CHAPTER 3 CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS

Contracts for purchase and sale of property Civil Code 2005, Article 428: A contract for purchase and sale of property is an agreement between the parties whereby the seller has the ob

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CHAPTER 3 CONTRACTS FOR THE INTERNATIONAL

SALE OF GOODS

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OVERVIEW ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS

1 Concept

1.1 Contracts for purchase and sale of goods

1.1.1 Contracts for purchase and sale of property

Civil Code 2005, Article 428:

A contract for purchase and sale of property is an

agreement between the parties whereby the seller has the obligation to hand over the property to the purchaser and receive payment, while the purchaser has the

obligation to accept the property and make payment to the seller

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1.1.2 Contracts for purchase and sale of goods

Commercial Law 2005, Article 3:

Purchase and sale of goods mean commercial activities

whereby the seller is obliged to deliver goods, transfer

ownership of goods to the purchaser and receive payment; the purchaser is obliged to pay the seller, receive the goods and the ownership thereof as agreed

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Contracts for purchase and sale of goods:

Contracts for purchase and sale of goods is an agreement between the parties, according to which the seller has the obligation to deliver goods, transfer the ownership of the goods to the buyer and receive payment, the buyer has the obligation to arrange payment, receive the goods and the ownership thereof

Note:

Commercial Law 2005 does not provide any concept for

contracts for either domestic or international purchase and sale of goods

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1.2 Contracts for the international sale of goods

Contracts for the international sale of goods = Contracts for purchase & sale of goods + international elements

1.2.1 International Law

1.2.1.1 Convention relating to a Uniform Law on the

International Sale of Goods (Hague Convention 1964)

Article 1, Chapter I, Annex (Uniform Law on the

International Sale of Goods):

The present Law shall apply to contracts of sale of goods

entered into by parties whose places of business are in the territories of different States, in each of the following cases:

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(a) where the contract involves the sale of goods which are at the

time of the conclusion of the contract in the course of carriage

or will be carried from the territory of one State to the territory

of another;

(b) where the acts constituting the offer and the acceptance have

been effected in the territories of different States;

(c) where delivery of the goods is to be made in the territory of a

State other than that within whose territory the acts

constituting the offer and the acceptance are effected

 The application of the present Law shall not depend on the

nationality of the parties

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1.2.1.2 United Nation Convention on Contracts for the

International Sales of Goods (CISG 1980)

CISG, Article 1, Chapter I, Part I :

This Convention applies to contracts of sale of goods

between parties whose places of business are in different

States;

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

 CISG does not define exactly the concept of contracts for

the international sale of goods

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OVERVIEW ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS 1.2.2 Vietnam Law

1.2.2.1 Temporary Regulation on concluding foreign trade

contracts (Regulation 4794/TN-XNK, issued by the

Ministry of Trade on 31/7/1991)

- Foreign trade contracts are those with international

elements;

- International elements: Traders are of different

nationalities; Goods are transported across borders;

Payment currency is foreign to at least one party

Nationality is one of the most important elements

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1.2.2.2 Commercial Law 1997

Contracts for purchase and sale of goods with foreign traders are contracts entered into between a

Vietnamese trader and a foreign trader

What is the crucial element?

A contract entered into between a Chinese trader and a Vietnamese one, both based in Vietnam?

A contract entered between two Vietnamese traders

based in different countries?

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1.2.2.3 Commercial Law 2005

Chapter II, Article 27.1.:

International purchase and sale of goods shall be

conducted in form of export, import, temporary import for re-export, temporary export for re-import and

transfer through border-gates

Legal definitions of forms of international sale of goods:

Article 28-30, Commercial Law 2005;

Commercial Law 2005 and nationality?

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- The movement of goods across national and/or customs

borders

- Contracts without the movement of goods across national and/or customs borders will not be considered “contracts for the international sale of goods”;

- Commercial Law 2005 may not govern all cases Traders may refer to Civil Code 2005 (civil relations involving foreign

elements) or other Laws;

 Real estate sold to foreigners?

 What is on-spot import/export?

 Your opinion on the listing of forms of international purchase and sale of goods?

