Ibl final assignment review of international business law contract

1 Information of the seller and the buyer 01 mark 2 Article 1: Commodity, Quantity, Price 01 mark 3 Article 2: Packing and Marking 01 mark 4 Article 3: Delivery time 01 mark 5 Article 4:

FOREIGN TRADE UNIVERSITY HCMC CAMPUS DEPARTMENT OF ECONOMICS AND LAW

INTERNATIONAL BUSINESS LAW — PLUE410

FINAL ASSIGNMENT

Academic year: 2024-2025

Student ID: 2212255024 Class code: ML02 - PLUE410 Lecturer: LLM Tran Thanh Tam

HO CHI MINH CITY, OCTOBER 4th 2024

MARKING PAGE

1.0 | Contract | Identify and analyze any mistakes or potential legal risks

review associated with the terms and conditions outlined in the

(8 marks) | contract and suggest any necessary revisions, additions,

or deletions to to correct the mistakes and mitigate these risks

(1) Information of the seller and the buyer (01 mark)

(2) Article 1: Commodity, Quantity, Price (01 mark)

(3) Article 2: Packing and Marking (01 mark)

(4) Article 3: Delivery time (01 mark)

(5) Article 4: Payment and Documents for payment (01 mark)

(6) Article 5: Force Majeure (01 mark)

(7) Article 6: Arbitration (01 mark)

(8) Article 7: Other terms and conditions (01 mark)

2.0 | References | List all the relevant references used in your report in

(1 mark) accordance with the APA Referencing system In-text

References and Bibliography required (1 mark)

3.0 | Positive Excellent English with clear concise writing No bullet

marking points No spelling or punctuation errors Excellent use

(1 mark) of key terms The work is properly referenced with

bibliography Clearly written and good use of linking words and sound paragraphs (1 mark)

Total

TABLE OF CONTENTS

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REFERENCES 10

INTRODUCTION

1 Context and Purpose of the Report

The contract is composed as an agreement between the Son Long Company as the Buyer and the Worldwide Machinery Company as the Seller Son Long Company is finalizing the contract and conducting a comprehensive review to point out any potential legal risks and

minimize those

2 Law documents used

In this contract, the Seller is a legal entity from the United States of America, and the Buyer

is a legal entity from Vietnam Since both countries are members of the United Nations Convention on Contracts for the International Sale of Goods (CISG) (Uncitral, n.d.), according to Article 1, clause 1, point a, the applicable law shall be CISG 1980 upon reviewing the contract (United Nations, 2010)

CONTRACT REVIEW

1 Information of Seller and Buyer

1.1 Information of Seller

The Seller entering the contract is Worldwide Machinery Limited Liability Company, a legal entity having a place of business in the USA The signing person for the Seller is Mr Chung Asip, who is the legal representative of Worldwide Machinery LLC according to Dun and Bradstreet (n.d.) The address of this company written in the contract is the registered address

of the company, so this address is recognised as the place of business for the Seller

However, there is no email address or phone number from the Seller providing the immediate for the Buyer to contact This means that there may be some delay in contacting when the Buyer contacts the Seller

1.2 Information of Buyer

The Buyer entering the contract 1s Son Long Trading Production Company Limited, a legal entity having a place of business situated in Vietnam In the contract, the signing person for the Buyer is Mrs Tran Thi Hong Dao, who is the legal representative of Son Long Company according to Masothue (n.d.)

