CHAPTER 7: THE INTERNATIONAL SALES CONTRACT

Chapter 7 comprises four core sections: an overview of contracts; terms and

conditions of the international sales of goods contract; terms and conditions of an
international supply of services contract; and some contract samples. Through these
contents, students know how to form clauses in international sales and then can check
formed contracts to identify if there are any issues that may pose problems or
repercussions that could harm the business results of their companies, and draft contracts
as lecturer’s requirement.

7.1. An overview of contracts.

7.1.1. Concepts and features of a contract.
* Concepts
There are some concepts in terms of an international sale of goods contract as
follows: According to business dictionary, an international sale of goods contract is a
contract under which the ownership and possession of a good, or entitlement to a service,
is transferred from a seller to a buyer in exchange for a specified sum of money (or its
equivalent).
Under Law on Commerce of Vietnam 2005, there is no clear definition or concept
regarding contracts of international sale of goods. However, through article 34-62, an
international sale of goods contract on its nature is an agreement between the buyer and
the seller (shall be conducted in form of export, import, temporary import for re-export,
temporary export for re-import and transfer through border-gates) in different countries
or between parties which have head offices located in the same territory, but one in
domestic area, and the other in special zones which are regarded as exclusive customs
zones according to the provisions of law.
Or, an international sale of goods contract means a foreign-involved sale of goods
contract, whereby the seller is obliged to deliver goods, transfer ownership of goods to
the buyer and receive payment; the buyer is obliged to pay to the seller, receive goods
and the ownership thereof as agreed.
* Features of an international sale of goods contract
In comparison with domestic sale of goods contract, an international sale of goods
contract has 3 features:
The first, parties to contracts of sale of goods – the buyer and the seller:
Article 1.1, CISG 1980: This Convention applies to contracts of sale of goods
between parties whose places of business are in different states:

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 (a) when the States are Contracting States; or when the rules of private international
law lead to the application of the law of a Contracting State.
Law on Commerce of Vietnam 2005: Parties to contracts of sale of goods own
places of business in two different countries, or both parties in the same territory, but one
in domestic area, and the other in special zones which are regarded as exclusive customs
zones according to the provisions of law.
However, nationality is not a fundamental basis to distinguish parties. Although
parties have different nationalities, but the purchase and sale are done in the same
territory, the sales contract is not international.
The second, payment currency may be foreign currency for at least one party.
The third, object to the contract
Under CISG 1980: the object may be moved across the border.
According to article 1 of CISG 1980, international factor of an international sale of
goods contract is defined by the just factor that is places of business of parties must be in
different states, but not the place of signing the contract or whether the goods are moved
across borders or not.
Under Law on Commerce of Vietnam 2005: the object must be moved across the
border because this is the only factor used to define the international purchase and sale
relations.

7.1.2. Conditions of a valid contract.

To constitute a legal contract, a contract must include following contents:
Legal parties: parties must be traders.
Traders include lawfully established economic organizations and individuals that
conduct commercial activities in an independent and regular manner and have business
registrations. [Article 6.1 – Law on Commerce of Vietnam 2005]
Traders are obliged to register their business according to the provisions of law.
Where traders have yet to register their business, they are still held responsibility for all
of their activities according to the provisions of this Law and other provisions of law
[Article 7 – Law on Commerce of Vietnam 2005]
Legal form:

Law on Commerce of Vietnam 2005:
Under Article 27.2: International purchase and sale of goods shall be conducted on
the basis of written contracts or other forms of equal legal validity.
Under Article 3.15: Forms of validity equivalent to documents include telegraph,
telex, facsimile, data message and other forms provided for the law.

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 Under Article 3.5: Data message means information created, sent, received and
stored in electronic media.

CISG 1980:
A contract of sale needs not be concluded in or evidenced by writing and is not
subject to any other requirement as to form. It may be proved by any means, including
witnesses.

Developed countries: basically similar to CISG 1980.
Legal content: A contract comprises fundamental clauses, conventional clauses and
discretionary clauses.
Fundamental clauses include indispensably basic clauses of a contract. If parties
are unable to reach these clauses, there is no contract. For example, clauses on
commodity, quality, quantity, price, shipment, payment, packing and marking, warranty
…
Customary clauses are clauses that are prescribed in Law documents. These
clauses may or may not be stipulated in the contract because they are tacitly applied. For
example, the place of delivery of real asset in an asset purchase agreement is at the
residence of the buyer if parties in the agreement have not agreed on the place of delivery
of the property, otherwise parties must follow the place of delivery prescribed in the
agreement.
Discretionary clauses are clauses that parties agree to add into the contract to
complete and better the contents of the contract such as clauses on fine for breach, force
majeure, governing law, arbitration …
Legal object:
+ According to Article 2 and 3 of CISG 1980, 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, investment securities, negotiable instruments or money;
(e) of ships, vessels, hovercraft or aircraft;
(f) of electricity.
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.

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 This Convention does not apply to contracts in which the preponderant part of the
obligations of the party who furnishes the goods consists in the supply of labour or other
services.
+ According to Law on Commerce of Vietnam 2005, the Government specifies
legal objects by prescribing list of goods banned from export and/or import (Decree
69/2018/ND-CP), lists of goods temporarily suspended from export or import, and list of
goods to be imported or exported under permits of competent state management agencies
and the procedures for granting permits.
Voluntary contract:
The contract must be formed on the basis of voluntary agreement and fairness.

7.1.3. Classifications of contracts.

7.1.3.1 In terms of period of time:
 Short-term contract:
Short-term contract is often signed in a relatively short period. After two parties
complete their obligations stipulated in the contract, legal relations between two parties
will come into the end.
 Long-term contract:
Long-term contract is a contract that has a long performance time and during that
period delivery will be performed many times.
7.1.3.2 In terms of business relations in international sale of goods contracts
There are export contract, import contract, temporary import for re-export,
temporary export for re-import and transfer through border-gates contract.
 Export contract: is a contract that sells commodities to foreign buyers in
order to transfer those commodities out of the territory as well as title to them to the
buyer.
 Import contract: is a contract that purchases and brings commodities from
foreign sellers into the territory in order to serve domestic production, process, and
consumption.
 Temporary import for re-export contract: is an export contract of imported
commodities which do not undergo processing or manufacturing in the country.
 Temporary export for re-import contract: is a purchase of commodities
produced in the country and exported to another country and not having undergone
processing in foreign country.
 Transfer through border-gates contract: is a purchase contract of
commodities from one country or territory for sale to another country or territory without

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carrying out the procedures for importing and exporting such commodities into and out of
the transferring country.
7.1.3.3 In terms of form of contracts
Under Article 27.2: International purchase and sale of goods shall be conducted on
the basis of written contracts or other forms of equal legal validity.
Under Article 3.15: Forms of validity equivalent to documents include telegraph,
telex, facsimile, data message and other forms provided for the law.
Under Article 3.5: Data message means information created, sent, received and
stored in electronic media.

7.1.4. Structure of a contract.

 Opening
 Country name
 Contract name, reference number and contract sign.
 Time and place
 Basis to establish the contract.
 Information about parties
 Name
 Address
 Fax, Telex, Phone number, email …
 Representative
 Contents of a contract
There are three parts of clauses:
 Fundamental clauses include indispensably basic clauses of a contract. If parties
are unable to reach these clauses, there is no contract. For example, clauses on
commodity, quality, quantity, price, shipment, payment, packing and marking, warranty
…
 Customary clauses are clauses that are prescribed in Law documents. These
clauses may or may not be stipulated in the contract because they are tacitly applied. For
example, the place of delivery of real asset in an asset purchase agreement is at the
residence of the buyer if parties in the agreement have not agreed on the place of delivery
of the property, otherwise parties must follow the place of delivery prescribed in the
agreement.
 Discretionary clauses are clauses that parties agree to add into the contract to
complete and better the contents of the contract such as clauses on fine for breach, force
majeure, governing law, arbitration …
 Singing

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7.2 Terms and conditions of the international commercial sale of goods contracts
(standard version):
7.2.1 Model contract for the international sale of goods contracts

PARTIES:
Seller
Name (name of company) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . .
Legal form (e.g. limited liability company) . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . .
Country of incorporation and (if appropriate) trade register number. . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Address (address of place of business of the Seller, phone, fax, e-mail). . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
Represented by (surname and first name, address, position, legal title of representation. .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buyer
Name (name of company) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . .
Legal form (e.g. limited liability company) . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . .
Country of incorporation and (if appropriate) trade register number . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Address (address of place of business of the Buyer, phone, fax, e-mail) . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . .
Represented by (surname and first name, address, position, legal title of representation) .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hereinafter: “the Parties”
1. Goods
1.1 Subject to the terms agreed in this contract, the Seller shall deliver the following
good(s) (hereinafter: “the Goods”) to the Buyer.

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 1.2 Description of the Goods (details necessary to define/specify the Goods which are
the object of the sale, including required quality, description, certificates, country of
origin, other details).
1.3 Quantity of the Goods (including unit of measurement).
1.3.1 Total quantity .................................................................................................
1.3.2 Per delivery instalment (in the case of a contract for delivery of the Goods by
instalments) .............................................................................................................
1.3.3 Tolerance percentage: Plus or minus . . . . . . . . . . . . % (if appropriate).
1.4 Inspection of the Goods (where an inspection is required, specify, as appropriate,
details of organization responsible for inspecting quality and/ or quantity, place and
date and/or period of inspection, responsibility for inspection costs).
1.5 Packaging ...............................................................................................................
1.6 Other specification ………(e.g. the intended use of the Goods could be specified).
2. Delivery
2.1 Applicable International Chamber of Commerce (hereinafter: ICC) Incoterms (by
reference to most recent version of the Incoterms at date of conclusion of the contract)
.......................................................................................................................................
2.2 Place of delivery .....................................................................................................
2.3 Date or period of delivery ......................................................................................
[Comment: Where there is a delivery by instalments the Parties should indicate every
date of delivery for each instalment.]
2.4 Carrier (where applicable) (name and address of carrier, contact person) ............
.......................................................................................................................................
2.5 Other delivery terms (if any) ..................................................................................
3. Price
3.1 Total price ..............................................................................................................
3.2 Price per unit of measurement (if appropriate) ......................................................
3.3 Amount in numbers ................................................................................................
3.4 Amount in letters ....................................................................................................
3.5 Currency .................................................................................................................
3.6 Method for determining the price (if appropriate) .................................................
4. Payment conditions
4.1 Means of payment (e.g. cash, cheque, bank draft, transfer) ..................................
4.2 Details of Seller’s bank account [if appropriate] ..................................................
4.3 Time for payment [specify the time] ......................................................................

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The Parties may choose a payment arrangement among the possibilities set out
below, in which case they should specify the arrangement chosen and provide the
corresponding details:
❑ Payment in advance
Amount to be paid (total price or part of the price and/or percentage of the total
price) .......................................................................................................................
Latest date for payment to be received by the Seller’s bank ..................................
Special conditions applying to this payment [if any] ...............................................
❑ Payment by documentary collection
Amount to be paid [total price or price per delivery instalment] ............................. .
Latest date for payment ..........................................................................................
Means of payment: (i.e. documents against payment − D/P, documents against
acceptance – D/A) hereafter: ................................................................................
The documents to be presented are specified at Article 5 of this contract.
Payment by documentary collection shall be the subject to the Uniform Rules for
Collections published by the International Chamber of Commerce (ICC).
❑ Payment by irrevocable documentary credit
The Buyer must arrange for an irrevocable documentary credit in favour of the
Seller to be issued by a reputable bank, subject to the Uniform Customs and
Practice for Documentary Credits published by the International Chamber of
Commerce (ICC). The issue must be notified at least 14 days before the agreed
date for delivery, or before the beginning of the agreed delivery period specified at
Article 2 of this contract, as appropriate, unless the Parties agree otherwise as
specified hereafter:
[Date on which the documentary credit must be notified to the Seller, other]
......................................................
The credit shall expire 14 days after the end of the period or date of delivery
specified in Article 2 of this contract, unless otherwise agreed hereafter: ...............
The documentary credit does not have to be confirmed, unless the Parties agree
otherwise, as specified hereafter: ...........................................................................
All costs incurred in relation to confirmation shall be borne by the Seller, unless
the Parties agree otherwise, as specified hereafter: ................................................
The documentary credit shall be payable at sight and allow partial shipments and
trans-shipments, unless the Parties agree otherwise, as specified hereafter: ..........
❑ Payment backed by bank guarantee

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 The Buyer shall provide, at least 30 days before the agreed date of delivery or the
beginning of the agreed delivery period specified at Article 2 of this contract,
unless the Parties specify hereafter some other date: . . . . . . . . . , either a first
demand bank guarantee subject to the Uniform Rules for Demand Guarantees
published by the ICC, or a standby letter of credit subject either to such rules or to
the Uniform Customs and Practice for Documentary Credits published by the ICC,
in either case issued by a reputable bank.
❑ Other payment arrangements
...............................................................................................................................
5. Documents
5.1 The Seller shall make available to the Buyer (or shall present to the bank specified
by the Buyer) the following documents (tick corresponding boxes and indicate, as
appropriate, the number of copies to be provided):
❑ Commercial invoice ..........................................................................................
❑ The following transport documents (specify any detailed requirements).
❑ Packing list .......................................................................................................
❑ Insurance documents .........................................................................................
❑ Certificate of origin ..........................................................................................
❑ Certificate of inspection ....................................................................................
❑ Customs documents ..........................................................................................
❑ Other documents .................................................................................................
5.2 In addition, the Seller shall make available to the Buyer the documents indicated
in the ICC Incoterms the Parties have selected under Article 2 of this contract.
6. Non-performance of the Buyer’s obligation to pay the price at the agreed time
6.1 If the Buyer fails to pay the price at the agreed time, the Seller shall fix to the
Buyer an additional period of time of (specify the length, e.g. 7 days, 14 days, 30
days, etc. or opt for a “period of time of reasonable length”) for performance of
payment. If the Buyer fails to pay the price at the expiration of the additional period,
the Seller may declare this contract avoided in accordance with Article 11 of this
contract.
6.2 If the Buyer fails to pay the price at the agreed time, the Seller shall in any event
be entitled, without limiting any other rights it may have, to charge interest on the
outstanding amount (both before and after any judgment) at the rate of [specify] % per
annum. [alternatively: Specify other rate of interest agreed by the Parties.]

