FOREIGN TRADE UNIVERSITY - HCMC CAMPUS

FACULTY OF INTERNATIONAL BUSINESS & TRADE

INTERNATIONAL
TRADE
TRANSACTIONS

PART I: HANDOUTS

HCMC, August 2021

INTERNATIONAL TRADE
TRANSACTIONS
TRAN THANH TAM (LL.M, PhD Candidate)
 COURSE INTRODUCTION
1. Course content
2. Course objectives
3. Reading materials
4. Teaching method
5. Learning method
6. Course assessment
 1. COURSE CONTENT

1 Incoterms

2 International sale of goods contract

3 Contract performance
 2. COURSE OBJECTIVES

• Grasp the basic knowledge regarding methods of

international trade transactions, risk
management in international trade transactions.
• Be able to draft, conclude and implement the
international sale of goods contract
• Comprehend and be able to use Incoterms
 3. READING MATERIALS

Textbook(s):
Practice of International Trade by
Nguyen Tien Hoang, Nguyen Xuan
Minh, Nguyen Thi Thu Ha, VNU
Publishing House, 2017.
 3. READING MATERIALS

Optional reading(s):
1- Indira Carr and Peter Stone (2018), International
Trade Law
2- Richard Schaffer, Filiberto Agusti and Lucien
Dhooge (2014) - International Business Law and Its
Environment
3- Ray August, Don Mayer and Michael Bixby (2013)
International Business Law: Text, cases and readings
 3. READING MATERIALS
• VIETNAMESE LEGAL DOCUMENTS:
1. LAW ON COMMERCE 2005
3. LAW ON FOREIGN TRADE MANAGEMENT 2017
4. CIVIL CODE 2015
5. DECREE NO.69/2018/ND-CP ON
IMPLEMENTING LAW ON FOREIGN TRADE
MANAGEMENT
 3. READING MATERIALS
• INTERNATIONAL TREATIES/TRADE PRACTICES
1. Convention on Contract for International Sale
of Goods 1980 (CISG)
2. Incoterms 2010, Incoterms 2020
3. The Uniform Customs & Practices for
documentary credits - UCP 600
 4. TEACHING METHOD
• BASED ON THE LECTURES (HANDOUTS) GIVEN
TO STUDENTS
• SOCRATIC DIALOGUE
5. LEARNING METHOD

• DISCUSSION
• GROUP PRESENTATION
• SELF - STUDY
 GROUP ASSIGNMENT
Draft International Sale of Goods contracts:
1. Export rice to the Middle East (FOB, T.T)
2. Import steel from the US (CIF, Clean collection)
3. Export coffee to Canada (CFR, D/A)
4. Import gasoline from Russia (CIF, D/P)
5. Export electronic devices to Laos (DAP, T.T)
6. Import indoor furniture from Malaysia (CPT, L/C)
7. Export vegetables to Japan (CPT, D/A)
8. Import machinery from China (CIP, L/C)
9. Export seafood to EU (FCA, L/C)
10. Import refrigerators from Korea (DPU, T.T)

11
 GROUP ASSIGNMENT
ASSIGNMENT REQUIREMENTS
+ Format: Students are encouraged to make their own contract template and
company’s logo.
+ Content:
(1) The contract should include the following terms and conditions: Preamble,
commodity, quantity, quality, packaging and marking, delivery, price,
payment, force majeure, arbitration, governing law. Additional terms and
conditions may be incorporated depending on the commodity, trade customs
and business strategies of the company,
(2) In addition to the contract, students are required to submit the Explanatory
Note with the view to providing detailed explanation and rationales for each
term and conditions drafted in the contract. Students are required to
research on relevant trade practices and customs, standard contracts drafted
by professional association and other scholarly writings (research papers,
books) to support their explanations.

12
 GROUP ASSIGNMENT
MARKING GUIDELINE
- Content:
In accordance with what you have learned in the course
In accordance with trade practices and customs (if any)
- Contract template and format: Well-designed and professional.
- Reference page (Harvard/APA styles applicable, 5 references are required in
text and list) (This is applicable to Explanatory Note)
- Contract language must be clear, concise, and direct; Grammar/ Verb/
Vocabulary – No typos
- Be sure to include the Title Page (Each group member with full name, class
and student number are required)
- Completed scripts must be submitted via MS Teams Assignment (File Name:
Class – Chosen Topic).

13
 6. COURSE ASSESSMENT
MARK (%) FORM OF ASSESSMENT

ATTENDANCE 10% ATTENDANCE CHECK

MID – TERM TEST 30% ASSIGNMENT + WRITING TEST

FINAL EXAM 60% WRITING TEST

PLUS/MINUS POINTS
 TENTATIVE SCHEDULE (Mon-Wed-Fri)
DAY CONTENT DAY CONTENT

1ST DAY - 9/8 CHAPTER 1 9TH DAY - 27/8 CHAPTER 2

2ND DAY - 11/8 CHAPTER 1 10TH DAY – 30/8 CHAPTER 2

3RD DAY – 13/8 CHAPTER 1 11TH DAY – 01/9 CHAPTER 2

4TH DAY – 16/8 CHAPTER 1 12TH DAY – 3/9 PRESENTATION+

MID TERM EXAM
5TH DAY – 18/8 CHAPTER 1 13TH DAY - 6/9 CHAPTER 3

6TH DAY – 20/8 CHAPTER 2 14TH DAY – 8/9 CHAPTER 3

7TH DAY – 23/8 CHAPTER 2 15TH DAY – 10/9 CHAPTER 3

8TH DAY – 25/8 CHAPTER 2 16th DAY – 4/9 GUEST SPEAKER

 TENTATIVE SCHEDULE (Tue-Thur-Sat)
DAY CONTENT DAY CONTENT

1ST DAY - 10/8 CHAPTER 1 9TH DAY - 28/8 CHAPTER 2

2ND DAY - 12/8 CHAPTER 1 10TH DAY – 31/8 CHAPTER 2

3RD DAY – 14/8 CHAPTER 1 11TH DAY – 02/9 CHAPTER 3

4TH DAY – 17/8 CHAPTER 1 12TH DAY – 4/9 GUEST SPEAKER

5TH DAY – 19/8 CHAPTER 1 13TH DAY - 6/9 MID TERM EXAM

6TH DAY – 21/8 CHAPTER 2 14TH DAY – 8/9 CHAPTER 3

7TH DAY – 24/8 CHAPTER 2 15TH DAY – 10/9 CHAPTER 3 +

REVISION
8TH DAY – 26/8 CHAPTER 2
Thank You
INCOTERMS®2020

1
 INCOTERMS® 2020

1
CONTENT AN OVERVIEW OF INCOTERMS®
2
3 FUNDAMENTALS OF INCOTERMS® 2020

DIFFERENCES BETWEEN INCOTERMS® 2010 AND 2020

2
 PART 1
AN OVERVIEW OF INCOTERMS

3
 HISTORY AND DEVELOPMENT

FUNDAMENTALS

Part I
REMARKS

CLASSIFICATIONS
 INCOTERMS QUIZ
T/F
1. The Incoterms® rules are derived from ‘International Contract Terms’
2. The Incoterms® rules are a set of International Commercial Law
3. The Incoterms® rules are not applicable to domestic trade transactions
4. The Incoterms® rules address the transfer of property/title/ownership of the goods sold.

5. The Incoterms® rules are applicable to contract of carriage

6. The Incoterms® rules are automatically applicable to sale of goods contract

7. Variations of Incoterms rules (FOB Stowed and trimmed; CIF landed;…) are stipulated in
Incoterms
8. Use of ® trademark symbol (the circled R trademark indicator) is required when referring to
Incoterms
9. The Incoterms® rules cater for materials transported by pipeline, such as oil and gas
I. AN OVERVIEW OF INCOTERMS

6
 1. HISTORY AND DEVELOPMENT

WHAT?

WHO?
INCOTERMS

WHEN?

WHY?
WHY INCOTERMS?

8
 DISCUSSION
• Incoterms = Trade terms?
• Incoterms = Shipping terms?
• Incoterms = Delivery terms?
• Incoterms = Payment terms?

9
1. HISTORY AND DEVELOPMENTS
1936 EXW, FCA, FOR/FOT, FAS, FOB, C&F, CIF
1953 Adding EX SHIP & EX QUAY
1967 Adding DAF & DDP
1976 Adding FOB airport
1980 Adding CPT & CIP
1990 Removing FOR/FOT & FOB airport; adding DDU

2000 13 terms similar to those of Incoterms 1990

2010 11 rules, DEQ→ DAT; DAF, DES, DDU→ DAP

2020 11 rules, DAT → DPU

 INCOTERMS 2010 vs. 2000
INCOTERMS 2000 INCOTERMS 2010

Name INCOTERMS 2000 INCOTERMS ®

2010

Terms TERMS RULES

DEQ DAT
DAF, DES, DDU DAP
Grouping 4 groups: E-F-C-D 2 Groups
International Trade Domestic and
International Trade
FOB, CFR, SHIP’S RAIL ON BOARD
CIF 11
I. OVERVIEW OF INCOTERMS

2
FUNDAMENTALS OF INCOTERMS

12
2. FUNDAMENTALS OF INCOTERMS
WHAT THE INCOTERMS RULES DO

• Obligations:
Who does what as between seller and buyer, e.g. who
organises carriage or insurance of the goods or who obtains
shipping documents and export or import licences;

• Risk: Where and when the seller “delivers” the goods, in other
words where risk transfers from seller to buyer; and

• Costs: Which party is responsible for which costs, for example

transport, packaging, loading or unloading costs, and checking or
security-related costs.
13
2. FUNDAMENTALS OF INCOTERMS
WHAT THE INCOTERMS RULES DO NOT DO

• whether there is a contract of sale at all;

• the specifications of the goods sold;
• the time, place, method or currency of payment of the price;
• the remedies which can be sought for breach of the contract of sale;
• most consequences of delay and other breaches in the performance of contractual
obligations;
• the effect of sanctions;
• the imposition of tariffs;
• export or import prohibitions;
• force majeure or hardship;
• intellectual property rights; or
• the method, venue, or law of dispute resolution in case of such breach.
Perhaps most importantly, it must be stressed that the Incoterms® rules do NOT deal with
the transfer of property/title/ownership of the goods sold.
14
I. OVERVIEW OF INCOTERMS

15
 3. REMARKS

• It is not mandatory to use INCOTERMS® in a sale

contract.
• INCOTERMS® are not price clauses, but do have an
impact on the pricing.
• Sales contracts which are based on a former version
(e.g. INCOTERMS® 2000) remain valid according to the
terms of that version.
16
 3. REMARKS