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Contracts for the international sale of goods is the agreement between parties whose places of

business are in different countries or separate

customs areas, according to which the Seller (the Exporter) is obliged to deliver goods, and transfer the ownership thereof to the Buyer (the

Importer); the Buyer is obliged to receive of the

goods and the ownership thereof, and arrange

payment

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2 Major features of contracts for the international

- Content: rights and obligations;

- Bilateral, consensual contracts, with consideration

2.2 Particular features:

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- Subjects: places of business in territories of different

States/separate customs areas;

- Objectives: move across State/customs border;

- Payment: foreign currency to at least 1 Party;

- Various sources of governing law:

+ National law

+ International will

+ Commercial practice

+ Legal precedent

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3 Legal validity of contracts for the international sale of

goods

- Subjects: legal;

- Objects: legal;

- Form: legal

+ CISG: oral, in writing or by specific acts;

+ Vietnam Law: in writing or equal forms;

- Content: Legal (includes legally compulsory articles):

Dependent on sources of law:

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+ Vietnamese Law:

• Commercial Law 1997: 6 compulsory articles;

• Civil Code 2005: 8 commonly used articles;

• Commercial Law 2005: no requirement;

+ International Law:

• CISG, Article 14: 3 articles;

• CISG, Article 19: 6 articles;

• English Law: commodity, quality, price;

• French Law: commodity, price

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4 Content of Contracts for the international sale

of goods:

4.1 Preamble:

- Contract date and number;

- Date and place of signing contract;

- Parties’ information;

- Legal basis of the contract (if necessary);

- Definition of terms (if necessary)

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4.2 Terms and conditions

4.2.1 Core terms and conditions:

- Object-related terms;

- Finance-related terms;

- Transport-related terms;

- Legal-related terms;

4.2.2 Additional terms and conditions:

- Confidential information; maintenance; warranty…

- Validity of contract; number of copies; languages…

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5 Notes on drafting contracts

- Content: detailed, consistent;

- Word choice: clear, precise;

- Language: official, popular

 Seller and buyer are free to choose language;

 VN customs regulations: Vietnamese or English;

or certified translation from other languages;

 Copies of different languages?

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DRAFTING CONTRACTS FOR THE INTERNATIONAL

SALE OF GOODS

1 Name of goods

- One of the most important terms in a contract

- Clearly define the goods to be exchanged

- Also known as: Commodity / Object of Contract

- Methods to draft:

a Name of goods + trade name / scientific name

E.g.:

Arabica/Robusta coffee

Pitaya (Hylocereus undatus): red dragon fruit

Pitaya (Hylocereus megalanthus): yellow dragon fruit

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SALE OF GOODS

b Name of goods + place of origin

c Name of goods + manufacture’s name

d Name of goods + brand name

e Name of goods + major specifications

E.g.: 14-inch TV; 29-seat bus

f Name of goods + main use

E.g.: Cotton for medical use

g Name of goods + HS code

E.g: Automobile air conditioner 8415.20

To specify the goods, a-g are often combined

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SALE OF GOODS

2 Quality

- One of the most important terms;

- Clearly define main characteristics of the goods;

- Require wide knowledge on machandizing

2.1 Methods to denote quality:

a As per sample

b As it is (tale quale)

c As inspected and approved

d As per standard or category

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SALE OF GOODS

e As per technical documents

f As per specifications of goods

g As per volumetric weight of goods

h As per general customary criteria

E.g.: FAQ, GAQ, GMQ

i As per content of essential components

j As per ratio of products form

k As per brand of goods

l As per description of goods

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SALE OF GOODS

2.2 Content of a quality article

- Define quality of goods (use one of / a combination of the above methods)

- Inspection of quality

+ Place of inspection: place of manufacture; place of

delivery; place of destination; place of use

+ Inspector: Manufacturer; representatives of parties;

intermediary organization

+ Inspection cost

+ Certificate of quality: preliminary/final

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SALE OF GOODS

E.g.: Quality of Vietnam export rice

- Broken: 35% max;

- Moisture: 14,5% max;

- Foreign matter: 0,4% max;

- Crop: Summer Autumn crop 2011

- Quality of goods is to be determined at the loading port by Vinacontrol Haiphong Inspection charges shall be borne by the Seller

- C/Q issued by Vinacontrol shall be final and binding both

parties

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SALE OF GOODS

3 Quantity/Volume

3.1 Measurement Unit

- Countable:

+ Single: 100 bales; 200 parcels; 1000 barrels

+ Collective: 5 dozens of eggs; 7 tens of oranges

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- Net net weight: without any package;

- Semi net weight: with direct package;

- Gross weight for net: negligible package cost;

- Legal net weight: Gross weight – tare determined by Customs officers

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- Goods whose mass is sensitive to moisture change