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 [Comment: The Parties should take into consideration that in some legal systems
payment of interest is unlawful, or is subject to a legal maximum rate, or there is
provision for statutory interest on late payments.]
7. Non-performance of the Seller’s obligation to deliver the Goods at the agreed
time
7.1 If the Seller fails to deliver the Goods at the agreed time, the Buyer shall fix to the
Seller an additional period of time (specify the length, e.g. 7 days, 14 days, 30 days,
etc. or opt for a “period of time of reasonable length”) for performance of delivery. If
the Seller fails to deliver the Goods at the expiration of the additional period, the
Buyer may declare this contract avoided in accordance with Article 11 of this
contract.
[Option: The Parties may provide liquidated damages for late delivery. If they decide
so, they could use the following model clause on liquidated damages unless otherwise
agreed.
“7.2 If the Seller is in delay in delivery of any goods as provided in this contract, the
Buyer is entitled to claim liquidated damages equal to 0.5% (parties may agree some
other percentage: . . . . . . . %) of the price of those goods for each complete day of
delay as from the agreed date of delivery or the last day of the agreed delivery period,
as specified in Article 2 of this contract, provided the Buyer notifies the Seller of the
delay.
Where the Buyer so notifies the Seller within . . . . . . . days from the agreed date of
delivery or the last day of the agreed delivery period, damages will run from the
agreed date of delivery or from the last day of the agreed delivery period. Where the
Buyer so notifies the Seller more than . . . . . . . days after the agreed date of delivery
or the last day of the agreed delivery period, damages will run from the date of notice.
Liquidated damages for delay shall not exceed . . . . . . . % of the price of the delayed
goods. Liquidated damages for delay do not preclude avoidance of contract in
accordance with Article 11.”]
8. Lack of conformity
8.1 There is a lack of conformity where the Seller has delivered:
8.1.1 Part only or a larger or a smaller quantity of the Goods than specified in
Article 1 of this contract;
8.1.2 The Goods which are not those to which this contract relates or goods of a
different kind;
8.1.3 The Goods which lack the qualities and/or characteristics specified in Article
1 of this contract and/or which lack the qualities of a sample or model which the
Seller has held out to the Buyer;

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 8.1.4 The Goods which do not possess the qualities and/or characteristics
necessary for their ordinary or commercial use;
8.1.5 The Goods which do not possess the qualities and/or characteristics for any
particular purpose expressly or impliedly made known to the Seller at the time of
the conclusion of this contract;
8.1.6 The Goods which are not contained or packaged in the manner specified in
Article 1 of this contract. [Comment: In the absence of such a contract clause, it
shall be the manner usual for such goods or, where there is no such manner, in a
manner adequate to preserve and protect the Goods.]
8.2 The Seller shall be liable under paragraph 8.1 of this Article for any lack of
conformity that exists at the time when the risk passes to the Buyer, even though the
lack of conformity becomes apparent only after that time.
[Comment: The Parties may limit the Seller’s liability for lack of conformity of the
Goods. However, such a contract clause shall be null and void if a lack of conformity
was known to the Seller and he failed to notify the Buyer thereof. If the Parties decide
to limit the Seller’s liability for lack of conformity, they could use the following
clause:
The Seller’s liability under paragraph 8.1 of this Article for lack of conformity of the
Goods is limited to [specify the limitation(s)].]
8.3 The Seller shall not be liable under paragraph 8.1 of this Article for any lack of
conformity if, at time of the conclusion of this contract, the Buyer knew or could not
have been unaware of such lack of conformity.
8.4 The Buyer shall examine the Goods, or cause them to be examined, within as
short period as is practicable in the circumstances. The Buyer shall notify the Seller of
any lack of conformity of the Goods, specifying the nature of the lack of conformity,
within . . . . . . . . . . days after the Buyer has discovered or ought to have discovered
the lack of conformity. In any event, the Buyer loses the right to rely on a lack of
conformity if he fails to notify the Seller thereof at the latest within a period of two
years (other period of time) from the date on which the Goods were actually handed
over to the Buyer.
Comment: The Parties may specify that the notice of non-conformity shall be in
writing. The Parties may also specify that, where the notice of non-conformity has
been sent by letter or other appropriate means, the fact that such notice is delayed or
fails to arrive at its destination shall not deprive the Buyer of the right to rely
thereon.]
8.5 Where the Buyer has given due notice of non-conformity to the Seller, the Buyer
may at his option:

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 8.5.1 Require the Seller to deliver any missing quantity of the Goods, without any
additional expense to the Buyer;
8.5.2 Require the Seller to replace the Goods with conforming goods, without any
additional expense to the Buyer;
8.5.3 Require the Seller to repair the Goods, without any additional expense to the
Buyer;
8.5.4 Reduce the price in the same proportion as the value that the Goods actually
delivered had at the time of the delivery bears to the value that conforming goods
would have had at that time. The Buyer may not reduce the price if the Seller
replaces the Goods with conforming goods or repairs the Goods in accordance
with paragraph 8.5.3 and 8.5.3 of this Article or if the Buyer refuses to accept such
performance by the Seller;
8.5.5 Declare this contract avoided in accordance with Article 11 of this contract.
The Buyer may also claim damages as provided for in Article 14 of this contract.
[9. Expertise procedure [Optional]
9.1 In the event that the Buyer is not satisfied with the quality of the Goods delivered
or to be delivered, it must inform the Seller of such dissatisfaction as soon as possible,
and in any event within . . . . . . . days of delivery of the Goods.
9.2 The Buyer shall immediately apply to the following institution . . . . . . . for an
expert to be appointed. If no institution has been specified by the Parties, then the
Buyer shall immediately proceed to appoint an expert. Any expert appointed shall be
independent of the Parties.
9.3 The expert shall consider and report to the Parties on the alleged non-conformity
of the Goods.
9.4 For this purpose, the expert shall be entitled to inspect the entire goods, or
samples taken under his supervision, and may carry out any test which he considers
to be appropriate.
9.5 The expert shall submit his report to both parties by (specify the means, e.g.
registered post). The report shall be final and binding upon the Parties unless, within
. . . . . . . days after it has been received, it is challenged by one of the Parties by the
commencement of proceedings in accordance with the dispute resolution procedure
provided under this contract.
9.6 The expert’s fees and expenses shall be borne by the Buyer pending completion of
the expertise procedure, but shall be reimbursed to the Buyer by the Seller if the
nonconformity of the Goods is established.]
10. Transfer of property

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10.1 The Seller must deliver to the Buyer the Goods specified in Article 1 of this
contract free from any right or claim of a third person.
[Option: The Parties may provide for the retention of title clause if such a clause is
valid under the law applicable to the contract. According to that clause, the Goods
shall remain the property of the Seller until the full payment of the price. If the Parties
decide so, they can use the following clause:
“10.1 Retention of title. The property in the Goods specified in Article 1 of this
contract shall not pass to the Buyer until the Seller has received payment in full of the
price of the Goods. Until property in the Goods passes to the Buyer, the Buyer shall
keep the Goods separate from those of the Buyer and third parties and properly
stored, protected and insured and identified as the Seller’s property.”]
10.2 If the Goods specified in Article 1 of this contract are subject to a right or claim
of a third person, the Buyer shall notify the Seller of such right or claim and request
that the other goods free from all rights and claims of third persons be delivered to it
by the Seller without any additional expense to the Buyer. [alternatively, the Buyer
may request the Seller to free the Goods from all rights and claims of third persons
within (specify the period of time e.g. reasonable time, immediately, 30 days, etc.)
without any additional expense to the Buyer.]
10.3 If the Seller complies with a request made under paragraph 10.2 of this Article,
and the Buyer nevertheless suffers a loss, the Buyer may claim damages in
accordance with Article 14 of this contract.
10.4 If the Seller fails to comply with a request made under paragraph 10.2 of this
Article, the Buyer may declare this contract avoided in accordance with Article 11 of
this contract and claim damages in accordance with Article 14.3 of this contract. If the
Buyer does not declare this contract avoided, he shall have the right to claim damages
in accordance with Article 14.3 of this contract.
10.5 The Buyer shall lose his right to declare this contract avoided if he fails to notify
the Seller as provided in paragraph 10.2 of this Article within . . . . . . . . . . days
[Alternative: Reasonable time, immediately, etc. from the moment when he became
aware or ought to have become aware of the right or claim of the third person in
respect of the Goods.]
10.6 The Seller shall not be liable under this Article if the existence of right or claim
of a third person on the Goods was notified to the Buyer at the time of the conclusion
of this contract and the Buyer agreed to take the Goods subject to such right or claim.
[10.7 Optional: “No action for legal defects can be taken by the Buyer after one year
(specify other period of time) from the date when the Buyer became aware of the
existence of right or claim of a third person on the Goods.”]

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11. Avoidance of contract
11.1 There is a breach of contract where a party fails to perform any of its obligations
under this contract, including defective, partial or late performance.
11.2 There is a fundamental breach of contract where:
11.2.1 Strict compliance with the obligation which has not been performed is of the
essence under this contract; or
11.2.2 The non-performance substantially deprives the aggrieved party of what it was
reasonably entitled to expect under this contract.
[Option: The Parties additionally agree that the following is to be considered as a
fundamental breach of contract: [Specify the cases that constitute a fundamental
breach of contract e.g. late payment, late delivery, non-conformity, etc.”].]
11.3 In a case of a breach of contract according to paragraph 11.1 of this Article, the
aggrieved party shall, by notice to the other party, fix an additional period of time of
reasonable length [alternatively, the Parties may specify the length, e.g. 15 days, 30
days] for performance. During the additional period of time the aggrieved party may
withhold performance of its own reciprocal obligations and may claim damages but
may not declare this contract avoided. If the other party fails to perform its obligation
within the additional period of time, the aggrieved party may declare this contract
avoided.
11.4 In case of a fundamental breach of contract according to paragraph 11.2 of this
Article, the aggrieved party may declare this contract avoided without fixing an
additional period of time for performance to the other party.
11.5 A declaration of avoidance of this contract is effective only if made by notice to
the other party.
* Note: For the purposes of this Model Contract, the term “Avoidance” is taken from the
CISG and means termination of contract.
12. Effects of avoidance in general
12.1 Avoidance of this contract releases both parties from their obligation to effect
and to receive future performance, subject to any damages that may be due.
12.2 Avoidance of this contract does not preclude a claim for damages for non-
performance.
12.3 Avoidance of this contract does not affect any provision in this contract for the
settlement of disputes or any other term of this contract that is to operate even after
avoidance.
13. Restitution

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 13.1 On avoidance of this contract either party may claim restitution of whatever it
has supplied, provided that such party concurrently makes restitution of whatever it
has received.
13.2 If both parties are required to make restitution, they shall do so concurrently.
13.3 Where the Seller is under an obligation to refund the price, he shall also be liable
for the interest thereon at the rate fixed by Article 6.2 of this contract, as of the date of
payment.
13.4 The Buyer shall be liable to account to the Seller for all the benefits which he has
derived from the Goods or part of them, as the case may be:
13.4.1 Where he is under an obligation to return the Goods or part of them; or
13.4.2 Where it is impossible for him to return the Goods or part of them, but the
contract is nevertheless avoided.
14. Damages
14.1 Any non-performance gives the aggrieved party a right to damages either
exclusively or in conjunction with any other remedies except where the
nonperformance is excused under force majeure as provided for in Article 17 of this
contract.
14.2 Where this contract is not avoided, damages for a breach of this contract by one
party shall consist of a sum equal to the loss, including loss of profit, suffered by the
other party. Such damages shall not exceed the loss which the Party in breach ought to
have foreseen at the time of the conclusion of this contract, in the light of the facts and
matters which then were known or ought to have been known to it, as a possible
consequence of the breach of this contract.
14.3 [To be adapted to a particular contract] In case of avoidance of this contract,
where there is a current price for the Goods, damages shall be equal to the difference
between the price fixed by the contract and the current price on the date on which the
contract is avoided. In calculating the amount of damages, the current price to be
taken into account shall be that prevailing at the place where delivery of the Goods
should have been made. If there is no such current price or if its application is
inappropriate, it shall be the price in a market which serves as a reasonable substitute,
making due allowance for differences in the cost of transporting the Goods. If there is
no current price for the Goods, damages shall be calculated on the same basis as that
provided in paragraph 14.2 of this Article.
14.4 If this contract is avoided and if, in a reasonable manner and within a reasonable
time after avoidance [the Parties may specify the concrete terms], the Buyer has
bought goods in replacement or the Seller has resold goods, the Party claiming