• Buyers and sellers should refer to the appropriate

version of the INCOTERMS®
e.g. FOB Hamburg, INCOTERMS® 2010.
• It is possible to add clauses or change the wording of
INCOTERMS®.
e.g. CFR Charleston port USA incl. THC, CUC, ISPS in
Charleston.
FCA Vienna Airport loaded on aircraft.
DDP Hanoi Vietnam VAT unpaid.
17
 3. REMARKS
1. The contract No.170211 VCT-FETA on 17/1/2011 b/w VIET
COTTON YARN INVESTMENT TRADING JSC & FETA
TEKSTIL SAN.TIC.LTD.STI:
“ ALL OTHER CONDITIONS, WHICH NOT STATED IN THIS
CONTRACT, WILL REFER TO INCOTERMS 2000”
2. The contract No. BVQA400 b/w FORMOSA INDUSTRIES
CORPORATION & NANYA PLASTICS CORPORATION:
“ The INCOTERMS 2000 will be used for this contract”

18
 I. INCOTERMS®

4
CLASSFICATIONS

19
 PART 2
FUNDAMENTALS OF
INCOTERMS®2020

20
 KEY DEFINITIONS
•Pre-carriage •Port-to-port
•Main-carriage •Port-to-door
•On-carriage •Omni-modal
•Door-to-door •On-board
•Door-to-port •Delivery
 KEY DEFINITIONS

❖Pre-carriage = any inland movement BEFORE the container is

delivered to the port/terminal

❖On-carriage = any inland movement AFTER the container is

picked up from the port/terminal
23
24
 The seller’s obligations The buyer’s obligations
• A1 General obligations • B1. General obligations
• A2. Delivery • B2. Taking Delivery
• A3. Transfer of risks • B3. Transfer of risks
• A4. Carriage • B4. Carriage
• A5. Insurance • B5. Insurance
• A6. Delivery/Transport • B6. Delivery/Transport
Document Document
• A7. Export- Import Clearance • B7. Export- Import Clearance
• A8.Checking/Packaging/Marking • B8.Checking/Packaging/Marking
• A9. Allocations of costs • B9. Allocations of costs
• A10. Notices • B10. Notices

25
 EXW – EX WORKS
• EXW (insert named place of delivery) Incoterms® 2020
→ EXW ABC Co.,Ltd , 15 D5 Street, Ward 25, Binh Thanh District, Hochiminh City, Viet Nam,
Incoterms 2020
➢ The Seller’s obligations:
- General obligations (A1):
- Delivery (A2):
 EXW – EX WORKS
➢ The Seller’s obligations:
- Transfer of risks (A3):
- Carriage and Insurance (A4, A5):
- Customs Clearance (A7):
- Notices (A10):

→ Free from loading, carriage and insurance, customs formalities

→ EXW represents the minimum responsibility for the seller
 EXW – EX WORKS
➢ The buyer’s obligations:
- Taking delivery (B2):
- Transfer of risks (B3):
- Carriage (B4):
- Insurance (B5):
- Customs Clearance (B7):
- Notice (B10):
 EXW – EX WORKS
➢ Notes:
- Transport mode: EXW may be used irrespective of the mode or modes
of transport, if any, selected.
- EXW may be suitable for domestic trades, where there is no intention at
all to export the goods.
- EXW imposes the least set of obligations on the seller → The buyer
should use it with care.
- EXW may be used if:
 VARIATIONS OF EX-WORKS
• EXW-LOADED
– Why is it common?
– Who would bear the risk of loss of or damage to the goods occurring while the
loading operation?

31
 DISCUSSION
A US exporter received a letter of credit with the anticipated price quote,
Ex Works. However, the letter of credit required an on-board ocean bill of
lading from Oakland, California, to be presented to the bank before it
released the payment. Discuss the risks the exporter may suffer.

32
33
 LOGO
FCA: Free carrier

FCA means that the seller delivers the goods to the

buyer in one or other of two ways.
1- When the named place is the seller’s premises:
 LOGO
FCA: Free carrier

2- When the named place is another place, the goods are delivered:
 LOGO
Named place in container transport by sea

❖ Container Yard (CY) is a place where containers are

stored before loading on to the vessel or after unloading
from the vessel/ship once it arrives at Port. A Container
Yard is primarily used for FCL (Full container load
shipment).

❖ Container freight station (CFS) is majorly used for LCL

(Less than container load) shipments. The goods before
loading on to the vessel/ship are taken to CFS to be
consolidated and after arriving to the port are taken to
CFS to be de-consolidated. The goods are also weighted
and checked at CFS before loading on the vessel.
 LOGO
Named place in container transport by sea

FCL = Full Container Load

LCL = Less than Container Load
FCA – Free Carrier

➢ FCA (insert Named place of delivery) Incoterms 2020

FCA Tan Son Nhat Airport, Viet Nam – Incoterms 2020.

38
FCA – Free Carrier
➢The seller’s obligations:
- Delivery (A2):
-Transfer of risks (A3)
- Carriage and Insurance (A4, A5): No obligation
- Delivery document (A6): .
- Export Clearance (A7)
- Checking, packaging, packing (A8)
- Allocation of costs (A9)
- Notices (A10)

39
FCA – Free Carrier
➢The buyer’s obligations:
- Transfer of risks (B3):
-Carriage (B4)
-Delivery document (B6):
-Import clearance (B7)
-Allocation of costs (B9)
-Notices (B10):
-Notes:
▪ Used irrespective of mode of transport
▪ Especially suitable for container transport
▪ FCA should be used instead of FAS or FOB if the seller does not
intend to deliver the goods alongside the ship or on board.

40
41
42
 INCOTERMS® 2020

FAS – Free Along Side Ship

FAS (insert named port of shipment) Incoterms
2020
→ FAS Cat Lai port, Viet Nam, Incoterms 2020
→ How to place the goods alongside ship?
43
 INCOTERMS® 2020 LOGO

FAS: Free alongside ship (insert Named

port of shipment) Incoterms® 2020
Free Alongside Ship means that the
seller delivers the goods to the buyer
when the goods are placed alongside the
ship (e.g. on a quay or a barge)
nominated by the buyer at the named
port of shipment or when the seller
procures goods already so delivered.
LOGO
46
47
FAS – Free Alongside ship
➢The seller’s obligations:
- Delivery (A2):
-The seller must deliver the goods either by placing them alongside the
vessel nominated by the buyer at the loading point, if any, indicated by
the buyer at the named port of shipment or by procuring the goods so
delivered.
The seller must deliver the goods on the agreed date or at the time
within the agreed period notified by the buyer or, if no such time is
notized, then at the end of the agreed period and in the manner
customary at the port.
- Transfer of risks (A3)
- Carriage (A4):
- Insurance (A5)
- Delivery document (A6):
- The seller must provide the buyer, at the seller’s cost, with the usual
proof that the goods have been delivered
- Unless such proof is a transport document, the seller must provide
assistance to the buyer, at the buyer’s request, risk and cost, in
obtaining a transport document.
-Export clearance (A7) 48
FAS – Free Alongside ship

➢The buyer’s obligations:

- Transfer of risks (B3)
- Carriage (B4)
- Delivery document (B6)
- Import Clearance (B7)
- Allocation of costs B9
- Notices (B10):
- Notes:
• Used only for sea or inland waterway transport
• Not suitable for containerized goods (using FCA instead of FAS);
• Lighterage/barge charges need to be allocated

49
50
 INCOTERMS® 2020 LOGO

FOB: Free on board + Named port

“Free on Board” means that the seller
delivers the goods on board the vessel
nominated by the buyer at the named
port of shipment or procures the goods
already so delivered.
 INCOTERMS® 2020

❖FOB – Free on board

➢FOB + Named port of shipment, Incoterms
2020
FOB Cat Lai Port, Viet Nam – Incoterms 2020
FOB – Free on board
➢The seller’s obligations:
- Delivery (A2):
-Risk transfer (A3)
- Carriage (A4):.
- Insurance (A5)
- Delivery document (A6): Export clearance (A7)

53
 DISCUSSION
An exporter and importer have agreed upon the Incoterms® 2020
rule FOB Cape Town port. At the time the sales contract was agreed
upon, it was unknown which shipping line or vessel would be used.
At the time of export, the exporter loads the container at its
premises and its forwarding agent arranges for the container to be
sent to the export stack for the vessel as advised by the
importer/agent; the container is placed into the export stack and
the importer is notified. The vessel nominated by the buyer is
delayed due to wind and collects the cargo only after the scheduled
loading date.
During the time after the export agent has placed the container into
the export stack, (which is customary in procuring the container so
delivered in South African ports) and the placing of the container on
board the vessel nominated by the buyer at the loading point, the
goods are damaged.
Who would bear the risk of damage to the goods?
54
 DISCUSSION
Same as above, except the vessel is not delayed
due to wind, but the cargo is left behind on the
quayside due to a ‘short shipment’ resulting from
the vessel being overladen at the previous port of
call. The cargo is damaged between the time of
delivery into the export stack and when the
container is shipped on the next available vessel.
Who would bear the risk of damage to the goods?

55
 INCOTERMS® 2020
❖ what is meant by ‘placing’ the
goods ‘on board’ the vessel? Are
securing, dunnage, and/or
trimming of the cargo required??
❖ ‘FOB secured stowed and
trimmed’?
 INCOTERMS® 2020
❖If goods are dropped during loading
and land on deck causing damage.
Who would be liable for this?
❖Under FOB, what happens if goods
are destroyed during loading when
only part of the goods has been put
on board? Has delivery been made,
so that risk for the goods already on
board has passed to the buyer?
❖ Who pays the cost of B/L?
 What does ‘on board’ mean?
❖ Port custom
❖Type of goods (out of gauge/super
heavy)
❖ RORO (Roll-on Roll off) Transport or
LOLO (Lift-on Lift-off) Transport
LOGO
 LOGO

www.themegallery.com
FOB – Free on board

➢The buyer’s obligations:

- Transfer of risks (B3)
- Carriage(B4)
- Delivery document: B6
- Import clearance(B7)
- Cost allocations B9
- Notice (B10):
- Notes:
• Used only for sea or inland waterway transport

• Not suitable for containerized goods (using FCA instead of FOB);

• Custom of loading port;
• Variations of FOB (FOB stowed, FOB trimmed)
• Usage of transport terms: FI, FO, FIO… 61
 Difference between FOB and FAS
• Delivery point;
• Allocation of cost and risks related to delivery:
+ Risks of loading: Seller;
+ Costs of loading: liner charter/voyage charter;
• Custom of the loading port;
• Proof of delivery: received for shipment/on board;

62
 LINER CHARTER
• Liners are ship trading between fixed and predetermined number of
ports regardless whether they are full or empty.
• Liners follow a schedule of ports of loading and discharge, usually
adhering to a published timetable on set conditions of carriage and
often charged at a published rate or freight.
• Liner cargo is almost made up of manufactured or partly-
manufactured goods
• The vast majority (90%) of liner cargo is carried in container
• Liner freight includes loading, stowage/trimming and discharge
expenses
63
 VOYAGE CHARTER
• Voyage chartering happens when a charter rents whole or part of a
ship for transporting his cargoes from port(s) of loading to port(s) of
discharge for a single or some of voyages
•Ships are running as the charterer’s requirements
• It almost always carries raw materials, very often in bulk such as iron
ore, grain, coal, and oil.
• Freight is determined by market to competitive and negotiated with
or without I, O, S, T → FIOST?
• Obligations and responsibility of carriers may be governed by both
Bill of lading and charterparty.
64
 LOGO
BILL OF LADING