However, the telephone number provided in the contract is not the telephone number in Masothue, meaning that the telephone number in the contract is not the number of the legal representative This means that there is a potential legal risk for the Seller to contact the unauthorized person of Son Long Not only that, the Seller may have difficulty in contacting the Buyer because of not knowing which department of Son Long Company that the Seller is contacting, since the telephone number provided from the Buyer is general

2 Article 1: Commodity, Quantity, Price

Although the quality of the Hamm Roller is stated to be at least 80% of the perfect quality, the method of measuring the quality is not stated in the contract Because of this missing quality, there is a potential legal risk arising regarding the quality of the good One reason is the discrepancies for the quality of the goods as both parties may understand the term “80%

up perfect quality” differently Furthermore, 1n case the Hamm Roller recerved by the Buyer does not meet the required quality standard, the Buyer may have difficulty in stating that the good is defective

One solution to resolve this legal risk is stating the method of checking the quality of the Hamm Roller in this article As for the best inspection method for both parties, both parties shall agree and covenant the inspection agencies at both seller’s country at the loading and the buyer’s country at the unloading port, and the result from the survey report in the buyer’s country is final and binding

3 Article 2: Packing and Marking

3.1 Packing

The term “standard export packing” is too broad and may lead to disputes if the goods are damaged during the transportation because of insufficient packaging Also, there are a lot of missing information regarding this article, such as the material for crates containing the

Hamm Roller, which size of container shall be used to contain the Hamm Roller, and

FCL/FCL or LCL/LCL term should be used for transporting the Hamm Roller

Son Long should negotiate more with Worldwide Machinery to decide how the Hamm Roller shall be contained when transporting from the USA to Vietnam Firstly, both parties should

agree on the material of the crate containing the Hamm Roller, such as wooden crates or

steel-reinforced packaging Secondly, both parties should decide how to protect the Hamm Roller inside the container, specifically how to prevent the Hamm Roller from being affected

by moisture penetration inside the container Lastly, both parties should decide the method of preventing the Hamm Roller from moving inside the container to minimize the chances the Hamm Roller collides with the wall of the container and becomes damaged

3.2 Marking

There is no information how the container should be marked when putting the Hamm Roller inside This may arise the legal risk when the Hamm Roller becomes missing and cannot be determined who to deliver to The container should be marked with the following information:

1 Contract Number: [Insert Contract Number] (e.g., 1208)

3 Gross and Net Weight of the container

4 Dimensions: Length, Width, Height of the container Both parties should decide whether

to transport the Hamm Roller under the FCL/FCL or LCL/LCL term

5 Port of Destination: Ho Chi Minh Port, Vietnam

6 Country of Origin: USA

7 Buyer’s Information: SON LONG TP CO., LTD

8 Seller’s Information: WORLDWIDE MACHINERY LLC

4 Article 3: Delivery time

In this Article, the remedy for late delivery of the Seller is not written in the contract, so there

is potential risk for the Seller to not deliver the Hamm Roller within 90 days after signing the contract and put the Buyer at disadvantage, especially if the Buyer made the payment before the delivery In such a case, the Seller may receive the payment from the Buyer and not deliver the goods on time without being liable for the fines and damages for the non-delivery

CISG 1980 law has no article regarding remedies for fines and damages for late delivery or non-delivery when the Buyer makes the purchase in advance, so according to Article 7 clause

2 of CISG 1980, another law shall be applicable for determining such fines and remedies Both parties can negotiate and choose the Vietnam law as the applicable law, according to

Article 683, clause 1 of Vietnam Civil Code 2015 In such a case, the fine for the Seller is agreed and not exceed 8% of the value of breached contract, according to Article 301

Vietnam Law on Commerce 2005 Not only that, by using Vietnam Law on Commerce 2005, there is legal enforcement for the Seller to deliver the Hamm Roller on time thanks to the Article 302 to Article 306 in this law

5 Article 4: Payment and Documents for payment

5.1 The Payment Method

The payment method used in the contract is Cash in Advance, posing the risk for the Buyer of not receiving the Hamm Roller or receiving the Hamm Roller not meeting the quality standard To solve the quality problem, both parties shall specify the inspection agencies in the Article 1 of this contract

On the other hand, the Buyer also has the risk of receiving the fake documents from the Seller,

as in the Cash in Advance payment method, the bank has no lability of checking whether the documents are in accordance with the contract or not Both parties should agree on a more secure payment method, for example, the Letter of Credit (L/C)