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 damages shall recover the difference between the contract price and the price paid for
the Goods bought in replacement or that obtained by the resale.
14.5 The damages referred to in paragraphs 14.5 and 14.6 of this Article may be
increased by the amount of any reasonable expenses incurred as a result of the breach
or up to the amount of any loss, including loss of profit, which should have been
foreseen by the Party in breach, at the time of the conclusion of this contract, in the
light of the facts and matters which were known or ought to have been known to it, as
a possible consequence of the breach of this contract.
14.6 Damages are to be paid in a lump sum [the Parties may specify the other
solution. Comment: Damages may be payable in instalments where the nature of the
harm makes this appropriate. Damages to be paid in instalments may be indexed].
14.7. Damages are to be assessed in the currency in which the monetary obligation
was expressed [the Parties may specify the other solution, e.g. in the currency in
which the harm was suffered].
15. Mitigation of harm
A party who relies on a breach of this contract must take such measures as are
reasonable in the circumstances to mitigate the loss, including loss of profit, resulting
from the breach. If it fails to take such measures, the Party in breach may claim a
reduction in the damages in the amount by which the loss should have been mitigated.
16. Change of circumstances (hardship)
[Comment: The Parties should be free to consult each other in the event of a major
change in circumstances − particularly one creating hardship for a particular party.
However, an SME should only include the option at the end of Article 16.3 (right to
refer to the courts/arbitral tribunal to make a revision or to terminate the contract) if
(i) the SME considers that it is not likely to be used against that party’s interests by a
party in a stronger tactical position or (ii) the right to refer to a court/tribunal is
already an existing right under the applicable governing law in the event of
hardship.]
16.1 Where the performance of this contract becomes more onerous for one of the
Parties, that party is nevertheless bound to perform its obligations subject to the
following provisions on change of circumstances (hardship).
16.2 If, however, after the time of conclusion of this contract, events occur which
have not been contemplated by the Parties and which fundamentally alter the
equilibrium of the present contract, thereby placing an excessive burden on one of the
Parties in the performance of its contractual obligations (hardship), that party shall be
entitled to request revision of this contract provided that:

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 16.2.1 The events could not reasonably have been taken into account by the
affected party at the time of conclusion of this contract;
16.2.2 The events are beyond the control of the affected party;
16.2.3 The risk of the events is not one which, according to this contract, the Party
affected should be required to bear;
16.2.4 Each party shall in good faith consider any proposed revision seriously put
forward by the other party in the interests of the relationship between the
Parties. [Option [add if wished: Otherwise delete if not applicable or not
enforceable under the law governing the contract.
“16.3 If the Parties fail to reach agreement on the requested revision within [specify
time limit if appropriate], a party may resort to the dispute resolution procedure
provided in Article 22. The [court/arbitral tribunal] shall have the power to make any
revision to this contract that it finds just and equitable in the circumstances, or to
terminate this contract at a date and on terms to be fixed.”.]
17. Force majeure – excuse for non-performance
17.1 “Force majeure” means war, emergency, accident, fire, earthquake, flood, storm,
industrial strike or other impediment which the affected party proves was beyond its
control and that it could not reasonably be expected to have taken the impediment into
account at the time of the conclusion of this contract or to have avoided or overcome
it or its consequences.
17.2 A party affected by force majeure shall not be deemed to be in breach of this
contract, or otherwise be liable to the other, by reason of any delay in performance, or
the non-performance, of any of its obligations under this contract to the extent that the
delay or non-performance is due to any force majeure of which it has notified the
other party in accordance with Article 17.3. The time for performance of that
obligation shall be extended accordingly, subject to Article 17.4.
17.3 If any force majeure occurs in relation to either party which affects or is likely to
affect the performance of any of its obligations under this contract, it shall notify the
other party within a reasonable time as to the nature and extent of the circumstances
in question and their effect on its ability to perform.
17.4 If the performance by either party of any of its obligations under this contract is
prevented or delayed by force majeure for a continuous period in excess of three
[specify any other figure] months, the other party shall be entitled to terminate this
contract by giving written notice to the Party affected by the force majeure.
[Alternative: If preferred, replace 17.4 with the following alternative:
“17.4 If the performance by either party of any of its obligations under this contract is
prevented or delayed by force majeure for a continuous period in excess of three

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 [specify any other figure] months, the Parties shall negotiate in good faith, and use
their best endeavours to agree upon such amendments to this contract or alternative
arrangements as may be fair and reasonable with a view to alleviating its effects, but
if they do not agree upon such amendments or arrangements within a further period
of 30 [specify any other figure] days, the other party shall be entitled to terminate this
contract by giving written notice to the Party affected by the force majeure.”.]
18. Entire agreement
18.1 This contract sets out the entire agreement between the Parties. Neither party has
entered into this contract in reliance upon any representation, warranty or undertaking
of the other party that is not expressly set out or referred to in this contract. This
Article shall not exclude any liability for fraudulent misrepresentation. [Add where
relevant: “This contract supersedes any previous agreement or understanding
relating its subject matter”].
18.2 This contract may not be varied except by an agreement of the Parties in writing,
(which may include e-mail). [Add where Article 16.3 or equivalent is included: “Or
in accordance with Article 16.3”].
19. Notices
19.1 Any notice under this contract shall be in writing (which may include e-mail)
and may be served by leaving it or sending it to the address of the other party as
specified in Article 19.2 below, in a manner that ensures receipt of the notice can be
proved.
19.2 For the purposes of Article 19.1, notification details are the following, unless
other details have been duly notified in accordance with this Article:
– ...................................................................................................................................
– ...................................................................................................................................
20. Effect of invalid or unenforceable provisions
If any provision of this contract is held by any court or other competent authority to
be invalid or unenforceable in whole or in part, this contract shall continue to be valid
as to its other provisions and the remainder of the affected provision, unless it can be
concluded from the circumstances that, in the absence of the provision found to be
null and void, the Parties would not have concluded this contract. The Parties shall
use all reasonable efforts to replace all provisions found to be null and void by
provisions that are valid under the applicable law and come closest to their original
intention.
21. Authorizations [add where relevant]

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 21.1 This contract is conditional upon the following authorizations first being
obtained [specify the authorization(s) or other conditions required e.g. of
governmental or regulatory authority].
21.2 The relevant party shall use all reasonable efforts on its part to obtain such
authorizations and shall notify the other party promptly of any difficulty encountered.
22. Dispute resolution procedure
Any dispute, controversy or claim arising out of or relating to this contract, including
its conclusion, interpretation, performance, breach, termination or invalidity, shall be
finally settled under the rules of [specify the arbitration institution] by [specify the
number of arbitrators, e.g. sole arbitrator or, if appropriate, three arbitrators]
appointed in accordance with the said rules. The place of arbitration shall be [specify].
The language of the arbitration shall be [specify].
[The following are alternatives to a specified arbitral institution under Article 22.
Alternative 1: Ad hoc arbitration
“Any dispute, controversy or claim arising out of or relating to this contract,
including its conclusion, interpretation, performance, breach, termination or
invalidity, shall be finally settled under the rules of UNCITRAL [specify other rules]
by [specify the number of arbitrators, e.g. sole arbitrator or, if appropriate, three
arbitrators] appointed by [specify name of appointing institution or person]. The
place of arbitration shall be [specify]. The language of the arbitration shall be
[specify].”]
[Alternative 2: State courts
“Any dispute, controversy or claim arising out of or relating to this contract, in
particular its conclusion, interpretation, performance, breach, termination or
invalidity, shall be finally settled by the courts of (specify place and country) which
will have exclusive jurisdiction.”.]
23. Applicable law and guiding principles
23.1 Questions relating to this contract that are not settled by the provisions contained
in the contract itself shall be governed by the United Nations Convention on Contracts
for the International Sale of Goods (Vienna Sales Convention of 1980, hereafter
referred to as CISG).
Questions not covered by the CISG shall be governed by the UNIDROIT Principles
of International Commercial Contracts (hereafter referred to as UNIDROIT
Principles), and to the extent that such questions are not covered by the UNIDROIT
Principles, by reference to [specify the relevant national law by choosing one of the
following options:

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 The applicable national law of the country where the Seller has his place of business,
or
The applicable national law of the country where the Buyer has his place of business,
or
The applicable national law of a third country (specify the country)].
23.2 This contract shall be performed in a spirit of good faith and fair dealing.

DATE AND SIGNATURE OF THE PARTIES

Seller Buyer
Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Name. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Signature Signature

7.2.2 Explanation of some fundamental terms and conditions

7.2.2.1. Goods.
Name of goods needs to be specified clearly, exactly and briefly in order to not mix
this commodity up with another.
For industrial products:
Commodity + Origin: if the origin affects the quality. For example: Japanese car,
Swiss watch
Commodity + main specifications:
Commodity + brand name: This method is applied for products of prestige
manufactures/ producers/ companies.
For example: HP Probook 2430s, Sony Trinitron TV
For agricultural products
Commodity + scientific name
Commodity + origin
Commodity + use/ usage
Commodity + main specifications
For example: skinless whole dried squid
We can combine some options to clearly identify the contract object for facilitation
of contract performance and avoid misunderstanding or disputes.
Some specific contract samples:
Rice export contract:

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 Commodity: Vietnamese white rice long grain, crop 2010, 10% broken.
Fertilizer import contract:
Commodity: UREA, fertilizer, Nitrogen 46% min, origin Indonesia.
Aquatic product export contract:
Commodity: Frozen black tiger shrimps
More specific: Semi-IQF Raw Head-On Shell-On Black Tiger Shrimps (Pennnues
Monodon)
7.2.2.2 Quality.
“Quality” is a term that manifests the qualitative issue of a commodity, specifies
feature, specification, size, effect, use, productivity, manufacturing standard … of that
commodity.
Quality is a basis to define the price. Therefore, determination of good quality can
help the buyers define good and right price, purchase right commodity.
There are a lot of ways to define quality:
a) By sample
This method is used to value quality of a consignment based on quality of some
goods taken out from that consignment.
This method’s drawback is the not-high exactness. Thus, it is only used for
commodity that is difficult to determine quality or has not had quality standard.
How to implement:
The seller provides the buyer with a sample to inspect. If the buyer agrees that
sample, the seller will make three pieces: each party keeps one, the remaining will be
kept by a third party appointed by the two parties to resolve later disputes.
Or, the sample can be provided by the buyer, and the seller has to produce counter
samples and both parties will sign contract basing on that counter samples.
Requirements:
Samples will be taken out from the consignment.
Samples must have average quality.
Correspondent to sample
According to sample
For example: “The rice shall be of quality as per sample No…, provided by the
seller on May 25th 20… 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”
b) By standard
For those products having official standards, parties will base on these standards to
define quality.

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 Notice:
Parties needs to understand the standard applied (the standard can be published by
the Government, industry, or manufacturing agency, so it needs to be specified
unambiguously the publication office, place, and date)
The standard can be modified if necessary.
The applied standard needs to be stated explicitly.
For example: Vietnamese standard coffee: TCVN 4193:2001 or National technical
regulations on products, goods of building materials QCVN 16:2014/BXD
c) By trade-mark
Trade-mark is a sign such as letters, words, names, signatures, labels, shapes, colors
that can be used to distinguish this producer’s goods from those of the others.
Notice:
Has trade-mark registered? (Only purchase registered products as they guarantee
the quality)
Which market has trade-mark registered?
Similar trade-marks need to be paid attention to.
For example: Honda Spacy 125cm3
d) By technical documents
Technical documents can be catalogues, installation instructions, operation
instructions …
Technical documents are an integral part (annex) of contracts.
For example: “Motorbikes with qualifications as stipulated in the technical
document No. 435, published in 20.., provided by the manufacturer, including design
manual/ instructions with signatures and stamps of the two parties,
Those technical documents are in English and Vietnamese and are an integral part
of the contract”.
e) By the main ingredient/ content…
There are two types:
● Useful content: prescribe % min
● Unuseful content: prescribe % max
Cases to apply: mines, chemicals, processed foods …
For example: Malaysian white urea:
- Nitrogen: 45% min;
- Kali: 15% min;
- Moisture: 15% max:
- Mixture: 1% max.
- Biuret: 1.0% max

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 f) By natural weight
Natural weight of a volume unit of a good is used to evaluate quality.
g) By prior examination/ inspection
If this method is applied, only when the buyer inspects the goods and approves, will
the signed contract become valid. If the buyer does not inspect the goods within the time
stipulated, the buyer tacitly agrees on the quality.
Cases to apply: Commodity with small quantity, not standardized like liquidated
goods, auctioned ones.
Ways to express approval:
Inspected – Approved
As it is.
As it is and where it is.
h) By the actual state of the commodity
This method was born in Italia, then immigrated into UK, France with other names
as “As is sale” or “arrive sale”. Under this method, the seller only delivers the goods
without any responsibility for the product’s quality. The product price is, therefore, not
high.
i) By description
All features about shapes, colors, sizes, uses … of a product will be mentioned. This
method is applied for products with easy-to-describe description.
The effect of this method will be subject to the ability of descriptor. It is often used
with other methods.
For example: “White rice of long grain with natural flavor
Broken: 15% max
Different color grain: 4% max
Moisture: 15% max
Damaged grain: 0.5% max
Mixture: 5 grains/kg max”
Or, for exported wooded furniture contract:
Commodity, description of goods: Love set wooden furniture
01 table (1,150 x 610 x 840) mm
01 lounge armchair (1,040 x 600 x 450) mm and cushion.
02 Love armchair (590 x 610 x 840) mm and cushion
j) By familiar standard
This method will be applied for agricultural products, not standardized material.
The approximate standards which are often used in the world are FAQ, GMO