1. Definition
❖ Bill of lading is a document issued by a carrier to a
shipper (exporter/seller/consignor), signed by the
captain, agent, or owner of a vessel, furnishing written
evidence regarding receipt of the goods (cargo), the
conditions on which transportation is made (contract of
carriage), and the engagement to deliver goods at the
prescribed port of destination to the lawful holder of the
bill of lading (Hinkelman, Edward G., 2008).
 LOGO

2. Functions
❖ Receipt of shipment: confirming whether goods have been
received in good condition.
❖ Evidence of carriage contract: having the carrier’s or the
carrier agent’s signature only.
❖ Document of title → security for payment
 LOGO

3. Types of B/L
❖ By receiver
❖ By negotiability
❖ By notes on B/L
❖ By shipment
❖ Transport process
 LOGO
3.1. By receiver

3.1.1. Straight B/L

❖ In the box consignee the name of the addressee is
entered.
❖ Only he has the right to receive the goods.
❖ Non-negotiable Bill.
❖ Not beneficial to use with COLLECTION and L/C mode of
payment.
 LOGO
3.1. By receiver

3.1.2. To order B/L (2 common cases)

a. To order blank endorsed
•“TO ORDER” or “TO ORDER OF THE SHIPPER”
❖ The shipper would endorse in blank on the back of the Bill of
Lading by signing with authorized signature and stamping with
the company’s seal (same seal as the one in L/C).
 LOGO
3.1. By receiver
b. To order of a Bank
❖ Ex: To order of HSBC Vietnam.
❖ It is the issuing bank that would endorse the B/L to enable
the applicant to take up of the delivery of the cargo once the
documents presented are complying or once the applicant
accepts to pay the discrepant documents.
 LOGO
3.1. By receiver
3.1.3. To bearer B/L
❖ Any holder in due course can claim the goods.
❖ Should not give it directly to the buyer with L/C or Collection
payment.
 LOGO
3.2. By negotiability

❖ Negotiability is the characteristic of a document that

allows it to be legally and freely transferable. It allows the
passing of its ownership from one party to another by
endorsement or delivery.
 LOGO
3.2. By negotiability

3.2.1. Negotiable B/L

B/L can be transferred by its consignee to a third party
by endorsing and delivering it to another party. (To order,
To bearer B/L)
3.2.2. Non-negotiable B/L
B/L can not be transferred by its consignee to a third
party by endorsing and delivering it to another party.
(Straight B/L)
 LOGO
3.3. By notes on B/L

3.3.1. Clean Bill of Lading

❖ A bill of lading issued by a carrier declaring that the goods
have been received in an appropriate condition, without the
presence of defects.
• “Shipped in good order and condition”.
 LOGO
3.3. By notes on B/L

3.3.2. Unclean Bill of Lading

❖ A bill of lading indicating some damage to, or loss of the goods.
It is also called a claused bill of lading.
• "goods insufficiently packed in accordance with the Carriage of Goods by Sea Act,"
“five boxes broken”, “ some bags torn”, “ case No. 12 missing,”
 LOGO
3.3. By notes on B/L

❖ In practice, a clean BL will be essential for the sales contract

and must be issued to fulfill the requirements stated in letters
of credit.
❖ Most banks refuse to accept any unclean bills of lading.
❖ By offering a letter of indemnity to carrier, indemnifying the
latter against all possible consequences.
 LOGO
3.4. By shipment on board

3.4.1. Received for shipment B/L

❖ A B/L which serves only as a receipt for goods accepted for
shipment on a named ship (vessel), and does not certify their
placement on board.
❖ Used where the goods arrive at the port of departure before
the vessel does.
 LOGO
3.4. By shipment on board

3.4.2. Shipped on board B/L

❖ This B/L evidences goods having been loaded on board the
specified vessel with loading date on it. In these cases, the
date of issuance of the B/L will be deemed to be the date of
shipment.
 LOGO
3.5. By transport process
3.5.1. Direct B/L
❖ Direct B/L means that the goods are shipped from the port
of loading direct to the port of destination without involving
transhipment.
3.5.2. Through B/L
❖ Different ships from origin to destination.
81
 INCOTERMS® 2020 LOGO

CFR: Cost and freight + Named port

Cost and Freight” means that the seller
delivers the goods to the buyer
• on board the vessel
• or procures the goods already so delivered.
The seller must contract for and pay the costs
and freight necessary to bring the goods to
the named port of destination.
 INCOTERMS® 2020
❖CFR – Cost and Freight
➢CFR + port of destination, Incoterms 2020
CFR Hai Phong Port, Việt Nam – Incoterms
2020
 INCOTERMS® 2020
❖ CFR – Cost and Freight
➢ Seller’s obligations:
- Delivery (A2):
- Transfer of risks (A3)
- Carriage (A4):
- Insurance (A5)
- Transport document (A6):
- Export clearance (A7)
- Cost allocation (A9)
➢ Buyer’s obligations
➢ Taking delivery and transfer of risks (B2, B3)
 Loading costs? Risks of unloading?
- Import clearance (B7)
- Cost allocations (B9)
- Notices (B10)
❖ Notes:
❑ Not suitable for containerized goods (using CPT instead of CFR).
❑ The buyer should contract for insurance.
❑ CNF, C&F, C + F: not recommended.
86
 INCOTERMS® 2020
❖ CIF - Cost, Insurance and Freight
➢ CIF + Named port of destination, Incoterms 2020
CIF Cat Lai Port, Viet Nam, Incoterms 2020.
➢ The seller fulfils his obligations by placing the insured goods on
board the vessel nominated by the seller at the agreed port of
loading or by procuring the goods already so delivered;
➢ Parties’ main obligations are similar to those in CFR, except for
insurance obligation
 INCOTERMS® 2020
➢ Seller’s insurance obligation:
▪ .
ICC – INTERNATIONAL CARGO CLAUSES (Lloyd’s Market Association/International
Underwriting Association ‘LMA/IUA’) – 01.01.2009
91
92
93
94
95
96
 INCOTERMS® 2020 LOGO

CPT: Carriage paid to + Named place

CPT
Border Border

Seller Port of Port of Named

place
Buyer
shipment destination
COST

RISK
 INCOTERMS® 2020
❖ CPT – Carriage paid to
➢ CPT + Named place of destination
CPT Noibai Airport, Vietnam – Incoterms 2020

❖ Carriage Paid To” means that the seller delivers the goods—
and transfers the risk—to the buyer by handing them over to
the carrier contracted by the seller or by procuring the goods
so delivered. The seller may do so by giving the carrier
physical possession of the goods in the manner and at the
place appropriate to the means of transport used.
 INCOTERMS® 2020
❖ CPT – Carriage paid to
➢ Seller’s obligations
- Delivery and transder of risks (A2,A3)
- Carriage (A4)
- Insurance (A5)
- Transport Document (A6):
- Custom clearance(A7)
 INCOTERMS® 2020
➢ Buyer’s obligations
❖ Take delivery, bear all risks of loss of or damage to the goods from the time they
have been delivered;
❖ Notice the seller of time of dispatching/place of destination and bear all arising
costs and risks if fail to perform B10;
❖ Pay all additional charges relating to the goods in transit or unloading costs,
unless such costs are for the seller’s account under contract of carriage;
❖ Clear the goods for import;
❖ Notes:
❖ All modes of transport;
❖ If the two parties do not intend to deliver the goods on board, CPT should be
used instead of CFR;
❖ The buyer should contract for insurance;
101
 INCOTERMS® 2020
❖ CIP – Carriage and Insurance Paid to
❖ CIP + Named place of destination, Incoterms 2020
CIP Noibai Airport, Vietnam, Incoterms 2020
➢ Tổng quan:
The seller fulfils his obligations by delivering the insured goods to
the carrier or another person nominated by the seller at a place
agreed between the parties
→ Parties’ obligations are similar to those in CPT.
➢ Seller’s obligations
➢ Buyer’s obligations
➢ Transport document
➢ Insurance issue
 INCOTERMS® 2020
➢ Insurance obligation:

▪ Unless otherwise agreed or customary in the particular trade, the seller must
obtain at its own cost cargo insurance complying with the cover provided by
Clauses (A) of the Institute Cargo Clauses (LMA/IUA) or any similar clauses
as appropriate to the means of transport used. T
▪ The insurance shall be contracted with underwriters or an insurance
company of good repute and entitle the buyer, or any other person having an
insurable interest in the goods, to claim directly from the insurer.
▪ The insurance shall cover, at a minimum, the price provided in the contract
plus 10% (i.e. 110%) and shall be in the currency of the contract.
▪ The insurance shall cover the goods from the point of delivery to at least the
named place of destination.
▪ The seller must provide the buyer with the insurance policy or certificate or
any other evidence of insurance cover.
 INCOTERMS® 2020
❖ Notes for C group
▪ Two critical points
▪ Avoid stipulating date of delivery at destination (date of arrival)
‘CIF Rotterdam not later than…’
‘Shipment to be arrived at discharging port before…’
▪ Unsuitability of minimum cover for manufactured goods
▪ C-terms are not equivalent to D-terms
105
 INCOTERMS® 2020 LOGO

DAP: Delivered at place + Named place

DAP
Border Border

Seller Port of Port of Named

place
Buyer
shipment destination
COST

RISK
 INCOTERMS® 2020
➢ DAF – Delivered at Frontier
➢ DES – Delivered ex Ship
➢ DDU – Delivered Duty Unpaid

2000 2010
DAF
DES DAP
DDU
108
109
 LOGO
ADDITIONS TO DDP

❖ DDP exclusive of duty, VAT and other import

charges.
 NOTES FOR D GROUP

➢DAP and DDP do not include unloading

➢If any difficulties seem likely to arise in relation to
the import of the goods into the buyer’s country, the
seller should try to avoid using the term DDP.
➢DPU or DAP and difficulties of reaching the final
destination

111
 Y Y Y
Can you bear all costs and Can you obtain the Can you bring the
risks until the goods are required import goods to the named ???
delivered to the buyer? licenses and carry out place of destination?
the import formalities

N N
N

Y N
Can you organize transport
???
Y

and pay the freight up to the Is the place of Are the goods
agreed place of destination destination a sea shipped in a
(without guarantee of port? container?
arrival)
???
N Y

Can you bring the goods to

N
Y Y
the agreed place of Is the place of Are the goods ???
international/main shipment destination a sea shipped in a
and carry out all formalities port? container?
upon exportation
N Y ???
N

