be marked: the package number, the measurements of the package, gross weight, net weight, the lifting positions the letter of credit number, the words RIGHT SIDE UP, HANDLE WITH CARE,':

KEEP DRY, and the mark .....................................( Shipping mark)Goods are to be packed in ...................( Description of required packing) and are to be well protected against dampness, shock, rust or rough handling. The SELLER shall be liable for any damage to or loss of the Goods attributable to improper or defective packaging(NOTE: The following subclause is relevant only to deliveries in Germany).

5.4. Disposal of PackagingResponsibility for the disposal of any packaging shall be the BUYER'S .

6. Notification of Delivery(NOTE: This clause applies largely to contracts under which delivery takes place in the country of the seller).lmmediately on Delivery, the SELLER shall notify the BUYER of delivery by .................. (Means of notification, e.g., FAX). This notification shall include ……..(List of documents and information required)

7. Inspection before shipment7.1. Inspection by the BuyerThe BUYER may, at the BUYER'S option, inspect the Goods prior to shipment. At least .............. (Number of days). Days before the actual Delivery date, the SELLER shall give notice to the BUYER, or to any agent nominated by the BUYER, that the Goods are available for inspection. The SELLER shall permit access to the Goods for purposes of inspection at a reasonable time agreed by the parties(NOTE: Customs requirements for importation of goods into Indonesia and the Philippines require inspection by SGS prior to shipment from the Seller's country. The following clause isrecommended for sales to these countries).

7.2. Inspection by Inspection serviceThe parties understand that importation into ............(Name of country) requires inspection of Goods by SGS before shipment from the SELLER'S country; The SELLER agrees to cooperate fully with the SGR' in providing access to and necessary information about the Goods for the purpose of such inspection

8. Early Delivery, Partial Shipment, Delay in Delivery8.1. Early Delivery(NOTE: The three sub-clauses below, are alternatives. Delete as necessary).

Early Delivery is not permitted under this ContractDelivery up to .........(Number of days). Days early is permitted; however, payment shall not become due until the date agreed for payment in this Contract. Delivery up to .......... (Number of days) Days early 'is permitted; in this case payment shall fall due as though the actual Delivery date were the Delivery date agreed in the Contract.8.2. Partial Shipment(NOTE: The two sub-clauses below are alternatives. Delete as necessary). Partial shipment is not permitted under this Contract

Partial shipment, is permitted under this Contract, subject to the agreement of both parties; however, any costs

arising from partial shipment shall be to the account of the .........(BUYER or SELLER).

8.3. Delay in DeliveryIn the event of late Delivery for reasons other than force majeure as defined in Clause 17 below, the SELLER shall pay as liquidated damages and not as a penalty the sum of .........(Figure). of the value of the undelivered part per Day of late Delivery up to a maximum of......... (Figure). of the Contract Price; Payment of liquidated damages shall be due without the BUYER having to furnish proof of any loss, damage or injure(NOTE: The two sub-clauses below are alternatives. Delete as necessary).Payment of liquidated damages shall constitute full and complete satisfaction of any claim of the BUYER against the SELLER arising from the or in connection with late Delivery of any Goods; In particular the SELLER shall not be liable for any indirect loss or damage, as defined in Clause 2.7 above, arising from or In connection with late Delivery of any Goods.Payment of liquidated damages by the SELLER shall not preclude the BUYER from seeking compensatory damages from the SELLER for any loss, injury or damage arising from or inconnection with late Delivery of any Goods; In particular the BUYER shall be entitled to compensation from the SELLER for any indirect or consequential loss or damage, including but not limited to loss of profit, loss of use or loss of contract, arising from or in connection, with late Delivery of any Goods; However, payments made as liquidated damages shall be offset against any compensatory damages recovered from the SELLER for the late Delivery of any Goods.8.4. Termination for DelayIn the event that the SELLER becomes liable to pay the maximum sum payable as liquidated damages under Clause 8.3 above, then the BUYER shall, upon due notice, have the rignt to terminate the Contract '9. PriceThe Price for the Goods to be delivered under this Contract is ........ Currency symbol and figure. (...................Currency and figure in words.)10. Terms of Payment Payment shall be made by means of an irrevocable, confirmed letter of credit; The BUYER shall open the letter of credit on or before .........( Date of opening of letter of credit). on the terms agreed by the parties and annexed to this Contract a? Appendix .......... .........(Appendix number).

This Contract shall not come into force under Clause 16 below until the SELLER has received advice that the letter of credit has been opened in his favour and has ascertained that the terms are in accordance with those agreed between the parties; Any discrepancy between the terms agreed by the parties and the letter of credit as issued shall be notified by the SELLER to the BUYER immediately11. Inspection of the Goods11.1. Duty to Inspection and Notify DiscrepanciesThe BUYER shall inspect the Goods on their arrival at the place of destination. If the Goods fail to conform with the Contract in either quality or quantity, then the BUYER shall notify theSELLER of any discrepancy without delay11.2. Failure to Notify DiscrepanciesIf the BUYER does not notify the SELLER of any suchdiscrepancy within ......... (Number of days). Days of the arrival of the Goods, then the Goods shall be deemed to have been in conformity with the Contract on arrival.

11.3. Buyer's Rights in the Event of Discrepancy in Quantity

If a material discrepancy in quantity exists and is duly notified to the SELLER, the BUYER at his discretion and subject to Clause8.2 above may either:a. Accept the delivered portion of the Goods and require the SELLER to deliver the remaining portion forthwith; orb. Accept the delivered portion of the Goods and terminate the remaining portion of the Contract upon due notice given to the SELLER.If any material discrepancy in quantity exists such that ………..….(Description of fundamental discrepancy) and if such discrepancy is duly notified to the SELLER, the BUYER may at his discretion:a. Adopt either of the remedies prescribed above in this clause;orb. Reject the delivered portion of the Goods and recover from theSELLER all payments made to the SELLER as well as all costs, expenses and customs duties incurred by the BUYER in association with the shipment, movement through customs, insurance or storage of the Goods(NOTE: Clause 11.4 below may not be necessary if SGS inspection takes place before shipment).11.4. Buyer's Rights in the Event of Discrepancy in QualityDiscrepancies in quality shall be considered as defects and shall give rise to claims under the defects liability provision of this Contract in Clause 12 belowHowever, a fundamental discrepancy in quality shall give the BUYER the right to refuse Delivery of the Goods in whole or in part and to recover from the SELLER all payments made for the unaccepted portion of the Goods as well as all costs, expenses and customs duties incurred by the BUYER in association with the shipment, movement through customs, insurance or storage of the unaccepted portion of the Goods12. Defects Liability12.1. Seller's Liability for DefectsThe SELLER warrants that the Goods supplied under this Contract shall at the date of their Delivery: a. Be free from defects in material

b. Be free from defects in workmanship

c. Be free from defects inherent in design, including but not limited to selection of materials, and be fit for the purpose for which such Goods are normally usedIf any defect provably present in any of the Goods on the date of Delivery comes to light during the defects liability period, then the BUYER shall forthwith notify the SELLER; The SELLER, without undue delay, shall at his own risk and cost and at his discretion repair or replace such item or otherwise make good the defectThe SELLER'S liability for defects is subject to the BUYER having adhered to all procedures and instructions applicable to the .......... Condition of use (e.g., "storage, installation, use or operation") l of the item, and expressly excludes damage to the Goods caused by fair wear and tear or by misuse occurring after Delivery12.2. Defects Liability PeriodThe SELLER shall be liable for defects which come to light during a period of .......... days from ........... 2 ; After the end of this period, the BUYER shall have no right to raise claims of any kind against the SELLER for any defect in any Goods of the SELLER'S supplyThe defects liability period shall be prolonged by the length of any period during which the Goods cannot be used by the BUYER because of a defect. However, if new Goods are delivered to replace defective Goods, the defects liability period shall not begin again onthe replacement Goods12.3. Limitation of Defects Liability(NOTE: The two clauses below are alternatives. Delete as necessary)The duty to repair and replace or otherwise to make good defects is the only duty of the SELLER in the event of the Delivery of defective Goods; In particular the BUYER shall not be entitled to compensation from the SELLER for an}' indirect loss or damages as defined in Clause 2.7 above, arising from or in connection with Delivery of defective GoodsThe SELLER'shall indemnify and hold harmless the BUYER against any loss or damage however arising whether direct or indirect which shall be suffered by the BUYER as the result of defective or faulty Goods delivered by the SELLER.

13. Liability to Third Parties(NOTE: The two clauses below are alternatives. Delete as necessary)

The ..........3 shall compensate and hold harmless the .......... ''from any award of damages, reasonable costs, expenses or legal fees, in the event of any action or lawsuit by a third party resulting from any injury, loss or damage to the third party caused by a defect inthe Goods delivered under this ContractIn the event of such Lawsuit, the ........' shall immediately notify the .......... : and shall fully cooperate with the ..........' in taking any necessary legal action.In the event of any action or lawsuit by a third party resulting from any injury, loss or damage to the third party caused by a defect in the Goods delivered under this Contract, the party against whom the action or lawsuit is brought shall bear all costs, expenses, awards of damages or legal fees arising therefrom

14. TaxationAll income taxes, value added taxes, customs duties, excise charges, stamp duties or other fees levied by any Government, Government agency or similar authority shall be borne exclusively by the party against whom they are levied.15. Assignment of Rights and Delegation of DutiesThe rights under this Contract may not be assigned nor the duties delegated by either party without the prior written consent of the other party.16. Coming Into Force This Contract shall come into force after signature by both parties and after:a. The issuance of a letter of credit in accordance with the terms of Clause 10 above;b. .................................................................2

If the Contract has not come into force within ..........3 Days of its signature by both parties, all its provisions shall become null and void.

17. Force majeure (NOTE: The word duty is marked' by an asterisk in this clause; for contracts under Philippines law, the word duty should be replaced by the word obligation).If either party is prevented from or delayed in, performing any duty under this Contract by an event beyond his reasonable control, then this event shall be deemed force majeure, and this party shall not be considered in default and no remedy., be it under this Contract or otherwise, shall be available to the other party. (NOTE: The subclause below contains examples only. It should be modified as necessary).Force majeure events include, but are not limited to: war (whether war is declared or not), 'riots, insurrections, acts of sabotage, or similar occurrences, strikes, or other labour unrest;newly introduced Laws or Government regulations; delay due to Government action or inaction, or inaction on the part of any inspection agency; Fire, explosion, or other unavoidable accident; flood, storm, earthquake, or other abnormal natural event.(NOTE: The subclause below on non-force-majeure events is Optional)Force majeure events do not include .......... .......... .......... ..........If either party is prevented from or delayed in, performing any duty under this Contract, then this party shall immediately notify the other party of the event, of the duty affected, and of the expected duration of the event.If any force majeure event prevents or delays performance of any duty under this Contract for more than .......... 2

Days, then either parties may on due notification to the other party terminate this Contract.18. TerminationNotice of Termination as defined in Clause 2.9 of this Contract shall be in writing and shall take effect .......... 3 Days from the receipt of such notice by the party notified. In the event of Termination, the duties of the parties shall be as incurred up to the date of Termination; In particular, the SELLER shall receive the full Price of any Goods delivered and accepted by the BUYER; The provisions of this Agreement dealing with defects liability, arbitration, and such other provisions as are necessary in order to resolve any post-Termination disputes shall survive Termination.19. Partial InvalidityIf any provision or provisions of this Contract are invalid or become invalid, then this shall have no effect on the remaining provisions. Further, the parties agree to replace any invalid provision with a new, valid provision having, as far as possible, the same intent as the provision replaced. 20. Modification and WaiverModification of the terms and conditions of this Contract shall be binding on both parties even without consideration if the modification is in writing, is signed, and is expressly stated to be a modification of this contract.

Any waiver of any right under this Contract is binding on the party making the waiver even without consideration provided the waiver is in writing, is signed and is expressly stated to be a waiver of the said right;21. LanguageThe language of the Contract, of all Contract Documents, and of all correspondence and other communication between the parties shall be English.22. NoticesNotices served by one party to the other under this Contract shall be made, in the first instance by facsimile transmission (hereinafter called "FAX"). A further copy of each notice shall be sent by registered mail and signed.The effective date of the notice shall be the date of FAX transmission. In the event of a dispute about the receipt of a FAX, however, the effective date of the notice shall be the date of receipt of the registered letter or a date seven days after the registeredmailing, whichever is earlier.Notices shall be sent to the following addresses and FAX numbers: SELLER: .......... .......... .......... .......... .......... .......... ..........Address:.......... .......... .......... .......... ...'.....,. .......... ..........FAX Number: .......... .......... .......... .......... .......... .......... ..........BUYER: .......... .......... .......... .......... .......... .......... ..........Address:.......... .................... .......... ..........'.......... ..........FAX Number: .......... ...'....... .......... .......... .......... ..---- -Any change in an address or FAX number shall be the subject of a required notice under this Contract.23. Settlement of DisputesAll disputes arising in connection with this Contract shall be finally settled under the Rules of Conciliation and Arbitration of the International Chamber of Commerce by .......... Number (of arbitrators)' arbitratorsappointed in accordance with the said rules.The place of arbitration shall be .......... Name of the place (city) of arbitration. The language of arbitration shall be English.(NOTE: The three sub-clauses below are alternatives. Delete as necessary).In the event of arbitration, each party shall bear its own costs.In the event of arbitration, the court shall assess the amount of the costs to be borne by each partyIn the event of arbitration, the party against whom the award is made shall bear the entire costs of both parties to the action.The parties agree that any award made in accordance with the provisions 5f this clause is final and binding on both parties.• ExecutionThe parties, intending to be legally bound, have signed this Contract on the dates and at the places stated below:For and on the behalf of: For and on the behalf of:SELLER BUYER

Title: Title:Date: Date:Place: Place:(NOTE: The witnessing of signatures is not required by all national laws).Witness of SELLER'S Signature Witness of BUYER'S Signature

3. MODEL CONTRACT FOR THE SALE OF GOODS AND THE CIVIL CODE OF VIETNAM 'The are three main types of contract, under CCVN (see appendix 2 for the, English and Vietnamese versions).

• Sales/Procurement Contract (421-442)• Contract to Manufacture (550-561)• Contract for Services (521-529)The model Contract is a pure Sales Contract - an exchange of "assets" for "money".In -the following parts some principal clauses from the model Sales contract are compared with the stipulations regarding civil contracts by the civil code of the Socialist Republic of Vietnam with a view to offering the reader an insight into the subject - matter.

3.1. Structure of the Model contract

What you should know before reading the contractPreamble Clause 1 : Applicable LawClause 2 : DefinitionsClause 3 : Entire Agreement and Contract Documents

What the Buyer will getClause 4 : Scope of supply

How the good will be supplied

Clause 5 : DeliveryClause 6: Notification of DeliveryClause 7: Inspection before ShipmentClause 8: Early Delivery, Partial Shipment, and Delay inDeliveryWhat the Buyer will giveClause 9; Price ;

How the Buyer will payClause 10: Terms of Payment

What if the goods are not as ordered ?

Clause 11: Inspection of tlic GoodsClause 12: Defects Liability

Liabilities outside the contract

Clause 13: Liability to Third PartiesClause 14: Taxation

The legal status of the contract

Clause 15: Assignment of Rights and Delegation of DutiesClause 16: Coming Into ForceClause 17: Force MajeureClause 18: TerminationClause 19: Partial Invalidity Clause 20: ModificationClause 21: LanguageClause 22: Notices Clause 23: Settlement of Disputes

Execution

Details not include in the main body of the contractAppendices

Clause 7: Inspection before ShipmentClause 8: Early Delivery, Partial Shipment, and Delay in Delivery What the Buyer will give. Clause 9: Price

How the Buyer will pay

Clause 10: Terms of PaymentWhat if the goods are not as ordered ? Clause 11: Inspection of the GoodsClause 12: Defects Liability . • .

Liabilities outside the contract

Clause 13: Liability to Third PartiesClause 14: Taxation

The legal status of the contract

Clause 15: Assignment of Rights and Delegation of DutiesClause 16: Coming Into Force ... ^Clause 17: Force Majeure 'Clause 18: TerminationClause 19: Partial InvalidityClause 20: ModificationClause 21: LanguageClause 22: NoticesClause 23: Settlement of Disputes

Execution

Details not include in the main body of the contractAppendices

3.2. Interpretation of the Contract under CCVN

• Article 135. Interpretation of Civil Transactions1. The interpretation of a civil transaction must be based upon the actual desire of the parties at the time of establishing such transaction an on the objectives of such transaction. 2. Where a civil transaction may be interpreted as having different meanings, the civil transaction must be interpreted in accordance with a meaning consistent with the objective of the transaction, and shall be in accordance with the customs of the place where the transaction was established; if the party which is economically stronger includes in the civiltransaction points 'which are disadvantageous to the weaker party, the interpretation of the civil transaction must be such that favors the weaker party.

• Article 408. Interpretation of contracts 1. If a contract contains unclear provisions, the interpretation of such provisions shall not only rely upon the wording of the contract but also shall be based upon the common intentions of the parties.2. If a clause of the contract susceptible of many meanings, shall be chosen the meaning, which would allow the implementation of the clause to most benefit the parties.3. If a contract contains a wording with many different meanings the contract shall be interpreted according to the, meaning which best conforms to the characteristics of thecontract.4. If a contract contains clauses or words which are difficult to understand, those shall be explained according to the customs at the appointed place for the execution of the contract.5. When a contact lack some provisions not belonging to the essential substance, the contract shall be supplemented according to the customs in regard of such types of contractsat the appointed place for the execution of the contract.6. The clauses of contract shall be interpreted in relations to each other so that each is given the meaning derived from the contract as a whole.

• Remark:Where rules of interpretation allow the court a great deal of freedom, the parties should be as precise as possible.3.3. Applicable Law of the Contract under CCVN.•Article 834: Civil contracts

1. Forms of civil contracts shall be governed by the law of the country where contracts are concluded. The contracts that are concluded in a foreign country with violations of law governing forms of contracts shall be valid in Vietnam if the form of those contracts does not violate the law of the Socialist Republic of Vietnam.2. The rights and obligations of parties in a civil contract shall be determined by the law of the country where performance of the contract takes place.The contracts that are concluded and performed wholly in Vietnam shall be governed by the law of the Socialist Republic of Vietnam. If the place of performance of a contract is not indicated then the place of performance shall be determined by the law of Socialist republic of Vietnam.3. The civil contract having has immovable property in Vietnam as its subject-matter shall be governed by the law of the Socialist Republic of Vietnam.

• Remark:Article 834 is in need of clarification by the courts.

3.4. Applicable Law of the Contract under the Model Contract.1. Applicable lawThis contract, and all questions relating to its formation, validity, interpretation or performance shall be governed by the law or....................(Note: The subclause below is optional). This contract" shall not include, incorporate or be subject to the provisions of the "United Nations Convention on Contracts for the International Sale of Goods. '

• RemarkThe Model Contract assumes freedom of contract in choosing an applicable law. It also allows-for exclusion of the Vienna Sales Convention.