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 FAQ (Fair average quality): Under this standard, the seller from a definite port must
deliver the goods with quality which is not lower than the average quality of that kind of
products delivered from the same port within a specific period (year, quarter, crop …)
GMO (Good merchantable quality): Under this standard, the seller must deliver the
goods with average quality sold and purchased in the market and accepted by ordinary
customers after careful consideration.
For example: Vietnamese white Rice long grain, 5pct broken F.A.Q (fair average
quality) of season 2017/2018 crop as to grain procurable at the time of shipment and shall
conform to the specification laid down in the schedule attached hereto (Schedule A) and
shall be in sound condition.
In reality, above methods can be combined together in order to bring higher effects.
7.2.2.3. Quantity.
“Quantity” is a term that manifests the quantitative issue of a commodity, specifies
measurement unit and ways of stipulation.
a) Measurement unit
Measurement is a process that uses numbers to describe things based on what we
can observe about them. This is done to be able to compare them to each other. We can
measure how big things are, how warm they are, how heavy they are, and lots of other
features as well. Measurement unit provides standards for our comparisons, so that the
numbers from our measurements refer to the same thing.
Today, most measurement units fall into one of three systems. The older two, the
British imperial system and the closely related to US customary system use the foot as a
measure of length, the pound as a measure for weight and the second as a measure for
time. A newer system, also called the international system of units, is the metric system
which uses the metre for length, the kilogram for weight, and the second for time. There
are other units as well. To avoid misunderstanding, the metric system is well advised to
use or stipulate the approximate units to metric system.
Some common measurement units:
1 MT = 1 metric ton = 1,000 kg
1 LT (long ton) British = 1,016.04 kg
1 ST (short ton) US = 907.18 kg
1 pound (Lb) = 0.454 kg
1 gallon (petroleum) British = 4.546 litre
1 gallon (petroleum) US = 3.785 litre
1 barrel (petroleum) = 159 litre
1 bushel (grain) = 36 litre
1 ounce = 28.35 gram

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 1 troy ounce = 31.1 gram
1 inch = 2.54 cm
1m = 39.37 inch = 3.281 ft
1 foot = 12 inches = 0.3048 m
1 mile = 1.609 km
1 yard = 0.9144 m
1m = 1.0936 yard
b) Ways to stipulate quantity
By exact figure: this method is often used for valuable and countable goods.
For example: 100 motorbikes; 15,000 barrels only; 525,000 UK gallons only.
By approximate figure: with tolerance
This method is used for goods in mass like fertilizer, ore, grain …
There are some expressions: about, approximate, more or less, from … to …
For example: 1,000 MT more or less 5%
Notice: Any quantity delivered in the tolerance shall not be deemed a breach of
contract.
c) Ways to stipulate weight
Gross weight: total weight of a commodity inclusive of the weight of the
container and packaging.
Gross weight = net weight + tare.
Net weight: weight of the contents, not including any packaging, etc.
Commercial weight: weight of a commodity with standard humidity.
Exchange real weight of a commodity into commercial weight by following
formula:
100 + Wsh
Gcw = Grw x
100 + Wrh

Where:
Gcw: commercial weight of the commodity
Grw: real weight of the commodity
Wsh: standard humidity of the commodity (%)
Wrh: real humidity of the commodity (%)
Theoretical weight: weight of a commodity is defined by the following formula:
P = ∑Vi miSi
(i = 1 n)
Where:

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 P: theorical weight of a commodity
Vi: volume of a unit of commodity
mi: specific weight of commodity i
Si: the number of commodity i
n: the number of types of commodity
This method is suitable for commodities with fixed specification and size.
For example: Quantity: 10,000 MT plus or minus 10% at Seller’s option. Or
10,000 MT more or less 5% at Buyer’s option.
7.2.2.4. Delivery.
Necessary information of delivery term is date of delivery, place of delivery,
advice/ notice of delivery, delivery instructions.
a) Date of delivery:
Date of delivery is the time that the seller must complete its delivery obligation. In
international business, there are 03 ways to stipulate time of delivery
 Periodical delivery:
- On a specific date: 31st Dec 2017
- On a date which is deemed to be the last date of delivery time: not later than
31st Dec 2017.
- In a period of time: 3rd Quarter, 2017
- In a specific period of time at the buyer’s option: Delivery from Feb to July at
Buyer’s Option.
 Not- periodical delivery: This method has general stipulation, rarely to be
used. Delivery term can be negotiated as follows:
- Shipment by first available steamer.
- Subject to shipping space available.
- Subject to the opening of L/C
- Subject to export license.
 Instant delivery:
- Promptly.
- Immediately.
- As soon as possible.
Each region has its own explanation for these above terms. Therefore, it is well
advised not to use them.
b) Place of delivery:
Places of delivery can be stipulated as follows:
 Specific port (station) of delivery, port (station) of arrival and port (station) of
transfer.

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  One port (station) and many ports (stations)
 For groceries, many ports (stations) of delivery or many places of destination.
For example:
Port of departure: Hai Phong/ Da Nang/ Hochiminh City
Port of arrival: London/ Liverpool.
 Definite port (station) and optional port (station).
In delivery terms, parties often choose a second or third port.
For example: FOB Hamburg/ Rotterdam
CIF London/ Rotterdam/ Hamburg.
Parties can stipulate main ports in a region which will be a chosen port for one of
them.
For example: Port of destination: CIF European main ports  the seller can
appoint any port in the main ports in Europe to be the port of destination.
c) Method of delivery:
Regulations on delivery at a place as a place of preliminary delivery or a
place of last delivery.
 Preliminary delivery: the buyer at the first step checks the goods to determine
the conformity to the contract’s quantity and quality. Preliminary delivery is often done at
the manufacturing place or place of departure. If there is anything wrong, the buyer asks
the seller to remedy it at once.
 Last delivery: to confirm that the seller completes its delivery obligation.
Regulations on delivery in terms of quantity and quality.
 Delivery in terms of Quantity: real quantity is determined by weighing,
counting or measuring the goods.
 Delivery in terms of Quality: feature, use, productivity, dimension, shape …
will be examined to determine quality of the goods.
 Analyzing method or sensible method will be applied.
 Examination can be done on all goods or only some particular goods.
d) Advice/ Notice of delivery:
Notice of delivery is subject to the delivery term. However, parties still stipulate
more about times and contents of the notice.
 Before delivery:
- The seller informs the buyer of: commodity available for delivery, date of
delivery, quantity, qualifications/ specifications, packing, marking.
- The buyer informs the seller of: necessary information for delivery or details of
vessel like vessel’s name, vessel nationality, vessel flag, vessel tonnage, ETA (estimated
time of arrival) (if the buyer arranges transportation).

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  After delivery: the seller informs the buyer of goods delivery situation,
including: commodity, quantity, qualifications/ specifications, packing, marking, vessel’s
name, vessel nationality, vessel flag, vessel tonnage, B/L number, ETD (estimated time
of departure), ETA (estimated time of arrival).
Contents of the notice is defined by its purpose.
e) Other instructions:
 For commodity in large volume, partial shipment is allowed or not, or total
shipment is required.
 Transhipment is allowed or not?
 Stale bill of lading is acceptable or not?
Stale B/L is presented to its consignee, or at a bank, after the last date specified in
the relevant letter of credit and which, therefore, is not acceptable as a valid document.
 Loading terms: terms that instruct the shipper to deliver the goods on board a
vessel in the agreed port at the time stipulated.
 Discharging terms: terms that instruct the consignee to take delivery of the
goods at the time stipulated in the port of discharge so that they can be discharged from
the vessel.
Example of Rice export contract:
Shipment:
* Port of loading: Hochiminh City main port.
* Time of shipment: July/ August 2018 (earliest loading on July 1st, 2018). Buyer to
give Seller minimum 5 days pre-advice of vessel arrival at load port.
* Loading condition: Seller guarantees to load at the rate of minimum 1,000 MT per
weather working day (1,000 MT/4 gangs/ 4 derrick/ day) of 24 consecutive hours
Saturday, Sunday and official holidays excluded unless used then time to count.
* Demurrage/ despatch: USD3,000/ USD1,500 per day.
* Loading term: when NOR (notice of readiness) tendered before noon, laytime shall
be commenced from 13:00 hour on the same date. When NOR tendered afternoon,
laytime shall be commenced from 8:00 hour on next date.
Example of Fertilizer import contract:
Shipment/ Delivery:
* Time of shipment: not later than 15th Nov 2018.
* Port of loading: Indonesia main port
* Destination: Saigon port.
* Notice of shipment: within 2 days after the sailing date of carrying vessel to
S.R.Vietnam, Seller shall notify by cable to Buyer the following information: L/C

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 number, Amount, Name and Nationality of the vessel, B/L number/ date, port of
loading, date of shipment, expected date of arrival at discharging port.
* Discharging terms: when NOR tendered before noon, laytime shall be commenced
from 13:00 on the same date. When NOR tendered afternoon, laytime shall be
commenced from 8:00 on next date.
1,000 MT/day WWDSHEX EIU (Saturday, Sunday and official holidays excluded
even in use)
* Dem/des: USD 4,000/ half.
7.2.2.5. Prices.
In this term, currency unit, price, way to stipulate price, discount and delivery term
need to be determined.
a) Currency:
Currency can be of the seller’s country or the buyer’s country, or of a third country
b) Price determination:
Prices in foreign trade contracts are international prices.
Below are some ways to determine prices:
 Fixed price: a price established at the time of signing the contract and
unchanged during the time of the contract.
For example:
“Unit price: USD 250/MT.
Total price: USD250/MT x 200MT = USD 50,000
(In words: US dollars fifty thousand only)
This price shall be understood to be FOB Haiphong port, Incoterms 2010, including
packaging.”

 Deferred price: a price determined after signing the contract or by

negotiation in a one period of time, or by basing on the world price at one day before
delivery.
* Included information: time, place and how to identify prices.
* Cases to apply: price fluctuates, market power belongs to the buyer.
For example: “Coffee price shall be identified as the trading price at London
Commodity Exchange at the time of delivery”.
 Revisable/ Flexible price
Although price is fixed in the contract, it can be revised if at the time of delivery,
the market price is fluctuated within a certain level.
For example:
Unit price: USD 600/MT

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 Total price: USD 600/MT x 500MT = USD 300,000
(In words, US dollars three hundred thousand only)
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: a price that is calculated at the time of signing the
contract includes fluctuation in production costs during the period of the contract.
Sliding scale price is often used for goods that need long time to produce and of
high value.
This price is given by European Economic Committee. Its formula:
Where:

M1 S1

P1 = Po (a + b. ------- + c. -------)

Mo So

P1: final price (used to make payment)

Po: basic price (established at the time of signing the contract)
a, b, c: price structure (percentage of factors)
a + b + c = 100%
a – weight of fixed costs.
b – weight of material costs.
c – weight of labor costs.

Mo and M1: price of material, at the time of signing the contract and determining
payment price.
So and S1: wage or wage index, at the time of signing the contract and
determining payment price
For example: “The initial price of the ship is GBP 5million, of which 50% is for
materials, 40% for manpower and 10% for fixed cost. This price shall be recalculated
upon delivery by the formula given by European Economic Committee as follows:
Reference materials for parties are magazine of ABC, published by XYZ Association
within 20 days upon delivery of the ship.”
c) Discount
In real business transactions, there are a lot of types of discount (about 20 types)

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  In terms of discount reasons:
- Discount due to purchase of big quantity.
- Seasonal discount: is used for people buying out-of-season products to
encourage purchasing power.
- Discount due to returning the purchased goods.
 In terms of ways to calculate discount:
- Single discount: is often expressed by a certain percentage in the offering
price.
- Double discount: comprises many single discounts which buyers receive due
to many other reasons.
- Progressive discount: is a discount that will gradually increase in proportion
to quantity of transacted goods in a certain transaction.
- Bonus: is a type of discount that sellers offer regular buyers if in a period (6
months, 1 year) total purchase amount reaches a certain level set by the sellers.
d) Delivery term:
When determining prices, parties always specify delivery term related to that
price. Thus, in purchase contracts, prices are always written next to a certain
delivery term.
For example: Price of a rice contract:
Unit price: USD 475/MT FOB, Saigon port Hochiminh City (Incoterms 2010)
Total amount: USD 4,750,000.00
(In words: US dollars four million seven hundred and fifty thousand only)
7.2.2.6. Payment.
This term stipulates: currency of payment, time of payment, methods of payment,
and payment documents.
a) Currency of payment
Currency of payment can be currency of the seller’s country, the buyer’s country or
a third party’s country.
Currency of payment does or does not need to be currency of the price. If currency
of payment is not currency of the price, parties must regulate the exchange rate.
b) Time of payment.
 Prompt payment:
Payment will be made in a reasonable time which allows buyers to consider
shipping documents.
 Advance payment:

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 Payment made after the contract signing but before delivery date.
Purpose: as Performance Bond, guaranteeing the contract performance.
Note:
- Payment before the delivery from 10 to 15 days.
- The delivery date will be of the first shipment.
- No interest on the advanced payment amount.
- The seller only makes delivery when getting the notice of credit available.
 Deferred payment:
Payment shall be made x days after:
- the delivery date.
- the date of document presentation.
- the date of taking delivery.
- the date of guarantee completion.
 Combined/ mixed time of payment:
- X1 days after the contract becomes effective, the Seller shall pay 3% of the
contract value.
- X2 days before the first shipment, the Seller shall pay 5% of the contract
value.
- Right after the first shipment, the Seller shall pay 5% of the contract value.
- Right after the last shipment, the Seller shall pay 10% of the contract value.
- The Buyer will keep 10% of the contract value and pay that upon the
completion of guarantee obligation. The remaining shall be paid in 4 years,
each year an equal amount.
c) Methods of payment
There are lots of different methods of payment: Documentary credit, Collection
(Clean collection, documentary collection), Cash against documents, Remittance (MT or
T/T), Open account, Advance payment … Each method has its own drawbacks and
strengths. Parties need to study carefully to choose the best one.
d) Payment documents
Payment documents include: means of payment (usually Draft) and shipping
documents:
- Draft/ Bill of Exchange
- Commercial Invoice
- Bill of Lading
- Insurance policy/ Insurance certificate (If CIF or CIP is applied)
- Certificate of Quality.
- Certificate of Quantity/ Weight.