???
113
J&J Ltd. of Guangzhou, China, sold solar panel displays to Sunshine
Technologies for $300,000 USD CIF. J&J contracted their freight forwarder,
Better Freight International Ltd., to move the cargo on a door-toport basis to
the port of Chicago, Illinois. Better Freight was notified that the shipment
would be ready for pick up from J&J on the first of the month. The goods
were picked up on time and moved to the port of loading for export loading.
The proper Importer Security Filing (ISF) information was filed in a timely
manner and the shipping carrier Main Container Line loaded the container
accordingly. While in transit, the container was subject to carriage stress, and
movement causing damage to the solar panels resulting in 100% loss of the
quality of the goods. Sunshine, upon investigation, discovered that the freight
forwarder Better Freight and the container carrier Main Container Line were
notorious for damaged cargo and poor stowage of containers from the Far
East. Sunshine filed a claim with J&J for the full value of the cargo plus a 30%
profit that was expected after U.S. importation and U.S. resale. The seller, J&J,
upon receipt of notification of the claim for damages refused the claim and
informed Sunshine Technologies that they, J&J, were not liable for the loss or
damage. 114
 PART 3
CHANGES TO INCOTERMS®2020

115
Incoterms®2020
 Incoterms®2020
• Overall changes: steering users towards the right
Incoterms® rule for their sale contract.
– a greater emphasis in this Introduction on making the
right choice;
– a clearer explanation of the demarcation and
connection between the sale contract and its ancillary
contracts;
– upgraded Guidance Notes presented now as
Explanatory Notes to each Incoterms® rule; and
– a re-ordering within the Incoterms® rules giving
delivery and risk more prominence
 ORDER WITHIN THE INCOTERMS RULES
2010 2020

A1-B1. General obligations of the seller-buyer A1-B1. General obligations

A2-B2. Licences, authorizations, security A2-B2. Delivery – Taking Delivery

clearances and other formalities
A3-B3. Contracts of carriage and insurance A3-B3.Transfer of risks

A4-B4. Delivery – Taking delivery A4-B4. Carriage

A5-B5. Transfer of risks A5-B5. Insurance

A6-B6. Allocation of costs A6-B6. Delivery/Transport Document

A7-B7. Notices to the buyer-seller A7-B7. Export- Import Clearance

A8-B8. Delivery document – Proof of delivery A8-B8. Checking/Packaging/Marking

A9-B9. Inspection of goods A9-B9. Allocations of costs

A10-B10. Assistance with information and A10-B10. Notices

related costs
 Incoterms®2020
• Major changes:
1. Bills of lading with an on-board notation and the
FCA Incoterms® rule
2. Costs, where they are listed
3. Different levels of insurance cover in CIF and CIP
4. Arranging for carriage with seller’s or buyer’s own
means of transport in FCA, DAP, DPU and DDP
5. Change in the three-letter initials for DAT to DPU
6. Inclusion of security-related requirements within
carriage obligations and costs
7. Explanatory Notes for Users
 CHANGES TO INCOTERMS®2020
1. On-board B/L in FCA
A6-B6 (Delivery/Transport document)
‘If the parties have so agreed, the buyer must
instruct the carrier to issue to the seller, at the
buyer’s cost and risk, a transport document stating
that the goods have been loaded (such as a bill of
lading with an onboard notation)’
 CHANGES TO INCOTERMS®2020
2. COSTS

• A6/B6: one-stop list of costs

 CHANGES TO INCOTERMS®2020
3. Different levels of insurance cover in CIF and CIP
• A5-B5 Insurance
‘Unless otherwise agreed or customary in the
particular trade, the seller must obtain at its own
cost cargo insurance complying with the cover
provided by Clauses (A) of the Institute Cargo
Clauses (LMA/IUA) or any similar clauses as
appropriate to the means of transport used.’
 CHANGES TO INCOTERMS®2020
4. CARRIAGE IN FCA, DAP, DPU, DDP
2010 A3a- B3a 2020 A4-B4

FCA Carrier Carrier/Buyer

DAP, DAT/DPU, Carrier/Seller

DDP
2010 A3a-B3a 2020 A4-B4
FCA B3a): ‘Contract B4; ‘The buyer must contract
for the carriage of or…………….. for the
the goods’. carriage of the goods’
DAP, DAT/DPU, A3a): ‘Contract A4: ‘ The seller must contract
DDP for the carriage of or ………………… for the
the goods’ carriage of the goods’
 CHANGES TO INCOTERMS®2020
5. DAT → DPU

2010 2020

DELIVERED AT TERMINAL OUT OF AT/OUT OF

TERMINAL TERMINAL

NOT UNLOADED

UNLOADED
DPU – DELIVERED AT PLACE UNLOADED (Named place of destination)
 CHANGES TO INCOTERMS®2020
6. Security-related requirements within carriage
obligations and costs
2010 2020
A2 Licences, A4 Carriage
authorizations, The seller must comply with any transport-
security related security requirements up to delivery
clearances and
other A7 Export/Import Clearance
formalities a) Export Clearance
Where applicable, the seller must carry out and
pay for all export clearance formalities required
by the country of export, such as:
- Export licence;
- Security clearance for export;
- Pre-shipment inspection; and
- Any other official authorisation
 DISCUSSION

Which factors affecting the choice of an

Incoterms rule?

The t

ransfer of risk takes place at the river port

127
 DISCUSSION

What are advantages and disadvantages of

the seller organising transport? The t

ransfer of risk takes place at the river port

128
Demurrage
(DEM) and
Detention
(DET)
 Thank You

__________
Default address Avenue, 4214,
Postal code 80.250-210 / Curitiba PR BR +55 32 3836 55 55
___________________________________________
+55 32 9685 55 55
LOGO AREA www.default.com
 CHAPTER 2:
INT’L SALE OF GOODS CONTRACT
 READING MATERIALS
1. Richard Schaffer, Filiberto Agusti and Lucien Dhooge
(2014) - International Business Law and Its Environment
(See Chapter 4 – p.86-119)
2. Ray August, Don Mayer and Michael Bixby (2013)
International Business Law: Text, cases and readings
(See Chapter 10- p.559-609)
3. Indira Carr and Peter Stone (2018), International Trade
Law (See Chapter 2 – p.60-94)
4. Nguyễn Minh Hằng, International Business Law (2012)
(See Chapter 3)
 READING MATERIALS
LEGAL DOCUMENTS
1. Law on Commerce 2005
2. Law on Foreign Trade Management 2017
3. Civil Code 2015
4. Decree No. 69/2018/NĐ-CP dated on 15 May 2018
5. United Nations Convention on Contracts for the international sale
of goods (1980) [CISG]
6. Incoterms 2020, Incoterms 2010
7. Unidroit principles of International Commercial Contracts (PICC)
2016
I. FUNDAMENTALS OF INT’L SALE OF GOODS
CONTRACT
INT’L SALE OF GOODS CONTRACT

= SALE OF
GOODS +
CONTRACT “INTERNATIONALITY ”
 1.2. INTERNATIONAL CHARACTER

1.2.1. Parties
1.2.2. Object
1.2.3. Payment currency
1.2.4. Governing law and dispute
settlement body
1.2.INTERNATIONAL CHARACTER
1.2.1. Parties
- CISG: Art 1.1, Art 10
- Vietnam’s law:
1.2.INTERNATIONAL CHARACTER
→ What if a party has more than one
place of business?

Ex: A buyer in Austria (a CISG State)

purchased goods from the Swiss branch
of a company with headquarters in
Liechtenstein (notably: a non-CISG
Contracting State) (CLOUT case 261)
1.2. INTERNATIONAL CHARACTER
1.2.2. Object
- CISG:
- Vietnam’s law: Law on Commerce 2005
– Art 27.1: Can be delivered across
borders
Remark: Country’s border – customs
border (Export Processing Zone;
commercial and industrial Zone…)
1.2. INTERNATIONAL CHARACTER
1.2.3. Payment currency

- Payment currency can be foreign to at

least one party to the contract
1.2. INTERNATIONAL CHARACTER
1.2.4. Governing law and dispute
settlement body
II. REQUIREMENTS FOR A VALID CONTRACT
II. REQUIREMENTS FOR A VALID
CONTRACT
1. Parties to the contract
2. Forms of the contract
3. Content of the contract
4. Objects of the contract
1. PARTIES TO THE CONTRACT
- VN: Decree No. 69/2018/NĐ-CP
- Competence to enter into a contract:
+ Legal representative
+ Authorized representative
 1. PARTIES TO THE CONTRACT

• Exceed the sphere of authorization?

• The legal representative knows but shows no
objection within a reasonable period?
See more:
- Art 142-143 Civil Code 2015
- Resolution No. 04/2003 of the Judges Council of
the Supreme People’s court
 Article 674 CIVIL CODE
1. The capacity for civil acts of individuals shall be
determined in accordance with the law of the country of
which such person holds nationality, except in the case
provided in clause 2 of this article.
2. Where a foreign individual establishes or performs civil
transactions in Vietnam, the capacity for civil acts of such
foreign individual shall be determined in accordance with
the law of Vietnam.
3. The determination of whether an individual has lost
capacity for civil acts, has difficulties in being aware of, or
controlling his or her own acts or has restricted capacity for
civil acts in Vietnam must comply with the law of Vietnam.
 CIVIL CODE
Article 19 Capacity for civil acts of individuals
The capacity for civil acts of an individual shall be the
capability of the individual to establish and exercise
civil rights and perform civil obligations through his or
her acts.
Article 20 Adults
1. Adults are persons who are eighteen (18) or more
years of age
2. An adult shall have full capacity for civil acts except
in the circumstances provided in articles 22, 23 and 24
of this Code.
 CIVIL CODE
Article 22 Loss of capacity for civil acts
1. Where a person is incapable of being aware of or controlling
his or her own acts due to any mental or other illness, a court
shall, based on the conclusion of forensic mental examination
and at the request of a person with related rights or interests, or
a relevant agency or organization, issue a decision declaring the
former person as a person who has lost capacity for civil acts.
Where the basis on which a person has been declared as having
lost the capacity for civil acts no longer exists, the court shall, at
the request of such person or any person with related rights or
interests, or a relevant agency or organization, issue a decision
revoking the decision declaring the loss of capacity for civil acts.
2. Civil transactions of a person who has lost the capacity for civil
acts must be established and performed by his or her legal
representative.
 ART 142 CIVIL CODE
1. A civil transaction entered into and performed by an unauthorized person
shall not give rise to rights and obligations with respect to the principal,
except in one of the following cases:
(a) The principal has recognized the transaction;
(b) The principal knew but has not objected within a reasonable period;
(c) The principal is at fault, resulting in the fact that the transacting person did
not know or could not have known that the person who entered into or
performed the civil transaction with him or her was unauthorized.
2. Where a civil transaction established or performed by an unauthorized
person does not give rise to rights and obligations with respect to the
principal, the unauthorized person must, nevertheless, fulfil obligations to the
person with whom he or she transacted, unless such person knew or should
have known that the representative was unauthorized but still carried out the
transaction.
3. A person having transacted with an unauthorized person has the right to
terminate unilaterally the performance of or to rescind the civil transaction
entered into and to demand compensation for any loss and damage, except
where such person knew or should have known that the representative was
unauthorized but still carried out the transaction or in the case prescribed in
clause 1(a) of this article.
 ART 143 CIVIL CODE
1. A civil transaction entered into and performed by a representative beyond his or
her scope of representation shall not give rise to rights and obligations of the principal
with respect to that part of the transaction which exceeded the scope of
representation, except in one of the following cases:
(a) The principal has agreed;
(b) The principal knew but has not objected within a reasonable period;
(c) The principal is at fault, resulting in the fact that the transacting person did not
know or could not have known that the person entered into or performed the civil
transaction with him or her beyond the scope of representation.
2. Where a civil transaction established or performed by a representative beyond the
scope of representation does not give rise to rights and obligations with respect to
that part of the transaction established or performed which exceeded the scope of
representation, the representative must fulfil obligations to the person with whom he
or she transacted with respect to that part of the transaction which exceeded the
scope of representation, unless such person knew or should have known that the
scope of representation was exceeded but still carried out the transaction.
3. A person having entered into a transaction with such representative has the right to
terminate unilaterally or rescind the civil transaction with respect to that part which is
beyond the scope of representation or with respect to the entire transaction and
demand compensation for any loss and damage, except where such person knew or
should have known that the scope of representation was exceeded but still carried
out the transaction or in the case prescribed in clause 1(a) of this article.
 Mechel Metal Supply Ltd. v. Metal
Construction Jsc
• Feb2003, Metal Construction JSC (A) (VN),
represented by Mr Ngô Văn Kèn entered into a
contract with Mechel Metal Supply Ltd
(Lichtenxtain) (B)
• A failed to open the L/C within the time limit.
The goods were made available at destination
port but A failed to take delivery. B then sold
the goods to another company at a lower
price.
• B brought A to the ICC
• A’s arguments:
- The contract is invalid as Mr Ken is not the
legal representative. He is merely the director
of the dependent unit of company A.
- Mr Ken failed to advise the Board of
Management of the existence of contract.
• B’s arguments:
- In the past, Mr Ken, acting as an authorized
legal representative, used to conclude the
contract with Company B.
- Mr Ken declares that he advised the Director
of the contract by phone.
 2. FORM OF THE CONTRACT