3.5. Scope of Contract: Technical SpecificationsNotes for preparing the Technical SpecificationA set of precise and clear specifications is-a prerequisite for bidders to respond realistically and competitively to the requirements of the Purchaser without qualifying their bids. In thecontext of International Competitive Bidding (ICB), the specifications must be drafted to permit the widest possible competition and, at the same time, present a clear statement of the required standards of workmanship, materials, and performance of the goods and services to be procured. Only if this is done will be objectives of economy, efficiency, and fairness in procurement be realised, responsiveness of bids be ensured, and the subsequent task of bid evaluation facilitated. The specifications should require that all goods and materials to be incorporated in the goods be new, unused, and of the most recent or current models, and that they incorporate all recent improvements in design and materials unlessprovides for otherwise in the contract ...Care must be taken in drafting specifications to ensure that they are not restrictive. In the specification of standards for equipment, materials, and workmanship, recognised international standards should be used as much as possible. Where other particularstandards are used, whether national standards of the Borrower's country or other standards, the specifications should state that equipment materials, and workmanship that meet other authoritative standards, and which ensure at least a substantially equal quality than the standards mentioned, will also be acceptable. '

Source: World Bank Standard . Bidding' Document: Procurement of Goods, p. 65.

• Remark: Technical specifications must • be prepared to allow absolute

certainty as to the scope of contract,

3.6. Legal Families and the Applicable Law

• The total agreement between the parties is their written contract (the fish) plus the applicable private law (the water)• In principle, the parties to a contract are free to decide the private law that will supplement their contract; i.e., the parties are free to choose the water their fish swims in.• Each country has its own national law. These laws belong to one of three families.

- The Civil Law Family: legal systems based on codified laws. The aim is consistency and predictability. The judge applies the written law. Examples: France, Germany, Spain.- The Common Law Family: legal systems aimed at achieving the most just result in the individual case. There is no written law - only precedents to guide decision-making. Examples: England, United State, Malaysia.- The Religious Law Family: legal systems based on Moslem principles. For contracts, there laws tend to adopt international common law or civil law principles.Examples: Saudi Arabia, Pakistan.

3.7. The Vienna Sales Convention .. - The United Nations .Conventions, on Contracts for the International Sale of Goods (The Vienna Sales Convention) is the law of any country that adopts it. Where the Conventionconflicts with existing national law, the Convention prevails.

• The Convention applies to international sales only. —- The parties to a contract can "opt out" of the Convention with a clause such as:This contract, and all questions concerning its validity, interpretation and performance shall be governed by the law of the Republic of Verbena. This contract shall not include, incorporate or be subject to the provision of the "United Nations Convention onContracts for the International Sales of Goods".• Many questions about the meaning of the Convention must be answered in the courts. So far the answers have been slow in coming.- Even so, the importer might wish to accept the Convention if the law applicable to the contract is weak or underdeveloped, or if it favours the seller too strongly.

3.8. Requirement to provide a User's Guide.• Article 435: Obligations to provide information and User's Guide.The seller is bound to provide the purchaser with necessary information on the assets sold, and guidelines for using those assets. If the seller fails to perform this obligation, the purchaser shall have the right to request the seller to perform the obligation; If the seller still does not perform it, the purchaser shall have the right to annul the contract and claim for compensation of damages.* Remark:The buyer's right to annulment for failure to produce a user's guide would not normally be acceptable in a seller.

1693.9. Transfer of Risk, Transfer of Title. • 'Article 432: Moment of Transfer of the Ownership1) The ownership over purchased items shall pass to the purchaser from the moment when the purchaser receives the object, except for cases where parties agree or lawstipulates otherwise.

• Article 43: Moment of Passage of Risk.1. The seller party shall bear risks regard of the sold assets until the moment when assets are delivered to the purchaser, and the latter shall bear risks from the moment of receiving assets if parties have not agreed otherwise.

• Remark:

The concepts of "deliver^'" and "receipt" will require some definition by the courts. Under an Incoferm contract, both terms could mean delivery.

3.10. Transfer of Risk and Title under the Model Contract.5. Delivery5.1. Date, Place and Terms of DeliveryDelivery of the Goods shall be made ............... The scheduled date of Delivery shall be ................ Risk and title to the Goods• shall pass from the SELLER to the BUYER on Delivery.

Remark: Transfer of risk and title .together is often the simplest arrangement. 3.11. Place of Delivery under CCVN and under the Model Contract.

• Article 426: Place of Delivery of Assets Parties shall agree upon the place of delivery of assets; If there are no agreement on this then the provision of Article -289 [residence or headquarters of Buyer] of this Code shall be applied.

The place of Delivery under this Contract is .............................;55. Agreed place of delivery. Note: In FOB, FCR, CIF and CIP(etc) contracts, this is the port/place of shipment,

'Remark:Place of Delivery should be stated. In C-term contracts it is the port of shipment, not the port of arrival.

3.12. Time of Delivery under CCVN and under the Model Contract.

• Article 425: Time of performance of a Sale Contract1. The time for performance of a sale contract shall be agreed upon by parties. The seller must deliver the assets to the purchaser at the time as agreed. The seller can deliver theassets before the Fixed time only if the purchaser agrees.In cases where parties do not fix the time for delivery of assets, the purchaser shall have the right to request the seller to deliver assets and the seller shall have the rights to ask the purchaser to receive assets at any time, provided that parties shall inform to each other within a reasonable period of time, and provided further that parties do not have other agreements.2. If parties have not agreed upon a. term of payment, the purchaser shall have to pay upon receipt of the assets.5. Delivery5.1. Date, Place and Terms of DeliveryDelivery of the Goods sliall l(e made ......The scheduled date of Delivery shall be

•Remark: •' .. . It is essential to clarify the time of delivery. Late delivery has important financial consequences. The warranty period usually begins to run from delivery. 3.13. Force Majeure under CCVN and under the Model Contract.

' • Article 308: Civil liability due to breach of civil obligations.

1. The obligor, who fails to fulfil improperly the obligation, shall bear civil liability to the obligor.2. The obligor, who cannot fulfils the obligation due to force majeure events, shall not bear civil liability, unless otherwise provided for by agreements or stipulated by the law.

17. Force MajeureIf either party is prevented from, or delayed in performing any duty* under this Contract by an event beyond his reasonable control, then this event shall be deemed force majeure, and this party shall not considered in default and no remedy, be it under this Contract or otherwise, shall be available to the other party.

[NOTE: The subclause below contains examples only. It should be Modified as necessary]. Force majeure event include, but are not limited to: war (whether war is declared or not), riots, insurrections, acts of sabotage, or similar occurrence's; strikes, or other labor unrest:newly introduced laws or Government regulations; delay due to Government action or inaction, or inaction on the part of any inspection agency, fire, explosion, or other unavoidable accident; flood, storm, earthquake, or other abnormal natural event.

[NOTE: The subslause below on • non - force 'Majeure events is optional] Force Majeure events do not include

If either party is prevented from, or delayed in, performing any duty* under this Contract, then this party shall immediately notify the other party of the event, of the duty* affected, and of the expected duration of the event.If any force Majeure event prevents or delays performance of any duty* under this Contract for more than ... 2 days, then either party may on due notification to the . other partyterminate this Contract.

• Remark:•Forced Majeure need details negotiation.

3.14. Penalties and Liquidated Damages under CCVN

• Article 377: Punitive damages.1. Punitive damages is measure that shall be applied by the agreement or the parties or by law to secure the fulfillment of an obligation by which the defaulting party must pay anamount of money to the injured party.2. An agreement or punitive damages, must be filed in an act which may be .separated from included into the main contract.

• Article 378; Rate of punitive damages.The rate of punitive damages may be a certain sum of money or may be terminated by percentage of the value of the breached part of the obligation, but must not exceed 5%.Article '379: Relationship between punitive damages and compensatory damages. '1. The parties may agree upon that the defaulting party shall have to pay only punitive damages but not compensatory damages, or both, either punitive damages andcompensatory damages; " if the rate of compensatory damages was not agreed upon in advance, the entire damages must be compensated.2. If the parties have agreed upon the choice between punitive damages or compensatory damages, the right to choose shall be granted to the injured party. 3. In case where punitive da infixes rather compensatory damages have been agreed upon by the parties or stipulated by law, the defaulting party must pay only punitive damages.

• Remark:The 5% rate for punitive damages is stringent is, but it is unclear.The possible of paying both compensatory and punitive damages ishighly unattractive to the seller: few contracts will allow it.

3.15. Liquidated damages under the Model Contract8.3. Delay in Delivery* In the event of late Delivery for reason other than force majeures defined in Clause 17 below, the SELLER shall pay as liquidated damages and not as a penalty the sum of<FIGURE>and of the value of the undelivered part per Day of late Delivery up to a maximum of <FIGURE> and of the Price payable Clause 9 below. Payment of liquidated damages shall be due without the BUYER'having'to furnish proof of any loss, damage or injury. [NOTE: r/ic too subclauses below are alia-natives.} "

Payment of liquidated damages shall constitute full and complete satisfaction of any claim of the. BUYER against the SELLER arising from or in connection with late Delivery of any Goods. In particular the SELLER shall not be liable for any indirect or consequential loss or damage, as defined in Clause 2.7 above, arising from or in connection with late Delivery of any Goods.Payment of liquidated damages by the SELLER shall not preclude the BUYER from seeking compensatory damages from the SELLER for any loss, injury or damage arising from or inconnection with late Delivery of any Goods. In particular the BUYER shall be entitled to compensation from the SELLER for any indirect or consequential loss or damage, including but not limited to loss of profit; loss of use or loss of contract, arising from or in connection with late Delivery of any Goods. However, payments made as liquidated damages shall be offset against any compensatory damages recovered from the SELLER for the late Delivery of and Goods.

8.4. Termination for DelayIn the event that the SELLER becomes liable to pay the maximum sum payable as liquidated damages under Clause 8.3 above, then the delay shall be deemed breach of contract and theBUYER may, upon due notice, terminate the Contract and/or seek any other remedy available to him.

Remark:In practice, few sellers will accept Alternative 2; it goes against the principle of liquidated damages.

3.16. Defective Delivery under CCVN• Article 428: Liability for delivery of assets in improper quantify

1. In cases where the seller delivers things in quantity exceeding that outnumbered the quantity which has been agreed upon, the purchaser shall have the right to refuse the excess, or to receive it and pay for it at agreed price. 2. In cases the seller party delivers things in quantity less than the quantity which has been agreed upon, the purchaser shall have either of following rights.

a. To terminate the contract and request compensation for damages. b. To receive the quantity which was delivered and request compensation for damages. .

c. To receive what has been delivered and extend a period of time for the seller to deliver the rest.

• Article 429: Liability due to Delivery of Incompleted Things.1. In cases where things which have been delivered are not completed and thus causing the usefulness to be failed, the purchaser shall have either of following rights:a. To cancel the contract and request compensation for damages:b. To receive what has been delivered and ask the seller party to deliver component or parts which have not been delivered and to request compensations for damages and tosuspend the payment until the things becomes complete.

• Article 430: Liability for delivery of things of the Wrong category.In case where the things-have... been .delivered, in improper [assortment], the purchaser shall have either of the following rights1. To terminate the contract and request compensation for damages. 2. To receive what has been delivered any pay for it at the price as agreed upon by parties. '3. To request the seller to deliver •tbinp in proper assortment.

Remark: ,The buyer's right to terminate is very hard on the seller. These clauses are (probably) disposive, however. Some wording on fundamental breach is necessary in the contract.

3.17. Defective Delivery under the Model Contract.

11.3. Buyer's rig fits in the event of Discrepancy in quantity' .If a material discrepancy in quantity exists and is duly noticed to the SELLER, the BUYER hi. his discretion and subject to clause 8.2 above may either.a. Accept the delivered portion of the Goods and required the SELLER to deliver the remaining portions forthwith; orb. Accept the delivered portion of the Goods and terminal of the remaining portion of the Contract upon the due notice given to the SELLER.If any material discrepancy in quantity exists such that <STATEMENT OF FUNDAMENTAL DISCREPANCY> and if such discrepancy is duly notified to the SELLER, the BUYER

may at his discretion.

a. Adopt either of the remedies prescribed in tins clause above;orb. Reject the dclivored portion of the Goods and recover from the SELLER all payments made to the SELLER as well as all costs, expenses and customs duties incurred by the BUYER in association with the shipment, movement through customs, insurance or storage of the Goods.11.4. Buyer's rights in the event Discrepancy in qualityDiscrepancies in quality shall be considered as defects and shall give rise to claims under the Defects Liability provision of this Contract in Clause 12 below.However, a fundamental discrepancy in quality shall give the BUYER the right to refuse Delivery of the Goods in whole or in part and to recover from the SELLER all payments made for the …… and customs duties incurred by the BUYER in association with the shipment, movement through customs. Insurance coverage of the unaccepted portion the Goods/Further a refusal to accept delivery in whole shall be considered termination under Clause 18 of this Contract and refusal to accept delivery in part shall be considered termination of that part of the Contract affected by such refusal.

Remark:The wording on. fundamental breach is a necessary protection for the seller. It is essential for the buyer to be fair to the seller or he will simply refuse to do business.

3.18. Defect liability under CCVN• Article 437: Guarantee of the Quality of Goods.1. The. seller shall guarantee the fitness and characteristics of things sold; If the purchase discovers in the purchased things the defects which devaluated it decreases its fitness of he/she must immediately notify the seller thereof and shall have the right to request the seller to repair, or to replace the things with the defects, or to reduce price and to compensate for damages, if parties have not agree otherwise.2. The sale party shall guarantee that things sold are in accordance with description on covers Or appropriate with the sample that has been chosen by the purchaser.3. The sale party shall not be liable for defects in the following cases: (a) Defect that the purchase party have already known and must have known when buying.

(b) Things at auction; things second hand trade;(c) The purchase party at fault of causing defect to things.

• Article 438: Warranty obligationThe sale party shall have warranty obligation to things sold for a period of time to be called warranty period, if the warranty is agreed upon by parties or stipulated by Law. Thewarranty period shall be calculated from the time the purchase party has to receive things.• Article 439. Right to request for [remedy of Defect under] warrantyDuring the warranty period, if the purchase party discovers any defects on things, it shall have the right to request the sale party to repair things free of charge or to reduce the priceor to exchange the things with defects for the others or to return things and receive back the money.

• Remark:

The correct word is "warranty"The warranty period appears to run forever unless otherwise regulated by the contract.The buyer has the right to choose the remedy which is grossly unfair to the seller.

3.19. Defect Liability under the Model Contract. 12. Defects liability

12.1. Seller's Liability for defectsThe SELLER warrants that the Goods, supplied under this Contract shall at the date of their Delivery. a. Be free defects in material.

b. Be free from defects in workmanship;

c. Be free from defect inherent in design, including but not limited to selection of materials and be fit for the purpose for which such Goods are normally used. If any defect provably present it any of the Goods, on the date of Delivery comes to light during the defects liability period, then the BUYER shall forthwith notify the SELLER. The SELLER, without undue delay, shall at his own risk and cost and at his discretion repair or replace such item or otherwise make goods the defect.The SELLER'S liability for defects is subject to the BUYER having adhered to all procedures and instruction applicable to the .... of the item, and expressly excludes damages to the Goods caused by fair wear and tear or by misuse occurring after Delivery.

1.2.2. Defects Liability periodThe SELLER shall be liable for defect which come to light during a period of ........... days from ..... After the end of this period, the BUYER shall have no right to raise claims of any kind against the SELLER for any defect in any Goods of the SELLER'S supply.The defect liability period shall be prolonged by the length of any period during which the Goods cannot be used by the Buyer because of a defect. However, it new Goods are delivered to replace defective Goods, the defects liability period shall not begin again onthe replacement Goods.

1.2.3. Limitation of Defects Liability.[NOTE: The two clauses below are alternatives. Delete as necessary] The duty to repair and replace or otherwise to make good defects is the only duty of the SELLER in the event of the Delivery, of defective Goods. In particular the BUYER shall not entitled to compensation from the SELLER for any indirect loss or damage as defined in Clause 2.7 above, arising from or in connection with Delivery of defective Goods.The SELLER shall indemnify and hold harmless the BUYER against any loss or damage however arising whether direct or indirect which shall be suffered by the BUYER as the result of defective or faulty Goods delivery by the SELLER.3.20. Payment under CCVN and the Model Contract

• Article 295: Fulfilling the obligation of paying money.1. The obligation to pay money shall be fulfilled in full, according to the time limit, at the appointed place and in the agreed upon procedures.2. The money that must be paid shall be the Vietnamese Dong, except in cases where the law stipulates otherwise.

• Article 424: Price and Modes of Payment3. Modes of payments shall be agreed upon by parties or stipulated by law.

• Remark:The requirement to pay all monies in Dong needs interpretation

UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL

SALE OF GOODSThe States Parties to this Convention,bearing strong mind the broad objective in the

CÔNG ƯỚC LHQ VỀ HỢP ĐỒNG MUA BÁN HÀNG HÓA QT

Các nước thành viên của Công ước

resolution adopted by the sixth special sesssion of the General Assembly of the United Nations on the establishment of a New International Economic Order;Considering that the development of international trade on the basis of equality and mutual benefit is an important element in promoting friendly relations among States;Being of the opinion that the adoption of uniform rules which govern contracts for the international sale of goods and take into account the different social, economic and legal systems would contribute to the removal of legal barriers in international trade and promote the development of international trade.

Have agreed as follows

này,Coi trọng những mục tiêu tổng quát của các nghị quyết về thiết lập một trật tự kinh tế quốc tế mới được Đại Hội Đồng LHQ chấp nhận trong khóa họp bất thường lần thứ 6,

Xét rằng sự phát triển thương mại quốc tế trên cơ sở bình đẳng, đôi bên cùng có lợi là một yếu tố quan trọng thúc đẩy quan hệ hữu nghị giữa các quốc gia;

Cho rằng việc chấp nhận các qui tắc thống nhất chi phối các mối quan hệ trong mua bán hàng hóa quốc tế và có tính đến các hệ thống xã hội kinh tế và pháp lý trong thương mại quốc tế và hổ trợ cho việc phát triển thương mại quốc tế,Đã thỏa thuận những điểm sau

Article 11. This Convertion applies to contracts of sale of goods between parties whose places of business are strong different States:(a) When the States are Contracting States; or (b) When the rules of private international law lead to the application of the law of a Contracting State2. The fact that the parties have their places of business in different States is to be disregarded whenever this fact does not appear either from the contract or from any dealings between, or from information disclosed by, the parties at any time before or at the conclusion of the contract.3. Neither the nationality of the parties nor the civil or commercial character of the parties or of the contract is to be taken into consideration in determining the application of this Convention.Article 2. This Convention does not apply to sales (a) Of goods bought for personal, family or household use, unless the seller, at any time before or at the conclusion of the contract, neither knew nor ought to have known that the goods were bought for any such use;(b) By auction;(c) On execution or otherwise by authority of law;(d) Of stocks, shares, investments securities, negotiable instruments or money; (e) Of ships, vessels, hovercraft or aircraft;(f) Of electricity.