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 - Certificate of Origin.
- Packing list.
- Other documents.
For example:
Payment:
- By Irrevocable letter of credit the full amount of the contract value.
- L/C beneficiary: Truong Thanh Furniture Corporation.
- L/C advising bank: Agribank (Vietnam Bank Agriculture and Rural Development).
- Bank of opening L/C: Barcelona Bank, Spain.
- Time of opening L/C: Not later than Oct. 10, 2018
- Payment document:
One full set of shipping document for each shipment is required as follows:
- Bill of lading: 2/3 set of clean on board marine bill of lading made out to order of
shipper and blank endorsed, marked “Freight collect”.
- Signed Commercial Invoice issued by the Seller in 03 originals and 03 copies.
- Packing list in 03 originals issued by the Seller indicating net, gross weight and
measurement for 01 container.
- Certificate of origin form A: Certificate of origin by the Vietnam Chamber of
Commerce and Industry in 01 original and 03 copies.
- Fumigation certificate: Fumigation certificate by Vietnam fumigation company in 01
original and 02 copies.
- Beneficiary’s certificate: Certifying that 1/3 set original B/L and shipping
documents have been set to CFR (buyer) within 05 days after B/L date.
7.2.2.7. Packaging, marking.
a) Packing
Parties often reach an agreement in:
- Packing quality
- Methods to supply packing
- Price of packing
 Regulations on packing quality:
 General regulation:
Packing quality must suit a specific means of transport (rail transport, sea transport,
air transport)
However, disputes can arise because two parties can have different understanding
on packing
 Specific regulation:
- Requirements on material of packing.

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 - Requirements on form of packing: cases, bales, drums, rolls, bags, crates …
- Requirements on size of packing.
- Requirements on layers of packing and their formation.
- Requirements on hoops and splints of packing …
 Regulations on supply of packing:
 Popular method: the seller supplies the buyer with packing and commodities.
 The seller gives the buyer an advance of packing, but after taking delivery, the
buyer must give back the packing. This method is applied in case packing is more
valuable than specialized packing (for example: container)
 The buyer provides the seller with packing. This method is applied when packing is
scare, and the market belongs to the seller.
 Methods to determine packing price:
 Be calculated as the commodity price.
Gross = net + tare = gross weight for
net.
 Parking charges are included in the commodity price.
 Parking charges are excluded in the commodity price.
b) Marking
Marking is a symbol, a word line to instruct transportation and maintenance.
Requirements of marking:
 Must be written by paint or colorfast ink.
 Easy to read and see.
 Must be 2cm or more than 2cm in size.
 Must not affect the commodity quality.
 Must be in black or violet for normal commodities, red for dangerous commodities,
orange for hazardous commodities. Marking surface must be smooth.
 Must be in a specific order.
 Must be lined in at least two adjacent faces.
For example:
General stipulation:
Packing: Export standard can withstand with sea transportation.
Coffee packing:
Packing: In about 60 kgs net/ 60.7 kgs gross, 300 bags per container.
Or: 60 kgs net, 0.65 kgs tare. New uniform jute bags required for the whole lot, to
be closed by jute yarn or cotton yarn. Weight for payment is the net shipping weight,
0.5% franchise.

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 7.2.2.8. Warranty.
This term needs to be stated in detail those following items:
 Cases to apply: The contract must stipulate clearly in which cases warranty
will be applied.
 Time of warranty: needs to be stipulated clearly because different types of
commodities have different duration.
 Place of warranty: will the place of warranty be the seller’s premise or the
buyer’s premise
 Warranty charges: will these charges be for the buyer’s or the seller’s
account?
For example: the seller undertakes to guarantee all quality standards,
specifications in accordance with the contract if the buyer follows all instructions on use
and maintenance of the seller. In the time of warranty, if the buyer finds any defects in
commodities, the seller must repair free of charge or replace another one. The defective
commodities will be shipped back to the seller for repair under the buyer’s account.
7.2.2.9 Insurance.
In this term, parties need to reach an agreement in who arranges insurance, terms of
insurance and insurance documents needed to take.
For example: Insurance for the contracted goods will be covered by the Buyer. The
seller should supply to the Buyer all necessary documents/information in time for
arranging cargo insurance.
7.2.2.10 Penalties.
Penalty is a punishment for violating part or all of the terms of a contract.
Cases of penalty:
 Delay in delivery
 Delivery not in conformity with quantity and quality.
Resolution:
- Cancel the contract.
- Do not pay compensation.
- Replace the consignment with expenses for the account of the
seller. Above resolutions can be applied with a penalty of a sum of
money.
 Late payment
- Penalty can be a percentage of the delayed amount based on the time of
delay. For example, 2% of the delayed amount/ month.
- Penalty can be counted based on an interest rate which is often the official
interest rate or overdraft interest of banks (sometimes plus some %). For

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 example, in case of late payment, from the due date, the unpaid amount shall
be charged an interest. The interest rate shall be subject to overdraft interest of
banks and pluses 2%.
For example:
In case of failure in opening L/C or making delivery in due time as stipulated in this
contract, except the reason of force majeure, the penalty for delayed delivery or delayed
L/C opening shall be counted based on the rate of 1% of the contract value per delayed
day.
7.2.2.11. Force majeure.
Force majeure is related to the concept of an "Act of God," meaning an event for
which no party can be held accountable, such as a hurricane or a tornado. Force majeure
also encompasses human actions, however, such as armed conflict. Generally speaking,
for events to constitute force majeure, they must be:
 Unforeseeable.
 External to the parties of the contract.
 Unavoidable (irresistible).
Force majeure includes three sub-clauses:
 Events of force majeure
 Procedure to certify force majeure.
 Corollary of force majeure.
In order to avoid the uncertainties and delays involved in relying on the applicable
law, parties to contracts often prefer to provide for a specific regime for force majeure,
along with a definition of which events shall quality for special treatment.
For example:
Force majeure shall be understood to be unforeseeable and unavoidable event
beyond the control of both the contracting parties, which in fact, causes difficulties
directly preventing the performance of the contractual obligation. Force majeure
circumstances must be notified by cable by each party to the other within 7 days and
confirmed by writing within 10 days from the cable together with a certificate of Force
majeure issued by the Chamber of Commerce concerned. Beyond this time Force
majeure circumstances shall not be taken into consideration.
7.2.2.12. Claim
Claim is some suggestions given by one party to another due to quantity, quality …
not in compatible with terms and conditions in the contract.
In this term, parties must regulate procedure to implement claim, time to claim,
obligations of parties and methods to adjust claim.

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 Claim must be in written form and include: commodity name, quantity, origin of
commodity, basis for claim, requirements on adjusting claim.
For example:
Any claim about quality must be in written form and sent to the seller within 60
days from the shipment date. Upon this time, the seller will be free from claim. Within 15
days since receiving the buyer’s claim, the seller must send his or her representative for
counter inspection. If the goods are not up to stipulation in the contract, the seller is liable
for replacing new goods compatible with the contract. If the seller fails to do so in due
time, the buyer is allowed to have Vinacontrol inspection. The inspection result by
Vinacontrol will be final and binding both sides.
7.2.2.13 Arbitration.
In this term, following contents must be included:
 Who is responsible for jurisdiction (National Court or Arbitrator) in case dispute
cannot be resolved amicably?
 Law applicable
 Place to execute arbitration.
 Division of arbitration fees.
For example:
When realizing this contract, if any dispute is unable to be agreed on the
negotiation between both sides, it will be brought to the Vietnam International
Arbitration Center beside the Chamber of Commerce and Industry in Hanoi to solve
according to the international commercial law and this is final and binding.

7.3. Terms and conditions of an international supply of services contract.

ITC Model contract for the international supply of services
PARTIES:

Supplier
Name (name of company). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal form (e.g. limited liability company) . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Country of incorporation and (if appropriate) trade register number . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Address (address of place of business of the Supplier, phone, fax, e-mail) . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .

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Represented by (surname and first name, address, position, legal title of representation) .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . .
Client
Name (name of company) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . .
Legal form (e.g. limited liability company) . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Country of incorporation and (if appropriate) trade register number . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Address (address of place of business of the Client, phone, fax, e-mail) . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Represented by (surname and first name, address, position, legal title of representation) .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Collectively “the Parties”

__________
Background
A. The Client carries on business in the [field/provision/supply of – specify].
B. The Supplier undertakes as part of its business the provision of services in
relation to [specify].
C. The Client wishes to engage the Supplier to provide such services in relation to
the Client’s business, and the Supplier is willing to provide such services
accordingly, on the terms of this contract.
D. [If necessary, give an additional short explanation of the reason for the
contract. If not necessary, delete this sub-section D.]
________________
Operative provisions
1. Supply of the service – Qualifi cations of the Supplier
1.1 The Supplier shall provide the following service(s) to the Client, subject to the
terms agreed in this contract and the more detailed specifications contained in
schedule 1: [describe the service(s)]
–...........................................................;

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–...........................................................;
–............................................................
1.2 The Supplier represents that it has all necessary capacity and qualifications to
supply the services the aforementioned services.
1.3 The service(s) to be provided to the Client by the Supplier under this contract
shall be rendered at/in [specify place(s) of performance – delete sub-clause if not
relevant]:
–...........................................................;
–............................................................
1.4 The service(s) to be provided to the Client by the Supplier under this contract
shall be rendered on [specify date/time of performance].
[Alternative 1: If the service(s) are to be provided during a certain time:
“1.4 The service(s) to be provided to the Client by the Supplier under this contract
shall be rendered between . . . . . . . . . . and . . . . . . . . . . [specify
timeframe/duration of performance], with the following intervals . . . . . . . . . .
[specify if necessary].”]
[Alternative 2: If there are different times/timeframes for the various services to be
provided:
“1.4 The service(s) to be provided to the Client by the Supplier under this contract
shall be rendered pursuant to the following schedule:
1.4.1 Service [to be specified] shall be provided on [specify date/time].
1.4.2 Service [to be specified] shall be provided between . . . . . . . . . . and .
. . . . . . . . . [specify timeframe/duration of performance]. with the following
intervals . . . . . . . . . . [specify if necessary].”]
1.5 The service shall be provided subject to the terms of this contract and in
accordance with the specifications listed in schedule 1, [and otherwise in
accordance with the Supplier’s current brochure or other published literature
relating to the service from time to time – to be deleted if not relevant/not
applicable].
1.6 The Supplier may at any time without notifying the Client make any changes
to the service(s) which are necessary to comply with any applicable safety or other
statutory requirements, or which do not materially affect the nature or quality of
the service(s).
1.7 The Client may order additional services or ask for amendments/ alterations of
services already agreed with the Supplier or give instructions to the Supplier
which result in an amendment, alteration, reduction or extension of the services
already agreed with the Supplier. In such case, the amended, altered, reduced or

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 extended services must be expressly specified in an addendum to schedule 1, and
the possible impact of the Client’s orders or instructions on the fees and expenses
to be paid to the Supplier must be expressly agreed by and between the Parties in
an addendum to schedule 2 before the services are performed.
[Alternative: The scope of the agreed services may not be changed, altered,
amended, reduced or extended, and the Client may not give any instruction to the
Supplier that would result in such an amendment, alteration, reduction or
extension of the services already agreed with the Supplier.]
2. Payment of fees
2.1 The Client shall pay the fees and expenses agreed with the Supplier, as
specified in schedule 2, and any additional sums which are agreed between the
Supplier and the Client for the provision of the service or which, in the Supplier’s
sole discretion, are required as a result of the Client’s additional or amended
instructions or lack of instructions, the inaccuracy or inappropriateness of any
material provided by the Client or any other cause attributable to the Client. 2.2
The Supplier shall be entitled to invoice the Client following the end of each
month in which the service is provided, or at other times agreed with the Client.
2.3 The Supplier’s standard charges and any additional sums payable shall b e paid
by the Client (together with any applicable value added tax, and without any set-
off or other deduction) within 30 [specify any other figure] days of the date of the
Supplier’s invoice.
3. Late payment and interest
If payment is not made on the due date, the Supplier shall be entitled, without
limiting any other rights it may have, to charge interest on the outstanding amount
(both before and after any judgment) at the rate of [specify] % per annum.
[Comment: The Parties should take into consideration that in some legal systems
payment of interest is unlawful, or is subject to a legal maximum rate, or there is
provision for statutory interest on late payments.]
4. Warranties and liability
4.1 The Supplier warrants to the Client that the service will be provided u sing
such care and skills as is customary for the provision of similar services on the
Client’s market [Option: In the Client’s country]. The service will be provided in
accordance with the specification agreed in schedule 1, and on the time [Option:
At the intervals and within the times] expressly agreed in Article 2.3. Where the
Supplier supplies in connection with the provision of the service any goods
supplied by a third party, the Supplier does not give any warranty, guarantee or
other term as to their quality, fitness for purpose or otherwise, but shall, where

