De cuong Giao dich QT

DIFFERENCES BETWEEN TYPES OF COUNTER TRADE: Types of counter Numbers of party Offset Yes material, components,Related products: spare parts Buy back Yes equipment, training,…Technology,

Phạm Phương Trinh

CLC_15DTM2

INTERNATIONAL SALES: types of international sales:

Exports:

- to ship goods or services of a country to other countries through national borders in order to sell and execute

foreign exchange

- to bring goods out of Vietnam’s territory to foreign countries or into exclusive customs zones in Vietnam’s

teritory

Imports:

- to bring goods into Vietnam’s territory from foreign countries or receive goods from exclusive customs zones in Vietnam’s territory

Temporary Import for re-export:

- to bring goods into Vietnam’s territory from foreign countries or receive goods from exclusive customs zones in Vietnam’s territory with completing the importing procedures of them, then executing the exporting procedures of them out of Vietnam Ex: goods for international fair

Temporary Export for re-import:

- to bring goods out of Vietnam’s territory to foreign countries or into exclusive customs zones in Vietnam’s teritory with completing the exporting procedures of them, then executing the importing procedures of them into Vietnam Ex: broken machinery

Cross-border transshipment:

- to buy goods from a country and sell to another country outside Vietnam’s territory without executing the importing procedures of them into Vietnam and the exporting procedures of them out of Vietnam

 Types of cross-border transshipment:

- Vietnam is an intermediate Goods are transported directly from the exporting country to the importing country without going through Vietnamese border-gates

- Goods are transported from the exporting country to the importing country through Vietnamese border-gates, but without executing the importing procedures of them intro Vietnam and the exporting procedures of them out of Vietnam

- Goods are transported from the exporting country to the importing country through Vietnamese border-gates and brought to bonded warehouses for transshipment, but without executing the importing procedures of them intro Vietnam and the exporting procedures of them out of Vietnam

COUNTER TRADE: is to exchange goods for other goods, rather than for hard currency Hard

currency in some situations may be able to use, but it’s very limited

Characteristics:

- Exporter is also importer

- Currency isn’t a payment tool

- Types of commodity are diversified (exchange in the same value)

Types of counter trade:

 Barter: is to exchange goods for other goods without using hard currency for payment Ex: barter 1 ton

of rice for 1 ton of coffee

 Switch trading: is same as barter, but has a third party involvement The obligations are transferred from the first or second party to the third party, means that importer’s debt is transferred to the third party for the debt which the third party owes the importer Ex: A import 1 ton of rice from C, B owes A $100,000

=> A requires B to pay for C

 Counter purchase: is a company sells goods to a foreign company for cash, but also promise to purchase unrelated goods from that foreign company (make payment immediately after each transaction) Ex: VN: export coffee to Thai

VN: import cars from Thai

 Buy back: is a company supplies technology, equipment,… to a foreign company and agree to purchase goods made by those machines, from that foreign company Ex:

Japan: export yarn machines to VN

Japan: import yarn from VN

 Offset: is a company (buyer) purchase finished goods from a foreign company, with the condition that foreign company has to purchase related goods: raw material, components, spare parts, from the buyer

to make finished goods, then they will offset the difference between 2 payment amounts Ex:

VN: import shirts from Thai

VN: export fabrics to Thai

 Compensation trade: is same as barter but using hard currency in trading

Measures to ensure implementation of counter trade:

 Reciprocal L/C: L/C (1) isn’t valid if L/C (2) isn’t opened

Bank Bank

 Special account: bank will follow, observe and speed up which company hasn’t done its payment and ask it to fulfill its obligation

 Third party controls documents:

Bank

 Late delivery or shortage penalty

PROCESSING: is an activity to import the raw material, components, spare parts… from overseas, and

re-export the finished products after assembling in mainland

Characteristics:

- Trading object is labor force

- Processing is exporting goods

- Commodities in processing is labor-intensive

- Country of processee has higher development than country of processor

Types of international processing:

 In title to materials:

- Processee hand over (part or whole) materials and pay processing remunerations

- Processee sells materials and then buys finished products from processor

- Processee supplies main materials and processor supplies auxiliary materials

 In processing remuneration:

- Target price: defined price for products

- Cost plus contract: real cost and remuneration

 In processing relation:

- Two-party processing

- Multi-party processing

International auction: is an activity where sellers hire auction organizers (center) to execute public

selling to choose buyers that offer the highest price

Types of international auction:

- Commercial auction: sell classified goods for traders

- Non-commercial auction: sell to clear stock

Procedures of an auction:

 Preparaiton:

- Goods owner contact with auction center

- Auction center: Set up sale plan, advertise, devide into lots, display the sample

 Good examination: buyers agree to join => must deposit a sum of money (this is defined by the sellers)

 Auction: 2 modes

- Upward bidding: the person who offer the highest price will win

- Downward bidding: the person who offer the lower price or nearly to the reserve price will win

International bidding: is an activity where a party sell goods through bidding (bid solicitor) to select a

trader that satisfied the requirement (bid winner), among many traders joining in the bidding (bidder)

Types of international bidding:

 Bidding scope:

- Open bidding

- Restricted bidding

 Quotation form:

- 1 bid dossier bag

- 2 bid dossier bags

 Bid opening procedure:

- 1 period bid

- 2 period bid

 Bidder evaluation procedure:

- Preselecting bid

- Un-preselecting bid

 Bid purpose:

- Purchasing bid

- Service bid

- Management bid

Trading at international fairs and exhibitions: are periodically organized in a specific time for

companies to perform their latest products and to meet partners and customers to sell products

Types of international fairs and exhibitions:

 Periodicity:

- Period

- Non-period

 Industry:

- Synthetic: for many industries

- Specialized: for only one industry

 Scope:

- International

- National

- Local

Trading in Commodity Exchange: is an activity where parties purchase and sell goods at a defined

price, upon at the time the contract is signed and the specific time in the future that goods are delivered

Forward contract: is a contract that allows to buy products for future with the price at the time signing

contract

Option contract: is a contract that allows to buy the rights of purchasing and selling products, but have to pay

a fee to buy that rights

DIFFERENCES BETWEEN TYPES OF COUNTER TRADE:

Types of counter

Numbers of party

Offset Yes material, components,Related products:

spare parts

Buy back Yes equipment, training,…Technology, negotiatingPay after 2

INCOTERMS 2010

Development of Incoterms:

-2000 (13 terms), 2010 (11 terms – replace DAF, DES, DEQ, DDU by DAT, DAP)

Content

Export

Import

Insurance Optional Optional Optional Optional Optional Seller Optional Seller Optional Optional Optional

Transfer

of risks

and costs

Disposal

of buyer

or at

seller’s

premises

To the carrier nominate

d by buyer

Alongside

of the ship (quay)

On board the vessel

-To the first carrier nominated

by seller -Named place of destinatio

n

-To the first carrier nominated

by seller -Named place of destinatio n

-On board the vessel -Named port of destinatio n

On board the vessel -Named port of destination

Named terminal

Disposal

of buyer ready for unloading (inside)

Disposal

of buyer ready for unloadin g (outside)

Seller

Seller Seller

Unloadin

Inpection

Seller:

purpose

of

delivery

Seller:

purpose of delivery, authority required

Seller:

purpose of delivery, authority required

Seller:

purpose of delivery, authority required

Mode of

sea &

inland waterway

sea &

inland waterway

any any inlandsea &

waterway

sea &

inland waterway

Why remove DAF, DES, DDU, DEQ?