Điều 11. Công ước này áp dụng cho những hợp đồng mua bán hàng hóa giữa các bên có trụ sở thương mại tại các quốc gia khác nhaua. Khi các quốc gia này là thành viên của Công ước, hoặcb. Khi luật được áp dụng là luật của nước thành viên Công ước này theo các quy tắc tư pháp quốc tế.2. Việc các bên có trụ sở thương mại tại các quốc gia khác nhau không tính đến khi vấn đề này không xuất phát từ hợp đồng, từ các mối quan hệ đã hình thành hoặc vào thời điểm ký hợp đồng gĩưa các bên hoặc từ việc trao đổi thông tin giữa các bên.3. Quốc tịch của các bên, quy chế dân sự hoặc thương mại của họ, tính chất dân sự hay thương mại của các bên hay của hợp đồng, không được xét tới khi xác định phạm vi áp dụng của Công ước này.Điều 2. Công ước này không áp dụng đối với giao dịch mua bána) các hàng hoá dùng cho cá nhân, gia đình hoặc nội trợ, trừ khi người bán, vào bất cứ lúc nào trong thời gian trước hoặc vào thời điểm ký kết hợp đồng, không biết hoặc không cần phải biết rằng hàng hóa đã được mua để sử dụng như thế;b) Bán đấu giá;c) Để thi hành luật hoặc văn kiện ủy thác theo luật;d) Cổ phiếu, cổ phần, chứng khoán đầu tư, các chứng từ có thể chuyển nhượng

hoặc tiền tệ;e) Tàu thủy, máy bay và tàu chạy trên đệm không khí;f) Điện năng

Article 31. Contracts for the supply of goods to be manufactured or produced are to be considered sales unless the party who orders the goods undertakes to supply a substantial part of the materials necessary for such manufacture or production.2. This Convention does not apply to contracts in which the preponderant part of the obligations of the part who furnishes the goods consists in the supply of labour or other services.Article 4. This convention governs only the formation of the contract of sale and the rights and obligations of the seller and the buyer arising from such a contract. In particular, except as otherwise expressly provided in this Convention, it is not concerned with:(a) The validity of the contract or of any of its provisions of any usage;(b) The effect which the contract may have on the property in the goods sold.Article 5 This Convention does not apply to the liability of the seller for death or personal injury caused by the goods to any person.Article 6 The parties may exclude the application of this Convention or, subject to Article 12, derrogate from or vary the effect of any of its provisions.

PART III. SALE OF GOODSChapter I. GENERAL PROVISION

Article 25 A breach of contract committed by one, of the parties is fundamental if it results in such detriment to the other party as substantially to deprive him of what he is entitled to expect under the contract, unless the party in breach did not foresee and a reasonable person of the same circumstances would not have foreseen such a result.Article 26 A declaration of avoidance of the contract is effective only if made by notice to the other party.Article 27 Unless otherwise expressly provided in this Part of the Convention if any notice, request or other communication is given or made by a party in accordance with this Part and by means appropriate in the circumstances, a delay or error in the transmission of the communication or its failure to arrive does not deprive that party of the right to rely on the communicationArticle 28 If, in accordance with the provisions of this Convention, one party is entitled to require performance of any obligation by the other party, a court is not bound to enter a judgement for specific performance unless the court would do so under its own law in respect of similar contracts of sale not governed by this Convention.Article 29 1. A contract may be modified or terminated by the mere agreement of the parties.2. A contract in writing which contains a provision requiring any modification or termination by

PHÂN 3: MUA BÁN HÀNG HÓAChương 1: Những quy đinh chungĐiều 25. Sự vi phạm hợp đồng do một bên gây ra là vi phạm cơ bản nếu vi phạm đó làm cho bên kia bị thiệt hại mà người bị thiệt hại trong một chừng mực đáng kể bị mất những gì mà họ được phép có theo hợp đồng, trừ phi bên vi phạm không tiên liệu được hậu quả đó và một người có lý trí minh mẫn cũng se không tiên liệu được nếu ở vào hoàn cảnh tương tự.Điều 26. Một lời tuyên bố về việc hủy hợp đồng chỉ có hiệu lực nếu được thông báo cho bên kia biết.Điều 27. Trừ phi Phần II của Công ước này có quy định khác, nếu thông báo yêu cầu hay thông tin khác đã được thực hiện bởi một bên của hợp đồng theo Phần III này và bằng một phương tiện thích hợp với hoàn cảnh, thì sự chậm trể hoặc lầm lẫn trong việc chuyển giao thông tin hoặc thông tin không đến người nhận, cũng se làm bên đó mất quyền viện dẫn các thông tin của mình.Điều 28. Nếu một bên có quyền yêu cầu bên kia thực hiện thi hành một nghĩa vụ nào đó thì chiếu theo các quy định của Công ước này Toa án không bị bắt buộc phải ra phán quyết buộc bên kia thực sự thực hiện hợp đồng, trừ khi toa án ra phán quyết đó trên cơ sở luật nước mình đối với các hợp đồng mua bán

agreement to be in writing may not be otherwise modified or terminated by agreement. However, a party may be precluded by his conduct from asserting such a provision to the extent that the other party has relied on that contract.

tương tự không được điều chỉnh bởi Công ước này.Điều 29.1. Một hợp đồng có thể được điều chỉnh hay chấm dứt bằng thỏa thuận đơn thuần giữa các bên.2. Một hợp đồng bằng văn bản chứa đựng một điều khoản quy định rằng mọi sự sủa đổi hoặc chấm dứt hợp đồng phải được các bên làm bằng văn bản thì không thể bị sủa đổi hoặc chấm dứt theo thỏa thuận giữa các bên hoặc dưới một hình thức khác. Tuy nhiên hành động của một bên có thể không cho phép họ viện dẫn điều khoản ấy trong chừng mực mà bên kia căn cứ vào hành động đó.

PART II. FORMATION OF THE CONTRACTArticle 14.1. A proposal for concluding a contract addressed to one or more specific persons constitutes an offer if it is sufficiently definite and indicates the intension of the offer or to be bound in case of acceptance. A proposal is sufficiently definite if it indicates the goods and expressly or implicitly fixes or makes provision for determining the quantity and the price.2. A proposal other than one. addressed to one or more specific persons is to be considered merely as an invitation to make others, unless the contrary is clearly indicated by the person making the proposal.Article 15.1. An offer becomes effective when it reaches the offeree.2. An offer, even if it is irrevocable, may be withdrawn if the withdrawal reaches the offeree before or at the same time as the offer.Article 161. Until a contract is concluded an offer may be revoked if the revocation reaches the offeree before he has dispatched an acceptance.2. However, an offer cannot be revoked:(a) If it indicates, whether by stating a fixed time for acceptance or otherwise, that it is irrevocable; or(b) If it was reasonable for the offeree to rely on the offer as being irrevocable and the offeree has acted in reliance on the offer.Article 17 An offer, even if it is irrevocable, is terminated when a rejection reaches the offeror.Article 181. A statement made by or other conduct of the offeree indicating assent to an offer is an acceptance. Silence or inactivity does not in itself amount to acceptance.2. An acceptance of an offer becomes effective at the moment the indication of assent reaches the offeror. An acceptance is not effective if the indication of assent does not reach the offeror within the time he has fixed or, if no time is fixed, within a reasonable time, due account being taken of the circumstances of the transaction, including the rapidity of the means of communication employed by the offerer. Anoral offer must be accepted immediately unless the circumstances indicate otherwise.

Điều 151. Một thư chào hàng có hiệu lực khi nó tới được người được chào hàng.2. Chào hàng dù là loại chào hàng không hủy ngang vẫn có thể bị hủy bỏ nếu thông báo về việc hủy chào hàng đến với người được chào trước hoặc cùng một lúc với chào hàngĐiều 161. Cho tới khi hợp đồng được giao kết, người chào hàng vẫn có thể rút lại chào hàng, nếu thông báo về về việc rút lại đó tới nơi người được chào hàng trước khi người này gửi thông báo chấp nhận chào hàng2. Tuy nhiên chào hàng không thể bị hủy bỏ.a) Nếu nó chỉ ro, bằng cách ấn định một thời hạn để chấp nhận hay bằng cách khác rằng nó không thể hủy ngang.b) Nếu người nhận coi chào hàng không thể hủy ngang là hợp lý và đã hành động theo chiều hướng đó.Điều 17. Chào hàng, dù là loại không hủy ngang se mất hiệu lực khi người chào hàng nhận được thông báo về việc từ chối chào hàng.Điều 181.Điều 191.Điều 201.Điều 211.Điều 221.Điều 231.Điều 241.

3. However, if, by virtue of the offer or as a result of practices which the parties have established between themselves or of usage, the offeree may indicate assent by performing an act, such as one relating to the dispatch of the goods or payment of the price, without notice to the offeror, thee acceptance is effective at the moment the act is performed, provided that the act is performed within the period of the time laid down in the preceding paragraph.Article 191. A reply to an offer which purports to be an acceptance but contains additions, limitations, or other modifications is a rejection of the other and constitutes a counter-offer.2. However, a reply to an offer which purports to be an acceptance but contains additional or different terms which do not materially alter the terms of the offer constitutes an acceptance, unless the offerer, without undue delay, objects orally to the discrepancy or dispatches a notice to that effect. If he does not so object, the terms of the contract are the terms of the offer with the modifications contained in the acceptance3. Additional or different terms relating, among other things, to the price, payment, quality and quantity of the goods, place and time of delivery, extent of one party's liability to the other or the settlement of disputes are considered to alter the terms of the offer materially.Article 201. A period of the time for acceptance fixed by the offeror in a telegram or a letter begins to run from the moment the telegram is handed in for dispatch, or from the date shown on the letter or, if no such date is shown, from the date shown on the envelope. A period of time for acceptance-fixed by the offeror by telephone, telex or other means of instantaneous communication, begins to run from the moment thatthe other reaches the offeree.2. Official holidays or non-business days occurring during the period for acceptance are included in calculating the period. However, if a notice of acceptance cannot be delivered at the address of the offeror on the last day of the period because that day falls on an official holiday or a non-business day at the place of business of the offeror, the period is extended until the first business day which follows.Article 211. A late acceptance is nevertheless effective as an acceptance if without delay the offeror orally so informs the offeree or dispatches a notice to that effect. 2. If a letter or other writing containing a late acceptance shows that it has been sent in such circumstance that if its transmission had been normal it would have reached the offeror in due time, the late acceptance is effective as an acceptance unless, without delay, the offerer orally informs the offeree that he considers his offer as having lapsed or dispatches a notice to that effect.Article 22 An acceptance may be withdrawn if the withdrawal reaches the offeror before or at the same time as the acceptance would have

become effective.Article 23 A contract is concluded at the moment when an acceptance of an offer becomes effective in accordance with the provisions of this Convension. Article 24 For the purposes of this Part of the Convension, an offer, declaration of acceptance or any other indication of intension "reaches" the addressee when it is made orally to him or delivered by any other means to him personally, to his place of business or mailing address, to his habitual residence.

Chapter II. OBLIGATIONS OF THE SELLERArticle 30. The seller must deliver the goods, hand over any documents relating to them and transfer the property in goods, as required by the contract and this Convention.

Section I. Delivery of the goods and handing over of documentsArticle 31. If the seller is not bound to deliver the goods at any other particular place, his obligation to deliver consists:(a) If the contract of sale involves carriage of the

goods in handing the goods over to the first carrier for transmission to the buyer;

(b) If, in cases not within the preceding subparagraph, the contract relates to specific goods, or unidentified goods to be drawn from a specific stock or to be manufactured or produced, and at that time of the conclusion of the contract the parties knew that the goods were at, or were to be manufactured or produced at, a particular place - in placing the goods at the buyer's disposal at that place.(c) In other cases in placing the goods at the buyer's disposal at the place where the seller had his place of business at the time of the conclusion of the contract.Article 32. If the seller, in accordance with the contract or this Convention, hands the goods over to a carrier and if the goods are not clearly identified to the contract by markings on the goods, by shipping documents or otherwise, the seller must give the buyer notice of the consignment specifying the goods.1. If the seller is bound to arrange for carriage of the goods, he must make such contracts as are necessary for carriage to the place fixed by means of transportation appropriate in the usual terms for such transportation.2. If the seller is not bound to effect insurance in respect to the carriage of the goods, he must, at the buyer's request, provide him with all available information necessary to enable him to effect such insurance.Article 33. The seller must deliver the goods:(a) If the date is fixed by or determinable from the contract, on that date;(b) If a period of time is fixed by or determinable form the contract, at any time within that period unless circumstances Indicate that the buyer is to choose a date; or(c) In any other case, within a reasonable time after the conclusion of the contract.Article 34If the seller is/bound to hand over documents

relating to the goods, he must hand them over at the time and place and in the form required by the contract. If the seller has handed over documents before that time, he may, up to that time, cure any lack of conformity in the documents, if the exercise of this right does notcause the buyer unreasonable inconvenience or unreasonable expense. However, the buyer retains any right to claim damages as provided for in this Convention.

UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS

The States Parties to this Convention,bearing strong mind the broad objective in the resolution adopted by the sixth special session of the General Assembly of the United Nations on the establishment of a New International Economic Orderconsidering that the development of international trade on the basis of equality and mutual benefit is an important element In promoting friendly relations among States;being of the opinion that the adoption of uniform rules which govern contracts for the international sale of goods and take into account the different social, economic and legal systems would contribute to the removal of legal barriers in international trade and promote the development of international trade.have agreed as follows

CÔNG ƯỚC LHQ VỀ HỢP ĐỒNG MUA BÁN HÀNG HÓA QTCác nước thành viên của Công ước này,Coi trọng những mục tiêu tổng quát của các nghị quyết về thiết lập một nền trật tự kinh tế quốc tế mới được Đại Hội Đồng LHQ chấp nhận trong khóa họp bất thường lần thứ 6,Xét thấy sự phát triển thương mại quốc tế trên cơ sở bình đẳng, đôi bên cùng có lợi là một yếu tố quan trọng thúc đẩy quan hệ hữu nghị giữa các quốc gia,Cho rằng việc chấp nhận các qui tắc thống nhất chi phối các mối quan hệ trong mua bán hàng hóa quốc tế và có tính đến các hệ thống xã hội kinh tế và pháp lý trong thương mại quốc tế và hổ trợ cho việc phát triển thương mại quốc tế,Đã thỏa thuận những điểm sau .PART 1. SPHERE OF APPLICATION AND GENARAL PROVISIONSChapter I. SPHERE OF APPLICATIONArticle 11. This Convertion applies to contracts of sale of goods between parties whose places of business are strong different States:(a) When the States are Contracting States; or (b) When the rules of private international law lead to the application of the law of a Contracting State2. The fact that the parties have their places of business in different States is to be disregarded whenever this fact does not appear either from the contract or from any dealings between, or from information disclosed by, the parties at any time before or at the conclusion of the contract.3. Neither the nationality of the parties nor the civil or commercial character of the parties or of the contract is to be taken into consideration in determining the application of this Convention.Điều 14.Công ước này áp dụng cho những hợp đồng mua bán hàng hóa giữa các bên có trụ sở thương mại tại các quốc gia khác nhaua. Khi các quốc gia này là thành viên của Công ước, hoặcb. Khi luật được áp dụng là luật của nước thành viên Công ước này theo các quy tắc tư pháp quốc tế.5.Việc các bên có trụ sở thương mại tại các quốc gia khác nhau không tính đến khi vấn đề này không xuất phát từ hợp đồng, từ các mối quan hệ đã hình thành hoặc vào thời điểm ký hợp đồng bĩưa các bên hoặc từ việc trao đổi thông tin giữa các bên.

Quốc tịch của các bên, quy chế dân sự hoặc thương mại của họ, tính chất dân sự hay thương mại của các bên hay của hợp đồng, không được xét tới khi xác định phạm vi áp dụng của Công ước này.Article 2. This Convention does not apply to sales (a) Of goods bought for personal, family or household use, unless the seller, at any time before or at the conclusion of the contract, neither knew nor ought to have known that the goods were bought for any such use;(b) By auction;(c) On execution or otherwise by authority of law;(d) Of clocks, shares, investments securities, negotiable instruments or money; (e) Of ships, vessels, hovercraft or aircraft;(f) Of electricity.Điều 2. Công ước này không áp dụng đối với giao dịch mua bána) các hàng hoá dùng cho cá nhân, gia đình hoặc nội trợ, trừ khi người bán, vào bất cứ lúc nào trong thời gian trước hoặc vào thời điểm ký kết hợp đồng, không biết hoặc không cần phải biết rằng hàng hóa đã được mua để sử dụng như thế;b) Bán đấu giá;c) Để thi hành luật hoặc văn kiện ủy thác theo luật;d) Cổ phiếu, cổ phần, chứng khoán đầu tư, các chứng từ lưu thông hoặc tiền tệ;e) Tàu thủy, máy bay và tàu chạy trên đệm không khí;f) Điện năngArticle 31. Contracts for the supply of goods to be manufactured or produced are to be considered sales unless the party who orders the goods undertakes to supply a substantial part of the materials necessary for such manufacture or production.2. This Convention does not apply to contracts in which the preponderant part of the obligations of the part who furnishes the goods consists in the supply of labour or other services.Điều 3. 1. Các hợp đồng cung cấp hàng hóa được chế biến hay sản xuất được coi là hợp đồng mua bán trừ khi bên đặt hàng cam kết cung cấp phần lớn các nguyên liệu cần thiết cho việc chế biến hay sản xuất hàng hóa đó. 2. Công ước này không áp dụng cho các hợp đồng trong đó có nghĩa vụ của bên cung cấp hàng chủ yếu là phải thực hiện một công việc hoặc thực hiện các dịch vụ khác. Article 4. This convention governs only the formation of the contract of sale and the rights and obligations of the seller and the buyer arising from such a contract. In particular, except as otherwise expressly provided in this Convention, it is not concerned with:(a) The validity of the contract or of any of its provisions of any usage;(b) The effect which the contract may have on the property in the goods sold.Điều 4. Công ước này chi điều chinh việc ký kết hợp đồng mua bán và các quyền và nghĩa vụ của người bán và người mua phát sinh từ hợp đồng đó. Trừ khi có quy định khác được nêu trong Công ước. Công ước không liên quan đến

a. Hiệu lực của hợp đồng hoặc của bất cứ điều khoản nào của hợp đồng hoặc bất ky tập quán nào.

b. Anh hưởng mà hợp đồng có thể có đối với quyền sở hữu các hàng hóa đã bán.

