TAI LIEU GIANG DAY MON: NGON NGU KINH TE THUONG MAI 5— HOP DONG THUONG MAI QUOC TE (Trich tie cuén: International Procurement Contract ciia tic gid DR James R. Pinnels va Hop dbng miu ICC ciia International Chamber of Commerce)Camere 1: Te Covrescr avo mie Law L CHAPTER 1 THE CONTRACT AND THE LAW 1. Public Law, Private Law and the Contract THE PROBLEM When negotiators from different countries agree a contract, they create a legal instrument, What is the relationship between this legal instrument and the law of the two home countries? THE ‘PRINCIPLE Two parties may agree to bind themselves in any way they choose, provided their agreement does not come into conflict with the public law (including the constitution) of their home countries or with stringent provisions of the private law. IN MORE DEPTH ‘The constitution of a country codifies the generally actepted principles that govern the country.” In addition to a constitution, each country has laws, Jn general, luws establish two kinds of rights and duties: (a) the rights and duties that each citizen owes the state, and (b) the rights and duties that citizens owe each other. ‘The law that regulates the relationship between state and citizen is called public law; private law regulates the relationship between citizens. ‘The public law of a country controls, for example, taxation, immigration, the formation of companies and similar matters. Criminal law is also public law. Private law looks at the behavior of citizens (and companies) toward each other. One branch of private law looks at agreements which citizens or companies make with each other—this is contract law. Business is based on agreements or contracts. At some stage most agree- ments reach a time of disagreement. ‘Then, the two sides study their contract and ask: what did we agree to do in this situation? If they made no specific agreement, they must ask: what does Pune TAN the law oblige us to do? This brings usInvreknarONAL ProcunManyr {o the most basic question about contracts: what is the relationship between a contract and the law? An example: BEC (Basic Electrical Components) is an English company It makes an offer to supply Verbena Importing with relays for $2 vad Under English contract law, the English company has the right to cancel its offer at any time before Verbena Importing accepts the offer. Although BEC has this right, it can agree with Verbena Importing not to cancel its offer before, let's say, 30 September. In other words, BEC can, if it wishes, give up or waive one of its rights under the law of contract Lawyers call waivable rights disposive, Of course, BEC's waiver applies oaly to the offer its making to Verbena Importing: it keeps its right to cancel other offers.* This example shows exactly the relationship between the contract and the law:-a contract writes the law that applies between the two parties. A Contract sets.aside rights and duties that exist under private law (e.g. BEC’s right to cancel its offer) and creates new rights and duties (e.g. the uty to deliver goods or the right to payment). {And the public law? The provisions of the public law are riever disposive. For example, public law in Verbena forbids the use of certain plastics in thé manufacture of insulation for cable. Can BEC agree with Verbena Importing that this law does not apply to their contract? Obviously not Public law is not disposive—the patties to a contract Gannot set it asize. A fishtank illustrates these relationships for us. ‘First, the fishtank has a stand: this is the constitution which supports the rest, The glass tank is the public law, and the water in the tank is the private law. The contract is a fish that swims in the water. Naturally, the fish displaces some of the water, but it can displace neither the glass (the public law) nor the stand (the constitution). Sometimes a contract is a small fish: for example the simple agreement that BEC cannot cancel its offer isa small fish that does not displace much 1" For more on afc, = Chapiee 3, Tan,tisrren 1: The Cowreact ano rae Law 3 water. On the other hand, big intesaational contracts afe often enormous fish, displacing almost all the water in the tank. To complete this picture, we must add some rocks: stringent provisions of the Private law. One example of such a rock is the refusal of the English judges to enforce penalty clauses in contracts. For example, a procurement contract for goods worth £3,000 says that if the supplier delivers late he must pay daily a penalty of £5,000. When the judge looks at this provision, he says (if he’ is applying English law): "This is a penatty, and inglish judges do not enforce penalties under a contract.” The contract has hit a rock—a stringent provision (or tradition) of the private law.* The idea of “law” that we have discussed so far is, of course, the tredi- tional western view. This view stresses that law and morality are close Partners: The purpose of law is to provide order, stability, and justice, ‘Thus ‘Viewed, the law consists of relatively fixed rules which regulate conduct According to the morality of the community. Proper conduct, as deter- mined by the community, should be allowed or required; improper conduct should be prohibited. Law, then, isa social institution. Iris not an end in itself but is an instrumentality for obtaining social justice (Anderson, p.17), Nothing could be further from the traditional eastern view. In the extract below, Pyong-Choon presents the long-standing Korean view of “law”: ‘For more detail on ponaly clauses, soe Chaar 10, Sean 14 INTERNATIONAL PROCUREMENT CONTRACTS: AN INTRODUCTION ‘The idea that law is an accumulation of collective experience never had any existence in the Korean political tradition, Law...was an instrument for chastising the vicious and the depraved. It was sharply distinguished from custom. It always signified a norm with physical force as a sanction behind it, It was therefore synonymous with punishment, no ‘more no less, It is little wonder that the ruling elite considered law beneath its dignity. Indeed, the concept that law applies only to the ‘barbarians orto the ignorant masses and never to the proper Chinese or to the rulers is strongly rooted in Korean thought... When the present- day Koreans try to follow the Anglo-American example, they have to depart so far from their traditional way of thinking that one can not help -wondering whether itis feasible, let alone advisable to do so (Pyong- ‘Choon, pp. 19 and 30). If we accept Pyong-Choon’s view as typically eastern, then clearly the gap between easterner and westerner is Wide. For a westerner, a contract, is of the highest significance: it puts into words powerful moral forces as they apply to the case in hand, Behind the contract stands a huge body of law and 3,000 years of religious and moral tradition, For the easterner, the contract is a simple agreement without such psychological and philosophical roots. Both sides should be aware of this gap during Contract negotiations; i is the source of much misunderstanding. Concept. Review Is A Tax-Free Contract BEC, an English company, is selling switchgear for power stations in Verbena, The parties agree that ‘English law applies.” BEC, however, wants to ensure that itis not able for tax under Verbenan tax law; therefore the lawyer drafts this clause: All incone taxes or other tax obligations created as a result of this contract shall be assessed and regulated exclusively according to the English tax law in force at the time of assessment. 1. Is BEC now free of Verbenan income taxes? (Check one answer) OQ yes QNo—because tax law is public law anid the parties cannot be set it aside CUNG—because the clause is worded too weakly 2. Does the clause below create a “tax-free contract” for BEC? The Buyer shall compensate and save harmless the Seller from all taxes assessed against the Seller by the government of the Buyer’s countr: QO yes Qno Q Yes, uNLEss4. What do you think is the purpose of such a clause? a... E bpgal § | 4e-The parties to'a contract create new rights and duties that exist only Compre 1: Te Conteacr ano mus Law ere eeee eae Ss Concept Review 2: Restatement ‘The clause below is from a contract forthe sale of mining equipment to South Africa: Before and during the execution of the work, the Contractor Shalt collaborate with the Representative of the Purchasing Company and any representative authorized by him to ensure that all work is being carried out in accordance with the weguixements of the Mine and Works Act, 1956, the Factories, Machinery and Building Works Act No. 22 of 1941 as amended up to Act 80 of 1971, and any other law, as may be applicable, as well as all regulations made in pursuance thereof. fre the Mine and Works Act, 1956, and the Factories, Machinery and Building Works Act No: 22 of 194] public law ot private law? . Qpusric private 2, Are “any other law, as may be applicable” and “regulations made in pursuance thereof” public law or private law? Qpusic OQ private 3. If the Contractor agrees to this clause, is he taking on any additional duties or giving up any rights that would normally be his? O yes QNo 3." Aconttact opératés within the sphere’of pri % 8 Yo betweeit them; they can set'aside disposive rights and duties that they’ have under the private law.; bth Hen ¢ The parties cannot set aside rights or duties under the public law or . Stringent provisions (or conventions) of the private Tawi Bl 6.