-DAF: seller delivers goods at the disposal of buyer on the arriving means of transport not unloaded, not

clears for import at the named place at the frontier, before customs border of import country The word

“frontier” may for any frontier including the country of export =>Buyer could not examine the goods before the goods arrive at the place of destination, which beyond the delivery point

-DES: seller delivers goods at the disposal of buyer on board the ship not unloaded, not clears for import at the

named port of destination Seller bears all risks and costs involving in bringing goods to named port of

destination and not discharging => Delivery point is not clear

-DDU: seller delivers goods to buyer (any place) not unloaded, not clears for import at the named place of

destination =>“Duty” may include the responsibility and risks for carrying out the customs formalities,

customs duty, taxes, any charges for import clearance and such duty has to be borne by the buyer

-DEQ: seller delivers goods at the disposal of buyer, not clears for import on the quay at named port of

destination Seller bears all risks and costs involving in bringing goods to named port of destination and discharging goods on the quay => Delivery point is not clear

Incoterms 2010 changes:

-Adapted rules: for domestic and international trade

-Electronic records: documents in contract may use electronic record or procure if agreed between the parties

or customary

-Assisting in obtaining any documents and information for security-related clearances

-Terminal handling charges: Incoterms 2010 clarifies who is responsible for terminal costs and put an end to the double charging

-String sales: Incoterms 2010 clarifies that the obligation on sellers in the middle of string is to procure goods that have already shipped (in case od FAS, FOB, CFR, CIF)

-Guidance note: explains the fundamentals of each term to be easy to understand the rules

-Point of transfering risks: Incoterms 2010 turns “ship’s rail” to “on board” to avoid omitting the case that goods are delivered on board the ship and reflect the commercial reality

-“Packing”: must comply with any requirements under the contract of sale and fit for transportation, but not stow within the containers

Incoterms not deal with: transfering the property rights of goods, unexpected or unforeseeeable events,

consequences of breaching the contract, method of payment

DIFFERENCES – SIMILARITIES BETWEEN DAT AND DAP:

Delivery place

Must be a terminal (all forms of terminal: quay, warehouse, container yard, road or rail or air terminal) at the port of discharge

Any place – which is in the buyer’s country or port of destination

SIMILARITIES

- Used with any means of transport (included multimodal carriage)

- Exporter must do export clearance

- Named place of destination in import’s country

- Importer must unload goods from arriving means of transport at the named place of destination

VARIATION: If our partner wish to refer these terms, Vietnamese company should pay attention to

ensure clarify the obligations and the time of transfering risks

FOB under ship’s tackle: the seller is responsible for risk of loss and damage to the goods until they are

hooked by the tackle (risk is transfer earlier than normal FOB)

FOB stowed or FOB trimmed: seller has obligations to stow and trim the goods in vessel’s hold (this term

for technical reason to ensure goods to be clear)

FOB shipment to destination: seller is responsible for carriage to the agreed port with the expenses at the

buyer’s account and buyer bears all risks of loss and damage to goods (must add a clause to specify the

parties’ obligations in the contract)

FOB liner terms: carrier bears responsibility and the cost of loading, stowage, dunnage, separation and

discharging

CIF liner terms: carrier bears responsibility and the cost of loading, stowage, dunnage, separation and

discharging (Price includes the freight=cost+additional fees =>Buyer truly pays for the price) (seller doesn’t

bear loading & buyer doesn’t bear unloading)

CIF free in: carrier is exempt from responsibility and the cost of loading at the shipment port, but bears

responsibility and the cost of unloading at the port of destination (seller bears loading)

CIF free out: carrier bears responsibility and the cost of loading at the shipment port, but be exempt from

responsibility and the cost of unloading at the port of destination (buyer bears unloading)

CIF free in and out: carrier is exempt from responsibility and the cost of loading and discharging (seller

bears loading & buyer bears unloading)

CIF container yard: seller completes his delivery obligation when the goods are placed at the container yard

CIF container freight station: seller completes his delivery obligation when the goods are placed at the

container freight station

CIF + c: buyer has to pay the price that includes commission for middle-man in export country

CIF + i: buyer has to pay the price that includes interest of loaning or interest of discounting the draft (seller

needs money, but buyer doesn’t have money => seller borrows money from bank on behalf of buyer and buyer pays for the interest ~ bank discounts the draft for seller and buyer pays for the interest)

