PracticalCourseforImport&ExportBusiness

InternationalSalesContractChapterTwoSection1.FormationofasalescontractSection2.ThestructureofasalescontractCONTENTSSection4.

ContractdraftingSection3.ContentsofasalescontractSection5.

Exercise

Section1Section

ONETheinternationalsalecontractisthemostusedcommercialcontractandamongthegoverningtraderelationsbetweentwodifferentnations,whichisgenerallygiveninwriting.Theagreementincludestherights,duties,obligations,andremediesforbreachofthepartiestothecontract.Thepartiescanbeeitheranexporter/selleroranimporter/buyer.Theinternationalsalecontractshouldhavedetailslikequantityandtypeofproduct,deliverytime,conditionsofpayment,price,governingbodyoflaw,theforumwherethedisputehastobesolved(ifanyarises),andthemethodofdisputeresolution.Afterlearningthischapter,youshouldbeableto:knowthecontentsofasalescontractHowtodraftasalescontractAfterlearningthischapter,youshouldbeableto:knowthecontentsofasalescontractHowtodraftasalescontractLearningObjectivesAbilityObjectivesSection

ONEFormationofasalescontractTherearefivebasicrequirementsthatneedtobesatisfiedinordertomakeasalescontract:●Anagreementbetweentheparties(whichisusuallyshownbythefactthatonehasmadeanofferandtheotherhasacceptedit).●Anintentiontobelegallyboundbythatagreement(oftencalledintenttocreatelegalrelations).●Certaintyastothetermsoftheagreement.●Capacitytocontract.●ConsiderationSection

ONEForacontracttoexist,usuallyonepartymusthavemadeanoffer,andtheothermusthaveacceptedit.Onceacceptancetakeseffect,thecontractwillusuallybebindingonbothparties,andtherulesofofferandacceptancearetypicallyusedtopinpointwhenaseriesofnegotiationshavepassedthatpoint,inordertodecidewhetherthepartiesareobligedtofulfiltheirpromises.Thereisgenerallynohalfwayhouse—negotiationshaveeithercrystallisedintoabindingcontract,ortheyarenotbindingatall.2.1.1OfferThepersonmakinganofferiscalledtheofferor,andthepersontowhomtheofferismadeiscalledtheofferee.Acommunicationwillbetreatedasanofferifitindicatesthetermsonwhichtheofferorispreparedtomakeacontract(suchasthepriceofthegoodsforsale),andgivesaclearindicationthattheofferorintendstobeboundbythosetermsiftheyareacceptedbytheofferee.Howlongdoesanofferlast?Anoffermayceasetoexistunderanyofthefollowingcircumstances.●Specifiedtime●Reasonabletime●Rejection●Counteroffer●Deathoftheofferor●Deathoftheofferee●Withdrawalofanoffer2.1.2AcceptanceIninternationaltradepractice,acceptanceshouldabidebythefollowingrequirements:●Acceptancemustbeabsoluteandunconditional.Itshouldbeanunreservedassenttoallthetermsputforwardintheoffer.Inprinciple,inanyadditions,modificationsorlimitationstotheofferaremade,itbecomesacounterofferinsteadofacceptance.●Acceptancecanbemadebyanactperformedbyanofferee,suchasonerelatingtothedispatchofthegoodsorthepaymentoftheprice.●Acceptancemustbeclearlyexpressedbytheofferee’sverbalorwrittenstatement.Silenceorinactivityisbynomeansacceptance.●Acceptancemustbemadebytheoffereewithinthevalidperiodofanoffer.Asarule,acceptancegoesintoeffectimmediatelyassoonasitreachestheofferor.2.1.3Timeoftheformationofthecontract

Section22.2TheStructureofasalescontractNomatterwhatnameandwhattypethecontractis,aformalbusinesscontractusuallyconsistsofthreeparts:thepreamble,thebodyandwitnessclauses.Section

TWO2.2.1ThepreambleThepreambleisapreliminarystatementtointroducethegeneralreasoningoftheagreement,theprincipleofreachingtheagreement,orthescopeofauthority.Itusuallyincludesatitle,theregisterednameofthecompany,theaddressofoperation/residenceandthecontractinformation,thedateandplaceforsigningofthecontractandtheprefaceorrecitalsofWHEREASclauses,etc.