°A “westérner” sees'a contract within a moral and'philosophical frame: Work which is unfamiliar to the “easternen"; this gap ofien'Teads to misunderstandings, [ORGE: CPR ver Saag ckEN [DvTensexTiowAs. Paocuananwt CONTRACTS: AN TNTRODUCTION 2, The Families of Law i THE PROBLEM Every country has a different law. International negotiators usually understand the business law of their own country but seldom understand other legal systems. This is dangerous: some- times a contract is unenforceable (= a judge will not enforce it) or contains hidden traps. THE PRINCIPLE There are four main families of law, two of which. (the “Anglo- American” and the “Continental”) are important in international trade.’ The international negotiator must have some knowledge of these two important law families, JIN MORE DEPTH ‘The four main families of law are: CONTINENTAL LAW ANGLO-AMERICAN LAW SOCIALISTLAW RELIGIOUS (ISLAMIC) LAW “Continental” Law The so-called “continental” law prevails in most of continental Europe, in France and Germany for example. This law derives from a code which the Roman Emperor Justinian developed 1,500 years ago; for this reason, lawyers often call it “Roman law.” ‘The Code Napoléon of 1803 devel. oped and updated Justinian’s code and influenced many legal systems around the world including those of Japan and most South American countries. The essence of “continental” law is codification: a clear code expresses what is legal and what is not. The German BGB (Civil Code) isan excellent example. ‘The continental family of law has well developed private law, especially the contract and commercial branches, “Anglo-American” Law Unlike Continental Law, the law of England, the United States (and many other English-speaking countries) is not completely codified. The tradition of uncodified law goes back to ancient kings who sat under oak trees and made legal decisions case by case.tus CONTRACT AND THE Law ‘To achieve faimess, the king decided each case in line with earlier decisions in similar cases, the so-called precedents. For this reason, lawyers often call Anglo-American Law “case law.” ‘Today, public law is generally codified, while private law remains largely case law, The case-law system prevails in England, in the United States, and in many ex-colonies of England such as Australia, tis important to note that the United States has codified its commercial law—tidying up the chaotic situation in which some fifty states followed often widely different legal practices. The Uniform Commercial Code (UCC) was writen between 1941 and 1952. A 1962 revision was adopted by 49 states; a 1972 revision was also widely adopted. Although different states and courts interpret the UCC differently, it offers a vital guide to current American thinking. Because England and the United States were predominant in world trade. until recently, Anglo-American legal thinking strongly influences interna, tional practice. The Anglo-American family has a fully developed private Jaw; in particular the big trading countries have developed a sirong commercial and contract law.* Socialist Law ‘The law in Socialist countries is normally codified, Public law is strongly developed, but private law is weaker. Because—until recently-—imose socialist countries rejected capitalism, many still lack 2 complete commercial law: company law and contract law are weak or missing alto- gether, If the contract-fish must swim in socialist water, it is often a large fish: the parties must regulate many matters that are simply not covered in the national law. Religious Law Religious law prevails in Islamic countries to a greater or lesser extent. Criminal and family law are well developed in Islamic legal thinking: contract law is thinner. In some Islamic countries (such as Pakistan), the ‘commercial law is a codified version of English law. Asain, if the contract-fish must swim in Islamic water, itis often a very large fish, ‘more information on the common wedlilon af "Anglo-Amoiou™8 _DyrsnnarioNnt Paocursmmr ConTaActs: AN INTRODUCTION ISA | Salmportant 1 area Anglo-American and Continental Law: the Differences ; Anglo-American contract law is largély case-law: each decision by a judge creates a precedent. Often this precedent is binding: future judges always follow it. The chart on the next page compares how Continental and the Anglo-American law treat the relationship between a case and the lav. ‘The Anglo-American and the Continental approaches to law produce different court proceedings, different styles of legal argument, and very different contract language. Much of the material in the following chap- - ters explores these differences. Let's take a single example for now: the ength and complexity of Anglo-American contracts. ‘You have probably noticed that English and American lawyers draft long contracts in difficult language. Why is this? Perhaps lawyers are paid by the word, and a long contract makes more money than a. short one! Although this was true in the past, itis not the heart of the problem, In the Anglo-American legal world, as we have seen, nobody knows the law in any given case until the judge reaches a decision. If the parties want to avoid surprises, they must draft a detailed contract covering all future possibilities. This makes contracts long and full of exceptions and conditions. Further, judges must take binding precedents into account when making their decisions, Each case may have dozens (even hundreds) of precedents. Contract language has developed over the centuries to “force” the judge to arrive at the same result whatever prece- dent(s) he or she uses. One example: if a judge once refused damages because the plaintiff had incurred “costs” while the contract spoke only of “expenses,” future contracts will tend to speak of “costs and expenses” thus avoiding the problem.* * Fer moze information on the problem of contact language, see Chapter 6Cun 1: Tue Conrnacr ano rue Law CONTINENTAL ANGLO-AMERICAN 9 ‘Start with a clear i legal code I ‘When a ease occurs, he judge simply ‘applies the code; Sometimes the judge| “ist inte ihe ode 0 ee hv _opliés ina paictar case, Hh] “TL ene PERHAPS 1 “The egisetnee RSE bute a) tha died ip aeomplicted ‘situation rit may pass completely : new lois an duke Beféré appyibg a sate, a oun ‘ay evaluate its jeonstutionality (Hoebec} 24). ‘This jiteans thai the cours may reject. astute aid refuse {© apply it, Judges alg have wide owes id inisipret sates; ie court ‘mist decide what the tata means. “(The cout) inierpretaton is the tay] fon, 8) Le Anglo-American Law: Two Laws with a Common Tradition In 1066 the French conquered England and developed a strong propesty law and a system of courts based on traditional feudal rights and duties, ‘These “common law’ courts gave only three remedies to injured parties + Money damages; + Possession of real estate (land and buildings); and + Possession of personal property, By 1475 commerce had begun, and the old remedies were inadequate. A new legal system was added: the “courts of equity” (or Chancery Courts). The new courts offered important new remedies including:16 [nrenvaTIONAL PROCUREMENT CONTRACTS: AN INTRODUCTION. + The injunction (an order from the court not to do something), and + The decree of specific performance (an order from the court to fulfill a duty under a contract). At the time of the American Revolution in 1776, the system of twin courts was in operation in both England and the American colonies. The Americans took it over. i ‘Today law courts and equity courts are combined, but modern courts still hear “actions at law” and “actions in equity”, This is important: an action at law and