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 possible, assign to the Client the benefit of any warranty, guarantee or indemnity
given by the person supplying the goods to the Supplier.
4.2 The Supplier shall have no liability to the Client for any loss, damage, costs,
expenses or other claims for compensation arising from any material or
instructions supplied by the Client which are incomplete, incorrect, inaccurate,
illegible, out of sequence or in the wrong form, or arising from their late arrival or
non-arrival, or any other fault of the Client, provided the Supplier has duly
notified the Client within [specify time] days of receipt of such material or
instructions.
4.3 Except in respect of death or personal injury caused by the Supplier’s
negligence, the Supplier shall not be liable to the Client for any loss of profit or
any indirect, special or consequential loss, damage, costs, expenses or other claims
(whether caused by the negligence of the Supplier, its servants or agents or
otherwise) which arise out of or in connection with the provision of the service or
their use by the Client, and the entire liability of the Supplier under or in
connection with the contract shall not exceed the amount of the Supplier’s fees for
the provision of the service.
5. Term, termination and consequences of termination
5.1 This contract shall take effect on the date of its signature by both parties or, if
signatures do not occur simultaneously, when the latest signature is given. Unless sooner
terminated pursuant to Articles 5.2 or 5.3, this contract shall continue for a period of
[specify – to be in line with Article 1.4].
5.2 The Supplier may forthwith terminate this contract by giving written notice to the
Client, if the latter fails to pay any sum payable by it under this contract within 7 [specify
any other figure] days of the due date for payment.
5.3 Either party may (without limiting any other remedy) at any time terminate the
contract by giving written notice to the other if the other commits any breach of this
contract and (if capable of remedy) fails to remedy the breach within 10 [specify any
other figure – note that some countries may impose longer deadlines] days after being
required by written notice to do so, or if the other goes into liquidation, becomes
bankrupt, makes a voluntary arrangement with its creditors or has a receiver or
administrator appointed.
For the purposes of the present sub-clause, a breach of any provision of this contract shall
be considered capable of remedy if the party in breach can comply with the provision in
question in all respects other than as to the time of performance [check that this clause is
valid under the laws applicable to the contract, and the laws of any country where
enforcement of this contract may be sought].

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5.4 The termination of this contract for any reason shall not affect:
5.4.1 Either party’s accrued rights, remedies or liabilities including payments due
at the effective date of termination; or
5.4.2 The coming into force or the continuance in force of any provision of this
contract which is expressly or by implication intended to come into or continue in
force on or after termination.
6. Confidentiality
6.1 Both parties understand and acknowledge that, by virtue of the present
contract, they may both receive or become aware of information belonging or
relating to the other party, its business, business plans, affairs or activities, which
information is confidential and proprietary to the other party and/or its Suppliers
and/or customers and in respect of which they are bound by a strict duty of
confidence (“Confidential Information”).
6.2 In consideration of such Confidential Information being disclosed or otherwise
made available to either party for the purposes of the performance of the present
contract, both parties hereby undertake that they will not at any time, either before
or after the termination of the present contract, and either directly or indirectly,
disclose, divulge or make unauthorized use of any Confidential Information,
except to the extent to which such Confidential Information:
6.2.1 Is publicly known at the time of its disclosure or being lawfully made
available to them;
6.2.2 After such disclosure or being made available to them, becomes
publicly known otherwise than through a breach of this undertaking;
6.2.3 Is required by law, regulation or order of a competent authority
(including any regulatory or governmental body or securities exchange) to
be disclosed by one of the Parties, provided that, where practicable, the
other party is given reasonable advance notice of the intended disclosure.
6.3 Upon the earlier of a request from the other party or the termination of this
contract, each party shall return the other all documents or records in any medium
or format containing any Confidential Information which are in its possession or
control and will not retain any copies of them.
6.4 This undertaking, and the obligations contained herein, will continue without
limit of period.
7. Force majeure – excuse for non-performance
7.1 “Force majeure” means war, emergency, accident, fire, earthquake, flood,
storm, industrial strike or other impediment which the affected party proves was
beyond its control and that it could not reasonably be expected to have taken the

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 impediment into account at the time of the conclusion of this contract or to have
avoided or overcome it or its consequences.
7.2 A party affected by force majeure shall not be deemed to be in breach of this
contract, or otherwise be liable to the other, by reason of any delay in
performance, or the non-performance, of any of its obligations under this contract
to the extent that the delay or non-performance is due to any force majeure of
which it has notified the other party in accordance with Article 7.3. The time for
performance of that obligation shall be extended accordingly, subject to Article
7.4.
7.3 If any force majeure occurs in relation to either party which affects or is likely
to affect the performance of any of its obligations under this contract, it shall
notify the other party within a reasonable time as to the nature and extent of the
circumstances in question and their effect on its ability to perform.
7.4 If the performance by either party of any of its obligations under this contract
is prevented or delayed by force majeure for a continuous period in excess of three
[specify any other figure] months, the other party shall be entitled to terminate this
contract by giving written notice to the party affected by the force majeure.
[If preferred, replace 7.4 with the following alternative:
“7.4 If the performance by either party of any of its obligations under this contract
is prevented or delayed by force majeure for a continuous period in excess of three
[specify any other figure] months, the Parties shall negotiate in good faith, and
use their best endeavours to agree upon such amendments to this contract or
alternative arrangements as may be fair and reasonable with a view to alleviating
its effects, but if they do not agree upon such amendments or arrangements within
a further period of 30 [specify any other figure] days, the other party shall be
entitled to terminate this contract by giving written notice to the party affected by
the force majeure.”]
8. Change of circumstances (hardship)
[Comment: The Parties should be free to consult each other in the event of a
major change in circumstances − particularly one creating hardship for a
particular party. However, an SME should only include the option at the end of
Article 8.4 (right to refer to the courts/arbitral tribunal to make a revision or to
terminate the contract) if (i) the SME considers that it is not likely to be used
against that party’s interests by a party in a stronger tactical position or (ii) the
right to refer to a court/tribunal is already an existing right under the applicable
governing law in the event of hardship.]

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 8.1 Where the performance of this contract becomes more onerous for one of the
Parties, that party is nevertheless bound to perform its obligations subject to the
following provisions on change of circumstances (hardship).
8.2 If, however, after the time of conclusion of this contract, events occur which
have not been contemplated by the Parties and which fundamentally alter the
equilibrium of the present contract, thereby placing an excessive burden on one of
the Parties in the performance of its contractual obligations (hardship), that party
shall be entitled to request revision of this contract provided that:
8.2.1 The events could not reasonably have been taken into account by the
affected party at the time of conclusion of this contract;
8.2.2 The events are beyond the control of the affected party; and
8.2.3 The risk of the events is not one which, according to this contract, the
party affected should be required to bear.
8.3 Each party shall in good faith consider any proposed revision seriously put
forward by the other party in the interests of the relationship between the Parties.
[Option [delete if not applicable or not enforceable under the law governing the
contract − see comment at beginning of Article 8]:
“8.4 If The Parties fail to reach agreement on the requested revision within
[specify time limit if appropriate], a party may resort to the dispute resolution
procedure provided in Article 15. The [court/arbitral tribunal] shall have the
power to make any revision to this contract that it finds just and equitable in the
circumstances, or to terminate this contract at a date and on terms to be fixed.”]
9. No partnership or agency
Nothing in this contract shall (i) be deemed to constitute a partnership in law
between the Parties, (ii) constitute either party the agent of the other for any
purpose or (iii) entitle either party to commit or bind the other (or any member of
its respective group) in any manner.
10. Assignment and subcontracting
10.1 This contract is personal to the Parties and [include only where relevant,
except to the extent necessary for the collection of outstanding bills through a
factoring agent,] neither party shall without the prior written approval of the other:
10.1.1 Assign, mortgage, charge or otherwise transfer or deal in, or create
any trust over, any of its rights; or
10.1.2 Subcontract or otherwise delegate the whole or any part of its rights
or obligations under this contract to another person.
11. Notices

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 11.1 Any notice under this contract shall be in writing (which may include e-mail)
and may be served by leaving it or sending it to the address of the other party as
specified in Article 11.2 below in a manner that ensures receipt of the notice can
be proved.
11.2 For the purposes of Article 11.1, notification details are the following, unless
other details have been duly notified in accordance with this Article:
–...........................................................;
–............................................................
12. Entire agreement
This contract sets out the entire agreement between the Parties. Neither party has
entered into this contract in reliance upon any representation, warranty or
undertaking of the other party that is not expressly set out or referred to in this
contract. This Article shall not exclude any liability for fraudulent
misrepresentation. [Add where relevant: This contract supersedes any previous
agreement or understanding relating its subject matter.] This contract may not be
varied except by an agreement of the Parties in writing (which may include e-
mail) [Option, add where Article 8.4 or equivalent is included: “or in accordance
with Article 8.4”.]
13. Effect of invalid or unenforceable provisions
If any provision of this contract is held by any court or other competent authority
to be invalid or unenforceable in whole or in part, this contract shall continue to be
valid as to its other provisions and the remainder of the affected provision, unless
it can be concluded from the circumstances that, in the absence of the provision
found to be null and void, the Parties would not have concluded this contract. The
Parties shall use all reasonable efforts to replace all provisions found to be null and
void by provisions that are valid under the applicable law and come closest to their
original intention.
14. Authorizations
14.1 This contract is conditional upon the following authorizations first being
obtained [specify the authorization(s) or other conditions required e.g. of
governmental or regulatory authority].
–...........................................................;
–...........................................................;
–............................................................
14.2 The relevant party shall use all reasonable efforts on its part to obtain such
authorizations and shall notify the other party promptly of any difficulty
encountered.

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15. Dispute resolution procedure
Any dispute, controversy or claim arising out of or relating to this contract,
including its conclusion, interpretation, performance, breach, termination or
invalidity, shall be finally settled under the rules of [specify the arbitration
institution] by [specify the number of arbitrators, e.g. sole arbitrator or, if
appropriate, three arbitrators] appointed in accordance with the said rules. The
place of arbitration shall be [specify]. The language of the arbitration shall be
[specify].
[The following are alternatives to a specified arbitral institution under Article 15:
Alternative 1: Ad hoc arbitration
“Any dispute, controversy or claim arising out of or relating to this contract,
including its conclusion, interpretation, performance, breach, termination or
invalidity, shall be finally settled under the rules of UNCITRAL [specify other
rules] by [specify the number of arbitrators, e.g. sole arbitrator or, if appropriate,
three arbitrators] appointed by [specify name of appointing institution or
person]. The place of arbitration shall be [specify]. The language of the
arbitration shall be [specify].”]
[Alternative 2: State courts “Any dispute, controversy or claim arising out of or
relating to this contract, in particular its conclusion, interpretation, performance,
breach, termination or invalidity, shall be finally settled by the courts of (specify
place and country) which will have exclusive jurisdiction.”]
16. Applicable law
[Specify national law] law shall apply to the contract.
Schedule 1: Specifi cations of the service(s) to be performed

_______________________________________________________________________

Schedule 2: Fees and expenses

The following services shall be charged on the basis of the time spent by the
Supplier at an hourly rate of . . . . . . . . . .
–...........................................................;
–...........................................................;
–............................................................
The following services shall be charged for a total amount of . . . . . . . ., regardless
of the time spent.
–...........................................................;
–...........................................................;

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 –............................................................
The Supplier shall not be entitled to vary the Supplier’s standard charges.

Alternative: The Supplier shall be entitled to vary the Supplier’s standard charges
from time to time by giving not less than [three] months’ written notice to the
Client from time to time.
All charges quoted to the Client for the provision of the service are exclusive of
any value-added tax (VAT), for which the Client shall be additionally liable at the
applicable rate from time to time.