• Written form or equivalent: Viet Nam (Art

27.2, Law on Commerce), China, Argentina,
Chile, Belarus, Hungary, Ucraina…
• The US: (Art 2.201, UCC): a contract for the
sale of goods for the price of $500 or more shall
be made in writing
• CISG 1980: Art 11 & Art 96
3. CONTENT OF THE CONTRACT
A. Are there any clauses mandatory in the
contract?

B. The content must not be contrary to the

laws
 A. Mandatory clauses in the
contract
- Viet Nam: Art 398 – Civil Code
- CISG 1980: Art 19.3
 COMMERCIAL LAW 1997
Article 50 Principal Contents of Contracts for Sale and Purchase of Goods
Contracts for sale and purchase of goods must contain the following principal
contents:
1. Name of goods;
2. Quantity;
3. Specifications, quality;
4. Price;
5. Method of payment;
6. Location and time for delivery and receipt of goods.
In addition to the principal contents stipulated in this article, parties may
agree on other contents of the contract.
 4. OBJECT OF THE CONTRACT
- Goods banned from export and import
- Goods imported and exported under
conditions
- Goods freely imported and exported
(See more: Appendix 1-3 – Decree
69/2018/NĐ-CP)
III. OFFER AND ACCEPTANCE
OFFER AND ACCEPTANCE

OFFER

INT’L SALE OF
+ GOODS
CONTRACT

ACCEPTANCE
Forms:
- Offer + Acceptance = Contract
- Offer signed by both the seller and buyer =
Contract
1. OFFER

+ CISG 1980: Art.14 → Art.24

+ Civil Code 2015: Art.386 → Art. 397

Contract formation under the CISG

OFFER ACCEPTANCE
• Form of acceptance (Art CONTRACT
• Criteria for an offer
18) • The time when the
(Art 14)
• Counter-offer (Art 19) contract is
• Withdrawal (Art 15)
• Time allowed for concluded (Art 23-
• Revocation (Art 16) 24)
acceptance (Art 20-21)
• Termination (Art 17)
• Withdrawal (Art 22)
1. OFFER

1. Criteria for an offer

2. Withdrawal and revocation of an offer
 Criteria for an offer
1 - Việt Nam: Art 386 Civil Code
- CISG 1980: Art 14
 ART 386.1
Offer to enter into a contract means a
clear expression by the offeror of its
intention to enter into a contract and to
be bound by such offer made to
another determined party or to the
public (hereinafter collectively referred
to as the offeree).
 ART 14 CISG 1980
(1) A proposal for concluding a contract addressed
to one or more specific persons constitutes an
offer if it is sufficiently definite and indicates the
intention of the offeror to be bound in case of
acceptance. A proposal is sufficiently definite if
it indicates the goods and expressly or implicitly
fixes or makes provision for determining the
quantity and the price.
(2) A proposal other than one addressed to one or
more specific persons is to be considered merely
as an invitation to make offers, unless the
contrary is clearly indicated by the person
making the proposal.
 REMARKS
• Inquiries
• Mass distribution of a catalogue of
merchandise
• Brochures
• Advertisement

→DISCLAIMER SHOULD BE PROVIDED SUCH AS:

 ART 14 VS ART 55 – OPEN PRICE
CONTRACT
‘Where a contract has been validly concluded
but does not expressly or implicitly fix or
make provision for determining the price, the
parties are considered, in the absence of any
indication to the contrary, to have impliedly
made reference to the price generally charged at
the time of the conclusion of the contract for
such goods sold under comparable circumstances
in the trade concerned.’
 ART 14 VS ART 55 – OPEN PRICE
CONTRACT
Case law:
In the majority of cases, the courts and arbitral
tribunals came to the conclusion that a contract
had been formed while in rare cases a different
result was reached
 WITHDRAWAL AND
2 REVOCATION
- CISG: Art 15.2, Art 16
- VN: Art 389, Art 390 Civil Code
 WITHDRAW REVOKE

OFFER REACHES DISPATCHES ACCEPTANCE

2 EXCEPTIONS ( Art.16.2)
 ART 389 CIVIL CODE 2015
An offeror may modify or withdraw an offer to enter
into a contract in the following cases:
(a) The offeree receives notice of modification or
withdrawal of the offer prior to or at the same time as
receipt of the offer;
(b) The offeror clearly specified the circumstances in
which the offer could be modified or withdrawn and
such circumstances have in fact arisen.
 ART 390 CIVIL CODE 2015

An offeror may revoke the offer to enter into a

contract if such right was specified in the offer
and the offeree receives the notice of revocation
of the offer prior to the offeree providing a notice
of acceptance of the offer to enter into the
contract.
2. ACCEPTANCE

+ CISG 1980: Art.14 → Art.24

+ Civil Code 2015: Art.386 → Art.397

2. ACCEPTANCE

1. the offeree shall accept the entire

content of the offer
2. the acceptance must be received
within the time limitation set forth in
the offer
3. the acceptance shall not be withdrawn
 The offeree shall accept the
1 entire content of the offer

- Civil Code 2015: Art 392, 393

- CISG 1980: Art.19.2; Art.19.3
 ART 393 CIVIL CODE 2015

“Acceptance of an offer to enter into a contract

means a reply by the offeree accepting the
entire contents of the offer”
→ ‘Mirror image’ rule
 THE ACCEPTANCE MUST BE
2 RECEIVED WITHIN THE TIME
LIMITATION SET FORTH IN THE
OFFER

- CISG: ART.18, ART.21

- VN: ART 394
 FORMS OF ACCEPTANCE
- Written forms
- Oral form
- Performing an act
- SILENCE = ACCEPTANCE?
+ CISG (Art 18.1)
+ VN (Art 393 Civil Code)
 DISCUSSION
A requests B to set out the conditions for the
renewal of a contract for the supply of wine, due
to expire on 31 December. In its offer B includes
a provision stating that “if we have not heard
from you at the latest by the end of November,
we will assume that you have agreed to renew
the contract on the conditions indicated above”.
Discuss.
 DISCUSSION
Under a long-term contract for the supply of
wine B regularly met A’s orders without
expressly confirming its acceptance. On 15
November A orders a large stock for New Year. B
does not reply, nor does it deliver at the
requested time.
Discuss whether B is in breach.
 The acceptance shall not be
3 withdrawn
- VN: Art 397 Civil Code
- CISG: Art 22
 DISCUSSION
The Polish seller (Y) sent an offer to the
Vietnamese buyer (X). The offer is valid until
30th May.
26/5: X accepted the offer on one condition –
that Y might reduce the price
29/5: X accepted the entire content of the initial
offer
27/5: Y concluded the contract with another
buyer.
X claims for damages.
IV. DRAFTING AN INTERNATIONAL SALE OF
GOODS CONTRACT
 IV. DRAFTING AN INTERNATIONAL SALE OF
GOODS CONTRACT
Opening

Terms and conditions

▪ Object-related terms
▪ Finance-related terms
▪ Transport-related terms
▪ Legal-related terms
▪ Additional terms
 1. Opening
1.1. Type/name of contract
1.2. Contract number
1.3. Time and place
1.4. Contract parties
1.5. Definitions
1.6. Preamble

56
 1. Opening
1.1.Type/name of contract
❖ Export – Import contract
❖ Sale/Purchase contract
❖ International sale of goods contract
1.2. Contract number
❖ Contract No. 105/2021
❖ Contract No. PETECH/2021-15

57
 1. Opening

1.3. Time and place

• HCMC, 15th May, 20…
• 15th March 20.. in Indonesia
What is the purpose of time and place?

58
 1. Opening
1.4. Contract parties
1.4.1. Seller
• Name of company and its legal form
• Country of incorporation and (if appropriate) Trade register
number
• Address
• Tel, Fax, Email
• Represented by (surname and first name, address,
position, legal title of representation)
→ Represented by Mr. Nguyen Van A – Vice Director ???
1.4.2. Buyer:…
59
 1. Opening
1.5. Definitions (If applicable)

• “Foreign Currency” means a currency of a country

other than that in which the Plant is to be installed.
• “Plant” means machinery, apparatus, materials
and all things to be provided under the Contract for
incorporation in the works.