an action in equity have different rules of procedure, especially the rules of evidence. As we saw above, the remedies available are.also different. If you become involved in a lawsuit, your lawyer will tell you what kind of action is best for you, Revolution AMERICAN LAW Another point. Anglo-American contracts often contain wording like this: Ml further rights, be it under this contract, at law or in equity, are expressly excluded This clause refers to the right of an injured party to bring an action under the contract, an action at faw, or an action in equity. If you sign such a clause, you are giving up important legal rights.Tue Cowreacr ano Tite Law 11 | Concept Reviews A Law Without a Family ‘These presents shall be governed by and construed in accordance with British Common Law. ‘An international bank included this clause in a Performance Guarantee. Unfortunately: a. . There is no “British Law,” only Ei member of the continental law family.) b. Specifying “Common Law” seems to exclude Equity and Stanute Law. sh or Scottish Law. (Scottish law is a i Question: If a contract is a fish swimming in water, in what water does this fish | swim? QUENGLISH COMMON LAW QQENGLISH LAW IN GENERAL Q scorns Law QNotaw What;You} Should Know } 1. "There are'four main families of law: Contin 4} Socialist 'and Religious (Islamic) SMOHAED Spee A contract written against a Socialist or Religious Law background | st be very detailed as contract law.is often weak in sue systeris. ie . ‘The main‘difference between Continental and Afiglo-Amierican’ Law is e degree of codification: Continental Law is fully’codifiéd while Anglo-American Law, especially private law; relies ‘mote!on fe precedent nhl fae Ball , /Aniglo-American private law is largely case“la ‘on its ‘merits; precedents are normally foll Continental judges, on the other hand, decide ‘codified.law to the situation, 4 ‘Two branche’ of Anglo-American Law’ still ‘exist today; (comnion) law |g sand equity,; Actions brought under these tw6l bratiches ‘differ. in'the.: (ype of remedy available and the procedure!of'the) gout12 Tbernanarionat. PRocuRIMBnet CONTRACTS: AN INTKODUEIION 3. The Applicable Law THE PROBLEM No contract is complete. When the contract does not answer a question, the answer lies in the applicable law, the law of a partic- ular state or country. In principle the parties are free to choose what law applies to the contract. What is important in choosing an applicable law? What happens if the parties cannot agree an applicable law? THE PRINCIPLE IN MORE ‘The parties should agree an applicable law before drafting a con- tract. Without a defined applicable law, the parties may’ write unenforceable provisions. Further, some applicable laws require a more detailed contract than others.” If the parties simply cannot agree a law, then they must write a very full contract. i DEPTH Ifa contract is a fish, it swims in water. In principle, the parties are free to decide which water their fish will swim in. A Chinese-German contract could choose German, Chinese, English, or, to oversimplify a litle, any other national law. You often find the Applicable Law clause at the end of a contract. Even $0, you should turn to itfirst before reading the rest of the contract. Some provisions of « contract change their meaning radically under different legal systems. An example of a carefully worded applicable law provision: This contract, and all questions concerning its formation, validity, interpretation and application shall be governed by the laws of the State of New York. Study this wording. It says that the laws of the State of New York govern the contract. That is clear enough. The clause also mentions four questions governed by these laws: Question 1: Forination Was the contract correctly formed? That depends on the applicable law. But if the contract was not Correctly formed, it does not exist, and so there is no applicable law. And if there is no applicable law, itis {impossible to decide if the contract is comectly formed or not! This legal knot is easy toj 1 Cuuamtur 1: Te Conreact ano an Law 13 untié if the parties agree that not only the contract itself but also the uestion of its formation is subject to the laws of the State of New York. Question 2: Validity Is the contract valid? If not, the same problem (and the same solution) arise as with Question 1, formation, Question 3: Interpretation How is the contract to be interpreted? ‘To understand this point we must distinguish between substantive law and rules of procedure. Substantive law is the law as it applies to the behavior of the parties: what does the law require them to do? Rules of procedure apply to the court and its way of conducting its business, ‘The rules of interpretation are procedural rules, not substantive laws. This wording makes it clear that both the substantive Jaws and the rules of interpretation are those of the State of New York.* Question. 4: Application How will the parties carry out their duties? What rules apply to the performance of the contract? As with interpretation, a dispute might arise about a substantive law and procedural rules. Again the wording makes the situation absolutely clear. An applicable law clause not only states the law applicable to the contract it sometimes states what law i8 not applicable. This clause is from a subcontract for space technology. ‘The main contractor is American; the subcontractor is German. The Contract. shall be governed by,’ subject to, and construed in accordance with the laws of the State of Florida... This Contract shall not include or incorporate the provisions of the ‘United Nations Convention on Contracts for the International Sale of Goods.” Fl This contract was written at a time when both the United States and Germany were in the process of ratifying the United Nations Convention (the so-called Vienna Sales Convention). ‘The parties wished to exclude its provisions from their agreement, Since the matter is disposive, they had every right todo so, What happens if during negotiations the two parties cannot agree an applicable law? If a French company, for example, will not accept Chinese law, and its Chinese counterpart will not accept French law? First, the parties could decide on a neutral law, for example English law, or Swiss law as applied in the Canton of Berne. Second, the parties * Sco Chapter 2 for more Information on wiles of intrpeaiaiion44 TERNATIONAL PROCUREMENT CONTRACTS! AN INTRODUCTION might agree to the law of one side, but write a very detailed and extensive contract leaving almost nothing for the applicable law to decide, ‘Accepting the law of “the other side” is not particularly dangerous if you research carefully and write a clear, detailed and fair contract. There is a third possibility. If the two sides reach no agreement, you sometimes see ‘provision such as this: 13.1. During the performance of the Contract, any dispute in connection with the Contract shall be settled by both parties through consultation in the spirit of friendliness. If no agreement can be reached after such consultation, the dispute shall be ‘submitted to arbitration. 13.2. The arbitration shall be conducted in the Arbitration Institute of the Stockholm Chamber of Commerce, Sweden... 13.3. The law applicable to the arbitration shal be neutral and be decided by the arbitration contiittee| Allowing the arbitration committee to decide the applicable law is danger- ous: neither party knows what law applies to the contract; the results of fairly common actions become unpredictable, and the chances of an expensive dispute increase. i ‘The next clause, taken from a contract to supply German equipment to the United States, illustrates a fourth possibility: This Agreement shall be interpreted in accordance with the laws of the Federal Republic of Germany. If, however, the German law conflicts with Texas or U.5. federal laws regarding any dispute between the parties, then the parties agree to use their best efforts to negotiate an equitable compromise acceptable to both sides hereto. in the event that such a compromise cannot be reached in a timely manner, then the dispute shall be settled in accordance with the separate “Arbitration Agreement” between the parties. ‘The parties were (apparently) unable to agree on one applicable Jaw,.so they named three. The clause foresees trouble, disputes and arbitration ahead because of this awkward arrangement; in the end, the arbitrator will decide whet law really applies. A surprising number of international contracts use the weaker