________________________________________________________________________

DATE AND SIGNATURE OF THE PARTIES

Supplier Client
Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Name. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Signature Signature

7.4. Some contract samples

7.4.1 Purchase contract of rice

PURCHASE CONTRACT NO. 16010440

DATED 28 FEBRUARY 2015
This contract is made on this date of 28th February 2015 by and between:
SELLER
FOOD COMPANY OF HOCHIMINH CITY
57 Nguyen Thi Minh Khai Street, District 1,
Hochiminh City Viet Nam.
Tel: (+84 8) … Fax: (+84 8) …
BUYER
TOEPFER INTERNATIONAL-ASIA PTE. LTD.
100 Beach Road #31-01 Shaw Tower
Singapore 189702
Tel: (+65) … Fax: (+65) …
In witness hereof, the Seller and the Buyer agree to conform to the following terms
and conditions:
COMMODITY

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VIETNAMESE WHITE RICE LONG GRAIN 5 PCT BROKEN MAXIMUM
SPECIFICATION

1. Broken (basis ¾) max: 5%

2. Chalky kernels (basis ¾) max: 6%
3. Yellow kernels max: 0.5%
4. Damaged kernels max: 0.75%
5. Immature kernels nil
6. Red and red streaked kernels max: 0.75%
7. Foreign matter max: 0.1%
8. Glutinous rice max: 0.5%
9. Moisture max: 14%
10. Paddy (grains per 1kg) max: 15 grains
11. Average length of the whole grain 6.2 mm
Milling degree well milled and double polished
Qualitative requirements must be fulfilled:
a. Crop 2014/2015
b. Smell: normal, without musty and mouldy (free from foreign odour or odour which
indicates deterioration)
c. The rice qualify shall not be inferior in grain and colour.
d. Rice shall be in good condition, free from live insects and free from visible
moulds. e. Rice shall be free from GMO
The Seller must submit before loading 3 sets of 1-kg samples which will be used as
reference in case of any dispute in quality for the items not mentioned above such as
shape, colour, taste. The said representative after being approved by them. One of the
samples will be retained by the seller, one by the buyer and one by the inspection
company.
ORIGIN VIETNAM
QUANTITY
5,000 metric tons more or less 10 pct. at Buyer’s option at contract price. Seller
guarantees the quota/export license in accordance with the quantity nominated by Buyer.
PACKING
In nee single PP woven bags (tare weight of minimum 150 grams per bag) of 50 kgs net
each. The bags must have double threads machine sewing at both ends suitable for rough
handling and sea transportation. The stiches must be double sewn at the mouth of bags.
These polypropylene bags used are new, clean, strong odourless and not in anyway

315
render the grain harmful for human edible purpose. Seller to provide Buyer with 2 pct
empty bags on the shipment free of charge.
MARKING
As per Buyer’s requirement to be advised by separate fax at least 10 days before vessel’s
ETA at loading port.
SHIPMENT
April 2015, provided the vessel is presented at loading port in readiness to load cargo
within the shipment period, Seller shall complete loading with and/or after the shipment
period and carrying charges shall not apply Partial shipment/ combined shipment allowed
at Buyer’s option and arrangement.
PRICE
USD 247.-/MT net shipped weight FOB Stowed and Trimmed Hochiminh City port,
Vietnam:
Dunnage (bamboo mat/ sticks, kraft paper), if any, to be at Owner’s/ Buyer’s order
and account.
Shore tally to be at Seller’s arrangement and account.
Showing and trimming at Seller’s account must be effected to Master’s/ Buyer’s
satisfaction.
Lighterage, if any, at loading port for Seller’s account.
Shipment on deck is not allowed.
WEIGHT AND QUALITY
Weight, quality and condition of cargo shall be final at loading port as per inspection by
SGS or a first-class independent surveyor at Buyer’s option. All costs for inspection to be
for Seller’s account. Buyer’s representative has the right to inspect cargo at the
mills/warehouses/port with the right of rejection on any uncontractual part of cargo with
the consent of appointed surveyor. The cargo must be replaced at Seller’s expense and
time. However, Seller shall coordinate closely with the appointed surveyor to have cargo
thoroughly inspected at the mills and/or warehouse and to ensure only contractual cargo
is loaded on barges to the port. This aims at avoiding possible problems of cargo rejected
by Buyer’s/ Receiver’s representative alongside ship and incurring expenses (re-
processing/ bagging/ transportation fees and vessel waiting time, demurrage, etc.) which
shall be for Seller’s account.
The use of hand hooks during handling/ loading is strictly prohibited; otherwise Buyer’s
representative shall have the right to stop the loading and time will count as laytime.
FUMIGATION
To be effected on board of vessel after completion of loading (by methyl bromide) with
risk and expense to be for Seller’s account. Expenses for crew on shore during

316
fumigation time, if any, for Owner’s/ Buyer’s account. Maximum 24 hours of fumigation
not to count as laytime.
PAYMENT
By irrevocable L/C to be opened from a first-class bank in Singapore latest by 28 March
2016 and advised to Seller’s nominated bank. L/C is payable at sight for 100 pet of
invoice value against presentation of following shipping documents:
A. Signed commercial invoice
B. Certificate issued and signed by Buyer’s representative, acknowledging receipt of
the original documents plus copies of documents listed below:
1. Full set (3/3) of original clean on-board Bill of Lading made out to order,
blank endorsed and marked “Freight Prepaid” plus 06 non-negotiable copies.
2. Certificate of Weight issued by SGS or independent surveyor.
3. Certificate of Quality issued by SGS or independent surveyor.
4. Certificate of vessel’s holds/ hatches cleanliness issued by SGS or
independent surveyor.
5. Certificate of Origin issued by Vietnam Chamber of Commerce and
Industry.
6. Fumigation certificate issued by Vietnam Fumigation Company of Ministry
of Agriculture and Rural Development or by independent surveyor at Buyer’s
option.
7. Phytosanitary certificate issued by Plant Protection Department of Ministry
of Agriculture and Rural Development.
8. Non-GMO certificate issued by independent surveyor.
9. Radiation certificate issued by independent surveyor or competent authority.
10. Health certificate issued by independent surveyor or competent authority.
11. Packing list.
12. Tally report issued by SGS or independent surveyor.
13. Copy of fax advising Buyer of shipment particulars within 01 working day
after completion of loading.
Other documents, if any, as per L/C requirement and amendment.
C. Copy of documents listed in items (1) to (13)
Third party documents and Charter Party B/L acceptable. All banking charges inside
Vietnam are or Seller’s account. All banking charges outside Vietnam are for Buyer’s
account.
LOADRATE
1,500 MT per WWD SHEX EIU basis 04 workable cranes/ derricks/ hooks or pro-rata
DEMURRAGE/ DESPATCH

317
Demurrage/ dispatch rate as per governing Charter Party to be advised to Seller upon
nomination or vessel or latest before vessel’s arrival at loading port. Demurrage/ dispatch
money to be settled directly between Buyer and Seller within 21 days after submission of
supporting documents.
NOTICE
Ship’s master/ owner/ agents will advise vessel’s ETA and her particulars to Seller 3
days/ 2 days/ 1 day before vessel’s estimated arrival at loading port. Seller shall plan
cargo arrival at loading port according to vessel’s schedule. Buyer shall not be
responsible for barges demurrage and/or carrying charges and/or cargo quality
deterioration, if any should Seller’s cargo wait for the vessel.
BERTH/ISPS
Buyer shall nominate seaworthy suitable for rice in bags within draft restriction of
loading port. Seller undertakes to provide a suitable and safe berth/ buoy for loading of
Buyer’s vessel at Hochiminh City port where Buyer’s vessel may proceed to, lie and
depart therefrom, always safely afloat. Seller warrants that the designated loading berth/
anchorage is safe, and facility is ISPS certified and all costs/ damages resulting from non-
compliance (facility/berth not ISPS certified) will be for account of Seller.
LAYTIME
In case N.O.R is tendered before noon time on a working day, laytime commence to
count the same day at 13:00 hrs. in case N.O.R is tendered after 13:00 hrs, laytime to
commence the next working day at 8:00 hrs. N.O.R can be tendered by cable/ telex/ fax
bu ship’s master/ owners/ agents WIBON, WIPON, WIFPON and/or WICCON, even in
case of port congestion. Time from 12:00hrs on Saturday to 07:00 hrs on Monday not to
count as laytime. Time used during holds survey not to count as laytime. If vessel is
declared unclean by independent surveyor, time lost in cleaning vessel holds/ hatches
until she is confirmed clean by surveyor not to count as laytime. Pro-rata will be applied
if a number of holds only need cleaning.
EXPORT QUOTA/ LICENCE
Seller shall obtain the relative export permission, quota and/or license in accordance with
the shipping program including but not restricted to quota’s quantity and validity. The
issuance and/or extension of quota/export license once the vessel is nominated within
contractual shipment and the resulting costs and consequences shall be for Seller’s risk
and account. Failure, if any, in obtaining the license shall not be considered as ground for
force majeure.
DUTIES AND TAXES

318
All export duties, customs duty or charges of whatsoever nature directly applicable to the
export of this cargo shall be for Seller’s account except freight tax which is on Buyer’s
account.
INSURANCE
To be covered by end buyers.
TITLE AND RISK
Seller shall deliver the cargo on vessel nominated by Buyer/ shipping agency. Title and
risk of loss of cargo sold hereunder shall be passes from Seller on to Buyer as the cargo
on board the vessel.
FORCE MAJEURE
As per GAFTA 120
ARBITRATION
As per GAFTA 125
GOVERNING TERMS
This contract states all of the governing terms and conditions to between Buyer and
Seller. There can be no amendment, alteration or deletion without the express written
consent of Buyer and Seller. Both sides guarantee that there will be no request for price
revision, delay of shipment or whatsoever change to the contract terms and conditions.
All other terms, if not conflicting with the above, are as per GAFTA 120.
SPECIAL CONDITIONS
Should Seller fail to deliver the cargo on the vessel nominated by Buyer within the
shipment period due to whatsoever reasons, Seller undertakes to pay to Buyer a penalty
of 100% of contractual value plus deadfreight.
Should there’s any short-delivered quantity on Buyer’s nominated vessel within the
shipment period due to whatsoever reasons, Seller undertakes to pay to Buyer a penalty
of 100% of value of the short delivered quantity at contracted price plus deadfreight and
arising costs. This penalty shall be automatically deducted from L/C proceeds upon
payment.
Seller shall confirm acceptance by signing/ stamping on this Contract and fax it back to
Buyer latest 2 March 2017 for record purpose.
Documents by fax/ e-mail by attachment are deemed as original and legally admissible.

BUYER SELLER
TOEPFER INTERNAITONAL
ASIA PTE.LTD FOOD COMPANY OF HOCHIMINH CITY

319
 ANNEX NO.1

TO VIETNAMESE RICE CONTRACT NO.16010440

DATED 28 FEBRUARY 2015

On this date of 2nd March 2015, it is manually agreed by and between:

SELLER
FOOD COMPANY OF HO CHI MINH CITY
57 Nguyen Thi Minh Khai Street, District 1,
Ho Chi Minh City, Vietnam
BUYER
TOEPFER INTERNATIONAL – ASIS PTE. LTD.
100 Beach Road, #31-01 Shaw Tower
Singapore 189702
Upon the following amendments to the above-mentioned contract:
COMMODITY:
VIETNAMESE WHITE LONG GRAIN WELL MILLED RICE IN
BAGS SPECIFICATION
Fit for human consumption at final destination (discharge ports) and are consumed in the
country of origin.
Moisture – up to 14% maximum (up to 15% allowed with penalty 1=1 basis of contract
price)
Broken kernels – up to 5% maximum
Whiteness – no less than 40-degree maximum
Red & damaged kernels – up to 1.5% maximum
Chalky kernels – no more than 4% preferred, but up to 6% maximum allowed, with a 1:1
discount to be deducted from the price for every percentage above 4% chalky kernels
proposed.
Paddy kernels – up to 0.1% maximum
Yellow kernels – up to 0.5% maximum
Foreign matter – up to 0.1% maximum
Pesticide residues to be within international limit
Heavy metals (mercury, lead and cadmium) according to the international limits
Free of any abnormal odor that indicates any damage to the rice Not modified
genetically (non-GMO)
Free from dioxin and radiation
New crop (2014/2015) free of live insects and the larvae.

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Mycotoxin (Aflatoxin) – up to 5 ppb maximum
The Seller must submit before loading 3 sets of 1-kg samples which items be used as
reference in case of any dispute in quality for the items not mentioned above such as
shape, color, taste. The said samples should be sealed, signed and stamped by buyers’
representative after being approved by them. One of the samples will be retained by the
seller, one by the buyer and one by the inspection company.
METHOD OF ANALYSIS
The standard method of analysis is to be based on ISO 7301 (details obtainable from
internet under “International Standards Organization”) or a recognized equivalent to the
satisfaction of the Grain Board.
PRICE
USD 253.-/MT net shipped weight FOB Stowed and Trimmed Ho Chi Minh City port,
Vietnam
FORCE MAJEURE
As per GAFTA 120
Since this rice is intended for Iraq and there is a force majeure risk involved with this
contract, both sides have agreed if buyer does not get the L/C from the end buyers, then
buyer will be forced to declare force majeure case for this contract. Under such case,
Buyer shall not be liable for failure or delay in performance of their responsibilities. All
other terms and conditions remain unchanged.
This Annex is an integral part of Contract No. 16010440 dated 28 February 2015.
Seller shall confirm acceptance by signing/ stamping on this annex and fax it back to
Buyer at least 2 March 2015 for record purpose.
Documents by fax/email by attachment are deemed as original.

BUYER SELLER

TOEPFER INTERNATIONAL FOOD COMPANY

ASIA PTE.LTD. HO CHI MINH CITY

321
7.4.2 Purchase contract of fertilizer
CONTRACT
No: …

Date: …

Buyer: ......................................................................

Hereinafter referred to as “Buyer”

Seller: ......................................................................