5.2 Documents for payment

Mentioning the necessary documents for the Seller, the Article 4 of the Contract mentions the term “commercial invoice” too broadly as the Seller may provide the documents less than the requirements from the Buyer and still declare these documents as “commercial invoice.” To resolve this, the Buyer should specify which documents the Seller should provide to the

Buyer

5.3 Example for modifying Article 4

Article 4; Payment and Documents for Payment

The Buyer and the Seller agree and covenant that the Buyer shall pay a total of USD 48,000

via the Letter of Credit (L/C) method, with the intermediaries banks consisting of:

1 Issuing Bank: The bank provided with the information of the Buyer entering this Contract, specified in Article | of this Contract

2 Advising Bank: The bank situating on the Seller's country and having the following description:

“BANK NAME: CHASE BANK

SWIFT CODE: CHASUS33

A/C NAME: WORLDWIDE MACHINERY LLC

A/C NO: 871117768”

The Buyer shall make payment upon receipt of the following documents from the Seller:

1 Signed Commercial Invoice in three (3) originals, specifying: (1) Full description of goods, (2) Quantity, unit price, and total price, and (3) Payment terms and shipping terms (CIF Ho Chi Minh Port)

2 Full Set of 3/3 Original Bills of Lading, marked “Freight Prepaid,” made out to order and notifying the Buyer

3 Detailed Packing List in three (3) originals, showing the weight, dimensions, contents, and packaging details of the goods

4 Certificate of Insurance covering 110% of the invoice value, under Clause C (ICC1982)

or higher, made in the Buyer’s name

5 Certificate of Origin

6 Inspection Certificate for both inspection on the Seller’s country and on the Buyer’s country The inspection certificate on the Buyer’s country shall be final and binding

7 Export License, made by the appropriating party in accordance with CIF INCOTERMS

2010

6 Article 5: Force Majeure

6.1 Events of Force Majeure

The events of Force Majeure specified in the contract are not full Son Long does not mention the war; currency and trade restriction, embargo, sanction; and any other events stipulated in ICC Force Majeure Clause 2020 This means that the events mentioned in Article 5 of the contract are too specific and not full, meaning that the other events not listed in the contract are not considered Force Majure in regard to the contract This leads to the Seller or the Buyer being liable for other circumstances that are beyond their control

Regarding the amendment of this article, Son Long needs to add the expanding phrases for the Force Majeure events, such as “ , and any other events listed in clause 2 ICC Force Majeure Clause 2020.”

6.2 Force Majeure procedure

This article lacks the procedure for the Seller to state the Force Majeure happened, putting the Buyer in uncertainty of the status of the Hamm Roller when a Force Majeure happened

Therefore, Son Long should provide the procedure to notify regarding the Force Majeure event Specifically, the affected party shall notify the non-affected party in written form without undue delay, within 7 consecutive days from the occurrence of the Force Majeure event The notification shall include: (1) A detailed description of the Force Majeure event, (2) The date on which the event occurred, (3) The expected impact on the performance of the affected obligations, (4) An estimate of the duration of the event, (5) Measures being taken to mitigate or overcome the effects of the Force Majeure event

In the notification, the fifth information is written to illustrate that the Force Majeure event is beyond control even after the affected party took reasonable measures to mitigate and

overcome the event

7 Article 6: Arbitration

7.1 Applicable law

In the Article 6 of the contract, the Buyer states the contract is governed by the provision of INCOTERMS 2010 This article is written to state the applicable law to govern the disputes may arise from the contract Since INCOTERMS 2010 is international trade practices and not law, using INCOTERMS 2010 in this article is a wrong intention for the Buyer as INCOTERMS is not suitable to be stated in this article

Instead, Son Long should state the specific law to be applicable for this contract As the

Seller is from the USA, the Buyer 1s from Vietnam, the CISG 1980 should be written in this article according to Article 1, clause 1, point a of CISG 1980 When there are issues arising from this contract but not covered by the CISG 1980, the law of Vietnam, either Vietnam