options, in effect allowing the court of arbitration to decide the applicable law. How does the court, if required, make its decision? What does it take into account? The JCC Rules of Conciliation and Arbitration, 1988, says:Cuan 1: Tus Covrener ano rie baw 15 . —co eri In the absence of any indication by the partes as to the applicable law, the arbitrator shall apply the law designated as the proper law by the rule of conflict which he deems appropriate (Article 13:3). ‘This doesn’t help much: the rules governing conflict of law are a study in themselves, and so, for the parties to the contract, the arbitrator's decison is unpredictable, As a rule of thumb, however, the court usually weighs four factors, whatever conflict-of-law rules itis applying: : a, The place of performance of the contract (i.e. the place where most of the work is actually done); ‘The place of execution (= signature) of the contract; The language ofthe contact ° ‘The currency or weights and measures prescribed. pes weight.” In practice, the place of performance is often decisive; in an FOB sales contract, this is the country of the seller, in a construction ‘Taken together, these points show the gravity of a contract—it’s “natural contract, that of the buyer. | : SOME SPECIMEN CLAUSES Applicable Law This contract shall in. all zespects:be construed and interpreted in accordance with the Law of the People’s, Republic of Bangladesh including any such Laws passed or made or coming into force during the period of the Contract. Governing Law These General Conditiéns and the Contract are governed by Italian Law. Applicable Law Regardless of the:place of agreement, the place of performace, or otherwise, this Agreement and all amendments, modifications, alterations, or supplements hereto, shall be construed undex, governed by, and the legal relations between the Parties hereto determined in accordance with, the laws of the Republic of the Philippines. In each case, the water round the fish is labeled: Bangladeshi law, Ttalian Jaw, the law of the Philippines, Even so, the third formulation is clearly better than the other two: it takes into account most of the legal problems that arise in disputes about the applicable law. IMPORTANT REMINDER The applicable law governs the disposive provisions (or traditions) of the private law: things that the parties could decide themselves (the fish) but—for whatever reason—left unregulated (the water). Public law always applies, whatever the parties agree. a16 [nrropwTtONAL PROCUREMENT CONTRACTS: AN INTRODUCTION = _______ nto Procunsaanr Conrmacrs: An Iirnonocnion Concept Reviews Which Water? BEC (Nonamia) sells 500 electronic typewriters to a company in Verbena. Unfortunately, 40% of the typewriters do not work and the buyer sends them back over a period of six months; the manufacturer replaces the defective typewriters under warranty. Because of the high rate of failures, the Verbenan buyer wants to cancel the Contract. The contract itself says nothing about cancellation, so the buyer turns to the applicable law. If the law of Verbena applies, then this provision of the Commercial Code of Verbena is the key: Cancellation’ If a merchant sells goods of such poor quality that the number of claims under the warranty is clearly excessive, then the buyer may return all the delivered goods to the seller and receive back all suns of money paid for the goods; on cancellation, all the provisions of the contract between the buyer and the Seller become’ null and void If the law of Nonamia applies, the situation is more complicated, Nonamia has no codified contract law, but the courts have decided two recent cases, In Case A, 500 printers imported by a Nonamian company contained 30% defective machines. The Judge allowed the importer to cancel the contract, return the printers and recover his ‘money. ‘In Case B, a Nonamian importer bought 1,000 computers. In this case, 400 Computers were defective. The judge ruled that if the foreign manufacturer repaired the computers, the buyer could not cancel the contract, 1. Which of these two countries is a common law country? Qverzena OQ Nonamia 2. Let's say the applicable law is the law of Verbena. Write below the two words in the cancellation law above that clearly require interpretation by the judge. & a. 3. Again, assume the law of Verbena applies: who will win the case? OBuyer QO sevter 4, Assume now that Nonamian law applies: which of the two cases offers the true precedent for the typewriter case? OcassA OcaseB “5. Ifthe judge follows Case A, who will win? OBuyer O setter 6. If the judge follows Case B, who will win? Ouver Sevier{Curtin 1 Te Conrtacr ano re Law 17 (What You. Should Know ¢ applicable law governs the contract; a well drafted contract also akes the. applicable law govern questions about the formation, “validity, interpretation and application of the contract, “If the parties'do not agree an applicable law, the arbittaton/judg. decides on’one by looking at the gravity, the place of execution, the’ slaneueze, the-eurency, the weights aid measues specified inthe “contract, and’so on, “A’clear, detailed and fair contract seat reduices'the' possible impact ‘Yot the’applicable' aw.18 IneromnarionAt, PRocurmmyr CONTRACTS: AN INTRODUCTIONCharme 2: lvrenraetwe A Conresce CHAPTER 2 " INTERPRETING A CONTRACT 1. Interpretation by Continental and Anglo- American Courts THE PROBLEM In a dispute, the two sides study the language of the contract closely. Often the dispute centers on the interpretation of @ word or phrase, Anglo-American and Continental courts follow differ. ent rules of interpretation. . These rules strongly influence the Teading and writing of contracts, What are the rules? THE PRINCIPLE Continental rules of interpretation are structured, whereas Anglo- American rules allow judges discretion. ‘The Anglo-American tradition forbids the use of letters, memorandums, minutes, etc, to interpret a contract: the contract is the entire agreement, IN MORE DEPT Systems of interpretation vary widely. Ase -xamples, let's study the German rules and the rules in the United States, Interpretation Under German Law Under German law, the first rule is this: if the meaning of a contract is plains’ that is to say, clear and unambiguous, then interpretation i wes allowed. If there is ambiguity, however, the judge (or, arbitrator) has four techniques of interpretation: Technique 1: Grammatical Interpretation Fist judges (or arbitrators) look closely at the exact wording of the contract: they interpret it grammatically, They ‘ty to establish a “plain meaning” which is beyond further interpretation, Technique 2: Systematic Interpretation’ Systematic interpretation means looking other clauses explain the ambiguous clause. fat the whole contract to see if20 raion PRocuwianer CONTRACTS: AN TN! RODUCTION Technique 3: Teleological Interpretation Often the key to interpretation is the purpose (teleology) of a clause. What were the parties trying to achieve in the ambiguous clause? If the intention (or “actual will”) of the parties is unclear, the judge/Arbitrator tries to find their “hypothetical will”: What would reason- able people normally agree under such circumstances? Technique 4: Historical Interpretation Historical Interpretation means using other documents (minutes, memorandums, pre-agreements, letters, etc.) to explain the background of the contract and thus make ambiguities clear. ‘Sometimes a contract says nothing about a problem situation; then the judge/arbitrator uses arguments based on analogy ore contrario. This is best explained with an example: Example: a contract clause states, “If the Supplier delivers late, he ig. subject ta penalty.” But what happens if the Buyer pays late?. The contract is silent. If we argue by analogy, then we sty: “Late delivery brings a penalty, so late payment should bring a penalty in the same way.” If we argue e contrario, then ‘we say: “The fact that the parties talk only about late delivery means that they deliberately excluded a penalty for late payment.” Overall, German rules of interpretation are clear and systematic, The German judge can always answer questions of interpretation, Interpretation in the United States ‘The American approach is different. Firstly the judge has wide discretion, ‘There is no unanimity as to..he process called interpretation. The rules are complex, technical and difficult to apply. It would, however, be a mistake to suppose that the courts follow any of these rules blindly, literally or consistently. As often as not they