CIF + s: buyer has to pay the price that includes bank’s exchange fee (from import country into export

country) to compensate for the exporter’s losses due to the currency fluctuation between two currencies

CIF + w: buyer has to pay the price that includes war insurane (risks related to security, war on the maritime

route of shipment)

CIF under ship’s tackle: the seller is responsible for risk of loss and damage to the goods until they are

hooked by the tackle (risk is transfer earlier than normal CIF)

CIF afloat: the goods are on the vessel at the time the contract is signed (for repeated repurchase contract by

endorse B/L or hand B/L)

CIF landed: seller has to pay for discharging at the port of destination, buy the buyer is responsible for risk

during discharging (because buyer doesn’t have condition to discharge)

SALE CONTRACT: is a contract under which the ownership of a good or entittlement to a service -

which is transferred from seller to buyer in exchanging for a specified sum of money

Features:

-Parties in sale contract: buyer – seller (CISG: parties place business in different countries and not in same territory, in VN Commercial Law accepts for special zones)

-Payment currency may be foreign currency for at least one party

-CISG: object may be moved across the border because it doesn’t define this, VN: object must be moved across the border because this is the only factor to define the international trade

Legal form: on written contract or other forms of legal validity (including telegraph, telex, fax, data message, verbal contract but must have a witness, witnesses) For data mes is information created, sent, received, stored

in electronic media

Legal content:

-Fundamental clauses (commodity, quality, quantity, price, shipment, payment, packing, warranty…)

-Conventional clauses may not be stipulated in the contract (place of delivery)

-Discretionary clauses that parties agree to add into the contract (breaching clauses, force majeure, governing law…) =>Without these clauses, we can’t conclude a contract

Types of contract: Period of time: short-term contract (1 year), long-term contract (partial shipment)

Structure of contract:

SALE CONTRACT

Date:

Between: Name:

Address:

Tel: Fax: Email:

Represented by

And: Name:

Address:

Tel: Fax: Email:

Represented by

(Seller) has agreed to sell and (Buyer) has agreed to buy the commodity under the terms and conditions provided in this contract as follows:

 Commodity: must be specified clearly, exactly, briefly

 For industrial products:

-Commodity+origin (origin affects the quality): Japanese car, Swiss watch

-Commodity+main specifications: 12-inch colored TV, long grain rice

-Commodity+brand name: HP Probook 2430s, Sony Trinitron TV

 For agricultural products:

-Commodity+scientific name: Urea fertilizer, tiger shrimp (Pennues Monodon)

-Commodity+origin: Vietnamese rice, Korean ginseng

-Commodity+usage: Wheat power for human consumption

-Commodity+main specifications: skinless whole dried squid

 Quality: is a basic to define the price

-Sample (in case: if buyer provides the sample, seller has to produce counter samples and both sign

contract basing on that sample):

“The rice shall be of quality as per sample No., provided by seller on May 25 th 2010 with two

parties’ signatures The sample shall be made into three pieces, each party keeps one and the remaining shall be kept by a third party appointed by the two parties”

-Standard: Vietnamese standard of coffee is TCVN 4193:2014, National technical regulations of

building materials is QCVN 16:2014/BXD, Vietnamese standard of peanut is TCVN 2383:2008

-Trade-mark (such as letters, words, names, signatures, labels, shapes, colors… to distinguish and

define goods’ quality): Panasonic ~ Pensonic, Honda Spacy 125cm3

-Technical documents:

“Motorbikes with qualifications as stipulated in the technical document No., published in 2010,

provided by the manufacturer, including design manual/instructions with signatures and stamps of two parties Those technical documents are in English and Vietnamese as an integral part of the contract”

-Main ingredient (useful: % min, harmful: % max):

“Malaysian white urea: Nitrogen 45% min, Kali 15% min, Moisture 15%max, Mixture: 1% max”

-Natural weight (for countable products)

-Prior examination (for small quantity of goods such as liquidated goods, auctioned goods): write the

word “Approved”, “As it is – where it is”

-Actual state of commodity (for second-hand products): write the word “As is sale”, “Arrive sale” -Description (such as shapes, colors, sizes, uses… of a product):

“White long grain rice: Broken 15% max, Moisture 15% max, Damaged grain 0.5% max,

Mixture 5 grains/kg max”.