Article 5 This Convention does not apply to the liability of the seller for death or personal injury caused by the goods to any person.Điều 5. Công ước này không liên quan đến trách nhiệm của người bán trong trường hợp hàng của người bán gây thiệt hại về thân thể hoặc làm chết một người nào đó.Article 6 The parties may exclude the application of this Convention or, subject to Article 12, derrogate from or vary the effect of any of its provisions.Điều 6. Các bên có thể không áp dụng Công ước này hoặc, theo đúng Điều 12, không thể làm trái với bất cứ điều khoản nào của Công ước hay sửa đổi hiệu lực của điều khoản đó.

Chapter II. GENERAL PROVISIONSArticle 7

1. In the interpretation of this Convention, regard is to be had to its international character and to the need to promote uniformity in its application and the observance of good faith in international trade.

2. Questions concerning matters governed by this Convention which are not expressly settled in it are to be settled in conformity with the general principles on which it is based or , in the absence of such principles, in conformity with the law applicable by virtue of the rules of private international law.

Điều 7. 1. Khi giải thích các Công ước này, cần lưu ý đến tính chất quốc tế của nó, đến sự cần thiết phải tăng cường sự nhất quán trong việc áp dụng Công ước và tuân thủ trong thương mại quốc tế.2. Các vấn đề liên quan đến đối tượng điều chinh của Công ước này mà không quy định cụ thể trong Công ước se được giải quyết theo các nguyên tắc chung mà từ đó Công ước được hình thành hoặc nếu không có nguyên tắc này thì chiếu theo luật được áp dụng theo quy phạm của tư pháp quốc tế.Article 81. For the purposes of this Convention statements made by and other conduct of a party are to be interpreted according to his intent where the other party knew or could not have been unaware what that intent was.2. If the preceding paragraph is not applicable, statements made by and other conduct of a party are to be interpreted according to the understanding that a reasonable person of the same find as the other party would have had in the same circumstances.3. In determining the intent of a party or the understanding a reasonable person would have had, due consideration is to be given to all relevant circumstances of the case including the negotiations, any practices which the parties have established between themselves, usages and any subsequent conduct of the parties.Điều 8. 1. Với mục đích của Công ước này, tuyên bố và cách sử dụng khác của một bên được giải thích theo đúng ý định của bên đó, khi bên kia đã biết hay không thể biết ý định ấy.2. Nếu quy định nói trên không được áp dụng thì tuyên bố và cách xử sự khác của một bên được giải thích theo nghĩa mà một người có lý trí, nếu người đó được đặt vào vị trí của phía bên kia, trong những hoàn cảnh tương tự cung se hiểu như thế.3. Khi xác định ý một bên hoặc một người có lý trí có ý định hoặc các hiểu như thế nào, cần phải tính đến mọi tình tiết liên quan, kể cả các cuộc đàm phán, mọi thực tế mà các bên đã có trong mối quan hệ tương hổ của họ các tập quán và mọi hành vi sau đó của các bên.Article 91. The parties are bound by any usage to which they have agreed and by any practices which they have established between themselves2. The parties are considered, unless otherwise agreed, to have impliedly made applicable to their contract or its formation a usage of which the parties knew or ought to have known and which in international trade is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade concerned.Điều 9. 1. Các bên bị ràng buộc bởi tập quán mà họ đã thoa thuận và bởi thực tiên đã được thiết lập trong mối quan hệ tương hổ đó.2. Trừ phi có thoa thuận khác, có thể cho rằng các bên ký kết hợp đồng có ngụ ý áp dụng những tập quán mà họ đã biết hoặc cần phải biết và đó là những tập quán có tính chất phổ biến trong thương mại quốc tế và được các bên áp dụng thường xuyên đối với hợp đồng cùng chủng loại trong lĩnh vực buôn bán hữu quan để điều chinh hợp đồng của mình hoặc điều chinh việc ký kết hợp đồng đó.Article 10. For the purposes of this Convention: (a) If a party has more than one place of business, the place of business is that

which has the closest relationship to the contract and its performance, having regard to the circumstances known to or contemplated by the parties at any time before or at the conclusion of the contract;

(b) If a party does not have a place of business, reference is to be made to his habitual residence.

Điều 10. Với mục đích của Công ước này,1. Nếu một bên có nhiều hơn một trụ sở thương mại thì trụ sở thương mại của họ se là trụ sở nào có mối liên hệ chặt che nhất với hợp đồng và với việc thực hiện hợp đồng đó, có tính tới những tình huống mà các bên đều biết hoặc đều dự đoán được ở bất ky lúc nào trước hoặc vào thời điểm thời điểm hợp đồng.b. Nếu một bên không có trụ sở thương mại thì se lấy nơi cư trú thường xuyên của họ.Article 11. A contract of sale need not be concluded in or evidenced by writing and is not subject to any other requirements as to form. It may be proved by any means, including witnesses.Điều 11. Hợp đồng mua bán không cần phải được ký hoặc xác nhận bằng văn bản hay phải tuân theo một yêu cầu nào khác về hình thức của hợp đồng. Hợp đồng có thể được ch71ng minh bằng mọi cách, kể cả bằng lời khai của nhân chứng.Article 12. Any provision of Article 11, Article 29 or Part II of this Convension that allows a contract of sale or its modification or termination by agreement or any offer, acceptance or other indication of intension to be made in any form other than in writing does not apply where any party has his place of business in a Contracting State which has made a declaration under Article 96 of this Convention. The parties may not derogate from or vary the effect of this Article.Điều 12. Bất ky quy định nào của Điều 11, Điều 29 hoặc Phần thứ hai của Công ước này cho phép hợp đồng mua bán thay đổi hoặc đình chi hợp đồng theo sự thoa thuận của hợp đồng các bên hoặc đơn chào hàng và chấp nhận đơn chào hàng hay bất ky sự thể hiện y1` chí của bên được lập không phải dưới hình thức văn bản mà dưới bất ky hình thức nào khác se không được áp dụng cho dù chi một trong số các bên có trụ sở thương mại đặt ở nước thành viên của Công ước mà nước đó đã tuyên bố bảo lưu theo Điều 96 của Công ước này. Các bên không được quyền làm trái với điều này hoặc sửa đổi hiệu lực của nó. Article 13. For the purposes of this Convention, "writing" includes telegram and telex.Điều 13. Theo tinh thần của Công ước này, điện báo và telex cung được coi là hình thức văn bản.

PART II. FORMATION OF THE CONTRACTArticle 14.1. A proposal for concluding a contract addressed to one or more specific persons constitutes an offer if it is sufficiently definite and indicates the intention of the offer or to be bound in case of acceptance. A proposal is sufficiently definite if it indicates the goods and expressly or implicitly fixes or makes provision for determining the quantity and the price.2. A proposal other than one addressed to one or more specific persons is to be considered merely as an invitation to make others, unless the contrary is clearly indicated by the person making the proposal.PHÂN II. KY KÊT HỢP ĐỒNGĐiều 141. Một đề nghị ký kết hợp đồng gửi cho một hay nhiều người xác định được coi là một lời chào hàng nếu được xác định chính xác và nếu nó chi ro ý định của người chào hàng muốn tự ràng buộc mình trong trường hợp có sự chấp nhận chào hàng. Một đề nghị có đủ điều kiện được coi là chính xác khi nó nêu ro hàng hóa và ấn định số lượng và giá cả một cách trực tiếp hoặc gián tiếp hoặc quy định thể thức xác định những yếu tố này. 2. Một lời đề nghị cho một hay nhiều người xác định chi được coi là một lời mời giao dịch mua bán, trừ phi người đó nói ro ý định của mình trong lời đề nghị.Article 15.1. An offer becomes effective when it reaches the offeree.2. An offer, even if it is irrevocable, may be withdrawn if the withdrawal reaches the offeree before or at the same time as the offer.Điều 151. Một thư chào hàng có hiệu lực khi nó tới tay người được chào hàng.2. Thư chào hàng dù là loại chào hàng không hủy ngang vẫn có thể bị hủy bo nếu thông báo về việc hủy chào hàng đến với người được chào trước hoặc cùng một lúc với chào hàng

Article 161. Until a contract is concluded an offer may be revoked if the revocation reaches the offeree before he has dispatched an acceptance.2. However, an offer cannot be revoked:(a) If it indicates, whether by stating a fixed time for acceptance or otherwise, that it is irrevocable; or(b) If it was reasonable for the offeree to rely on the offer as being irrevocable and the offeree has acted in reliance on the offer.Điều 161. Cho tới khi hợp đồng được giao kết, người chào hàng vẫn có thể rút lại chào hàng, nếu thông báo về về việc rút lại đó tới nơi người được chào hàng trước khi người này gửi thông báo chấp nhận chào hàng2. Tuy nhiên chào hàng không thể bị hủy bo.a) Nếu nó chi ro, bằng cách ấn định một thời hạn để chấp nhận, hay bằng cách nào khác rằng nó không thể hủy ngang.b) Nếu người nhận coi chào hàng không thể hủy ngang là hợp lý và đã tin tưởng hành động theo thư chào đó.Article 17 An offer, even if it is irrevocable, is terminated when a rejection reaches the offeror.Điều 17. Chào hàng, dù là loại không hủy ngang se mất hiệu lực khi người chào hàng nhận được thông báo về việc từ chối chào hàng.Article 181. A statement made by or other conduct of the offeree indicating assent to an offer is an acceptance. Silence or inactivity does not in itself amount to acceptance.2. An acceptance of an offer becomes effective at the moment the indication of assent reaches the offeror. An acceptance is not effective if the indication of assent does not reach the offeror within the time he has fixed or, if no time is fixed, within a reasonable time, due account being taken of the circumstances of the transaction, including the rapidity of the means of communication employed by the offeror. An oral offer must be accepted immediately unless the circumstances indicate otherwise.3. However, if, by virtue of the offer or as a result of practices which the parties have established between themselves or of usage, the offeree may indicate assent by performing an act, such as one relating to the dispatch of the goods or payment of the price, without notice to the offeror, thee acceptance is effective at the moment the act is performed, provided that the act is performed within the period of the time laid down in the preceding paragraph.Điều 18. 1.Một lời tuyên bố hay một hành vi khác của người được chào hàng biểu hiện sự đồng ý với chào hàng tạo thành chấp nhận chào hàng. Sự im lặng hoặc không có hành động nào không được hiểu là mặc nhiên có giá trị như một sự chấp nhận.2.Chấp nhận chào hàng có hiệu lực từ khi người chào hàng nhận được chấp nhận. Chấp thuận chào hàng không có hiệu lực nếu như thư chấp nhận ấy không được gửi tới người chào hàng đúng thời hạn quy định trong thư chào hàng, hoặc nếu thời hạn không được quy định thì trong một thời gian hợp lý, xét theo các tình tiết của giao dịch kể cả tốc độ của các phương tiện liên lạc mà người chào hàng sử dụng. Một chào hàng bằng miệng phải được chấp nhận ngay, trừ khi các tình thế bắt buộc phải ngược lại3.Tuy nhiên nếu do hiệu lực của chào hàng hoặc do thực tiên đã có giữa hai bên trong mối quan hệ tương hổ hoặc tập quán thì người được chào hàng có thể chứng to sự chấp thuận của mình bằng một hành động nào đó như hành động liên quan đến việc gửi hàng hay trả tiền dù không thông báo cho người chào hàng thì chấp nhận chào hàng có hiệu lực kể từ khi những việc làm đó được thực hiện với điều kiện là chúng phải được thực hiện với điều kiện là chúng phải được thực hiện trong thời hạn đã quy định nói ở phần trên. Article 191. A reply to an offer which purports to be an acceptance but contains additions, limitations, or other modifications is a rejection of the other and constitutes a counter-offer.2. However, a reply to an offer which purports to be an acceptance but contains additional or different terms which do not materially alter the terms of the offer constitutes an acceptance, unless the offerer, without undue delay, objects

orally to the discrepancy or dispatches a notice to that effect. If he does not so object, the terms of the contract are the terms of the offer with the modifications contained in the acceptance3. Additional or different terms relating, among other things, to the price, payment, quality and quantity of the goods, place and time of delivery, extent of one party's liability to the other or the settlement of disputes are considered to alter the terms of the offer materially.Điều 19.1.Một phúc đáp có khuynh hướng chấp nhận chào hàng nhưng có chứa đựng những điểm bổ sung, giảm bớt hay sữa đổi khác thì được coi là từ chối chào hàng và tạo nên sự mặc cả về mua bán.2. Tuy nhiên sự phúc đáp theo hướng chấp nhận chào hàng, nhưng có chứa đựng các điều khoản bổ sung hay những điều khoản khác mà không làm biến đổi một cách cơ bản nội dung của chào hàng thì được coi là chấp nhận chào hàng, trừ phi người chào hàng không biểu hiện bằng miệng ngay để phản đối những điểm khác biệt đó hoặc gửi ngay thông báo về sự phản đối của mình cho người được chào hàng. Nếu người chào hàng không làm như vậy, thì nội dung của hợp đồng se là nội dung của chào hàng gồm những sữa đổi nêu trong chấp nhận chào hàng. 3. Các yếu tố bổ sung hay sửa đổi liên quan đến các điều kiện giá cả, thanh toán; đến phẩm chất và số lượng hàng hóa, địa điểm và thời gian giao hàng, đến phạm vi trách nhiệm của các bên hay giải quyết các tranh chấp được coi là những điều kiện làm biến đổi một cách cơ bản nội dung của chào hàng. Article 201. A period of the time for acceptance fixed by the offeror in a telegram or a letter begins to run from the moment the telegram is handed in for dispatch, or from the date shown on the letter or, if no such date is shown, from the date shown on the envelope. A period of time for acceptance-fixed by the offeror by telephone, telex or other means of instantaneous communication, begins to run from the moment thatthe other reaches the offeree.2. Official holidays or non-business days occurring during the period for acceptance are included in calculating the period. However, if a notice of acceptance cannot be delivered at the address of the offeror on the last day of the period because that day falls on an official holiday or a non-business day at the place of business of the offeror, the period is extended until the first business day which follows.Điều 20. 1. Thời hạn chấp nhận chào hàng do người chào hàng quy định trong điện tín hay thư, bắt đầu từ lúc bức điện được giao để gửi đi hoặc vào ngày ghi trên thư hoặc nếu ngày đó không có thì tính từ ngày bưu điện trên bì thư. Thời hạn để chấp nhận chào hàng do người chào hàng quy định bằng điện thoại, bằng telex, hoặc bằng phương tiện thông tin liên lạc khác, bắt đầu tính từ thời điểm chào hàng đến tay người được chào hàng.2. Các ngày lê chính thức hay ngày nghi nằm trong thời hạn quy định chấp nhận chào hàng thì không được trừ, khi tính thời hạn đó. Tuy nhiên, nếu thông báo chấp nhận chào hàng không thể giao tại địa chi của người chào hàng vào ngày cuối cùng của thời hạn quy định mà ngày cuối cùng đó là ngày lể hay ngày nghi tại trụ sở thương mại của người chào hàng, thì thời hạn chấp nhận chào hàng se được kéo dài tới ngày làm việc đầu tiên tiếp theo.Article 211. A late acceptance is nevertheless effective as an acceptance if without delay the offeror orally so informs the offeree or dispatches a notice to that effect. 2. If a letter or other writing containing a late acceptance shows that it has been sent in such circumstance that if its transmission had been normal it would have reached the offeror in due time, the late acceptance is effective as an acceptance unless, without delay, the offerer orally informs the offeree that he considers his offer as having lapsed or dispatches a notice to that effect.Điều 21. 1. Một chấp nhận chào hàng chậm trê vẫn có hiệu lực là một chấp nhận nếu người chào hàng thông báo ngay bằng miệng cho người nhận chào hàng hoặc gửi cho người này một thông báo về việc đó.2. Nếu thư từ hay văn bản khác là sự chấp nhận chậm trê, được người nhận chào hàng gửi đi trong những điều kiện mà, nếu sự chuyển giao bình thường nó đã đến tay người chào hàng kịp thời, trừ phi người chào hàng thông báo ngay

bằng miệng không chậm trê, hoặc gửi văn bản thông báo ngay cho người được chào hàng biết rằng người chào hàng coi chào hàng của mình đã hết hiệu lực.Article 22. An acceptance may be withdrawn if the withdrawal reaches the offeror before or at the same time as the acceptance would have become effective.Điều 22. Chấp nhận chào hàng có thể bị hủy bo nếu thông báo về việc hủy bo tới nơi người chào hàng trước hoặc cùng thời điểm hiệu lực của chấp nhận.Article 23 A contract is concluded at the moment when an acceptance of an offer becomes effective in accordance with the provisions of this Convension. Điều 23. hợp đồng được coi là đã được ký kể từ lúc chấp nhận chào hàng có hiệu lục theo đúng các quy định của Công ước này.Article 24. For the purposes of this Part of the Convension, an offer, declaration of acceptance or any other indication of intension "reaches" the addressee when it is made orally to him or delivered by any other means to him personally, to his place of business or mailing address, to his habitual residence.Điều 24. Theo tinh thần của Phần III Công ước này, một chào hàng, một thông báo chấp nhận chào hàng hoặc bất cứ một thể hiện ý định nào cung được coi là “tới nơi” người được chào hàng khi được thông tin bằng lời nói với người này, hoặc được giao bằng bất cứ phương tiện nào cho chính người được chào hàng tại trụ sở thương mại của họ, tại địa chi bưu chính hoặc nếu họ không có trụ sở thương mại hay địa chi bưu chính, thì gửi tới nơi thường trú của họ.

PART III. SALE OF GOODSChapter I. GENERAL PROVISIONPHÂN 3: MUA BÁN HÀNG HÓA

Chương 1: Những quy đinh chung

Article 25 A breach of contract committed by one, of the parties is fundamental if it results in such detriment to the other party as substantially to deprive him of what he is entitled to expect under the contract, unless the party in breach did not foresee and a reasonable person of the same circumstances would not have foreseen such a result.Điều 25. Sự vi phạm hợp đồng do một bên gây ra là vi phạm cơ bản nếu vi phạm đó làm cho bên kia bị thiệt hại mà người bị thiệt hại trong một chừng mực đáng kể bị mất những gì mà họ được phép có theo hợp đồng, trừ phi bên kia vi phạm không tiên liệu được hậu quả đó và một người có lý trí minh mẫn cung se không tiên liệu được nếu ở vào hoàn cảnh tương tự. Article 26 A declaration of avoidance of the contract is effective only if made by notice to the other party.Điều 26. Một lời tuyên bố về việc hủy hợp đồng chi có hiệu lực nếu được thông báo cho bên kia biết.Article 27 Unless otherwise expressly provided in this Part of the Convention if any notice, request or other communication is given or made by a party in accordance with this Part and by means appropriate in the circumstances, a delay or error in the transmission of the communication or its failure to arrive does not deprive that party of the right to rely on the communicationĐiều 27. Trừ phi Phần II của Công ước này có qui định khác, nếu thông báo yêu cầu hay thông tin khác đã được thực hiện bởi một bên của hợp đồng theo Phần III này và bằng một phương tiện thích hợp với hoàn cảnh, thì sự chậm trê hoặc lầm lẫn trong việc chuyển giao thông tin hoặc thông tin không đến người nhận, cung se không làm bên đó mất quyền viện dẫn các thông tin của mình. Article 28 If, in accordance with the provisions of this Convention, one party is entitled to require performance of any obligation by the other party, a court is not bound to enter a judgement for specific performance unless the court would do so under its own law in respect of similar contracts of sale not governed by this Convention.Điều 28. Nếu một bên có quyền yêu cầu bên kia thực hiện nghĩa vụ nào đó thì chiếu theo các quy định của Công ước này, toa án không bị bắt buộc phải ra phán quyết buộc bên kia thực hiện hợp đồng, trừ khi toa án ra phán quyết đó

trên cơ sở luật nước mình đối với các hợp đồng mua bán tương tự không được quán triệt bởi Công ước này.Article 29 1. A contract may be modified or terminated by the mere agreement of the parties.2. A contract in writing which contains a provision requiring any modification or termination by agreement to be in writing may not be otherwise modified or terminated by agreement. However, a party may be precluded by his conduct from asserting such a provision to the extent that the other party has relied on that contract.Điều 29. 1. Một hợp đồng có thể được điều chinh hay chấm dứt bằng thoa thuận đơn thuần 2. Một hợp đồng bằng văn bản chứa đựng một điều khoản qui định rằng mọi sự sữa đổi hoặc chấm dứt hợp đồng phải được các bên làm bằng văn bản thì không thể bị sữa đổi hay chấm dứt theo thoa thuận giữa các bên dưới một hình thức khác. Tuy nhiên hành động của một bên có thể không cho phép họ viện dẫn điều khoản ấy trong chừng mực mà bên kia căn cứ vào hành động đó.