choose the standard or the rule that they think will give rise to a just result in a particular case (Calamari, p.17). In other words, the judgment does not follow the rules; the rules follow the judgment. ’ Without losing ourselves in technicalities, what are the rules? i First, two general principles underlie interpretation: Principle 1: The Plain Meaning Rule As under Continental thinking, interpretation is forbidden if the meaning is plain. However, many recent judgments and commentaries attack this whole idea. For example:Ciurran 2; freereetna 4 Conner 21 ‘Vagueness, indefiniteness and uncertainty are matters of degree, with no absolute standard for comparison. It must be remembered that all modes i of human expression are defective and inadequate.... ‘The court...must take language as it is and people as they are. it must not be pedaniic or ‘meticulous in interpretation of expressions. Gudgment in Rivers v. Beadle, District Court of Appeal, California, 7 Cal. Rp. 170 (1960) In essence: there is never an absolutely “plain meaning.” Principle 2: The Need to Establish the Intention of the Parties ‘The main task of interpretation is to discover the intention of-the parties; if the intention is disputed, interpretation follows four guidelines (Groner, .263): + Interpretation assumes that the parties made the agreement in good | faith. Tricks, secrets and special meanings are rejected; + Interpretation should produce a legal result, not an illegal one; | + Interpretation should avoid an absurd result; - + Interpretation should avoid hardship. i Beyond the two principles discussed so far, the prestigious Restatement : of Contracts gives five rules of interpretation Rule 1: Ordinary Words Have Ordinary Meanings Ordinary words, keep their “ordinary meanings,” the meanings a “reasonable person” would give to them. Rule 2: Technical Words Have Technical Meanings ‘Technical words keep the meanings they have in the trade that uses them, Rule 3: The Contract is Interpreted as a Wholé ‘The judge/arbitrator must interpret the contract asa whole. (This differs from German “systematic interpretation”: under American thinking, the Contract must be interpreted as a whole.) Rule 4: Interpretation Considers the Business Context Interpretation must take into account the business situation: the nature of the contract, its purpose, market pressures at the time, and so on. This rule does not, however, permit German-style “historical interpretation” ‘There is a rule of substantive law which siates thatthe final agreement ‘made by the parties supersedes tentative terms discussed in earlier nego- tiations. Consequently, in determining the content of the contract, carer tentative agreements and negotiations are inoperative... The rule is designed to require parties to put their complete agreement..in writing (Cataract, 138s).22 InereenaTiONAL PRocume MENT CONTRACTS: AN INTRODUCTION. This principle is called the “Parol Evidence Rule.” Strictly applica, i means that a written contract cannot be interpreted in the light of any previous agreement, written or oral. Today, however, judges in the United States are softening this rule. Even so, the rule has a decisive influence on the drafting of international contracts: most contracts arc written as though the Parol Evidence Rule were a watertight rule. The parties do, indeed, pur their complete agreement in writing. Rule 5: Interpretation Considers Business Norms and Traditions Interpretation must consider (a) how the parties carried out the contract before the dispute arose, (b) previous dealings of the same type between the parties, and (c) what is normal in the trade. The Limits of Interpretation: The No-Contract Situation Despite these rules, “a court should not remake a contract for the parties under the guise of interpreting it. Therefore, if the contract is so vague ot indefinite that the intended performance cannot be determined, the contract Cannot be enforced” (Anderson, p. 218). Unlike the German judge, the American judge may decide that he is unable (or unwilling) to interpret a contract. in this case there is “no contract’ : Resolving Contradictions A special problem of interpretation is direct contradiction. If the terms of 4 contract contradict each other, special rules apply (Anderson, p.220):, + Words prevail over figures; + Typewritten text prevails over printed text + Interpretation (usually) goes against the “drafting party,” that is to say, against the party who wrote the contract, If the contradiction cannot be resolved, the judge does not enforce the Contract at all. An example shows how serious this can be. In Moore v, Mohon (Tex. Civ. App. 514 SW2d 508) one contract clause stated that the price of a piece of land was $110,000. Another clause stated that the price was $275 per acre; this gave a total of $102,333. The judge ruled that there was no contract because he saw no way to resolve the conflict Conclusion ‘The German and the American rules are exaniples of the Continental and Anglo-American systems in action. Two general points are clear {@) The Anglo-American judge has wide discretion in interpreting the con- tract; accordingly lawyers draft contracts in painstaking detail to avoid the tisk of interpretation. The Continental judge has less discretion; because the outcome of interpretation is easier to predict, Continental contrite tend to be shorter and easier to read.{ SUMP 2: HereaPneniG 4 Conrenct 23 i + reratiOR stays close to the text of the contra: aqiglo-American judges usually ignore letters, agreements and so'on in interpreting'a contract. f Souays the entire agreement “the om . conte’ oF information outside the ect contrasted appro: aches strongly influence the drafting. Shall sce in the following sections, Concept Review; Nothing Beyond MESS the entire agreement and ¢ understand: tions, oral dn thie contract or th this contract. There are no ngs, conditions, Feservations or at pritten, that are not embodied lat_have -not-been, superseded by 2. Letus say that Verbenan lew ip es 0 the contract. Can a Verbenan Judge use ait the nomnal Verbenan principles interpret the contract? O yes QNo 3. If no, what principle(s) are ¢, 4. Ifthe law of the State of use all the normal Ay XCluded? ay. California applies tothe contac, can the American judge ‘merican. Principles of, interpretation? O yes QNno 5. Who would be more likely dd this clause to a contract; g Verbenan lawyer who Ras accepted the law of Calin e 48 the applicable law? Oren American lawyer Who has accepied Verbena lor? OVeRBENAN LawyER O American Lawyer24 INTERNATIONAL PROCUREMENT CONTRACTS: AN INTROBUCHON 2. Interpretation, Entire Agreement, and the - Contract Documents THE PROBLEM ‘Anglo-American contracts often list “contract documents.” Why? And what problems does this list cause? THE PRINCIPLE If the contract is the entire agreement, then outside documents are normally excluded from the contract, Some contracts, however, include documents by naming them specifically. ‘This creates a problem if the included documents contradict each other; for this reason, the drafter must rank documents in order of priority. IN MORE DEPTH In Chapter 2 we saw that Anglo-American law takes the contract as the entire agreement; in other words, nothing outside the contract is part of the agreement, In international practice, however, parties often wish toChawren 2: nreeeReTING 4 Conect 25 ' incorporate” (= include) outside material into the contract: general I fonditions, special conditions, subcontracts, the Incoterms “st ihe ! International Chamber of Commerce, and $0 on. ‘To do this he Contes ames such materials as Contract Documents. An example: Contract and Contract Documents . | SContract” means this Purchase Agreement itself, gnd 211 applicable General Conditions of Purchase, Special Conditions of Purchase, specifications, the Statement of Work, and manufacturing drawings, All contract documents and the clauses of this contract shall be read, if possible, so as to be consistent. In the event of conflict, the ordes of precedence for the provisions and documents which constitute this agreement is as follows: 1. Any alterations typed on the face of the printed Purchase Agreement 2. The printed text of the Purchase Agreement itself 3. Specifications 4, Statement of Work 5: Manufacturing Drawings §. The Buyer’s Special Conditions of Purchase 7, "The Buyer’s General Conditions of Purchase specific documents that are part of the son gact (Don’t worry if you don't know what all these documents are!) and it accepts that with s0 many documents contradictions are likely, 1g . Tgolve gontradictions, it gives an order of precedence, or “senievity” : ampng the documents: the higher its place on the list, the greater the / authority a document has.