Hereinafter referred to as “Seller”

Both Seller and Buyer have concluded this Contract on the terms and conditions set forth
hereunder.
1. Commodity
Granulated Chemical Fertilizer NPK (16-16-8-13S) in Bags.
2. Specification
a) Nitrogen 16.0 Percent Min
b) Available P2O5 16.0 Percent Min
c) Water Soluble P2O5 13.6 Percent Min
d) Available K2O 8.0 Percent Min
e) Sulfur 13.0 Percent Min
f) Moisture 2.0 Percent Max
g) Granular, dry, free flowing
h) Free from harmful substances
3. Origin
Philippines
4. Manufacturer
Philippines Phosphate Fertilizer Company (PHIPHOS)
5. Quantity
5,000 Metric tons more or less 5 percent at Seller’s option.
6. Price

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USD 263.50 (United States Dollars Two Hundred Sixty-Three and Cents Fifty only)
per Metric ton CFR Free Out one safe berth of HCMC Port, Vietnam
7. Total Amount
USD 1,317,500.00 (say: United States Dollars One Million Three Hundred
Seventeen Thousand and Five Hundred +/-5%)
8. Shipment
Not later than Oct. 15th, 2016
9. Loading port
Isabel, Leyte, Philippines
10. Discharging port
One safe berth, one safe port of HCMC Port, Vietnam
11. Marking
Philphos neutral export standard marking
12. Packing
In new white 50 kgs net PP woven outer bag plus PE inner liner bag, 2 percent empty
printing spare bags to be supplied free of charge.
13. Payment
To be effected in US dollar by an irrevocable Letter of Credit payable 100% of invoice
value at sight against presentation of Seller’s shipping documents listed below, to be
opened not later than Sep.17th, 2016 through Eastern Asia Commercial bank or
Vietinbank or Vietnam bank of Agriculture in favour of Dong – A Pharmaceutical Co.,
Ltd. L/C to be advised through Standard Chartered bank, Seoul, Korea. All shipping
documents shall be in triplicate otherwise stated:
 Signed Commercial Invoice
 Packing List
 Original clean on-board ocean Bill of Lading made out to order of L/C opening
bank, marked “freight prepaid” and notify the applicant or its nominee.
 Certificate of origin issued by Philippines Customs.
 Certificate of quality and quantity issued by the international independent surveyor.
 Beneficiary’s certificate certifying that one full set of non-negotiable shipping
documents have been sent directly to applicant’s HCMC branch office within five
(05) days.
 Working days from B/L date by express courier whose receipt must be presented for
negotiation.
 Copy of fax advising applicant of full shipment particular within three (03) working
days from B/L date; the name of carrying vessel, name of commodity, shipped

323
 quantity, B/L date and number, ETA at discharging port, invoice value and L/C
number and also fax the same to opening bank.
Remark: One full set of signed shipping documents should be faxed to Buyer within
three (03) working days from B/L date for Buyer’s care of import formalities before
vessel arrival.
14. Terms and conditions of Letter of Credit
 L/C amount and quantity 5 percent more or less.
 Charter Party B/L and third-party document to be acceptable.
 Partial shipment and transshipment to be not allowed.
 Shipping documents to be presented within 21 days from B/L date, but within L/C
validity.
 All banking charges at opening bank for Buyer’s account.
 All banking charges outside Vietnam for Seller’s/ Beneficiary’s account.
 L/C amendment charges will be at faulty party’s account.
 L/C to be freely negotiable at any bank.
In case L/C opening will be delayed, shipment may be delayed.
15. Title and risk
Title and risk of the goods shall pass from Seller to Buyer as the goods pass over the
vessel’s rail at the time of loading.
16. Discharging terms and conditions
Seller or their agent shall inform Buyer of vessel nomination stating main particular
of the vessel and Buyer shall confirm acceptance of vessel nomination to Seller within 24
hours from moment of receipt of Seller’s vessel nomination.
Seller shall warrant that carrying conveyance must be fully covered for P&I risks with
an International Group (or equivalent) P&I club.
Buyer to guarantee discharge rate of 1,000 MT per Weather Working Day of 24
consecutive hours, Sunday and Holiday Excluded Even if Used, on the basis of four (04)
workable derricks available in good order or pro-rata.
Notice of Readiness (NOR) to be tendered on arrival of vessel at sea pilot station or
anchorage, whether in berth or not (WIBON), whether in free particle or not (WIFPON),
whether in port or not (WIPON), whether custom cleared or not (WICCON)
Laytime to be commenced either at 13:00 hours of the same working days, if OR is
tendered during 08:00 -12:00 hours, and at 08:00 hours of the following working day, if
NOR is tendered during afternoon office hours.
Shifting time for the vessel from pilot station to the first berth or anchorage is not to
count as laytime. All other subsequent shifting(s) and waiting time to be for Buyer’s
account and time used to count as laytime.
324
 The time of any break on discharging due to bad weather condition shall be excluded
from laytime.
Demurrage/ dispatch rate to be determined as per the governing charter party.
Demurrage/ dispatch money, if any to be settled between Seller and Buyer at the
demurrage/ dispatch rate per day and pro-rata all time lost/ laytime saved in accordance
with the time Sheet and/or the Statement of Facts signed by the master of the vessel or a
person authorized by the master which is to be made within 15 days after completion of
discharging.
Any lighter at discharging port shall be at Buyer’s accounts. The time used for lighter
age to account as laytime.
17. Insurance
Insurance to be for Buyer’s responsibility and account. Vessel up to 25 years age
acceptable, but OAP, if any, is for Seller’s account on the basis of presentation of official
debit note and evidence by Buyer and shall be calculated at international standard OAP
scale as follows:
Vessel from 16 years old up to 20 years old: 0.185 percent.
Vessel from 21 years old to up 25 years old: 0.375 percent.
18. Determination of quality and quantity:
International independent surveyor’s inspection and certificate of quality and quantity at
loading port arranged and borne by Seller to be taken as final and binding on both parties.
19. Force Majeure
Neither party shall be held responsible for the delay or failure of performance of
obligation in this Contract when such delay or failure is caused by strikes, flood, acts of
god, earthquake, or any laws, rules or regulations of any governmental authority or other
conditions beyond its control which cannot be forecast or provided against and the party
subject to such obligations has exhausted alternative means of performing the obligation
in question.
The party wishing to claim for relief by reason of any said circumstances shall notify
the other party in writing of this intervention and of cessation and deliver certificate
issued by the Chamber of Commerce at the place where the accident occurred exceeds
sixty (60) days, each party shall have the right to cancel this Contract, unless otherwise
agreed in such case neither party shall have the right to claim eventual damages.
20. Claim
All claim by Buyer shall be informed by telex or cable immediately after cargo
completely received at destination port and be confirmed in writing delivered to the
Seller within 30 days after such discharge (for claim of any kind of latent defects
respectively) together with survey report of international well-known surveyor.
325
 21. Arbitration
Any dispute arising under or relating to this Contract, or the breach thereof, which
cannot be settled amicably between both parties shall be referred to the Vietnam
International Arbitration Center beside the Chamber of Commerce and Industry in
HCMC under the Rules of Conciliation and Arbitration of International Chamber of
Commerce, whose award shall be final and binding on both parties, it should be
transferred to the International Arbitrating Committee in Singapore.
The fees for arbitration and/ or any other charges, if any, shall be borne by the losing
party unless otherwise awarded.
22. Other terms and conditions
Seller shall take necessary measures to obtain an export license and Buyer shall take
necessary measures to obtain an import license.
All permits, port duties, taxes, royalties and other charge of any nature on the cargo
imposed or assessed by the country of discharging are for Buyer’s account.
After signing this Contract, all previous negotiations and correspondences pertaining
to the subject matter shall be null and void.
All amendments and supplements to this Contract shall be effective only if they are
made in writing and signed by the authorized representative of both parties.
23. Incoterms
This Contract is subject to interpretation in accordance with the International
Commercial Terms (Incoterms 2000) edition and as amended to apply.
This Contract comes into effect from the signing date and is made into four (04)
originals and each party keep two (02) originals. Hard copy by fax also comes into same
effect as original subject to both parties’ agreement

For and on behalf of Buyer For and on behalf of Seller

CHAPTER SUMMARY

1. International sale of goods contracts play crucial role in import-export activities in

particular and in the modern society in general.
2. An international sale of goods contract is an agreement between Seller and Buyer
in different countries, in which stipulates obligations and benefits of parties in
detail. Seller’s main obligation is to deliver goods in conformity with the contract
on goods’ name, quality, quantity, time of delivery as well as documents related to

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 the goods. Buyer’s main obligation is to take delivery in time and make payment
as stipulated in the contract.
3. A contract’s main provisions are: commodity, quality, quantity, delivery, prices,
payment, packing and marking, warranty, insurance, penalty, force majeure, claim,
arbitration.

REVISION QUESTIONS
1. What is an international sale of goods contract?
2. List briefly all important terms and conditions of a contract.
3. In your opinion, what provision of a contract is the most important? Why?
4. What is payment method? List all payment methods.
EXERCISES
1. Suppose that you are an importer/ exporter, compose a contract for your product.
2. Suppose that you are a Vietnamese exporter, analyze, make a comment on the
following rice export contract, find mistakes, disadvantages and correct them to
perfect the contract.

SALE CONTRACT
Contract No: RWSC09092201
Date: 22 September 2014
The Seller: REAL WORLD JSC
Add: Hoang Dieu St., Dist. 4, Ho Chi Minh City, Vietnam
Tel: 84.62615872
Acct No.: (USD) 30524189 at ACB – Khanh Hoi branch
FDA Registration No.: 12781904916
Represented by Mr. Nguyen Vu – General Manager
The Buyer: RAMA FOOD MFG. CORP
Add: 1486E, Cedar St., Ontario, CA 91761
Tell: (909) 932 – 5305
Fax: (909) 932 – 6666
Represented by Mrs. Tanya Garrett – Managing Director.
The Seller agrees to sell and the Buyer agrees to buy hereinafter commodities under
the following terms and conditions:
COMMODITY: White, irregular rice
ORIGIN: Vietnam
QUALITY:
- Broken: 25%
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 - Moisture: 14% - 15%
- Double polish: required
- Chalky kernel: 5.0% max (basis ¾ grain).
- Foreign matter: 1% max
- Yellow kernel: 1% max
- Paddy: 5 per kg.
QUANTITY:
- 929,880 kgs (nine hundred and twenty-nine thousand eight hundred and
eighty kilos)
- Tolerance: 1%

UNIT PRICE: USD 365.00/Ton (US dollars three hundred and sixty per ton)
CFR Long Beach Port, in accordance with Incoterms 2010.
SHIPMENT:
- Shipment date: from 25 September 2017 to 31 December 2017.
- Transshipment: Allowed.
- Partial shipment: Allowed.
- Port of loading: Ho Chi Minh (any terminal)
- Port of destination: Long Beach or Los Angles.
PACKING: the rice is packed in new 45.36-kg PE bags (equivalent to 100
lbs/bag)
INSPECTION: by the buyer’s representative at the seller’s warehouse or at the
port of loading.
FUMIGATION: The rice must be fumigated in container at the port of loading.
DOCUMENTS REQUIRED:
- Full set (3/3) original clean on-board Bill of Lading.
- Signed commercial invoice in triplicate.
- Packing list in triplicate.
- Certificate of Fumigation issued by Vietnam government/ competent
authority.
- Certificate of Origin to be issued by Vietnam Chamber of Commerce and
Industry (VCCI)
PAYMENT: by T/T or by cash 100% in advance or within 5 days after B/L
issuance date.
GENERAL TERMS: Both parties undertake to execute strictly all articles of
this contract. Any amendment or addition to this contract shall be made in
writing after being mutually agreed by both parties
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 FORCE MAJEURE: Neither party to this contract shall be held responsible for
breach of contract caused by an act of god, insurrection, civil war, war, military
operation or local emergency. The parties do hereby accept the international
provision of “Force Majeure” published by the International Chamber of
Commerce, Geneva, Switzerland, and as defined by I.C.C rules uniform customs
and practice.
CLAIMS AND ARBITRATION: In case of claim on quality discrepancy
against the seller, the buyer shall officially notify the seller by fax within 2
weeks from the date of arrival of vessel at discharging port. Thereafter, both
buyer and seller mutually appoint an international reputable neutral inspection
agency and such inspection result shall be deemed as final to both buyer and
seller.
Any dispute arising under this sales contract would be settled amicably at first.
In case the dispute cannot be settled, the dispute will be referred to the Vietnam
International Arbitration Center of Vietnam Chamber of Commerce and Industry
(VCCI)
This contract is recognized by email and will come into force after being signed
by both concerning parties.

THE SELLER THE BUYER

3. In position of a Vietnamese importer, make a comment on the following

provisions of a Hot rolled steel plates import contract, find mistakes, disadvantages and
correct them to perfect the contract
 Commodity: Steel
 Quantity: 587 MT.
 Unit price: USD 630.00/MT HCMC port.
 Shipment: 180 days after receiving L/C.
 Payment: By irrevocable confirmed L/C, A/S with TTR.
4. In position of a Vietnamese exporter, make a comment on the following
provisions of a Coat export contract, find mistakes, disadvantages and correct them to
perfect the contract
 Commodity: Coat
 Quantity: 6,000 pcs
 Unit price: USD 6.5/pc
 Shipment: 20 days after signing of contract.
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  Payment: Clean Collection.
5. In position of a Vietnamese importer, make a comment on the following
provisions of a Milk powder export contract, find mistakes, disadvantages and correct
them to perfect the contract
 Commodity: Milk
 Quantity: 12,000 kg
 Unit price: USD 14.55/kg HCMC port, Vietnam
 Shipment: 180 days after signing of this contract.
 Payment: CAD.
6. In position of a Vietnamese exporter, make a comment on the following
provisions of a wooden furniture export contract, find mistakes, disadvantages and
correct them to perfect the contract
 Commodity: Wooden furniture
 Quantity: 21,000 set
 Unit price: USD 120.00/set FOB
 Shipment: Dec 31, 2008.
 Payment: D/A
7. Compose a rice export contract.
8. Compose a coffee export contract.
9. Compose a fertilizer import contract.
10. Compose a computer component contract.

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