“A set wooden furniture: 1 table (1,150x600x840 mm),1 lounge armchair(1,040x600x450 mm)”

-Familiar standard (for agricultural products):

+FAQ (Fair average quality)-seller from a port must deliver goods with quality not lower than the average quality of that products deliver from the same port

+GMO (Good merchantable quality)-seller deliver goods with average quality sold and purchased in the market and accepted by ordinary customers after careful consideration

 Quantity : “5000 Metric tons more or less 10pct at Buyer’s option”

-Measurement unit: 1MT=1,000 kg

-Exact figure (for countable products): 100 motorbikes, 100 barrels only

-Approxiamte figure (for products in mass): 1,000 MT more or less 5%

-Weight:

+Gross weight = net weight + tare

+Net weight: real weight of the content

+Commercial weight: CW= real weight x 100+standard humidity

100+ real humidity

+Theoretical weight (for products with fixed specification & size): 10,000 MT plus or minus 10%

at Seller’s or Buyer’s option (this will depend on who hires ship)

Theoretical w =∑

k=0

n Volume i x Specific weight i x Number i

 Prices:

“Unit price: USD 2,000.00/MT

Total price: USD 2,000.00/MT x 1,000MT = USD 2,000,000.00

In words: 2 million US dollars only

This price shall be understood to be FOB Newport, Ho Chi Minh City, Incoterms 2010, including packaging At the time of delivery, if peanut price on New York market is of 5% different from this

price then market price shall be applied.”

-Currency

-Price determination

+Fixed price: “Unit price: USD 250/MT Total price: USD 250/MTx200MT = USD 50,000 This

price shall be understood to be FOB Hai Phong port, Incoterms 2010, including packaging”

+Deferred price (for products basing on market price or price easily fluctuates): “Coffee price shall

be identified as the trading price at London Commodity Exchange at the time of delivery”

+Flexible price (for products that price of products in the signed contract can be revised): “Unit

price: USD 250/MT Total price: USD 250/MTx200MT = USD 50,000 At the time of delivery, if

coffee price on the London market is of 5% different from this price then market price shall be

applied”

+Sliding scale price (for products that need long time to produce or high value – machine): “The

initial price of the ship is GDP 5 million, of which 50% is for materials, 40% for manpower, 10% for fixed costs This price shall be recalculated upon delivery by the formula given by European

Economic Committee as follows: Reference materials for parties are magazine of , published

by Association within 20 days upon delivery of the ship”

-Discount: there are 2 main types of discount: the discount reasons (purchase of big quantity, buy

out-of-season products, return the purchased goods), ways to calculate the discount (a certain percentage, many single discounts from other reasons, quantity of transacted goods in a certain transaction)

 Delivery:

“-The goods will be delivered under FOB Newport, Ho Chi Minh City (Incoterms 2010)

-Time of shipment: no latter than 31st December 2017

-Port of loading: Newport, Ho Chi Minh City

-Port of discharge: Brooklyn Marine Terminal, New York

-Transshipment: Not allowed

-Partial shipment: Not allowed”

-Time of delivery:

+Periodical delivery: on specific date

+Not-periodical delivery:

+Instant delivery: when seeing these terms “Promptly”, “Immediately”, “As soon as possible”

=>just disregard

-Place of delivery:

+One port and many ports: “Port of departure: Hai Phong/Ho Chi Minh City”, “Port of arrival:

London/Liverpool”

+Definite port and optional port: “FOB Hamburg/Rotterdam”

-Method of delivery: Premilinary Delivery/Last delivery

-Advice of delivery:

+Before delivery: seller informs the necessary information for delivery

+After delivery: seller informs products delivery situation

-Other instructions: for commodity in large volume, partial shipment or transhipment is allowed or

not, stale bill of lading is accepted or not

 Notice:

“Ship’s master/owner/agents will advise vessel’s estimated arrival to Seller 3 days before vessel’s estimated arrival at loading port Buyer shall not be responsible for barge demurrage or carrying charges, if any should Seller’s cargo wait for the vessel.”