* Let's look now ata less effective clauses i Contract Documents “Contract Documents” means collectively :the completed Tender Documents with possibie supplements, the Contract Agreement, ‘tender Drawings, the Notice of Award, the Performance Bond, the Guarantee for Advance Payment, the Form gf Retention Guarantee, the Copy of Policy for Third Party Insurance, the Letter of Power of Attorney and the Joint Venture Agreement (if any) with annexures and appendices included therein ond any addenda, supplemental agreement, change orders and extra work orders (if any). ee ‘This clause is badly worded. Tt names man; categories of documents which | | iy documents, including whole may of may not exist, for example “extra + For the procedures tha ser Section 3. ‘recedonee in « plant constuction contrat, nos Chapter 12 |26 igrzRNATIONAL PROCUREMENT CONTRACTS: AN INTRODUCTION work orders (if any).” With so many documents, there will be contradictions, but the provision offers no order of precedence. International procurement contracts are sometimes a single page; the meat of the agreement lies in volumes of contract documents. (See the next Concept Review for an example.) When that happens, a well drafted precedence clause is essential. SOME SPECIMEN CLAUSES This clause from a shipbuilding contract incorporates the Incoterms into the contract and establishes the precedence between the contract and the Incoterms.* “Incoterms 1990” means “Incoterms 1990,” the .. | Anternational rules for the interpretation of its terms published by the International Chamber of Commerce. When a term from Incoterms 1990 is used in the Contract, the rules and definitions applicable to that term in Incoterms 1990 shall be deemed to have been incorporated in the Contract except insofar as they may conflict with any other provision of the Contract, in which case the provisions of the Contract prevail. In its Section (e), the following clause from a Procurement contract for a power station allows the purchaser to regulate priority. ‘The supplier is likely to be unhappy about that. The term Contract Documents shall mean and include the following which shall be deemed to form an integral part of the contract: a. Invitation to Bid, Instructions to Bidders, Contract Agreement, General Conditions of Contract, and Special Conditions of Contract; b./ Specifications of the equipment/goods to be supplied and erected under the Contract as detailed in the accompanying Technical Specifications; Supplier's Bid Proposal including the letters of clarification thereto between the Supplier and the Purchaser prior to the Award of Contract; All the materials, literature, data and information of any sort given by the Suppliex along with his bid, subject’ to the approval of the Purchaser; e.' In the event, of any. conflict between the above- mentioned documents, the matter shall be referred to the Purchaser whose decision shall be final. * See Chapter 3 for more information on Incotenms. |(Cuarran 2: lirenrrening 4 CONTRACT 27 Concept Reviews The One-Page Contract Look closely at Clause 2 of this contract form, Does it conform with what we have said in this section? If not, how does it differ? CONTRACT FORM This agreement made the ......sceee. day of : noes » 19..... between (NAME OF PURCHASER] of i (sAzLING' ADDRESS OF PURCHASER) (hereinafter “the Purchaser") of the one part and (NAME OF SUPPLIER] of (NATLING ADDRESS OF SUPPLIER] (hoveinafter. “the Supplier”) of the other part: whereas the Purchaser is | desirous the goods and ancilliary services listed in the Price Schedules and described inthe Technical Specifications should be provided by the Supplier and has accepted a bid by the Supplier for the provision of those goods and services in the sum of {CONTRACT PRICE IN-WORDS AND FIGURES] (hereinafter “the Contract Price”) NOW THIS AGREEMENT WITNESSETH AS FOLLOWS: 1, In this Agreement, words and expressions shall have the same meanings as are respectively assigned to them in'the Conditions of Contract referred to. 2. The, following documents. shall be deemed to form and be read and construed as part of this agreement, viz.: aj the Bid Form and price Schedules; b) The Schedule of Requirements; ¢) The Technical Specifications; d) ithe General Conditions of Contract; and e) ‘The Special Conditions of Contract. 3. In consideration of the payments to be made by the Purchaser to the Supplier as hereinafter mentioned, the Supplier hereby covenants with the Purchaser to provide the goods and services and to remedy ‘defects therein in conformity in all respects with the provisions of the Contract. 4. The Purchaser hereby covenants to pay the Supplier in consideration of the goods and services and the remedying of defects herein, the Contract Price or other sums 2s may become payable under the provisions of the Contract at the times and in the manner prescribed in the Contract . IN WITNESS whereof the parties hereto have caused this Agreement to be executed in accordance with thelr res~ pective las the day and the year first above written. i28 InereRNATIONAL, PROCUREMENT CONTRACTS: AN INTRODUCTION Tae, ‘ould: ee ;Amenicah contact, adit trai Accu HAG lems thatarise from ¢o Ramus! set [in order ot precedent for, 3. Interpretation and the Whereéas-Recital THE PROBLEM Most Anglo-American contracts begin with a “whereas-recital,”” Why? What should the “whereas-recital” include and exclude? THE PRINCIPLE A contract states the rights and duties of the parties; it does not discuss the motivation of the parties, the business situation, or 7 other important background information. Without such informa- tion, however, the judge cannot always interpret the contract correctly; the Parol Evidence Rule, you remember, forbids the Anglo-American judge to use background materials not expressly named as contract documents. Accordingly the parties include matters of fact, expectation and so on in the form of a whereas- recital . IN MORE DEPTH Traditionally the Anglo-American contract is an “entire agreement.” Unfortunately, however, the text of a contract does not answer many important questions: Why did the parties sign the contract? What circus. stances made the deal attractive? How long had the parties known each other? What future business did they hope for? If a contract rans into trouble, the judge/arbitrator asks such questions in order to interpret the Contract; often the parties give different answers, To prevent this uncer. tainty, lawyers write the answers to these background questions into the Contract. How? Through the whereas-recital. Contracts often begin:i | This Procurement Contract between The Styropak Company of Nonania and Verbena Packaging Ltd of Verbena 1 Witnesseth that WHEREAS the parties ‘h lave for many years success~ fully traded together AND WHEREAS Styropak has recently developed Biodegradable styrofoam packaging The parties hereby agree. After this opening come the rights and duties agreed by the parties, “The Word whereas means because or considering that; in other words, Whereas-clauses are not provisions, promises or conditions—they are {rlanations.* On the next page isa typical whereas recital if you look, it quickly, you'll see that it conta information. Such information is useful to an A arbitrator if the contract runs into tr Parol Evidence Rule.** Teg contract writen under a Continental Law, a recital (“preamble”) ig useful: it prevents misunderstanding, In an Anglo-American contract tag fontaifs an Entire Agreement clause, a recital is essential, Contiventat lawyers often avoid he complicated grammar of the whereas-cleuse; they prefer simple sentences under the heading Preamble. The legal resalt 1. of course, exactly the same. Summary ‘The body of the contract records the tights and duties ofthe parties; the Fecital states their motivations, their goals, and other background information. “J. BOUTRe arama ot sock clic, soe Chae 6, Seaiog ‘See Section 1 of this Chapter for this rule30 4 TYPICAL WHEREAS- RECITAL, nertseaTioNAt PRocuAnManT CONTRACTS: AN Ir RODUCTION WHEREAS the parties have successfully cooperated in a number of projects in the Republic of Verbena during the last ten years; WHEREAS the Supplier has wide experience in the supply of electronic products for use in tropical conditions: WHEREAS the parties concluded on!2@ May 1990 'a Memorandum of Understanding and Amtend to develop products specifically for conditions in Verbena; WHEREAS the Supplier has developed and patented @ new electronically triggered relay under the registered trade-neme “Hair Trigger; WHEREAS both parties are interested in introducing this new technology into the East Asian region; WHEREAS ‘the Purchaser wishes to incorporate the latest relay~ manufacturing technology in its own Products; AND WHEREAS the government of the Repub- iic of Verbena is actively supporting the introduction of pioneer technology Tt is hereby agreed that..CHAPTER 2: JinenPReTiNa 4 Cowreact 31 Concept Reviews Shelf Life —— SHELVES IN ADVERTIZING ‘SHELVES IN VERBENA q BOOKLET y Jn 1989, Verbena Storage bought from Northern Chipboard technology for making Warchouse shelves from chipboard planks, For a period of five years, Verbena Storage agreed to purchase the board directly from Northern.’ Unfortunately, in tropical humidity, the boards bend under the weight of stored components. Vervena Storage asks for help, Northern refuses. Verbena Storage re-reads the contract. The .televant clause says: Northern warrants the suitability of the Chipboard for the manufacture of’ storage shelves without defects under normal conditions. This warranty does not apply in ‘the event of incotrect use-of the Chipboard; further, the warranty is void if shelves are used under improper condit ions 5 Northem says tropical heat and humic lity are not “normal conditions” and installing shelves in tropical warehouses is “improper use.” Verbena Storage disagrees. Obviously the words normal and improper need interpretation. "The recital helps here: WHEREAS the Northern Chipboard Company has worldwide expertise in the manufacture of chipboard for all types of storage AND WHEREAS the chipboard has been successfully used in all parts of the world for the manufacture of storage shelves... a 1, Underline the words in the recital that help Verbena Storage. 2. Northern and Verbena Storage interpret normal and improper differently, Which interpretation is supported by the recital?INTERNATIONAL, PROCUREMENT CONTRACTS: AN INTRODUCTION a oe s only fact byyapreed th 4. Interpretation and Definitions THE PROBLEM Continental law-makers include a precise definition of many important terms in the law itself. Because Anglo-American law is based on cases, it offers many conflicting definitions. “This leads to uncertainty: how will the judge interpret a particular term if the-contract gets into trouble? The Anglo-American drafter must overcome this uncertainty. But how? THE PRINCIPLE IN MORE Anglo-American contracts often begin by listing definitions, The list defines problem terms; it records special meanings that the Parties have agreed. In principle, definitions belong “up front” in a clause of their own, DEPTH Let’s begin with an example: BEC is negotiating a contract in India; the parties agree that BEC’ technical advisers shall have “holidays” free, To BEC, Christmas and Easter are holidays; to the Indian company, they are not. To avoid the problem, the lawyer must draft a definition of holidays. In this contract “holidays” shall mean all legal holidays in the State of Kerala, and, in addition, 24 and 25 December, Good Friday, Eastér Saturday, and Easter Sunday. In international contracts, both Continental and Anglo-American lawyers are careful to include such definitions. For the Anglo-American, however, the problem goes deeper. The rules of Anglo-American inter,Cunprnin 2: ferenrnecine 4 Contnact. 33 pretation say that normal words in a contract keep their normal meanings and that technical words keep their trade usage. ‘The problems are obvious: Which words are normal? Which are technical? Further, a judge looking back at the precedents might find many definitions expressed or implied in different judgments. A judge’s opinion could make life difficult for the pares, So the parties to an Anglo-American contract usually include a strong list of definitions as “Article 1.” ‘Some words always cause trouble unless drafters carefully define them, For instance, the Conditions of Contract published in 1987 by the Féd ration Internationale des Ingénieurs Conseils (FIDIC) for Electrical and Mechanical Works begins with thity-seven definitions. Some examples: “Contractor” means the person ‘whose tender has been accepted by the Employer and the legal successors in title to the Contractor but not (except with the consent of the Employer) any assignee of the Contractor, “Contract” means the agreement between the Employer and the Contractor for the execution of the Works incorporating the Conditions, Specification, Employer's Drawings and Contractor's Drawings, priced and completed Schedules, Tender, Lotter of Acceptance ‘and such further documents as may be expressly incorporated by the Letter of Acceptance. “Foreign Currency” means a currency of a country other than that.in.which-the Plant is to be installed i “Plant” means machinery, apparatus, matezials and all things to be provided under the Contract for Andoxporation in the Works. A definition, as you see, performs two different tasks: Task 1: Choosing a Meaning If a word has several meanings, a definition pinpoints the agreed mean- ing. ‘The FIDIC definition of foreign currency does this. (The word foreign changes its meaning according to the nationality of the writer, & single, agreed meaning is essential.) Task 2: Assigning a Meaning If the parties attach a special meaning to a term—if they go beyond its normal dictionary meaning—then the definition explains this special meaning. The FIDIC definitions of contractor and contract work in this34 DergRNATIONAL PROCUREMENT CONTRACTS: AN INTRODUCTION. way. (No dictionary defines contract as “the agreement between the Enmiployer and the Contractor for the execution of the Works, etc.” This is a special meaning agreed by the parties.) Any defined term is usually capitalized throughout the text of the contract; cither the whole word or simply the first letter is printed in capital letters. This alerts the reader to the special definition, Some contracts contain definitions within individual articles. This can ‘cause problems. An example taken from a consortium agreement: 6. The parties shall exchange proprietary information for use in the preparation of a Proposal as follows: a, “Proprietary Information,” as used hereunder, means all documented information and information contained in physical components disclosed by one party, (hereinafter called the “Disclosing Party,") to the other party, (hereinafter called the “Receiving Party,”) provided such information. is clearly identified as being proprietary. b.'The Receiving Party agrees to accept Proprietary Information from the Disclosing Party in confidence and shall employ reasonable efforts to prevent disclosure of such information to any third party. The Receiving Party shall not, without the written permission of the Disclosing Party, use Proprietary Information for any other’ purpose than evaluation, Introducing definitions in Section 6 of a contract is dangerous. Does the definition apply to this clause only? Or to every use of the term “hereunder” (afier the definition but not before)? Or to every usage of the term throughout the contract? If the parties redraft the contract several times and change the order of the clauses, serious misunderstandings can arise. Definitions belong in their own section at the start of the contract. | Asia general principle: every term that the parties discuss in detail during the' negotiation is defined under Definitions at the start of the contract, SOME SPECIMEN DEFINITIONS ‘The most common wording at the start of the definitions section is this: 1, Definitions In this contract, the following terms shall be interpreted as indicated: U1 “the Contract” means the agreement entered into...Cunoren 2: livrenreerin A CONTRACT. 