60
 1. Opening
1.6. Preamble/Whereas clause
Whereas: The seller and buyer, each with full corporate authority,
certifies, represents and warrants that each can fulfill the requirements of
this agreement and respectively provide the products and the funds referred
to herein, in time and under the terms agreed to hereafter;
or
Whereas: The seller and the buyer both agree to finalize this contract under
the terms and conditions; and the product offered for sale is subject only to the
terms and conditions contained in this contract and strictly confidential between
the buyer and the seller and it is therefore agreed as follows:

61
 2. Terms and conditions

2.1. Commodity/Scope of supply

2.1.1. Industrial products
• Commodity + origin
– Japanese motorbike
– Swiss watch
• Commodity + main specifications
– 12 inch colored TV
• Commodity + brand name
– Sony Trinitron TV
– HP Probook 2430s

62
 2. Terms and conditions
2.1.2. Agricultural products
• Commodity + scientific name
– Tra, Swai, Sutchi catfish, Striped Catfish, Silver striped catfish:
Pangasius hypophthalmus
– Basa, basa catfish, bocourti, Bocourti fish, Bocourti catfish:
Pangasius pangasius
• Commodity + origin
– Vietnamese rice
• Commodity + use/usage
– Wheat powder for human consumption
– Rice paste (base element for preparation of spring roll)
• Commodity + main specifications
– Skinless whole dried squid

63
 2. Terms and conditions
2.1. Commodity/Scope of supply
Combination of some options to clearly
identify the contract object -> for facilitation of
contract performance and avoid
misunderstanding/disputes.
• Vietnamese long grain white rice of 10%
broken, crop 2005
• Two-litre multi rice cooker, Natio brand, model
FX12, made in Japan, 2003

64
 DISCUSSION
A dispute arose between a Vietnamese seller
and the British buyer.
+ Pre-contractual documents:
Raw, Unoxidised Tapioca Starch, Industrial
Grade
+ Contract:
Raw, Unoxidised Tapioca Powder, Industrial
Grade
 DISCUSSION
Plaintiff, a Swiss corporation, entered into contracts to purchase
chicken from B.N.S. International Sales Corporation. Defendant was a
New York corporation. The English language contracts called for the
delivery of “chicken” of various weights as follows:

‘US Fresh Frozen Chicken, Grade A, Government Inspected, Eviscerated

2½-3 lbs. and 1½-2 lbs. each
75,000 lbs. 2½-3 lbs........@$33.00
25,000 lbs. 1½-2 lbs........@$36.50 per 100 lbs. FAS New York

When the birds were shipped to Switzerland, the 2-lb. sizes were not
young broiling chickens as the plaintiff had expected, but mature
stewing chickens or fowl. The plaintiff protested, claiming that in
German the term chicken referred to young broiling chickens.
 Defendant notes that the contract called not simply for
chicken but for "US Fresh Frozen Chicken, Grade A,
Government Inspected." It says the contract thereby
incorporated by reference the Department of
Agriculture's regulations, which favor its interpretation
The regulation of the Department of Agriculture, 7 C.F.R.
§ 70.300-70.370, entitled, "Grading and Inspection of
Poultry and Edible Products Thereof." and in particular §
70.301 which recited:
"Chickens. The following are the various classes of
chickens:
(a) Broiler or fryer . . . (b) Roaster . . . (c) Capon . . . (d)
Stag . . .
DISCUSSION (e) Hen or stewing chicken or fowl . . . (f) Cock or old
rooster . . .

The question was: What kind of chicken did the plaintiff

order? Was it “broiling chicken,” as the plaintiff argued,
or any chickens weighing 2 lbs., as the defendant
argued?
Frigaliment Importing Co., Ltd. v. B.N.S. International
Sales Corp., 190 F. Supp. 116 (S.D.N.Y. 1960).
 2.2. Quantity
2.2.1. Measurement unit
• Countable:
– Single: 100 bales; 200 parcels; 1000 barrels,…
– Collective: 5 dozens of eggs; 7 tens of oranges

Drum
Crate

Barrel
bag
Box

bale
Roll
Case
 2.2. QUANTITY
2.2.1. Measurement unit
• Uncountable:
• Metric system (international system): Length (mm, cm,
dm, m); Weight (g, kg, MT).
• Imperial system (UK) and Customary measure (US):
Length (yard, feet, inches, mile); weight (pound, ounces,
LT, SL).
• Note: 1MT = 1000 kg; 1 LT = 2240 pounds (1016 kg); 1 ST
= 2000 pounds (907 kg).

69
 2.2. QUANTITY
2.2.2. Ways of stipulation
a. By exact figure: valuable and countable goods
• 100 motorbikes
• 15.000 Barrels only
• 525.000 UK Gallons only
b. By approximate figure: with tolerance
• Tolerance: Any quantity delivered between the tolerance shall not
be deemed a breach of contract.
• Expression: “ ±….”, “about”, “approximately”, “more or less”…
• Associated stipulation
✓ Party to choose tolerance: Seller-Buyer-Vessel Charterer’s
option?
✓ Price of the tolerated quantity: Contract price? Market price?

70
 2.2. Quantity
2.2.2. Ways of stipulation
b. By approximate figure: with tolerance
• 500 MT ± 5% at the buyer’s option;
• 1000MT approximately 5% at the buyer’s option;
• 10000 MT more or less 5% at the seller’s option;
• From 950 MT to 1000 MT at the seller’s option;
• Tolerance 5% more or less at seller’s option at contract price.

71
 TOLERANCE
Article 30 –UCP 600:
a. “ The word “about” or “approximately” used in connection
with the amount of the credit or the quantity or the unit price
stated in the credit are to be construed as allowing a tolerance
not to exceed 10% more or 10% less than the amount, the
quantity or the unit price to which they refer
b. A tolerance not to exceed 5% more or 5% less than the
quantity of the goods is allowed, provided the credit does not
state the quantity in terms or a stipulated number of packing
units or individual items and the total amount of the drawings
does not exceed the amount or the credit”
 STANDARD CONTRACT- COFFEE
Article 1 - Quantity
The quantity shipped or loaded shall be that stated in the
contract. A tolerance of 3% in weight, more or less, shall be
permitted only if the difference is due to circumstances
beyond the control of the sellers.
(European Contract for Coffee – 2018 edition)
STANDARD CONTRACT-COCOA BEANS FCC
The contract quantity is net of any tare and is subject to a tolerance of
plus or minus 1.5 per cent of the weight at time of shipment, with the
exception of shipped weight contracts where the tolerance is plus or
minus 0.5 per cent. For in store/on truck/on railcar/on barge contracts
the tolerance is based on the weight at the time of delivery.
Weight tolerance
Where the net landed weight exceeds the contract quantity by 1.5 per
cent or more, the Buyer shall have the option to refuse the total
excess over the contract quantity or accept it at the market value at
the close of business on the last day of weighing. Where the net
landed weight is less than the contract quantity by 1.5 per cent or
more the total shortfall shall be the subject of a settlement based on
the difference between the contract price and the market value on
the last day of weighing provided that the market price at the close of
business is higher than the contract price.
 STANDARD CONTRACT – GAFTA 100
‘QUANTITY: ............................................2% more or less.
Sellers shall have the option of shipping a further 3% more or
less than the contract quantity. The excess above 2% or the
deficiency below 2% shall be settled on the quantity thereof at
shipment at market value on the last day of discharge of the
vessel at the port of destination; the value to be fixed by
arbitration, unless mutually agreed. Should Sellers exercise the
option to ship up to 5% more, the excess over 2% shall be paid
for provisionally at contract price. The difference between the
contract price and the market price calculated in accordance
with the provisions of this clause shall be adjusted in a final
invoice. In the event of more than one shipment being made,
each shipment shall be considered a separate contract, but the
margin on the mean quantity sold shall not be affected thereby.’
 FRANCHISE (Exemption rate)
Franchise vs Tolerance
Example:
‘Franchise for Shipping Weight Terms for cocoa beans in
bags only
Parties must agree a franchise representing the weight loss
which could be expected due to natural shrinkage during the
voyage. In the event that Parties do not agree, a franchise
of 1.5% shall apply’

(Article 8.3.3 – Contract Rules for Cocoa beans issued by

Federation of Cocoa Commerce -FCC)
 2.2. QUANTITY
2.2.3. Methods to determine quantity
2.2.3.1. Gross weight
Gross weight = net weight + tare
2.2.3.2. Net weight
- Net net weight: without any package;
- Semi net weight: with direct package;
- Gross weight for net: negligible package cost;
- Legal net weight: Gross weight – tare determined by
Customs officers.
 2.2. QUANTITY
2.2.3. Methods to determine quantity
2.2.3.3. Theoretical weight
M (mass) = D (density) x V (volume)
2.2.3.3. Commercial weight
Goods whose mass is sensitive to moisture change.
 Commercial Weight

G0 : Commercial Weight

100 + W0 G1 : Actual Weight

G0 = G 1 x
W0 : Standard moisture
100 + W1
W1 : Actual moisture

Example: Quantity of cotton in contract: 120 MT, standard moisture

stipulated in the contract is 10%. Actual moisture at the loading time is
15%. Commercial weight?
 2.2. QUANTITY
DRAFTING A QUANTITY CLAUSE
- Specify content: exact/approximate (if it is approximate
weight, there must be stipulation on tolerance).
- Select the method to determine quantity (gross/net/
theoretical/commercial weight)
- Inspection of goods:
- Place of inspection: shipped weight/landed weight;
- Inspector: Parties’ representatives or intermediary; + Inspection
cost distribution
- Certificate of quantity: preliminary or final
 2.2. QUANTITY
E.g. Quantity of Vietnam export coffee:
- 5000 MT +/- 5% at the seller option;
- Tolerance’s price is determined at time of delivery;
- The mentioned above quantity is understood as gross
weight for net;
- Quantity is to be determined at the unloading port by
Continent Inspection Service Co.; Ltd.
- Inspection cost shall be at Buyer’s account.
- C/Q issued at the unloading port shall be final and
binding both parties.
 2.3. QUALITY
2.3.1. By technical documents
“Motorbikes with qualifications as stipulated in the
technical document No 345, 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
anintegralpartof thecontract”.

82
 2.3. QUALITY

2.3.2. By specification
“Brand-new motorbikes of 110cm3, maximum speed of
150km/h, fuel consumption of 1,6l/100km, automatic start,
available in 3 colors of blue, red and yellow as illustrated in
the enclosed pictures.”

2.3.3. By trademark/trade name

Honda Spacy 125cm3

83
 2.3. QUALITY
2.3.4. By sample
• Provided by seller or buyer;
• In case of sample given by the buyer, the seller will have to
produce counter samples for delivery.
“The rice shall be of quality as per sample No…, provided
by the seller on April 24th 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.”

84
 2.3. QUALITY

2.3.5. By description
• Case: Not standardized products with quality rather
stable.
“White rice of long grain with natural flavor
✓ Broken: 15% max
✓ Different color grain: 4%max
✓ Moisture: 15%max
✓ Mixture: 5 grains/kg max”

85
 2.3. QUALITY

2.3.6. By the main ingredient/content

• Case: mines, chemicals, processed foods…
“Malaysian white urea:
- Nitrogen: 45% min;
- Kali: 15% min;
- Moisture: 15% max;
- Mixture: 1% max.”

86
 2.3. QUALITY

2.3.7. By prior inspection/examination

• Case: Commodity with small quantity, not standardized
like: liquidated goods, auctioned ones.
✓ Inspected – approved.
✓ As it is.
✓ As it is and where it is.

87
 2.3. QUALITY

• Choice of ways to stipulate quality depends on:

✓ Nature of goods;
✓ Trade practices;
✓ Relevant power between the parties.