Chapter II. OBLIGATIONS OF THE SELLERChương II. Ngia vu cua ngươi ban

Article 30. The seller must deliver the goods, hand over any documents relating to them and transfer the property in goods, as required by the contract and this Convention.Điều 30. Người bán có nghĩa vụ giao hàng, giao chứng từ liên quan đến hàng hóa và chuyển giao quyền sở hữu về hàng hóa đúng theo quy định của hợp đồng và của Công ước này.

Section I. Delivery of the goods and handing over of documentsMuc I. Giao hang va chuyển giao chưng tư

Article 31. If the seller is not bound to deliver the goods at any other particular place, his obligation to deliver consists:(a) If the contract of sale involves carriage of the goods in handing the goods over to the first carrier for transmission to the buyer;(b) If, in cases not within the preceding subparagraph, the contract relates to specific goods, or unidentified goods to be drawn from a specific stock or to be manufactured or produced, and at that time of the conclusion of the contract the parties knew that the goods were at, or were to be manufactured or produced at, a particular place - in placing the goods at the buyer's disposal at that place.(c) In other cases in placing the goods at the buyer's disposal at the place where the seller had his place of business at the time of the conclusion of the contract.Điều 31. Nếu người bán không bị buộc phải giao hàng tại một nơi nhất định nào đó, thì nghĩa vụ giao hàng của người đấy gồma) Nếu hợp đồng mua bán quy định cả việc vận chuyển hàng hóa , thì người bán phải giao hàng cho người vận chuyển đầu tiên để chuyển giao cho người mua.b) Nếu trong những trường hợp không nằm trong trường hợp đề cập tại điểm nói trên, mà đối tượng của hợp đồng mua bán là hàng đặc định hoặc hàng đồng loại phải được tách ra từ một khối lượng dự trữ xác định hoặc phải được chế tạo hay sản xuất ra và vào lúc ký kết hợp đồng, các bên đã biết rằng hàng hóa đã có hay đã phải được chế tạo hoặc được sản xuất tại một nơi nào đó, thì người bán phải có nghĩa vụ đặt hàng dưới quyền định đoạt của người mua tại nơi đó.c) Trong trường hợp khác, người bán có nghĩa vụ đặt hàng dưới quyền định đoạt của người mua tại nơi mà người bán có trụ sở thương mại vào thời điểm ký kết hợp đồng.Article 32. If the seller, in accordance with the contract or this Convention, hands the goods over to a carrier and if the goods are not clearly identified to the contract by markings on the goods, by shipping documents or otherwise, the seller must give the buyer notice of the consignment specifying the goods.1. If the seller is bound to arrange for carriage of the goods, he must make such contracts as are necessary for carriage to the place fixed by means of transportation appropriate in the usual terms for such transportation.

2. If the seller is not bound to effect insurance in respect to the carriage of the goods, he must, at the buyer's request, provide him with all available information necessary to enable him to effect such insurance.Điều 32. 1. Nếu người bán, chiếu theo hợp đồng hay Công ước này, giao hàng cho một người chuyên chơ, và nếu hàng không được tách biệt một cách ro ràng cho mục đích của hợp đồng bằng cách ghi ký mã hiệu trên hàng hóa, bằng các chứng từ chuyên chơ hay bằng cách nào khác, thì người bán phải thông báo cho người mua biết về việc họ đã gửi hàng kem theo chi dẫn về hàng hóa.2. Nếu người bán có nghĩa vụ thu xếp việc chuyên chơ hàng hóa, thì họ phải ký kết các hợp đồng cần thiết để việc chuyên chơ được thực hiện tới đích, bằng các phương tiện chuyên chơ thích hợp với hoàn cảnh cụ thể và theo các điều kiện thông thường đối với phương thức chuyên chơ đó.3. Nếu người bán không có nghĩa vụ bảo hiểm hàng hóa trong quá trình chuyên chơ, thì họ phải cung cấp cho người mua, nếu người mua yêu cầu, mọi thông tin cần thiết có thể giúp người mua ký kết hợp đồng bảo hiểm.Article 33. The seller must deliver the goods:(a) If the date is fixed by or determinable from the contract, on that date;(b) If a period of time is fixed by or determinable from the contract, at any time within that period unless circumstances indicate that the buyer is to choose a date; or(c) In any other case, within a reasonable time after the conclusion of the contract.Điều 33. Nếu người bán phải giao hànga) Đúng vào ngày giao hàng mà hợp đồng đã quy định, hay có thể xác định ngày đó bằng cách tham chiếu hợp đồng,b) Vào bất ky thời điểm nào trong khoảng thời gian được hợp đồng ấn định hay có thể xác định được bằng cách tham chiếu hợp đồng nếu như không thể căn cứ vào các tình tiết để biết ngày giao hàng mà người mua ấn định.c) Trong mọi trường hợp khác, trong một thời hạn hợp lý sau khi hợp đồng được ký kết.Article 34If the seller is/bound to hand over documents relating to the goods, he must hand them over at the time and place and in the form required by the contract. If the seller has handed over documents before that time, he may, up to that time, cure any lack of conformity in the documents, if the exercise of this right does notcause the buyer unreasonable inconvenience or unreasonable expense. However, the buyer retains any right to claim damages as provided for in this Convention.Điều 34. Nếu người bán có nghĩa vụ giao các chứng từ có liên quan đến hàng hóa thì họ phải thực hiện nghĩa vụ này đúng thời hạn, đúng địa điểm và đúng hình thức như quy định của hợp đồng. Trong trường hợp người bán giao chứng từ trước thời hạn, thì người bán có thể, trước khi hết thời hạn quy định loại bo những điểm không phù hợp trong chứng từ với điều kiện là việc làm này không gây cho người mua một trở ngại hay phí tổn vô lý nào. Tuy nhiên người mua vẫn có quyền đoi người bán bồi thường thiệt hại chiếu theo công ước này.Section II. Conformity of the goods and third party claimsArticle 351. The seller must deliver goods which are of the quantity, quality and

description required by the contract and which are contained or packaged in the manner required by the contract.

2. Except where the parties have argeed otherwise, the goods do not conform with the contract unless they

(a) Are fit for the purposes for which goods of th& same description would ordinarily be used;

(b) Are fit for any particular purpose expressly or impliedly made known to the seller at the time of the conclusion of the contract, except where the circumstances show that the buyer did not rely, or that it was unreasonable for him to rely, on the seller's skill and judgement;

(c) Possess the qualities of goods which the seller has held out to the buyer as a sample or model;

(d) Are contained or packaged in the manner usual for such goods or, where there is no such manner, in a manner adequate to preserve and protect the goods.

3. The seller is not liable under subparagraphs (a) to (d) of the preceding paragraph for any lack of conformity of the goods if at the time of the conclusion of the contract the buyer knew or could not have been unaware of such lack of conformity.

MUC II. Tinh phu hơp cua hang hoa va quyền cua ngươi thư 3.Điều 35. 1. Người bán phải giao hàng đúng số lượng, phẩm chất và mô tả quy định trong

hợp đồng, và đúng bao bì hay đóng gói như trong hợp đồng yêu cầu.các bên thoa thuận khác, hàng

2. Ngoại trừ trường hợp các bên đã có thoa thuận khác, hàng hóa bị coi là không phù hợp với hợp đồng nếu

a) Chúng không thích hợp cho các mục đích sử dụng mà hàng hóa cùng loại vẫn thường áp dụng;

b) Hàng không thích hợp cho các mục đích cụ thể nào mà người bán đã trực tiếp hoặc gián tiếp biết được vào lúc ký kết hợp đồng, trừ trường hợp các hoàn cảnh cụ thể cho thấy rằng người mua đã không dựa vào ky năng và quyết định của người bán, hoặc việc dựa vào như vậy là không hợp lý;

c) Hàng hóa không thể hiện các phẩm chất của hàng mẩu hoặc kiểu dáng mà người bán đã cung cấp cho người mua;

d) Hàng không được đóng bao bì theo cách thông thường cho những hàng cùng loại hoặc, nếu không thể hiện cách thông thường, thì bằng cách thích hợp để giữ gìn và bảo vệ hàng hóa đó.

3. Người bán không chịu trách nhiệm về việc giao hàng không đúng hợp đồng như đã nêu trong các điểm từ (a) đến (d) của Điều khoản trên nếu người mua đã biết hoặc không thể không biết về việc hàng không phù hợp vào lúc ký kết hợp đồng.

Article 36 1. The seller is liable accordance with the contract and this Convension for any

lack of conformity which exists at the time when the risk passes to the buyer; even though the lack of conformity becomes apparent only after that time.

2. The seller is also liable for any lack of conformity which occurs after the time indicated in the preceding paragraph and which is due to a breach of any of his obligations, including a breach of any guarantee that for a period of time the goods will remain fit for their ordinary purpose or for some particular purpose or will retain specified qualities or characteristics.

Điều 36. 1. Người bán chịu trách nhiệm, theo đúng hợp đồng và Công ước này, về mọi

sự không phù hợp của hàng hóa vào lúc chuyển giao rủi ro cho người mua, ngay cả khi sự không phù hợp của hàng hóa chi được phát hiện sau đó.

2. Người bán cung chịu trách nhiệm về mọi sự không phù hợp của hàng hóa xảy ra sau thời điểm đã nói ở điểm trên và là hậu quả của sự vi phạm bất ky nghĩa vụ nào của người bán, kể cả việc không thể đảm bảo trong một thời hạn nào đó, hàng hóa vẫn thích hợp cho mục đích sử dụng thông thường hay mục đích cụ thể hoặc vẫn duy trì được những tính chất hay đặc điểm đã quy định.

Article 37. If the seller has delivered goods before the date for delivery, he may, up to that date, deliver any missing part or make up any deficiency in the quantity of the goods delivered, or deliver goods in replacement of any non-conforming goods delivered or remedy any lake of conformity in the goods delivered, provided that the exercise of this right does not cause the buyer unreasonable inconvenience orunreasonable expense. However, the buyer retains any right to claim damages as provided for in this Convention.Điều 37. Trong trường hợp giao hàng trước thời hạn, người bán có quyền, cho tới thời hạn đó, giao một phần hay một số lượng thiếu hoặc giao hàng mới thay cho hàng đã giao thông phù hợp với hợp đồng, hoặc khắc phục mọi sự không phù hợp của hàng hóa đã giao với điều kiện việc làm đó của người bán không gây cho người mua một trở ngại hay phí tổn vô lý nào. Tuy nhiên người mua có quyền đoi bồi thường thiệt hại chiếu theo Công ước này.Article 38

1. The buyer must examine the goods, or cause them to be examined, within as short a period as is practicable in the circumstances.

2. if the contract involves carriage of the goods, examination may be deferred untill after the goods have arrived at their destination.

3. if the goods are redirected in transit or redispatched by the buyer without a reasonable opportunity for examination by him and at the time of the conclusion of the contract the seller knew or ought to have known of the possibility of such redirection or redispatch, examination may be deferred until after the goods have arrived at the new destination.

Điều 38. 1. Người mua phải kiểm tra hàng hoặc bảo đảm đã có sự kiểm tra hàng

trong một thời gian ngắn mà thực tế có thể làm được tùy tình huống cụ thể.

2. Nếu hợp đồng có quy định về chuyên chơ hàng hóa, thì việc kiểm tra hàng có thể được chậm lại đến lúc hàng tới nơi phải đến.

3. Nếu địa điểm đến của hàng bị thay đổi trong thời gian hàng đang trên đường vận chuyển hoặc hàng được người mua gửi đi tiếp và khi đó người mua kgo6ng có cơ hội hợp lý để kiểm tra hàng hóa, con người bán đã biết hay đáng le phải biết khi ký kết hợp đồng về khả năng đổi lộ trình hay gửi tiếp đó, thì việc kiểm tra có thể được dời lại cho đến khi hàng đã tới nơi đến mới.

Article 391. The buyer loses the right to rely on a lack of conformity of the goods if he does not give notice to the seller specifying the nature of the lack of conformity within a reasonable time after he has discovered it or ought to have discovered it.2. In any event, the buyer loses the right to rely on a lack of conformity of the goods if he does not give the seller notice thereof at the latest within a period of two years from the date on which the goods were actually handed over to the buyer, unless this time-limit is inconsistent with a contractual period of guarantee.Điều 39.

1. Người mua bị mất quyền khiếu nại về hàng hóa không phù hợp với hợp đồng nếu người mua không thông báo cho người bán những tin tức về sự bất phù hợp đó trong một thời hạn hợp lý kể từ lúc người mua đã phát hiện hay đáng le đã phải phát hiện ra khiếm khuyết đó.

2. Trong mọi trường hợp, người mua bị mất quyền khiếu nại hàng không phù hợp với hợp đồng nếu người mua không thông báo cho người bán biết điều đó chậm nhất trong thời hạn 2 năm kể từ ngày hàng hóa đã thực sự giao cho người mua trừ phi thời hạn này trái ngược với thời hạn bảo hành quy định trong hợp đồng.

Article 40. The seller is not entitled to rely on the provisions of Articles 38 and 39 if the lack of conformist relates to facts of which he knew or could not have been unaware and which he did not disclose to the buyer.

Điều 40. Người bán không có quyền viện dẫn các quy định của Điều 38 và 39 nếu sự khiếm khuyết của hàng hóa liên quan đến các yếu tố mà người bán đã biết hoặc không thể không biết và họ đã không thông báo cho người mua,Article 41. The seller must deliver goods which are free from any right or claim of a third party, unless the buyer agreed to take the goods subject to that right or claim. However, if such right or claim is based on industrial property or other intellectual property the seller's obligation is governed by Article 42.Điều 41. Người bán phải giao loại hàng mà chúng không bị ràng buộc bởi bất cứ quyền hay khiếu nại nào của người thứ 3 trừ trường hợp người mua đồng ý nhận loại hàng bị ràng buộc vào quyền và khiếu nại đó. Tuy nhiên, nếu quyền và khiếu nại đó được hình thành trên cơ sở sở hữu công nghiệp hay sở hữu trí tuệ thì nghĩa vụ của người bán se được điều chinh theo Điều 42.Article 421. the seller must deliver goods which are free from any right or claim of a third

party based on industrial property or other intellectual property, of which at the time of the conclusion of the contract the seller knew or could not have been unaware, provided that the right or claim is based on industrial property or other intellectual property or other intellectual property:

(a) under the law of the State where the goods will be resold or otherwise used, it was contemplated by the parties at the time of the conclusion of the contract that the goods would be resold or otherwise used in that State; or

(b) in any other case, under the law of the State where the buyer has his place of business.

2. The obligation of the seller under the preceding paragraph does not extend to the cases, where

(a) at the time of the conclusion of the contract the buyer knew or could not have been unaware of the right or claim ;or(b) The right or claim results from the seller's compliance with technical drawings, designs, formulae or other such specifications furnished by the buyer.Điều 42.

1. Người bán phải giao những hàng hóa mà chúng không bị ràng buộc bởi bất cứ quyền hay khiếu nại nào của người thứ ba trên cơ sở sở hữu công nghiệp hay sở hữu trí tuệ khác mà người bán đã biết hoặc không thể không biết vào thời điểm ký kết hợp đồng, với điều kiện nếu các quyền và yêu sách nói trên được hình thành trên cơ sở sở hữu công nghiệp hay sở hữu trí tuệ khác.

a) theo pháp luật của quốc gia nơi hàng hóa se được bán hay sử dụng bằng cách khác, nếu các bên dự đoán vào lúc ký kết hợp đồng rằng hàng hóa se được bán lại hay sử dụng bằng cách khác tại quốc gia đó; hoặc

b) trong mọi trường hợp khác, theo luật pháp của quốc gia nơi có trụ sở thương mại của người mua.

2. Trong các trường hợp sau đây, người bán không bị ràng buộc bởi những nghĩa vụ nêu trên

a) Vào lúc ký kết hợp đồng, người mua đã biết hoặc không thể không biết về sự hiện hữu của hay khiêu nại nói trên; hoặc

b) quyền hay khiếu nại bắt nguồn từ việc người bán đã tuân theo bản ve ky thuật thiết kế công thức hay những số liệu chi tiết do người mua cung cấp.

Article 431. The buyer loses the right to rely on the provision of Article 41 or article 42 if

he does not give notice to the seller specifying the nature of the right or claim of the third party within a reasonable time after he has become aware of the right or claim.

2. The seller is not entitled to rely on the provision of the preceding paragraph if he knew of the right or claim of the third party and the nature of it.

Điều 43. 1. Người mua mất quyền khiếu nại dựa vào các quy định của Điều 41 và 42,

nếu người mua không thông báo cho người bán tính chất của quyền hay khiếu nại của người tứ 3, trong một thời gian hợp lý kể từ khi người mua đã biết hay đáng le phải biết về quyền hay khiếu nại đó.

2. Người bán không có quyền viện dẫn những quy định tại điểm (1) nêu trên nếu người bán đã biết về quyền hay khiếu nại của người thứ 3 về tính chất của quyền hay khiếu nại đó.

Article 44. Notwithstanding the provisions of paragraph (1) of Article 39 and paragraph (1) of Article 43, the .buyer may reduce the price in accordance with Article 50 or claim damages, except for loss of profit, if hehas a reasonable excuse for his failure to give the required notice.Điều 44. Bất kể những quy định của điểm (1) Điều 39 và điểm (1) Điều 43, người mua có thể giảm giá theo Điều 50 hay đoi bồi thường thiệt hại, ngoại trừ khoản lợi bị bo lơ, nếu người mua có lý do hợp lý để giải thích nguyên nhân không thông báo tin tức cần thiết cho người bán.