- G0 : Commercial weight W0: Standard moisture

- G1 : Actual weight W1: Actual moisture

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SALE OF GOODS

3.4 Content of a quantity article:

- Specify content: precise/flexible (if it is flexible weight, there must be stipulation on tolerance)

- Select the method to determine quantity (gross/net/

theoretical/commercial weight)

- Inspection of goods:

+ Place of inspection: shipped weight/landed weight;

+ Inspector: Parties’ representatives or intermediary;

+ Inspection cost distribution

+ Certificate of quantity: preliminary or final

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SALE OF GOODS

E.g.: Quantity of Vietnam export coffee:

- 5000 MT +/- 5% at the seller option;

- Tolerance’s price is determined at time of delivery;

- The mentioned above quantity is understood as gross

weight for net;

- Quantity is to be determined at the unloading port by

Continent Inspection Service Co.; Ltd

- Inspection cost shall be at Buyer’s account

- C/Q issued at the unloading port shall be final and

binding both parties

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- Tare provided by the seller without return

- Tare provided by the seller with return

- Tare provided by the buyer

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4.4 Methods to determine tare’s charge

- Packing charge included

- Separate packing charge to be paid by the buyer

- Gross weight for net

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DRAFTING CONTRACTS FOR THE INTERNATIONAL SALE

OF GOODS

4.5 Methods to denote tare quality

- Unspecific stipulation: Packaging must be suitable for a

certain means of transport;

+ By sea: Durable, endure pressure;

+ By railway: Durable, suitable size;

+ By air: Light, fireproof, suitable size

- Specific stipulation:

+ Material: Polyethylene, cardboard, fiber;

+ Type: Case, Bale, Drum, Roll, Gunny bag;

+ Size: 50-kg gunny bag; 50 x 50 x 50 cm drum;

+ Number of layers…

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SALE OF GOODS

E.g.: Term of tare for export corn:

The Seller is obliged to packing corns in 50-kg bags

suitable for sea transport with transshipment

Corn to be packed in single jute new bags of 50 kg net

each, about 50.3 kg gross each, sewn at mouth with jute twine thread suitable for rough handling and sea

transportation

The Seller shall supply 0.2% of new jute bags free of

charge out of quantity of bags shipped

In which article of an international sales contract shall

packaging charge be often stipulated?

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SALE OF GOODS

5 Delivery

5.1 Time of delivery

- Specific time of delivery:

+ On a specific date: On May 5 th , 2012

+ No later than/Before a specific date: Before May 5 th ;

+ In a specific period of time: Within 2 months since the

contract date/ From 1 st to 20 th of August;

- Unspecific time of delivery:

+ Prompt delivery: Immediate delivery;

+ Conditional delivery: Subject to the opening of L/C

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SALE OF GOODS

5.2 Place of delivery

- Basis to determine place of delivery:

+ International commercial terms

+ Means of transport;

+ Intentions of parties in the contract

- Content of place of delivery

+ Place/port of loading

+ Place/port of discharge

- Methods to denote:

+ Single port/Multiple ports

+ Specified port(s)/Optional port(s)

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SALE OF GOODS

5.3 Notice of delivery

- Number, time and content of notice;

- Parties’ liability subject to failure of notice;

- Customary: single notice (F, D); triple notices (C);

5.4 Shipment advice

- Transshipment (not) allowed;

- Partial shipment (not) allowed;

- Stale B/L (not) accepted;

- Loading/Unloading advice (if necessary)

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DRAFTING CONTRACTS FOR THE INTERNATIONAL SALE

OF GOODS

E.g.: Delivery as per FOB, Incoterms 2010

- Time of delivery: No later than June 30 th 2012;

- Port of delivery: Haiphong, Vietnam

- Port of discharge: Main ports in Europe

- Seller should without delay inform Buyer by fax when the goods are ready for delivery Within 48 hours prior to vessel’s arrival, Buyer should inform Seller of details of ship number, ETA and loading conditions Within 24 hours after the loading of goods on board, Seller should inform Buyer of B/L date and number

- Partial shipment and stale B/L are not accepted

Tiêu đề	Contracts for the International Sale of Goods
Người hướng dẫn	Nguyễn Thị Minh Hà
Trường học	Vietnamese University of Commerce
Chuyên ngành	International Trade Law
Thể loại	lecture notes
Năm xuất bản	2013
Thành phố	Hanoi

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Số trang	80
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