 Payment:

“One hundred percent (100%) of invoice value shall be paid by Irevocable L/C at sight:

-L/C Beneficiary:

-L/C Advising Bank:

-Issuing Bank:

One full set of shipping doc for each shipment as follows:

-Signed Commercial invoice

-Full set (3/3) of original clean on board Bill of Lading made out to order, blank endorsed and marked

“Freight Prepaid” plus 6 non-negotiable copies

-Detailed Packing list

-Certificate of Quality issued by independent surveyor

-Fumigation certificate issued by Vietnam Fumigation Company of Ministry of Agriculture and Rural Development or by independent surveyor at Buyer’s option in 01 original and 02 copies.

-Certificate of Origin issued by Vietnam Chamber of commerce and Industry in triplicate.

-Phytosanitary certificate issued by Plant Protection Department of Ministry of Agriculture and Rural Development

-Certificate of Non-GMO issued by independent surveyor

Third party documents and Charter Party B/L accepted.”

-Currency of payment: must be specified clearly

-Time of payment:

+Prompt payment: made in a reasonable time for buyers to consider shipping documents

+Advance payment: made after the contract signing but before the delivery date (about 10-15 days,

must be the first shipment)

+Deferred payment: made X days after the delivery date/ the date of doc presentation/ the date of

taking delivery/ the date of guarantee completion

+Combined time of payment: X days after the contract becomes effective, buyer shall pay 3% of

the contract value/ Right after the first shipment, buyer shall pay 5% of the contract value

-Method of payment: Documentary credit, collection, cash against documents, remittance

-Payment document: including means of payment and shipping documents

 Packaging:

“+In new single PA bag of 500 grams net each, using vacuum method Put 10 kgs in new, clean, sound PP bag and then sealed In new carton box, put 2 PP bags and insert foam 2 percent empty PP

spare bag to be supplied free of charge

+Marked: “Keep away from water”, “Flameable”

+Label on the packaging with the content included:

-Name of product

-Name and address of manufacturer and packer

-Gross weight

-Year of harvest and date of pakaging

-Expiry date”

-Packing: must suit means of transport and be specified clearly (material, form, size, layers )

+Outter packing: box, crate, drum, barrel, case, bag, bale, roll

+Inner packing: cardboard, tarpauline, foil, PP/PVC, PE, oil gease, woods shaving, waste paper

-Marking: must be written by colorfast ink and paint (black or violet for normal goods, red for

dangerous goods, orange for hazardous goods):

+Symbol: Fragile, Use no hooks, This way up, Keep away from sunlight, Keep away from water,

Fleameable, Do not destroy barrier, Tear off here

 Insurance: “Insurance to be for Buyer’s responsibility and account Vessel up to 25 years age

accepted Overage Insurance Premium (OAP) to be reimbursed by the Seller on the basis of

presentation of evidence by Buyer and shall be calculated at international standard OAP scale as follows:

-16-20 years: max 0.185%

-21-25 years: max 0.375%

-26-30 years: max 0.500%”

Term A

Term B

Term C

-Fire, explosion -Ship sinks, ship wreck -Truck derailment, overturned, rammed (expect water) -Unload at temporary port

-Throw goods out of ship -Cost for emergency service -Earthquake, volcano, lightning, thunder -Sea water overflows into ship

-Damage goods when loading & unloading -Goods were washed away

-Pirate -Dispution in crew ship