Section III. Remedies for breach of contract by the sellerMuc III. Cac biên phap bao hô phap ly trong những trương hơp ngươi ban vi pham hơp đông.

Article 45. If the seller fails to perform any of his obligations under the contract or this Convention, the buyer may(a) exercise the rights provided in Articles 46 to 52;(b) claim damages as provided in Articles 74 to 77.1. The buyer is not deprived of any right he may have to claim damages by exercising his right to other remedies.

2. No period of grace may be granted to the seller by a court or arbitral tribunal when the buyer resorts to a remedy for breach of contract.Điều 45.1. Nếu người bán không thực hiện một nghĩa vụ phát sinh theo hợp đồng mua

bán hay Công ước này, thì người mua có căn cứ đểa) thực hiện những quyền hạn của mình theo quy định tại các Điều từ 46 đến 52;b) đoi bồi thường thiệt hại như quy định tại các Điều từ 74 đến 77.2. Người mua không mất quyền đoi bồi thường thiệt hại khi họ đã sử dụng quyền áp dụng một biện pháp bảo hộ pháp lý trong trường hợp người bán vi phạm hợp đồng. Article 46. The buyer may require performance by the seller of this obligations unless the buyer has resorted to a remedy which is inconsistent with this requirement.1. If the goods do not conform with the contract, the buyer may require delivery of substitute goods only if the lack of conformity constitutes a fundamental breach of contract and a request for substitute goods is made either in conjunction with notice given under Article 39 or within a reasonable time thereafter.

2. If the goods do not conform with the contract, the buyer may require the seller to remedy the lack of conformity by repair, unless this is unreasonable having regard to all the circumstances. A request for repair must be made either in conjunction with notice given under Article 39 or within a reasonable time thereafter. Điều 46.1. Người mua có thể yêu cầu người bán thực hiện nghĩa vụ, trừ phi người mua

sử dụng một biện pháp bảo hộ pháp lý không phù hợp với yêu cầu đó.2. Nếu hàng hóa không phù hợp với hợp đồng, người mua chi có thể đoi người

bán phải giao hàng thay thế khi sự không phù hợp đó tạo nên một sự vi phạm cơ bản hợp đồng và yêu cầu thay thế hàng phải được đặt ra cùng một lúc với việc thông báo những dữ kiện theo điều 39 hoặc trong một thời hạn hợp lý sau đó.

3. Nếu hàng hóa không phù hợp với hợp đồng, người mua có quyền yêu cầu người bán loại trừ sự khiếm khuyết ấy, trừ phi điều này không hợp lý xét theo tất cả các tình tiết. Yêu cầu loạt trừ sự khiếm khuyết của hàng hóa so với hợp đồng phải được tiến hành, hoặc cùng một lúc với thông báo những dữ kiện theo Điều 39 hoặc trong một thời hạn hợp lý sau đó.

Article 47 1. The buyer may fix an additional period of the time of reasonable length for performance by the seller or his obligations. . 2. Unless the buyer has received notice from the seller that he will not perform within the period so fixed, the buyer may not, during that period .resort to any remedy for breach of contract. However, the buyer is not deprived thereby of any right he may have to claim damages for delay in performance. Điều 47.1. Người mua có thể ấn định thêm một thời hạn hợp lý để người bán thực hiện nghĩa vụ.2. Trừ phi người mua đã được người bán thông báo rằng người bán se không thực hiện nghĩa vụ của mình trong thời hạn bổ sung đó, người mua không được sử dụng đến bất ky biện pháp bảo hộ pháp lý nào trong trường hợp người bán vi phạm hợp đồng trước khi thời hạn bổ sung kết thúc. Tuy nhiên, ngay cả trong trường hợp này người mua cung không mất quyền đoi bồi thường thiệt hại do người bán chậm trê trong việc thực hiện nghĩa vụ.Article 48 1. Subject to Article 49, the seller may, even after the date for delivery, remedy at his own expense any failure to perform his obligations, if he can do so without unreasonable delay and without causing the buyer unreasonable inconvenience or uncertainty of reimbursement by the seller of expenses advanced by the buyer. However, the buyer retains any right to claim damages as provided for in this Convention.2. If the seller requests the buyer to make known whether he will accept performance and the buyer does not comply with the request within a reasonable time, the seller may perform within the time indicated in his

request. The buyer may not, during that period of time, resort to any remedy which is inconsistent with performance by the seller.3. A notice by the seller that he will perform within a specified period of time is assumed to include a request, under the preceding paragraph 2, that the buyer make known his decision.4. A request or notice by the seller under paragraph (2) or (3) of this article is not effective unless received by the buyer.Điều 48.1. Theo đúng quy định của Điều 49, người bán có thể, ngay cả sau khi hết thời

hạn giao hàng, loại trừ mọi thiếu sót trong việc thực hiện nghĩa vụ của mình, với điều kiện là việc làm đó không kéo dài sự chậm trê vô lý và không gây ra cho người mua những trở ngại hay tình hình bất định vô lý trong việc hoàn trả các phí tổn mà người bán phải thực hiện cho người mua. Tuy nhiên người mua vẫn giữ nguyên quyền đoi bồi thường thiệt hại chiếu theo Công ước này.

2. Nếu người bán yêu cầu người mua cho biết là người mua có chấp nhận việc loại trừ thiếu sót nói trên của người bán hay không và nếu người mua không đáp ứng yêu cầu này trong một thời hạn hợp lý thì người bán có thể thực hiện việc loại trừ thiếu sót đó trong thời hạn mà người bán đã ghi trong yêu cầu. người mua không thể, trong thời hạn đó sử dụng bất cứ biện pháp bảo hộ pháp lý nào không thích hợp cho việc thực hiện nghĩa vụ của người bán.

3. Nếu người bán thông báo rằng người bán se thực hiện việc loại trừ thiếu sót trong một thời hạn ấn định thì thông báo nói trên bao gồm cả yêu cầu người mua cho biết họ chấp nhận việc loại trừ thiếu sót hay không, chiếu theo quy định của khoản 2 nói trên.

4. Yêu cầu hay thông báo của người bán theo khoản 2 hay 3 của Điều khoản này se không có hiệu lực nếu người mua không nhận được nó.

Article 491. The buyer may declare the contract avoided(a) If the failure by the seller to perform any of his obligations under the contract or this Convention amounts to a fundamental breach of contract; or (b) In case of non-delivery, if the seller does not deliver the goods within the additional period of time fixed by the buyer in accordance with paragraph (1) of article 47 or declares that he will not deliver within the period so fixed.2. However, in cases where the seller has delivered the goods. The buyer loses

the right to declare the contract avoided unless he does so:(a) In respect to late delivery, within a reasonable time after he has become aware that delivery has been made;(b) In respect of any breach other than late delivery, within a reasonable time:(c) after he knew or ought to have known of breach;(d) after the expiration of any additional period of time fixed by the buyer in accordance with paragraph (1) of Article 47. or after the seller has declared that he will not perform his obligations within such an additional period; or (e) after the expiration of any additional period of time indicated by the seller in accordance with paragraph (2) of Article 48, or after the buyer declared that he will not accept performance.Điều 49.1. Người mua có thể tuyên bố hủy hợp đồnga) nếu việc người bán không thực hiện bất cứ nghĩa vụ nào phát sinh từ hợp đồng hay từ Công ước này cấu thành một vi phạm cơ bản đến hợp đồng; hoặcb) trong trường hợp không giao hàng, nếu người bán không giao hàng trong thời gian đã được người mua gia hạn thêm cho họ theo khoản 1 Điều 47 hoặc nếu người bán tuyên bố se không giao hàng trong thời hạn bổ sung đó.2. Tuy nhiên trong trường hợp người bán đã giao hàng, người mua se mất quyền hủy hợp đồng trừ khi người mua đã tuyên bố hủy hợp đồng;a) khi hàng giao chậm, trong một thời hạn hợp lý kể từ lúc người mua đã biết rằng việc giao hàng đã được thực hiệnb) đối với mọi trường hợp vi phạm không phải giao hàng chậm trê, trong một thời hạn hợp lýi) kể từ lúc người mua đã biết hay đáng le phải biết về sự vi phạm đó;ii) sau khi đã hết thời hạn bổ sung cho người bán theo khoản 1 Điều 47 hoặc sau khi người bán đã tuyên bố rằng họ se không thực hiện nghĩa vụ của mình trong thời hạn đã được gia hạn đó; hoặc11) sau khi đã hết thời hạn bổ sung mà người bán đã chi ro theo khoản 2 Điều 48 hoặc sau khi người mua đã tuyên bố rằng họ không chấp nhận thực hiện nghĩa vụ.

Article 50. If the goods do not conform with the contract and whether or not the price has already been paid, the buyer may reduce the price in the same proportion as the value that the goods actually delivered had at that time of the delivery bears to the value that conforming goods would have had at the time. However, if the seller remedies any failure to perform his obligations in accordance with Article 37 or Article 48 or if the buyer refuses to accept performance by the seller in accordance with those Articles, the buyer may not reduce the price.Điều 50. Trong trường hợp hàng hóa không phù hợp với hợp đồng bất kể tiền hàng đã được trả hay chưa, người mua có thể giảm giá hàng theo ty lệ căn cứ vào sự sai biệt giữa giá trị thực của hàng hóa vào lúc giao hàng và giá trị của hàng hóa nếu hàng phù hợp với hợp đồng vào lúc giao hàng. Tuy nhiên, nếu người bán loại trừ mọi thiếu sót trong việc thực hiện mọi nghĩa vụ theo Điều 37 hoặc Điều 48 hoặc nếu người mua từ chối chấp nhận việc thực hiện của người bán theo các điều khoản này thì người mua không được giảm giá hàng.Article 51. If the seller delivers only a part of the goods or if only a part of the goods delivered is in conformity with the contract, Article 46 to 50 apply in respect of the part which is missing or which does not conform.1. The buyer may declare the contract avoided in its entirety only if the failure to make delivery completely or in conformity with the contract amounts to a fundamental breach of the contract.Điều 51.1. Nếu người bán chi giao một phần hàng hóa hoăc nếu chi một phần hàng hóa

đã giao phù hợp với hợp đồng thì các Điều 46 đến 50 se được áp dụng đối với phần hàng hóa thiếu hoặc phần hàng hóa không phù hợp với hợp đồng.

2. Người mua chi được tuyên bố hủy bo toàn bộ hợp đồng nếu việc không thực hiện hợp đồng hoặc một phần hàng giao không phù hợp với hợp đồng cấu thành một sự vi phạm cơ bản hợp đồng.

Article 521. If the seller delivers the goods before the date fixed, the buyer may take

delivery or refuse to take delivery.2. If the seller delivers a quantity of goods greater than that provided for in the

contract, the buyer may take delivery or refuse to take delivery of the excess quantity. II the buyer takes delivery of all or part of the excess quantity, he must pay (or it at the contract rate.

Điều 52.1. Nếu người bán giao hàng trước thời hạn quy định thì người mua được quyền

chấp nhận hoặc từ chối việc giao hàng đó.2. Nếu người bán giao một số lượng nhiều hơn số lượng quy định trong hợp

đồng, người mua có thể chấp nhận hay từ chối số lượng vượt trội nói trên. Nếu người mua chấp nhận toàn bộ hay một phần số lượng vượt trội nói trên thì người mua phải trả tiền hàng vượt trội theo giá hợp đồng quy định.

Chapter III. OBLIGATIONS OF THE BUYERArticle 53. The buyer must pay the price for the goods and lake delivery of them as required by the contract and this Convention.

Chương III. Nghia vu cua ngươi muaĐiều 53. Người mua có nghĩa vụ thanh toán tiền hàng và nhận hàng theo quy định của hợp đồng và của Công ước này. .

Section I. Payment of the PriceArticle 54. The buyer's obligation to pay the price includes taking such steps and complying with such formalities as may be required under the contract or ant laws and regulation to enable payment to be made.

Muc I. Thanh toan tiền hangĐiều 54. Nghĩa vụ thanh toán tiền hàng của người mua bao gồm việc áp dụng các biện pháp và hoàn chinh các thủ tục theo yêu cầu của hợp đồng hoặc luật lệ để có thể thực hiện việc trả tiền hàng.Article 55. Where a contract has been validly concluded but does not expressly or implicitly fix or make provision for determining tlie price, the parlies are considered, in the absence of any indication to the contrary, to have impliedly

make reference to the price generally charged at the lime of the conclusion the contract tor such' goods sold under comparable circumstances in the trade concerned.Điều 55. Khi hợp đồng đã được ký kết một cách hợp pháp, nhưng không quy định giá cả một cách trực tiếp hoặc gián tiếp, hoặc không quy định cách xác định giá trị các bên, trừ phi có sự quy định ngược lại được coi là đã có ngụ ý dựa vào giá đã được ấn định cho loại hóa như vậy khi hàng hóa này được đem bán trong những điều kiện tương tự của ngành buôn bán hữu quan.Article 56. If the price is fixed according to the weight of the goods, in case of doubt it is to be determined by the net weight.Điều 56. Nếu giá cả được ấn định theo trọng lượng của hàng hóa thì trong trường hợp có nghi ngờ, giá se được xác định theo trọng lượng tịnh.Article 57. If the buyer is not bound to pay the price at any other particular place, he must pay It to the seller:1. At the seller's place of business, or2. If the payment is to be made against the handing over of the goods or of documents, at the place where the handing over takes place.3. The seller must bear any increase in the expenses incidental to payment which is caused by a change in his place of business subsequent to the conclusion of the contract.Điều 57. 1. Nếu người mua không có nghĩa vụ thanh toán tiền hàng tại một địa điểm nào đó thì họ phải trả tiền cho người bán a) tại trụ sở thương mại của người bán; hayb) tại nơi giao hàng hoặc giao chứng từ nếu việc trả tiền được thực hiện khi giao hàng hoặc giao chứng từ. 2. Người bán phải chịu sự gia tăng phí tổn để thực hiện việc thanh toán do sự thay đổi địa điểm trụ sở thương mại của mình sau khi hợp đồng được ký kết.Article 581. If the buyer Is not bound to pay the price at any other specific time, he must

pay it when the seller places either the goods or document controlling their disposition at the buyer's disposal in accordance with the contract and this Convention. The seller may make such payment a condition for handing over the goods or documents.

2. If the contract Involves carriage of the goods, the seller may dispatch the goods on terms whereby the goods, or documents controlling their disposition, will not be handed over to the buyer except against payment of the price.

3. The buyer Is not bound to pay the price until he has had an opportunity to examine the goods, unless the procedures for delivery or payment agreed upon by the parties are inconsistent with his having such an opportunity.

Điều 58. 1. Nếu người mua không có nghĩa vụ trả tiền vào một thời hạn nhất định, thì người mua phải trả khi, theo hợp đồng và Công ước này, người bán đặt hoặc hàng hóa hoặc các chứng từ nhận hàng dưới quyền định đoạt của người mua. Người bán có thể đưa ra điều kiện phải thanh toán như vậy để đổi lại việc giao hàng hoặc chứng từ. 2. Nếu hợp đồng quy định việc chuyên chơ hàng hóa, người bán có thể gửi hàng với điều kiện là hàng hay chứng từ nhận hàng chi được giao cho người mua khi người mua thanh toán tiền hàng.Article 59. The buyer must pay the price on the dale fixed by or determinable from the contract and this Convention without the need for any request or compliance with any formality on the part of the seller.Điều 57. Người mua phải trả tiền vào ngày quy định hoặc có thể được xác định theo hợp đồng và Công ước này mà không cần yêu cầu hay thực hiện một thủ tục nào khác về phía người bán.

Section II. Taking deliveryMuc II. Nhận hang

Article 60. The buyer's obligation to take delivery consists:(a) In doing all the acts which could reasonably be expected of him In order to

enable the seller to make delivery; and

(b) In taking over the goods. Điều 60. Nghĩa vụ nhận hàng của người mua gồma) thực hiện mọi hành vi tiếp theo một cách hợp lý để cho phép người bán thực

hiện việc giao hàng; vàb) tiếp nhận hàng hóa. .

Section III. Remedies for breach of contract by the buyerArticle 611. If the buyer falls to perform any of his obligations under the contract or this Convention, the seller may:(a) exercise the right provided In Article 62 to 65.(b) claim damages as provided In Article 74 to 77.2 The seller Is not deprived of any right he may have to claim damages by exercising his right to other remedies.3 No period of grace may be granted to the buyer by a court or arbitral tribunal when the seller resorts to a remedy tor breach of contract.

Muc III. Cac biên phap bao hô phap ly trong trương hơp ngươi mua vi pham hơp đông

Điều 61. 1. Nếu người mua không thực hiện một nghĩa vụ nào đó theo hợp đồng mua bán hay Công ước này, thì người bán có thể a) thực hiện các quyền quy định tại Điều 62 và 65b) đoi bồi thường thiệt hại như quy định tại các Điều từ 74 đến 772. Người bán không mất quyền đoi bồi thường thiệt hại khi họ sử dụng quyền được áp dụng các biện pháp bảo hộ pháp lý khác.3. Không một thời hạn tăng thêm nào có thể được toa án hay trọng tài ban cho người mua khi người bán áp dụng một biện pháp bảo hộ pháp lý trong trường hợp người mua vi phạm hợp đồng. Article 62. The seller may require the buyer to pay the price, take delivery or perform his other obligations, unless the seller has resorted to a remedy which Is inconsistent with this requirement.Điều 62. Người bán có thể yêu cầu người mua trả tiền, nhận hàng hay thực hiện các nghĩa vụ khác trừ phi người bán sử dụng một biện pháp bảo hộ pháp lý khác không thích hợp với các yêu cầu đó.Article 631. The seller may fix .an additional period of time of reasonable length for performance by the buyer of his obligations.2. unless the seller has received notice from the buyer that he will not perform within the period so fixed, the seller may not. during that period, resort to any remedy for breach of contract. However, the seller is not deprived thereby of any right he may have to claim damages for delay in performance.Điều 63. 1. Người bán có thể ấn định cho người mua một thời hạn bổ sung hợp lý để thực hiện nghĩa vụ của mình.2. Trừ phi nhận được thông báo của người mua chó biết se không thực hiện nghĩa vụ trong thời gian ấy, người bán trong thời hạn đó không thể áp dụng bất cứ một biện pháp bảo hộ pháp lý nào trong trường hợp người mua vi phạm hợp đồng. Tuy nhiên, người bán không vì thế mà mất quyền đoi bồi thường thiệt hại vì người mua chậm thực hiện nghĩa vụ.Article 641. The seller may declare the contract avoided(a) if the failure by the buyer to perform any of his obligations under me contract or this Convention amounts to a fundamental breach of contract; or(b) if the buyer does not, within the additional period of time fixed by the seller in accordance with paragraph (1) of Article 63, perform his obligation to pay the price or take delivery of the goods, or if he declares that he will not do so within the period so-fixed.2. However, In cases where the buyer has paid the price, the seller, loses the right to declare the contract avoided unless he does so(a) In respect of late performance by the buyer, before the seller has become rendered: or(b). In respect of any breach other than late performance by the buyer, within a reasonable time(c) after the seller knew or ought to have known of the breach; or

(d) after the expiration of any additional period of time fixed by the seller In accordance with paragraph (1) of Article 63, or after the buyer has declared that he will not perform his obligations within such an additional period.