88
 2.3. QUALITY
DRAFTING A QUALITY CLAUSE
• Define quality of goods (use one of / a
combination of the above methods)
• Inspection of quality
– Place of inspection: place of manufacture; place of
delivery; place of destination; place of use
– Inspector: Manufacturer; representatives of parties;
intermediary organization
– Inspection cost
– Certificate of quality: preliminary/final

89
 DISCUSSION
1. Quality inspection is conducted at the seller’s country
2. Quality inspection is conducted by Company X at the
seller’s country
3. Quality inspection conducted by Company X at the
seller’s country is binding
4. Quality inspection is conducted at the buyer’s country
5. Quality inspection is conducted by Company X at the
buyer’s country
6. Quality inspection conducted by Company X at the
buyer’s country is binding
7. Quality inspection is conducted by both Company X at
the seller’s country and Company Y at the buyer’s
country. Survey report issued by Y is binding.
 2.3. QUALITY
E.g.: Quality of Vietnam export rice
– Broken: 35% max;
– Moisture: 14,5% max;
– Foreign matter: 0,4% max;
– Crop: Summer Autumn crop 2011
– Quality of goods is to be determined at the loading port
by Vinacontrol Haiphong. Inspection charges shall be borne
by the Seller.
– C/Q issued by Vinacontrol shall be final and binding both
parties

91
 2.4. DELIVERY/SHIPMENT
2.4.1. Time of Delivery
- Specific time of delivery
- On a specific date: On May 5th, 20..
- No later than/Before a specific date: Before May 5th;
- In a specific period of time: Within 2 months since the
contract date/ From 1st to 20th of August;
- Unspecific time of delivery
- Conditional delivery: Subject to the opening of L/C;
Subject to export License
- Prompt/Quick/ASAP/Immediately: UCP 600 – Art 3

92
 2.4. DELIVERY/SHIPMENT
2.4.2. Place of Delivery
- Basis to determine place of delivery
- International commercial terms
- Means of transport;
- Intentions of parties in the contract
- Content of place of delivery
- Place/port of loading
- Place/port of discharge
- Methods to denote
- Single port/Multiple ports
- Specified port(s)/Optional port(s).

93
 2.4. DELIVERY/SHIPMENT
2.4.3. Notice of Delivery
- Frequency, time and content of notice;
- Parties’ liability subject to failure of notice;
- Customary: single notice (F, D); triple notices (C);
2.4.4. Delivery instructions/ Other delivery terms
- Transshipment (not) allowed;
- Partial shipment (not) allowed;
- Stale B/L (not) accepted; [Stale B/L: 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/Unloading advice (if necessary).

94
Transshipment is the unloading from one vessel
and reloading to another vessel during the
carriage from the port of loading to the port of
discharge. If it doesn’t occur between these two
ports, unloading and reloading is not considered
to be transshipment.
(Art 104 ISBP 681)
Partial shipment is the shipment on more than
one means of conveyance within the same
mode of transportation, even if the means of
conveyance leave on the same day for the same
destination.
(Art 81 ISBP 681)
 2.4. DELIVERY/SHIPMENT
• DRAFTING A DELIVERY TERM:
Necessary information
- Applicable Incoterms (by reference to most
recent version of the Incoterms at date of
conclusion of the contract)
- Time of delivery
- Place of delivery
- Advice/Notice of delivery
- Delivery instructions

97
 2.4. DELIVERY/SHIPMENT
E.g. Delivery:
Delivery as per FOB, Incoterms 2010
- Time of delivery: No later than June 30th 2012;
- Port of delivery: Haiphong, Vietnam
- Port of discharge: Main ports in Europe
- Seller should without delay inform Buyer by fax when the
goods are ready for delivery. Within 48 hours prior to vessel’s
arrival, Buyer should inform Seller of details of ship number,
ETA and loading conditions. Within 24 hours after the loading
of goods on board, Seller should inform Buyer of B/L date and
number.
- Partial shipment and stale B/L are not accepted.
98
 2.5. PRICE

❑Price currency
- Parties’ agreement: Export/Import countries’
currency or a third country’s currency;
- Customary: E.g.: USD (Crude oil ); GBP (Metals)
- Often determined by the stronger party;
- Often of stable value;
- May differ from payment currency.

99
 2.5. PRICE

❑Four methods to stipulate prices:

✓ Fixed price;
✓ Deferred fixing price;
✓ Flexible price;
✓ Sliding scale price.

100
 2.5. PRICE

2.5.1. Fixed price

• “Unit price: 250 USD/MT.
Total price: 250 USD/MT x 200MT = 50.000 USD
(In words: fifty thousand US dollar only)
This price shall be understood to be FOB Haiphong Port,
Incoterms 2020, including packaging.”
• “Unit price: 250 USD/MT, FOB Haiphong Port, Incoterms
2020, including packaging.”

101
 2.5. PRICE

2.5.2. Deferred price

• Included information: time, place and how to identify
prices.
• Case: price fluctuates, market power belongs to buyer.
“Coffee price shall be identified as the trading price at
London Commodity Exchange at the time of delivery.”

102
 2.5. PRICE

2.5.3. Flexible price

• Adding: time, place, identification of price difference
and allowed tolerance.
“Unit price: 600 USD/MT
Total price: 600 USD/MT x 500MT= 300.000 USD
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.”

103
 2.5. PRICE
2.5.4. Sliding scale price
• Case: Goods needs long time to produce and of high
value.
“The initial price of the ship is GBP 5 million, 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:
P1= Po (a + b.M1/Mo + c.S1/So)
Reference materials for parties are magazine of ABC, published by
XYZ Association within 20 days upon delivery of the ship.”

104
 2.5. PRICE
DRAFTING A FIXED PRICE CLAUSE
Necessary information:
- Price currency
- Unit price: Include the Incoterms rule applied and
charges (not) included;
- Total price: in number and in words;
- Discount (if any)

105
 2.5. PRICE
DRAFTING A FIXED PRICE CLAUSE
Vietnam export rice price
- Price currency: USD
- Unit price: USD 410/MT as per FOB Haiphong Port, SRV,
Incoterms 2010, packing charges included.
- Loading, unloading costs and any other surcharges arising
from the contract, whether at the loading or unloading
charges shall be at Buyer’s account.
- Total price: Approximately USD 410,000.
(In words : About four hundred and ten thousand United States
Dollars only).

106
 2.6. PAYMENT
❖ Payment currency
- Payment currency is price currency
- Payment currency is not price currency
❖ Time of payment
- Advance payment
- Prompt payment
- Deferred payment
❖ Mode of payment
- Transfer
- Collection
- Documentary credit 107
 2.6.1. Time of Payment
a. Advance payment
• 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: of the first shipment
- No interest on the advanced payment amount
- Seller only makes delivery when getting the notice of credit
available.

108
 2.6.1. Time of Payment

b. 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

109
 2.6.1. Time of Payment
c. 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
guaranteeobligation. The remaining shall be paid in 4 years, each year an equal amount.

110
 2.6.2. Mode of payment
a. Open account
b. Remittance
• Mail transfer – MT
• Telegraphic transfer – T/T or TTR
c. Collection
• Clean collection
• Documentary collection
d. Documentary credit
e. Advance payment

111
 5.6.2. Mode of payment

Buyer Takes ?
? ?
Seller Takes
All the Risk All the Risk

Letter
Pre-Pay of Open
Collection Remittance Account
Credit

Who Should Take the Risk?

112
 a. Open account
• Seller ships the goods and all the necessary
shipping and commercial documents directly to
a buyer who agrees to pay a seller’s invoice at a
future date.
• Open account is typically used between
established and trusted traders.

113
 b. Remittance
• Mail transfer – MT
Remittance order is in a form of a letter sent by post.
• Telegraphic transfer – T/T or TTR
Remittance order is in a form of a telegraphic message
sent by Telex of SWIFT.

114
 b. Remittance
Two types of remittance:
• Mail transfer remittance: M/T
– Rarely used nowadays
– Low cost, Low speed
– Risky
• Telegraphic transfer Remittance: T/T (wire/Telex/Swift)
– Popular
– Costly, Speedy
– Safe

Buyer Payment order by Seller

Bank mail/Wire/Telex/Swift Bank
Nostro Account 115
Procedure of Transfer remittance:
a – Remittance before shipping goods

Seller’s Bank 2. Transfer Buyer’s Bank

remittance

3. To 1.
Credit Application
seller’s for
account remittance

4. Shipment and sending docs

Seller/Exporter Buyer/Importer
Contract
Procedure of Transfer remittance:
b – Remittance after shipping goods

Seller’s Bank Buyer’s Bank

3. Transfer
remittance
2.
Application
4. To Credit
for
seller’s
remittance
account

1. Shipping goods, sending docs

Seller/Exporter Buyer/Importer
(0) Contract
Procedure of Transfer remittance
c – Mixed Remittance: before and after shipping goods

Term of payment:
• Make payment by T/T
• Within 01 week after signing contract, buyer should remit
in advance 20% contract value.
• 80% remaining value will be transferred to seller upon
receiving docs.
• Pay to account:
• A/C name:
• A/C No. (USD):
• Swift code:
• Bank name:
• Bank address:
118
 b. Remittance

• Wordings
“Within 7 days upon receipt of the copy of the
shipmaster’s confirmation from Seller that the
goods have been dispatched, the Buyer shall
instruct BOC to remit the full contract value by
T/T to Seller’s account at VCB Hà Nội.”

119
Within 01 week after receiving the seller’s notice of
shipmen, buyer should remit 100% contract value by TT to
seller’s account at Bank X.

Payment by T/T within 7 days after receiving shipping

documents (original) to Kolon company, account No… at
Vietcombank, branch HCM.
Payment should be made upon buyer’s receiving following
shipping docs:
- 3/3 clean Bill of Lading, shipped on board, marked
Freight prepaid.
- Commercial invoice: 3 copies
- Packing list: 3 copies
- Certificate of origin issued by Korean Commercial
Chamber
 C- COLLECTION

The URC 522 are the Uniform Rules for Collections:

Sub- Article 2(a): Collection means the handling by
banks of documents as defined in Sub-Article 2(b) in
accordance with instructions received, in order to:
• Obtain payment and/or acceptance
• (or) Deliver documents against payment and/or
against acceptance
• (or) Deliver documents on other terms and
conditions.
121
 C- COLLECTION

Sub- Article 2(b):

"Documents" means financial documents and/or
commercial documents:
1 "Financial documents" means bills of exchange,
promissory notes, cheques, or other similar instruments
used for obtaining the payment of money;
2 "Commercial documents" means invoices, transport
documents, documents of title or other similar
documents, or any other documents whatsoever, not
being financial documents 122
Types of Collection

Sub- Article 2(c):

"Clean collection" means collection of financial
documents not accompanied by commercial documents.
Sub- Article 2(d):
"Documentary collection" means collection of:
(1) Financial documents accompanied by commercial
documents;
(2) Commercial documents not accompanied by
financial documents.
123
 c. Collection
❖ Clean collection
Shipment + Commercial
documents
Importer Exporter

 Bill of
 Bill of  Payment or  Payment or B/E
exchange
exchange Acceptance with Acceptance

Payment or B/E with

Acceptance

Presenting bank  Bill of exchange Remitting bank

 c. Collection
❖ Documentary collection
Shipment
Importer Exporter

 B/E &  B/E &

 Payment or  Payment or B/E
Commercial Commercial
Acceptance with Acceptance
documents documents

Payment or B/E with

Acceptance

 B/E & Commercial

Presenting bank documents Remitting bank
 c. Collection
• Wordings
Payment shall be made by D/P through BOC
Hongkong Bank upon Seller’s presentation of the
following documents:
- At sight B/E drawn on Buyer;
- Commercial invoice: 3 copies;
- Certificate of quality : 3 copies;
- Certificate of quantity : 3 copies;
- Full set (3/3) of clean shipped onboard B/L.