SectionTWO

SectionTWO2.2.2ThebodyThemainbodyisthecoreofacontract.Itmainlyincludesbasicclausesandgeneraltermsandconditionsofthecontract,reflectingdutiesandobligationsofbothparties.Generallyspeaking,thebasicclausesare:thenameofcommodity,thequality,thequantity,theunitprice,thepacking,thepayment,theshipment,thecommodityinspection,theinsurance,etc.Usuallyforpurchaseorsalesconfirmationorshort-formcontracts,onlythesebasicclausesareincluded.Detailedcontractsalsoincludegeneraltermsandconditionsasinspection,claim,arbitration,forcemajeure,etc.,whichmayvaryondifferentoccasionsandbeprintedoverleaf.SectionTWO2.2.3WitnessclausesThewitnessclauses,asfinalclausesofacontract,usuallyincludecontractvalidity,languagevalidity,copies,signature,seal,andsoon.Usually,thepartiesconcernedinacontractwillstipulatethatthecontractcomesintoeffectwhenitissignedandsealed.Thelegallanguageusedforcomposingthecontractshouldbedetermined.Iftwoormorelanguagesareadopted,theprevailinglanguageshouldalsobedeterminedincaseofdiscrepancybetweenoramongthedifferentversions.Originalcopiesofthecontractshouldbedeterminedbyspecifyingthenumberofcopies.Usually,eachpartykeepsoneoriginalcopyofthecontract.SectionTWO2.2.3Witnessclauses

SectionTWO2.3ContentsofasalescontractSectionThreePointsforattentionwhendrawinguptheclause:SectionThree2.3.2QualityofgoodsThequalityofacommodityisthecombinationoftheintrinsicqualityandtheoutsideformortheshapeofthecommodity,suchasthestructure,thetaste,thechemicalcomposition,etc.Ininternationaltrade,themethodsofexpressingthequalityofacommoditymaygenerallybeclassifiedintotwokinds:bydescriptionandbyactualquality.SectionThree2.3.3QualitytoleranceIntradingagriculturalproducts,industrialrawmaterialsorsomeproductsoflightindustry,atoleranceclauseisusuallystipulatedinthesalescontract.Tolerancemeansthepermissiblerangewithinwhichthequalitysuppliedbythesellermaybeeithersuperiororinferiortothequalitystipulatedinthecontract.Thetolerancemaybethatagreeduponbetweenthesellerandthebuyerbeforehand,orthatgenerallyrecognizedbytradeassociations.Suchtolerancecanbecompensatedbytheincreaseordecreaseofthepriceinproportiontothedegreeofthetolerance.Sometimes,apriceadjustmentisnotneededifthetoleranceiswithinacertainlimit.SectionThree2.3.4QuantityofgoodsItisevidentthatabusinessdealcannotbecompletedwithoutcaringforthequantityofthegoodssoldorbought.Thequantityofgoodsreferstotheweight,thenumber,thelength,thevolume,thearea,thecapacity,etc.,whichareindicatedbydifferentmeasuringunits.SectionThree2.3.5MoreorlessclausesAtthetimeoftheconclusionofacontract,thequantityclauseshouldbeclearlyanddefinitelystipulatedsoastoavoidpossibledisputesthereafter.However,itisverydifficulttoaccuratelymeasuresomeagriculturalandmineralproductslikecorn,soybean,wheat,coal,etc.What’smore,influencedbynaturalconditions,packingpatterns,andloadingandunloadingmethods,thequantityofgoodsdeliveredbythesellerusuallydoesnotconformtothequantitydefinitelystipulatedinthecontract.SectionThree2.3.6UnitpriceIninternationaltrade,thepricetermliesatthecoreofthetermsandconditionsofacontractandoftenresultsinsomeofthekeyproblemswhichtheexporterandtheimporterhavetosolve.Thepriceofacommodityusuallyreferstotheunitprice.Aunitpriceconsistsoffourparts:thetypeofcurrency,thepriceperunit,themeasurementunitandtradeterms.Thedetailsareasfollows:SectionThree2.3.8ShipmentShipmentreferstothecarriageofthegoodsfromthesellertothebuyer,whichincludesthetimeofshipment,theportofloading,theportofdestination,thepartialshipment,thetransshipment,thedemurrage,thedispatch,etc.Examples:1)Shipmentiseffectedonorbefore/notlatterthan/latestonAugust12,2019.2)Shipmenttobemadewithin30daysafterthereceiptoftheL/C.TherelevantL/CmustreachthesellersnotlaterthanJuly30,2019.3)ShipmentfromShanghai,ChinatoGenoa,ItalyduringJuly,2019withpartialshipmentallowed,transshipmentnotpermitted.SectionThree2.3.9PaymentSectionThree2.3.10InsuranceSectionThreeSection4

ContractDraftingSection

FourSection

Four

Section

FourSection