Điều 64. 1. Người bán có thể tuyên bố hủy hợp đồnga) nếu việc không thực hiện nghĩa vụ của người mua theo hợp đồng hay Công ước cấu thành một sự vi phạm cơ bản hợp đồng; hoặcb) nếu người mua không thực hiện nghĩa vụ trả tiền hoặc không nhận hàng trong thời hạn bổ sung theo khoản 1 Điều 63 hoặc nếu người mua tuyên bố se không làm việc đó trong thời hạn ấy. 2. Tuy nhiên trong những trường hợp người mua đã trả tiền, người bán mất mất quyền tuyên bố hủy hợp đồng trừ khi người bán làm đã như vậy,a) trong trường hợp người mua chậm thực hiện nghĩa vụ – hoặc khi người bán biết rằng nghĩa vụ đã được thực hiện; hoặcb) trong trường hợp người mua vi phạm bất cứ nghĩa vụ khác ngoài việc chậm trê – trong một thời hạn hợp lý,i) kể từ lúc người bán đã biết hay đáng le phải biết sự vi phạm đó, hoặcii) sau khi kết thúc thời hạn bổ sung theo khoản 1 Điều 63 hay sau khi người mua đã tuyên bố rằng họ se không thực hiện nghĩa vụ của mình trong thời hạn bổ sung đó.Article 651. If under the contract the buyer is to specify the form, measurement or other

features of the goods and he fails to make such specification either on the date agreed upon or within a reasonable time after receipt of a request from the seller, the seller may, without prejudice to any other rights he may have, make the specification himself in accordance with the requirements of the buyer that may be known to him.

2. if the seller makes the specification himself, he must inform the buyer of the details thereof and must fix a reasonable time within which the buyer may make a different specification. If .after receipt of such a communication, the buyer falls to do so within the time so fixed, the specification made by the seller is binding.

Điều 65. 1. Nếu theo hợp đồng, người mua phải xác định hình dáng, kích thước hay những đặc điểm khác của hàng hóa và nếu người mua không làm điều đó vào thời gian thoa thuận hay trong một thời hạn hợp lý kể từ khi nhận được yêu cầu của người bán, thì người bán có thể tự mình xác định hàng hóa theo đúng nhu cầu của người mua mà người bán có thể biết mà không làm phương hại đến các quyền lợi khác.2. Nếu người bán tự mình xác định hàng hóa, họ phải báo chi tiết cho người mua nội dung việc xác định đó và ấn định một thời hạn hợp lý để người mua có thể đưa ra các chi tiết khác của hàng hóa. Nếu sau khi nhận được thông báo đó mà người mua không xác định chi tiết hàng hóa trong thời hạn nói trên thì sự xác định hàng hóa do người bán thực hiện có tính chất bắt buộc.

Chapter IV. PASSING OF THE RISKChương IV. Chuyển rui ro

Article 66. Loss of or damage to the goods after the risk has passed to the buyer does not discharge him from his obligation to pay the price, unless the loss or damage is due to an act or omission of the seller.Điều 66. Thất thoát hay hư hong hàng hóa xảy ra sau khi rủi ro chuyển sang người mua không miên trừ cho người mua nghĩa vụ trả tiền, trừ phi thất thoát hay hư hong hàng đó là do hành động hay sự thiếu trách nhiệm của người bán gây ra. Article 671. If the contract of sale Involves carriage of the goods and the seller Is not bound to hand them over at a particular place, the risk passes to the buyer when the goods are handed over to the first carrier for transmission to the buyer in accordance with the contract of sale. If the seller is bound to hand the goods over to a carrier at a particular place, the risk does not pass to the buyer until to the carrier at that place. The fact that the seller is authorized to retain documents controlling the disposition of the goods does not affect the passage of the risk. 2. Nevertheless, the risk does not pass to the buyer until the goods are clearly identified to the contract, whether by markings on the goods, by shipping documents, by notice given to the buyer or otherwise.

Điều 67.1. Nếu hợp đồng mua bán quy định việc vận chuyển hàng hóa và người bán

không bị buộc phải giao hàng tại nơi quy định, rủi ro được chuyển sang người mua kể từ lúc hàng được giao cho người chuyên chơ thứ nhất để chuyển cho người mua theo hợp đồng mua bán. Nếu người bán buộc phải giao hàng cho một người chuyên chơ tại một nơi quy định, rủi ro không được chuyển cho người mua cho đến khi hàng hóa được giao cho người chuyên chơ tại nơi đó. Việc người bán được phép giữ lại các chứng từ nhận hàng không ảnh hưởng đến việc chuyển giao rủi ro.

2. Tuy nhiên rủi ro không được chuyển sang cho người mua nếu hàng hóa không được phân định ro ràng theo hợp đồng bằng cách ghi ký mã hiệu trên hàng hóa, bằng các chứng từ vận tải, bằng một thông báo gửi cho người mua hoặc bằng những cách thức khác.

Article 68. The risk in respect of goods sold in transit passes to the buyer from the conclusion of the contract. However, if the circumstances so indicate, the risk is assumed by the buyer from the time the goods were handed over to the carrier who issued the documents embodying the contract of carriage. Nevertheless, if at the time of the conclusion of the contract of sale, the seller knew or ought to have known that the goods had been lost or damaged and did not disclose this to the buyer, the loss or damage is at the risk of the seller.Điều 68. Rủi ro về hàng hóa đã bán trên đường vận chuyển được chuyển sang cho người mua, kể từ khi ký kết hợp đồng. Nhưng trong các trường hợp cần thiết như đã nêu, người mua phải nhận rủi ro về mình kể từ khi hàng được giao cho người chuyên chơ là người ký phát các chứng từ xác nhận việc thực hiện hợp đồng chuyên chơ. Tuy nhiên, nếu vào lúc ký kết họp đồng mua bán, người bán đã biết hoặc đáng le phải biết về sự kiện hàng hóa đã bị mất hay hư hong và đã không thông báo cho người mua về điều đó thì việc thất thoát hay hư hong hàng hóa do người bán phải gánh chịu. There are some mistakes in the Vietnamese translation. How do you corect the translated version according to the English original?

Article 691. In cases not within Article 67 and 68, the risk passes to the buyer when he takes over the goods or, if he does not do so in due time, from the time when the goods are placed at his disposal and he commits a breach of contract by failing to take delivery.2. However, if the buyer is bound to take over the goods at a place other than a place of business of the seller, the risk passes when delivery is due and the buyer is aware of the fact that the goods are placed at his disposal at that place.3. If the contract relates to goods not then identified, the goods are considered not to be placed at the disposal of the buyer until they are clearly identified to the contract.Điều 69.

1) Trong các trường hợp không được nêu tại Điều 67 và 68, rủi ro được chuyển sang người mua khi người này nhận hàng hoặc nếu người mua không làm việc này đúng thời hạn quy định kể từ lúc hàng được đặt dưới quyền định đoạt của người mua và người mua đã vi phạm hợp đồng vì không chịu nhận hàng.

2) Tuy nhiên, nếu người mua bị buộc phải nhận hàng tại một nơi không phải là trụ sở thương mại của người bán, rủi ro được chuyển khi việc giao hàng phải được thực hiện và người mua biết rằng hàng đã được đặt dưới quyền định đoạt của họ tại nơi đó.

3) Nếu hợp đồng mua bán liên quan đến hàng hóa chưa được định dạng, hàng chi được coi là đã đặt dưới quyền định đoạt của người mua chừng nào chúng được tách biệt ro ràng cho mục đích của hợp đồng.

Article 70. If the seller has committed a fundamental breach of contract, Article 67, 68 and 69 do not impair the remedies available to the buyer on account of the breach.Điều 70. Nếu người bán vi phạm cơ bản đối với hợp đồng, các quy định của điều 67, 68, 69 không ảnh hưởng đến quyền của người mua sử dụng các biện pháp bảo hộ pháp lý trong trường hợp xảy ra vi phạm đó.

Chapter V. PROVISIONS COMMON TO THE OBLIGATIONS OF THE SELLER AND OF THE BUYER

Section I. Anticipatory breach and instalment contractsCac điều khoan chung đôi vơi nghia vu cua ngươi ban va ngươi

mua.Muc 1. Vi pham trươc va cac hơp đông giao hang tưng phân

Article 711. A party may suspend the performance of his obligations if, after the conclusion of the contract, it becomes apparent that the other party will not perform a substantial part of his obligations as a result of: (a) a serious deficiency in his ability to perform or in his creditworthiness; or(b) his conduct in preparing to perform or in performing the contract.2. if the seller has already dispatched the goods before the grounds described in the preceding paragraph become evident, he may prevent the handing over of the goods to the buyer even though the buyer holds a document which entitled him to obtain them. The present paragraph relates only to the right in the goods as between the buyer and the seller.

3. A party suspending performance, whether before or after dispatch of the goods, must immediately give notice of the suspension to the other party and must continue with performance if the other party provides adequate assurance of his performance.Điều 71.1. Một bên có thể ngưng thực hiện nghĩa vụ của mình nếu có dấu hiệu cho thấy sau khi hợp đồng được ký kết, bên kia se không thực hiện một phần chủ yếu nghĩa vụ của họ doa) Sự khiếm khuyết nghiêm trọng về khả năng thực hiện hoặc về uy tín; hoặcb) Cung cách làm việc của bên kia trong việc chuẩn bị thực hiện hay trong khi thực hiện hợp đồng,2. Nếu người bán đã gửi hàng đi trước khi nhận ra những lý do nêu trong mục trên, họ có thể ngăn cản không để hàng hóa được giao cho người mua ngay cả nếu người mua nắm giữ chứng từ cho phép họ nhận hàng. Mục này chi liên quan đến quyền của người mua và người bán đối với hàng hóa.3. Một bên ngưng thực hiện hợp đồng dù trước hay sau khi gủi hàng, phải giữ ngay một thông báo về việc đó cho bên kia và phải tiếp tục thực hiện hợp đồng nếu bên kia bảo đảm đầy đủ việc thự hiện nghĩa vụ của họ.Article 721. If prior to the date for performance of the contract it is clear that one of the parties will commit a fundamental breach of contract, the other party may declare the contract avoided.2. If time allows, the party intending to declare the contract avoided must give reasonable notice to the other party murder to permit him to provide adequate assurance of his performance.3. The requirements of the preceding paragraph do not apply if the other party has declared that he will not perform his obligations.Điều 72.1. Nếu trước ngày quy định thực hiện hợp đồng mà thực tế cho thấy ro ràng một bên se gây ra vi phạm cơ bản hợp đồng, bên kia có thể tuyên bố hủy hợp đồng.2. Nếu thời gian cho phép, bên nào có ý định tuyên bố hợp đồng bị hủy thì phải gửi một thông báo hợp lý cho bên kia để cho phép họ bảo đảm đầy đủ việc thực hiện nghĩa vụ của mình.3. Các quy định của khoản trên không áp dụng nếu bên kia đã tuyên bố rằng họ se không thực hiện nghĩa vụ của mình.Article 731. In the case of a contract for delivery of good by instalments, if the failure of

one party to perform any of his obligations in respect of any instalment, constitutes a fundamental breach of contract with respect to that instalment, the other part may declare the contract avoided with respect to that instalment.

2. If one party's failure to perform any of his obligations In respect of any instalment gives the other party good grounds to conclude that a fundamental breach of contract will occur with respect to future instalments, he may declare the contract avoided for the future, provided that he does so within a reasonable time.

3. A buyer who declares the contract avoided in respect of any delivery may at the same time declare it avoided In respect of deliveries already made or of future deliveries if by reason of their interdependence, those deliveries could

not be used for the purpose contemplated by the parties at the time of the conclusion of the contract.

Điều 73.1. Nếu hợp đồng quy định giao hàng từng phần và nếu việc một bên không thực hiện nghĩa vụ liên quan đến một lô hàng tạo nên một sự vi phạm cơ bản hợp đồng về lô hàng đó thì bên kia có thể tuyên bố hủy hợp đồng về lô hàng liên quan.2. Nếu một bên không thực hiện bất cứ một nghĩa vụ có liên quan đến lô hàng nào, cho phép bên kia có lý do xác đáng để kết luận rằng sự vi phạm cơ bản hợp đồng se xãy ra đối với các lô hàng được giao trong tương lai, bên đó có thể tuyên bố hủy hợp đồng đối với các lô hàng giao trong tương lai với điều kiện phải làm việc đó trong một thời hạn hợp lý.3. Người mua khi tuyên bố hủy hợp đồng đối với bất ky lô hàng nào, có thể cùng một lúc tuyên bố hợp đồng bị hủy đối với các lô hàng se được giao trong tương lai nếu do tính liên kết các lô hàng này không thể sử dụng được cho những mục đích mà các bên đã dự tính vào lúc ký kết hợp đồng.

Section II. DamagesArticle 74. Damages for breach of contract by one party consist of a sum equal to the loss, including loss of profit suffered by the other party as a consequence of the breach. Such damages may not exceed the loss which the party in breach foresaw or ought to have foreseen at the time of the conclusion of the contract in the light of the facts and matters of which he then knew or ought to have known as a possible consequence of the breach of contract.Muc 2.Điều 74.Article 75. It the contract is avoided and if in a reasonable manner and within a reasonable time after avoidance the buyer has bought goods in replacement or the seller has resold the goods, the party claiming damages may recover the difference between the contract price and the price in the substitute transaction as well as any further damages recoverable under article 74.Điều 75.

Article 761. If the contract is avoided and there is a current price for the goods, the party claiming damages may if he has not made a purchase or resale under Article 75, recover the difference between the price fixed by the contract and the current price at the time of avoidance as well as any further damages recoverable under Article 74. If, however the party claiming damages has avoided the contract aftertaking over the goods, the current price at the time of such taking over shall be applied instead of the current price at the time of avoidance.2. For the purposes of the preceding paragraph, the current price is the price prevailing at the place where delivery of the goods should have been made or if there is no current price at that place, the price at such other place as severs as a reasonable substitute making due allowance for differences in the costs of transporting the goods.Điều 76.1. Khi hợp đồng bị hủy và hàng có một mức giá hiện hành, bên đoi bồi thường thiệt hại có thể, nếu họ đã không mua hàng thay thế hay bán lại theo Điều 75, nhận phần chênh lệch giá ấ định của hợp đồng và giá hiện hành vào lúc hủy hợp đồng cùng mọi khoản tiền bồi thường thiệt hại khác có thể được nhận theo Điều 74. Mặc dù vậy, nếu bên đoi bồi thường thiệt hại đã tuyên bố hủy hợp đồng sau khi đã tiếp nhận thì giá hiện hành vào lúc tiếp nhận hàng được áp dụng thay cho giá hiện hành vào lúc hủy hợp đồng.2. Với mục đích của khoản nói trên, giá hiện hành là giá áp dụng tại nơi mà việc giao hàng đáng le phải được thực hiện hoặc nếu không có giá hiện hành tại nơi đó, là giá áp dụng tại một nơi khác mà người ta có thể dùng để thay thế một cách hợp lý có tính đến sự chênh lệch trong chi phí chuyên chơ hàng hóa.Article 77. A party who relies on a breach of contract must take such measures as are reasonable in the circumstances to mitigate the loss including loss of profit resulting from the breach. If he fails to take such measures the party in breach may claim a reduction in the damages in the amount by which the loss shouldhave been mitigated.

Điều 77. Một bên viện dẫn vi phạm hợp đồng của bên kia, phải áp dụng những biện pháp hợp lý căn cứ vào các tình huống cụ thể để hạn chế tổn thất, kể cả khoản lãi bị bo lơ do sự vi phạm hợp đồng gây ra. Nếu họ không làm điều đó, bên vi phạm hợp đồng có thể yêu cầu giảm bớt một khoản tiền bồi thường thiệt hại bằng với mức tổn thất mà le ra đã có thể hạn chế được.

Section III. InterestArticle 78. If a party fails to pay the price or any other sum that is in arrears, the other party is entitled to interest on it without prejudice to any claim for damages recoverable under article 74.Muc 3. Tiền lãiĐiều 78. Nếu một bên chậm thanh toán tiền hàng hay mọi khoản tiền thiếu khác, bên kia có quyền đoi tiền lải tính trên số tiền chậm trả đó mà không ảnh hưởng đến quyền đoi bồi thường thiệt hại của họ theo Điều 74.

Section IV. ExemptionsArticle 79. A party is not liable for a failure to perform any of his obligations if he proved that the failure was due to an impediment beyond his control and that he could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the Contract or to have avoided or overcome it or its consequences1. If the party's failure is due to the failure by a third person whom he has engaged to perform, the whole or a part of the Contract, that party is exempt from liability only if(a) he is exempt under the preceding paragraph; and(b) the person whom he has so engaged would be so exempt if the provision of

that paragraph were applied to him.2. The exemption provided by this Article has effect for the period during which

the impediment exists.3. The party who fails to perform must give notice to the other party of the

impediment and its effect on his ability to perform. If the notice is not received by the other party within a reasonable time after the party who fails to perform knew or ought to have known of the impediment, he is liable for damages resulting from such non receipt.

4. Nothing in this article prevents either party from exercising any right other than to claim damages under this Convention.

Muc 4. Miên trachĐiều 79. 1. Một bên không chịu trách nhiệm về việc không thực hiện một nghĩa vụ của họ nếu chứng minh được rằng việc không thực hiện đó la do một trở ngại nằm ngoài kiểm soát của họ và không thể đoi hoi một cách hợp lý rằng họ phải tính tới trở ngại đó vào lúc ký kết hợp đồng hoặc phải tránh hay khắc phục các hậu quả đó.2. Nếu một bên không thực hiện nghĩa vụ của mình do người thứ 3 cam kết thực hiện toàn bộ hay một phần hợp đồng cung không thực hiện điều đó, thì bên ấy chi được miên trách trong trường hợpa) được miên trách theo quy định của khoản nói trên, vàb) nếu người thứ 3 cung se được miên trách nếu các quy định của khoản trên được áp dụng cho họ. 3. Miên trách theo điều này chi có hiệu lực trong thời gian tồn tại trở ngại đó.4. Bên nào không thực hiện nghĩa vụ của mình thì phải báo cho bên kia biết về trở ngại và ảnh hưởng của nó đối với khả năng thực hiện nghĩa vụ. Nếu thông báo được bên kia nhận trong thời hạn hợp lý kể từ khi bên không thực hiện nghĩa vụ đã biết hay đáng le phải biết trở ngại trong việc gửi thông báo đó, thì bên này phải chịu trách nhiệm về những thiệt hại từ việc bên kia không nhận được thông báo.5. Những quy định của điều khoản này không cản trở mỗi bên sử dụng quyền khác ngoài quyền đoược bồi thường thiệt hại theo Công ước này.Article 80. A party may not rely on a failure of the other party to perform to the extent that such failure was caused by the first party's act or omission.Điều 80. Các bên không được viện dẫn việc không thực hiện nghĩa vụ của bên kia trong chừng mực mà sự vi phạm nghĩa vụ đó là do những hành vi hay sơ suất của chính bên viện dẫn.