126
 d. Documentary credit
Definition
• Documentary credit is as assurance of payment by the
bank.
• It is an arrangement under which the bank, at the
request of the buyer or on its own, undertakes to make
payment to the seller provided specific Documents are
submitted.
• Documentary Credits in Popular Language are known as
LETTER OF CREDIT (L/C).

127
 4. Procedure of Documentary Credit
Issuing / Opening Bank Advising Bank

Letter of credit (sight/time)

Documents
Application

Goods
Beneficiary
Applicant / Buyer Seller
Importer
Contract Exporter

128
 d. Documentary credit
• Types of L/C
Revocable L/C vs Irrevocable L/C

A revocable L/C can be An irrevocable letter of

cancelled, revoked or amended credit cannot be amended or
without the consent of the cancelled without the consent
beneficiary or the applicant up of the issuing bank, the
to moment of payment. confirming bank, if any, and
the beneficiary.

129
 d. Documentary credit
• Types of L/C
L/C at sight vs L/C with deffered payment

A L/C at sight is payable once it An L/C with deferred

is presented along with the payment shall be payable for a
necessary documents. number of days as of the date of
document presentation.

=
+ =
130
 d. Documentary credit
• Types of L/C
- Without recourse L/C
The advising bank will not be able to recover the
money paid to the beneficiary in case the issuing bank
does not pay the advising bank.
- Confirmed L/C
Issuing bank’s authenticity has been confirmed by the
advising bank.

131
 d. Documentary credit
• Types of L/C
- Revolving L/C
The amount becomes available again without issuing
another L/C and usually under the same terms and
conditions.
- Transferable L/C
The rights and obligations of the beneficiary are
transferred to another party.

132
 d. Documentary credit
• Types of L/C
- Back to back L/C

- Stand by L/C
It is a guarantee issued in format of LC by issuing
bank, not at all documentary credit.

133
 d. Documentary credit
• Wordings
Payment: in GBP by irrevocable at sight L/C opened at Natwest, 120 Hight
street, Harborn, Birmingham, UK, advised by Vietcombank, 198 Tran Quang
Khai, Hanoi, Vietnam to the favour of the seller. L/C must reach the seller no
later than 15 days before expected shipment and valid 30 days since opened.
TTR is accepted. The L/C shall be available for payment upon presentation of the
following documents:
- Bill of exchange at sight, drawn under the buyer;
- Full set of B/L marked clean, on board, freight prepaid;
- Insurance policy for 110% contract value covering “all risks”
- Invoice in triplicate;
- Packing list in duplicate;
- Phytosanitary certificate in duplicate.

134
 MODEL ARBITRATION CLAUSE
“Any dispute arising out of or in relation with this contract
shall be resolved by arbitration at the Vietnam International
Arbitration Centre (VIAC) in accordance with its Rules of
Arbitration”.
“Any dispute arising out of or in relation with this contract
shall be resolved by arbitration at the Vietnam International
Arbitration Centre at the Vietnam Chamber of Commerce and
Industry (VIAC) in accordance with its Rules of Arbitration”.
Parties may wish to consider adding:
(a) the place of arbitration shall be [city and/or country].
(b) the governing law of the contract [is/shall be] the
substantive law of [ ].
(c) the language to be used in the arbitral proceedings shall be
[ ].
Chapter 3:
Contract Performance
 PROCEDURES TO PERFORM EXPORT CONTRACTS

1. Asking for export license 2. Checking payment

4. Carriage and insurance 3. Preparing goods

5. Customs procedures 6. Making delivery

8. Dealing with claims 7. Payment procedures

2
 1. Export license application
• Subject to the government’s import-export controls in the certain period
of time.
• Legal basis: Law on Foreign Trade Management and Decree
No.69/2018/NĐ-CP.
• 2 kinds of licenses for exported goods: export licenses and automatic
export licenses.
• Goods under specific management: Certificate of exportability required
(e.g rice)
 2. Checking payment
• Inform buyers of delivery.
• Check obligations of preparation relating to payments.
• In case payment is made by L/C, what should exporters do?

5
 L/C checking 40A: FORM OF
DOCUMENTARY CREDIT
20: DOCUMENTARY
CREDIT NUMBER
50: APPLICANT
31C: DATE AND PLACE 59: BENEFICIARY
OF ISSUE

31D: DATE AND PLACE

OF EXPIRY 32B: CURRENCY
CODE, AMOUNT

39A: PERCENTAGE CREDIT

AMOUNT TOLERANCE

6
 45A:
41D: AVAILABLE DESCRIPTION OF
WITH … BY … GOODS AND/OR
42C: DRAFT AT … SERVICES
42D: DRAWEE

43P: PARTIAL SHIPMENTS

44T: TRANSSHIPMENT
44A: LOADING ON BOARD/
DISPATCH / TAKING IN CHARGE
AT/FROM…
44B:FOR TRANSPOTATION TO:
44C: LATEST DATE OF SHIPMENT

46A: DOCUMENTS
REQUIRED

7
 71B: CHARGES

48: PERIOD FOR

PRESENTATION

8
46A:
DOCUMENTS
REQUIRED
 Time span with LC

Validity of L/C, delivery time and payment time

LC Delivery LC
min. 21 working days
opening date expiry

-L/C advice. - Documents receiving.

-L/C keeping at advising bank. - Prepare payment docs,

-Goods preparation and delivery. - Keeping docs at advising bank

- Reserved time. - Sending docs to opening bank/

negotiation bank.
- Reserved time.

12
 Time span with LC
* At sight LC

LC Payment LC
opening date expiry

*Deferred LC

LC B/E presentation Payment LC Payment

opening and acceptance date expiry date

13
 3. Goods preparation
3.1. Packing: safe, economic, artful.
• Outer packing

Drum Barrel
Box
Crate

Case Bag Bale Roll

14
 3. Goods preparation
3.1. Packing: safe, economic, artful.
❖ Inner packing

Wood shaving
Tarpauline
Cardboard

Oil, Gease
Foil PP, PVC Waste paper
15
 3. Goods preparation
3.2. Marking
• Purpose
Info relating to contract, special instructions.

Fragile Use no hooks This way up Keep away

from sunlight

Keep away Do not

from water Flameable destroy barrier Tear off here
 3. Goods preparation
3.3. Goods checking and inspection
• Why?
- Conformity with contract.
- Subject to regulations of export/import country.
• Who inspect?
• Validity of certificates?

17
 Conformity with contract

Certificate of quantity

18
 Conformity with contract

Certificate of quality

19
Sanitary certification

Health certificate

20
 Quarantine

Phytosanitary certificate

21
 3. Goods preparation
3.3. Goods checking and inspection
❖ Procedures

Doc application On-site inspection

Supervising Issuance of
goods delivery temporary certificate

Issuance of
official certificate
 4. Carriage & Insurance
4.1. Contract of carriage
• Liner term -> liner B/L
• Voyage charter -> Charter party B/L
4.2. Contract for insurance
• Insurance clause
• Amount insured
• Form of insurance contract
+ Open policy / voyage policy
+ Insurance certificate / insurance policy
23
Insurance request

24
 5. EXPORT CUSTOMS CLEARANCE

2. Get the 3. Carry out

1. Customs
classification
declaration and export customs
result of customs
submission procedure
inspection

4. Pay customs 5. Clear the

duties goods
 FORMS OF CUSTOMS DECLARATION

E-CUSTOMS OR
E-CUSTOMS PAPER-BASED
(Art 25.2 Decree
08/2015/ND-CP)
 Booking Note/ Booking confirmation: Name of the vessel, port of
discharge

Sales Contract

Commercial Invoice
DOCUMENTS
PREPARED FOR Packing List
EXPORT CUSTOMS
DECLARANCE Equipment Interchange Receipt (EIR): container No., seal No.

Additional documents: Certificate of Quality, Certificate of Analysis,

Insurance policy, fumigation, phytosanitary certificate

Export Licence
 DOCUMENTS SUBMITTED FOR EXPORT
CUSTOMS CLEARANCE

1/ Electronic Customs Declaration Form

2/ Export license (if applicable)
3/ Certificate of exportability (if applicable)
4/ Certificate of inspection (health, fumigation, phytosanitary)
(if applicable)
5/ Commercial invoice
6/ List of woods used (if applicable)
(Circular No. 27/2018/BNNPTNT)
7/ Entrusted export contract (if applicable)
 CLASSIFICATION OF CUSTOMS INSPECTION
Art.26-Decree 08, Decree 59; Art.19-Circular 38,Circular 39

GREEN LANE: consignment cleared, subject to

neither document review nor on-site customs
inspection

YELLOW LANE: Subject to Customs’ document

review

RED LANE: Subject to both Customs’ document

review and on-site customs inspection
 6. Making delivery

• By sea – not in container (Bulk cargo)

1. Cargo list

2. Cargo plan

6. Exchange MR for BL
Consigner Carrier

3. Ask for
date, time of
delivery

Port authority 30
 6. Making delivery
• By sea – in containers (FCL)
1. Cargo list

2. Booking note
3. Give order to deliver cont and seal
Carrier’s
6. B/L issuing
agent
Consigner

4. Goods packing,
customs procedures,
deliver containers

Container yard - CY
 6. Making delivery
• By sea – in containers (LCL)
1. Cargo list
2. Booking note
4. House B/L issuing
Consolidator
Consigner

Container freight station - CFS

 6. Making delivery

• By air
✓ Booking.
✓ Deliver the goods and conduct procedures.
✓ Receive AWB (MAWB/HAWB).
✓ Advise consignee.

33
 7. Payment procedures

• Preparing the documents as stated in the contract

or L/C.
• Presenting full set of documents to advising bank
within the given period of time to get payment.

34
 8. Dealing with claims

• Cases
• Solutions
• Documents
+ Letter of complaint.
+ Relevant docs: Contract, B/L, Tally sheet, Report on
Receipt of cargo (ROROC), Certificate of short-landed cargo
(CSC), Cargo outturn Report (COR), Survey Record, Customs
Inspection Report.
+ Damage calculation.
35
COR
(Cargo Outturn Report)
CSC
(Certificate of Shortlanded
Cargo)
ROROC
(Report On Receipt Of Cargo)
 DISCUSSION
• On 6 December 2020, Australian buyer order a consignment via a
purchase order
• On December 2020, the Vietnamese seller confirmed the order via the
proforma invoice

DISCUSS STEPS TO PERFORM THE CONTRACT FOR

EXPORTING WOODEN FURNITURE BY SEA AT THE
VIETNAMESE ENTERPRISE
 2.PROCEDURES TO IMPORT

Licence application Remind delivery

Transport arrangement Preparations for payent

Insurance Payment procedures

Taking delivery Customs procedures

Checking imported goods Complaints and solutions

41