Section V. Effect of AvoidanceMuc V. Hậu qua cua viêc huy hơp đông

Article 811. Avoidance of the contract releases both parties from their obligations under it, subject to any damages which may be due. Avoidance does not affect any provisions of the contract for the settlement of disputes or any other provisions of the contract governing the rights and obligations of the parties consequent upon the avoidance of the contract.2. A party who has performed the contract either wholly or in part may claim restitution form the other party of whatever the first party has supplied or paid under the contract if both parties are bound to make restitution they must do so concurrently.Điều 81.1. Việc hủy hợp đồng giải phóng hai bên khoi nghĩa vụ của họ, trừ những khoản bồi thường thiệt hại có thể có. Việc hủy hợp đồng không có ảnh hưởng đến quy định của hợp đồng và giải quyết tranh chấp hay quyền lợi và nghĩa vụ của hai bên trong trường hợp hợp đồng bị hủy.2. Bên nào đã thực hiện toàn bộ hay một phần hợp đồng có thể đoi bên kia hoàn lại những gì mà họ cung cấp hay đã thanh toán khi thực hiện hợp đồng. Nếu cả hai bên đều bị buộc phải thực hiện việc hoàn lại, họ phải cùng một lúc thực hiện việc đó.Article 821. The buyer loses the right to declare the contract avoided or to require the seller to deliver substitute goods if it is impossible for him to make restitution of the goods substantially in the condition in which he received them.2. The preceding paragraph does not apply(a) if the impossibillity of making restitution of the goods or of making restitution of the goods substantially in the condition In which the buyer received them is not due to his act or omission.(b) if the goods or part of the goods have perished or deteriorated as a result of the examination provided for in article 38; or(c) if the goods or part of the goods have been sold in the normal course of business or have been consumed or transformed by the buyer in the course of, normal use before he discovered or ought to have discovered the lack of conformity.Điều 82.1. Người mua mất quyền tuyên bố hủy bo hợp đồng hay đoi người bán phải giao hàng thay thế nếu họ không thể hoàn lại hàng hóa trong tình trạng thực chất đúng như khi họ nhận hàng đó.2. Điều khoản trên không áp dụng.a) Nếu việc không thể hoàn lại hàng hóa hoặc không thể hoàn lại trong tình trạng về thực chất đúng như khi người nhận, không phải do một hành động hay một sự sơ suất của họ.b) Nếu hàng hóa hay một phần hàng hóa không thể sử dụng được hoặc hư hong theo kết quả của việc kiểm tra quy định tại điều 38; hoặcc) Nếu trước khi nhân thấy hay đáng le phải nhận thấy hàng hóa không phù hợp với hợp đồng, người mua đã bán toàn bộ hay một phần hàng hóa trong quá trình kinh doanh thông thường, hay đã tiêu dùng hoặc biến đổi toàn bộ hay một phần hàng hóa theo hình thức sử dụng thông thường. Article 83. A buyer who has lost the right to declare the contract avoided or to require the seller to deliver substitute goods in accordance with article 82 retains all other remedies under the contract and this Convention.Điều 83. Người mua, khi đã mất quyền tuyên bố hủy bo hợp đồng hay đoi người bán phải giao hàng thay thế theo Điều 82, vẫn được phép duy trì quyền sử dụng biện pháp bảo hộ pháp lý khác theo hợp đồng và Công ước này.Article 841. If the seller is bound to refund the price he must also pay interest on it from the date on which the price was paid2. The buyer must account to the seller for, ail benefits which he has derived from the goods or part of them(a) If he must make restitution of the goods or part of them; or(b) .If it is impossible for him to make restitution of all or part of the goods or to make restitution of all or part of the goods substantially in the condition in which he received them but he has nevertheless declared the contract avoided or required the seller to deliver substitute goods.Điều 84.

1. Nếu người bán bị buộc phải hoàn lại giá tiền họ cung phải trả tiền lãi trên tổng số tiền đó kể từ ngày người mua đã thanh toán.2. Người mua phải trả cho người bán số tiền tương đương với mọi lợi nhuận mà họ đã được hưởng từ hàng hóa hay một phần hàng hóa.a) khi họ phải hoàn lại toàn bộ hay một phần hàng hóa, hay b) Khi họ không thể hoàn lại toàn bộ hay một phần hàng hóa hay không thể hoàn lại hàng thực chất đúng như tình trạng họ đã nhận, mặc dù họ đã tuyên bố hợp đồng bị hủy hay đã đoi người bán giao hàng thay thế.

Section VI. Preservation of the GoodsArticle 85. If the buyer is in delay in taking delivery of the goods or where payment of the price and delivery of the goods are to be made concurrently if he (ails to pay the price and the seller is either in possession of the goods or otherwise able to control their disposition the seller must take such steps as are reasonable inthe circumstances to preserve them. He is entitled to retain them until he has been reimbursed his reasonable expenses by the buyer.Muc 6. Bao quan hang hoaĐiều 85. Khi người mua chậm trê nhận hàng hay không trả tiền hoặc khi việc trả tiền và và giao hàng phải được tiến hành cùng lúc và hàng hóa con nằm dưới quyền định đoạt hay kiểm soát của người bán, người bán phải thực hiện những biện pháp hợp lý trong từng tình huống để bảo quản hàng hóa. Người bán có quyền giữ lại hàng hóa cho tới khi người mua hoàn trả cho họ các chi phí hợp lý.Article 861. If the buyer has received the goods and intends to exercise any right under the contract or this Convention to reject them, he must take such steps to preserve them as are reasonable in the circumstances. He is entitled to retain them until he has been reimbursed his reasonable expenses by the seller.2. If goods dispatched to the buyer have been placed at his disposal at their destination and he exercises the right to reject them, he must take possession of them on behalf of the seller provided that this can be done without payment of the price and without unreasonable inconvenience or unreasonable expense. This provision does not apply if the seller or a person authorized to. take charge of the goods on his behalf is present at the destination. If the buyer takes possession of the goods under this paragraph his rights and obligations are governed by the preceding paragraph.Điều 86.1. Nếu người mua đã nhận hàng và có ý định sử dụng quyền từ chối nhận hàng theo hợp đồng hay Công ước này, thì họ phải thực hiện các biện pháp hợp lý trong những tình huống đó để bảo quản hàng hóa. Người mua có quyền giữ lại hàng hóa cho tới khi người bán hoàn trả cho mình các chi phí hợp lý.2. Nếu hàng hóa gửi cho người mua đã được đặt dưới quyền định đoạt của người này tại nơi đến và nếu người mua sử dụng quyền từ chối hàng thì họ phải thay mặt người bán tiếp nhận hàng hóa với điều kiện người mua có thể làm việc này mà không phải trả tiền hàng và không gặp trở ngại hay các chi phí bất hợp lý. Quy định này không áp dụng nếu người bán hay người được ủy quyền nhận hàng hóa cho người có mặt tại nơi đến. Nếu người mua tiếp nhận hàng theo quy định của khoản này, những quyền lợi và nghĩa vụ của người mua được điều chinh bằng quy định tại khoản trên. Article 87. A party who Is bound to take steps to preserve the goods may deposit them in a warehouse of a third person at the expense of the other party provided that the expense incurred is not unreasonable.Điều 87. Bên nào bị buộc phải có những biện pháp để bảo quản hàng hóa, có thể giao hàng vào kho của người thứ ba, chi phí do bên kia chịu với điều kiện các chi phí này phải hợp lý.Article 881. A party who is bound to preserve the goods in accordance with article 85 or 86 may sell them by any appropriate means If there has been an unreasonable delay by the other party in taking possession of the goods or in taking them back or in paying the price or the cost of preservation, provided that reasonable notice of intention to sell has been given to the other party.2. If the goods are subject to rapid deterioration or their preservation would

Involve unreasonable expense, a party who is bound to preserve the goods in

accordance with article 85 or 86 must take reasonable measures to sell them. To the extent possible he must give notice to the other party of his intention to sell.

3. A party selling the goods has the right to retain out of the proceeds ot sale an amount equal to the reasonable expenses of preserving the goods and of selling them. He must account to the other party for the balance.

Điều 88.1. Bên nào phải bảo quản hàng hóa theo Điều 85 hay 86 có thể bán hàng đi bằng cách thức thích hợp nếu bên kia chậm trê một cách phi lý trong việc tiếp nhận hay lấy lại hàng hoặc trong việc trả tiền hàng hay các chi phí bảo quản, nhưng phải thông báo hợp lý cho bên kia ý định phát mại hàng hóa. 2. Nếu hàng hóa thuộc loại mau hong hay việc bảo quản se gây ra các chi phí phi lý thì bên nào có nghĩa vụ bảo quản hàng hóa theo Điều 85 hay 86 phải tiến hành các biện pháp hợp lý để bán đi. Theo khả năng của mình họ phải thông báo cho bên kia biết ý định phát mại đó.3. Bên bán hàng được quyên giữ lại từ tiền bán hàng một số tiền ngang với các chi phí hợp lý của việc Bảo quản và phát mại hàng hóa. Phần con lại được trả cho bên kia.

PART IV. FINAL PROVISIONSArticle 89. The Secretary-Genaral of the United Nations is hereby designated as the depositary for this Convention.Phân 4. NHƯNG QUY ĐINH CUÔI CUNGĐiều 89. Tổng Thư ký LHQ được chi định là người giữ lưu chiểu bản Công ước này.Article 90. This Convention does not prevail over any international agreement which has already been or may be entered into and which contains provisions concerning the matters governed by this Convention, provided that the parties have their places of business in States parties to such agreement.Điều 90. Công ước này không ảnh hưởng đến bất ky một thoa thuận quốc tế nào đã được hay se được ký kết bao gồm những quy định liên quan đến các vấn đề là đối tượng điều chinh của Công ước này, với điều kiện các bên của hợp đồng phải có trụ sở thương mại tại các quốc gia thành viên của thoa thuận quốc tế đó.Article 911. This Convention is open for signature at the concluding meeting of the United

Nations Conference on Contracts lor the International Sale of Goods and will remain open for signature by all States at the Headquarters of the United Nations New York until 30 September 1981.

2. This Convention is subject to ratification acceptance or approval by the signatory States.

3. This Convention is open for accession by all States which are not signatory States as from the date it is open for signature.

4. Instruments of ratification, acceptance, approval and accession are to be deposited with the Secretary-General of the United Nations.

Điều 91.1. Công ước này được để ngo cho các bên ký kết tại phiên họp bế mạc của Hội nghị LHQ về Hợp đồng Mua bán Hàng hóa Quốc tế, và se để ngo cho các quốc gia ký kết tại trụ sở LHQ tại New York, cho tới ngày 31-11-1981.2. Công ước này phải được sự phê chuẩn, chấp thuận hay chuẩn y của các quốc gia ký kết.3. Công ước này được để ngo để tất cả các quốc gia không ký tên tham gia, kể từ ngày Công ước để ngo cho các bên ký kết.4. Việc phê chuẩn, chấp nhận, chuẩn y và tiếp cận phải được đăng ký với Tổng Thư ký LHQ.Article 921. A Contracting State may declare at the time of signature, ratification, acceptance, approval or accessionthat it will not be bound by Part II of this Convention or that it will not be bound by Part III of this Convention.2. A contracting State which makes a declaration in accordance with the preceding paragraph in respect of Part II or Part III of this Convention is not to be considered a Contracting State within paragraph (1) of Article 1 of this

Convention in respect of matters governed by the Part to which the declaration applies. Điều 92.1. Một quốc gia thành viên có thể vào lúc ký kết, phê chuẩn, chấp nhận, chuẩn y hay gia nhập, tuyên bố se không bị ràng buộc bởi Phần II hay Phần III của Công ước này. 2. Một quốc gia thành viên, theo đều khoản trên đưa ra một tuyên bố về Phần II hay Phần III của Công ước này se không được coi là một quốc gia thành viên theo nghĩa của Khoản 1 Điều 1 Công ước này về các vấn đề quy định của Công ước có liên quan đến tuyên bố đó.Article 931. If a Contracting State has two or more territorial units in which, according to its constitution, different systems of law are applicable in relation to the matter dealt with in this Convention, it may, at the lime of signature, ratification, acceptance, approval or accession, declare that this Convention is to extend to all its territorial units or only to one or more of them, and may amend its declaration by submitting another declaration another declaration at any time. . ,2. These declarations are to be notified to the depositary and to state expressly the territorial units to which the Convention extends.3. It, by virtue of a declaration under this Article, this Convention extends to one or more but not all of the territorial units of a Contracting State, and it the place of business of a party is located in that State, this place of business for the purposes of this Convention, is considered not to be in a Convention, extends.4. It a Contracting State makes no declaration under paragraph (1) of this article, the Convention is to extend to all territorial units of that State.Điều 93.1.2.3.Article 941. Two or more Contracting States which have the same or closely related legal

rules on matters governed by this Convention may at any time declare that he Convention is not to apply to contracts of sale or to their formation where the parties have their places of business in those Slates. Such declarations may be made jointly or by reciprocal unilateral declarations.

2. A contracting State which has the same or closely related legal rules on matters governed by this Convention as one or more non-Contracting States may at any time declare that the Convention is not to apply to contract of sale. or to their formation where the parties have their places of business in those States.

3. If a State which is the object of a declaration under the preceding paragraph subsequently becomes a Contracting State, the declaration made will, as from the date on which the Convention enters into force in respect of the new Contracting State, have the effect of a declaration makes under paragraph (1), provided that the new Contracting State joins in such declaration or makes a reciprocal unilateral declaration.

Điều 94.1.2.3.Article 95. Any state may declare at the time of the deposit of its instrument of ratification, acceptance, approval or accession that it will not be bound by subparagraph (1) (b) of article 1 of this Convention.Điều 95.1.2.3.Article 96. A Contracting State whose legislation requires contracts of sale to be concluded in or evidenced by writing may at any time make a declaration in accordance with article 12 that any provision of article 11, article 29, or Part II of

this Convention, that allows a contract of sale or its modification or termination byagreement or any offer, acceptance, or other indication of intention to be made in any form other than in writing, does not apply where-any party has his place of business in that State.Điều 96.

Article 971. Declarations made under this Convention at the time of singnature are

subject to confirmation upon ratification, acceptance or approval.2. Declarations and confirmations of declarations are to be in wiling and be

formally notified to the depositary. 3. A declaration takes effect simultaneously with the entry into force this

Convention in respect of the State concerned. However, a declaration of which the depositary receives formal notification after such entry into force takes effect on the first day of the month following the expiration of six month after the date of its receipt by the depositary. Reciprocal unilateral declarations under article 94 take effect on the first day of the month following the expiration of six months after the receipt of the latest declaration by the depositary.

4. Any State which makes a declaration under this .Convention may withdraw it at any time by a formal notification in writing addressed to the deposition. Such withdrawal is to take effect on the first day of the month following the expiration of six months after the date of receipt of the notification by the depositary.

5. A withdrawal of a declaration made under article 94 renders inoperative, as from the date on which on which the withdrawal takes effect, any reciprocal declaration made by another State under that article.

Điều 97.1.2.3.Article 98. No reservations are permitted except those expressly authorized in this Convention.Điều 98.

Article 99.1. This Convention enters into force, subject to the provisions of paragraph (6)

of this Article, on the first day of the month following the expiration of twelve month's after the date of deposit of the tenth instrument of ratification, acceptance, approval or accession, including an instrument which contains a declaration made under article 92.

2. When a State ratifies, accepts, approves or accedes to this Convention after the deposit of the tenth instrument of ratification, acceptance, approval or accession, this Convention, with the exception of the Part excluded, enters into force in respect of that State, subject to the provisions of paragraph (6) of this article, on the first day of the month following the expiration of twelve months after the date of the deposit of its instrument of ratification, acceptance, approval or accession.

3. A State which ratifies, accepts, approves or accedes to this Convention and is party to either or both the Convention relating to a Uniform Law on the Formation of Contracts for the International Sale of Goods done at The Hague on 1st July 1964 (The 1964 Hague Formation Convention) and the Convention relating to a Uniform Law on the International Sale of Goods done at The Hague on 1 July 1964 (The 1964 Hague Sales Convention) shall at the same time denounce, as the case may be, either or both the 1964 Hague Formation Convention and the 1964 Hague Formation Convention of the Netherlands to that effect.

4. A State party to the 1964 Hague Sales Convention which ratifies, accepts, approves or accedes to the present Convention and declares or has declared under article 92 that it will not be bound by Part III of this Convention shall at the time of ratification, acceptance, approval or accesion denounce the 1964 Hague Sales Convention by notifying the Government of the Netherlands to that effect.

5. A State party to the 1964 Hague Formation Convention which ratifies, accepts, approves or accedes to the present Convention and declares or has

declared under Article 92 that it will not be bound by Part III of this Convention shall at the time of ratification, acceptance, approval or accession denounce the 1964 Hague Formation Convention by notifying the Government of the Netherlands to that effect.

6. For the purpose of this Article, ratification, acceptances, approvals and accessions in respect of this Convention by States parties to the 1964 Hague Formation Convention or to the 1964 Hague Sales Convention shall not be effective until such denunciations as may be required on the part of those States in respect of the latter two Conventions have themselves become effective. The depositary of this Convention shall consult with the Government of the Netherlands, as the depositary of the Conventions, so as to ensure necessary co-ordination in this respect.

Điều 99.1.2.3.Article 1001. This Convention applies to the formation of a contract only when the proposal for concluding the contract is made on or after date when the Convention enter into force in respect of the Contracting States referred to in subparagrph (1) (a) or the Contracting State referred to in subpsrsgraph (1) (b) of Article 1.2. This Convention applies only to contract concluded on or after the date when the Convention enters into force in respect of the Contracting States referred to in subparagraph (1)(a) or the Contracting State relered to in subparagraph (1)(b) of Article 1.Điều 100.1.2.3.Article 1011. A Contracting State may denounce this Convention, or Part II or Part III of the

Convention, by a formal notification in writing addressed to the depositary.2. The denunciation takes effect on the first day of the month following the

expiration of twelve months by the depositary. Where a longer period for the denunciation to take effect is specified in the notification, the denunciation takes effect upon the expiration of such longer period after the notification is received by the depositary.

Done at Vienna, this day of eleventh day of April, one thousand nine hundred and eighty, in a single original, of which the Arabic, Chinese, English, French. Russian and Spanish texts are equally authentic.IN WITNESS WHERE OF the undersigned plenipotentiaries being duly authorized by their respective Governments have signed this Convention.

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