35 ‘The wording below is more careful: 1, Interpretations The following interpretations of texms shall apply except where the context otherwise indicate: 1.2, “Acceptance” means the issue of a Quality Assurance and Acceptance Certificate by the Contractor subject to... ‘The purpose of writing “except where the context otherwise indicates” is to avoid a common problem: the use of a defined word in a different context. For example, some contracts define the word works: £. ‘Works’ means all Plant to be provided and work | to be done by the Contractor under the Contract. If the contract somewhere speaks of “delivery ex works,” then clearly the defined meaning of works cannot apply. ‘The drafter avoids this problem with the words “except where the context otherwise indicates.” A full definition often includes more than direct, formal definition. Sometimes it adds examples or a “negative definition”: a statement of what the term does not mean. The definition below uses both examples and negative definition, : 1/12, “TECHNICAL DATA” ehall mean any information directly related. to the design, engineering, development, production, Processing, manufacture, use, operation, 8 overhaul, repair, maintenance, modification or reconstruction of the MP2 systen, associated equipment or spare parts. Such data includes, for example, information in the form of blueprints, drawings, ‘photo- graphs, plans, instructions, computer software and documentation. It does not include information containing general scientific, mathematical ox engineering principles. FSS]36 INTERNATIONAL PROCUREMENT CONTRACTS: AN INTRODUCTION Concept: Reviews In the Picture Verbena Fan makes electric power fans for industrial applications. Verbena Fan buys technology and hi-tech parts from BEC. A clause in the contract says: Modifications to Technical Data For a period a five years after the coming into force of the contract, the Supplier shall inform the Receives of all modifications to technical data without delay, and supply copies of modified technical data as necessary Fre maintenance manual for the fans uses many photographs to help repairmen who speak little English. Four years after the contract comes into force,the maimersaee ‘ianual is revised. BEC sends Verbena Fan the text of the new manual but not the neg Bhotographs. When Verbena Fan asks for the photographs, BEC says that the Photographs are not “technical data” but merely an aid to repairmen, 1. Ifthe contract contains no definition of technical data, who is probably right? OIVERBENA FAN OQ BEC “ 2: I the contract contains the definition below, who is probably right? LTPCHNICAL DATA” means any information directly related fonene design, engineering, production, operation, repaiz, or maintenance of the FANS. Such dats pheludes, but is not limited to, information in the form of blueprints, drawings, illustrations, photos gzaphs, instructions, computer software and’ ite documentation. O VerBeNa FAN OQ BEc i now : ion of interpret the, Continental drafte parties; siish’ seesW/L - by be coheed Carrer 6: Covreact ENGtsit 81 CHAPTER 6 CONTRACT ENGLISH 1. The Contract Sentence THE PROBLEM ‘The opening sections of an Anglo-American contracts are often puzzling; it is hard to see how the whereas, the witnesseth, and the rest fit together, Sadly, many international contracts are poorly drafted: the wording. is often ungrammatical and sometimes nonsense, What is the clue to contract language? THE PRINCIPLE Traditional English-language contracts are drafted as a single sentence: the “contract sentence.” In principle, all the parts of a contract fit into a single grammatical unit, IN MORE DEPTH Lawyers are. conservative... Lawyers working in English today still draft contracts in the ancient style, even though these old forms are interna- tionally a source of confusion. One tradition is the drafting of contracts as a single sentence. ‘This sentence pattern has three main variations, Variation 1: “This Contract Witnesseth...” 1 ‘The lease on the next page illustrates the most common contract pattern: 4 no matter how long a contract is, it can still follow this one-sentence. pattern, Let's look at the grammar of the sentence: a THIS LEASE.. i This Lease’is the subject of the contract sentence. Many contracts begin with a similar subject: This Licensing Agreement, This Technical Assistance Agreement and s0 on. a : BETWEEN... 7 The word between introduces the names of.the two parties, Hach 4 party is usually given a “hereinafter referred to” title: Landlord or Tenant, Employer or Contractor or whatever.82 IISTERNATIONAL. PROCUREMENT CONTRACTS: AN INTRODUCTION "| Apartment _4 on the £ifth ‘floor in the building : This Lease made the tenth day of August between Alan Quartermain hereinafter referred to as “the landlord” and Elizabeth Jenkins hereinafter referred to as “the Tenant” Witnesseth: that the Landlord hereby leases to the Tenant and the Tenant hereby hires from the Landlord on the conditions attached hereto the apartment known as known as 13 Greek Street for the term of three years commencing the first day of September 1990 and ending the thirty-first day ‘of August 1993 at the ‘annual rent of $5,000 payable in equal monthly instalments in advance on the first day of each month during the said term In Witness Whereof, Landlord and Tenant have respectively signed and Sealed this lease as of the dey and year Firee dhove weitten WITNESSETH THAT. This is the main verb, “This lease witnesseth that..” simply means “This lease is proof that..." (The -eth is an antique ending for the third person singular, present tense.) WHEREAS... This lease contains no “whereas” clauses. As we saw in Chapter 2, a string of whereas clauses at this point gives, if necessary, the background to the agreement. g of noun clauses—a list of the~ agreed rights and duties of the parties. Grammatically, of course, a noun clause looks exactly like a sentence; for example: He suid that he loves dogs but that his wife prefers horses. The two clauses in italics are noun clauses, they are direct objects of the verb “said.” In structure, however, they are exactly like sentences. In the same way, the many “sentences” in a contract are noun clauses, direct objects of the verb “witnesseth.” This means, of course, that the periods (full stops) at the end of each provision in theCuarren 6: Cowreact Evoustt 83 Sure 6 Conmmacr Brust 8 contract are grammatically wrong—but in a long contract they are unavoidable. (This also explains why the provisions of a contract are often called clauses and not sentences.) Ee IN WITNESS WHEREOF... The two parties sign the contract to “witness” it, in other words to “give proof of” their agreement. ‘This use of the word witness can cause confusion because, in many documents, the signatures of the parties must themselves be witnessed; in this case, however, the signature of the “witness” simply confirms that the signature of the party is genuine.* Variation 2: “Know All Men... ‘This variation occurs in short documents such as Bid Bonds, less often in full contracts. The document below is a transfer of ownership for a new car. Again the contract is a single sentence. Know all Men by these Presents That The Albert Motor Company, the Seller, whose address is 3 Dry Boulevard, Alton, New Hampshire, for and in consideration of the sum of $17,000 paid by Joe Ditherspoon, the Buyer, whose address is 1839 Long Lane, Alton, New Hampshire, have bargained, sold, granted and conveyed and by these presents do bargain, sell, grant”and cofivey unto the Buyer, the Buyer’s successors (heirs, executors, adminis~ trators) and assigns one Ford Mustang Model 1990 Factory No Ap 23840984762Hx543. Motor No 72LK153 To Have and to Hold the same unto the Buyer and Buyer's successors (heirs, executors, administrators) and assigns forever In Witness Whereof, the Seller has set his hand and seal or caused these presents to be signed by Les proper conorate officers and caused Lee propey corpprete aeeiPennke fefeto asfiveds the oleventh day ob Setsbere 1550" * See Chapter 4, Section 2 for more information on signatures,84 Variation INTERNATIONAL PROCUREMENT CONTRACTS: ANINTRODUCIION KNOW ALL MEN... ‘This means “All men (people) are informed....” Know is the main verb of the contract sentence; itis in the command (imperative) form. BY THESE PRESENTS. These presents means “these clauses present before you” or simply “this contract.” THAT... The rest of the contract is a list of noun clauses containing the information that “all men should know.” As with Variation I, any number of “whereas” clauses can follow the word “That.” “X" THE SELLER... The name of the seller is introduced, FOR AND IN CONSIDERATION OF. The price is named, “Y” THE BUYER... ‘The name of the buyer is introduced. w.HAS BARGAINED, SOLD. ‘The seller has sold.... Then the goods are named. IN WITNESS WHEREOF.. ~ The formula is the same as for Variation 1.) (The seal in the case of a ‘Transfer of Ownership like this is important; since only one party signs the document, the seal makes it legally binding.) : “The Parties Hereby Agree That...” ‘The agreement on the next page is a standard form for selling a second- hhand car in the United States. It contains 2 heading that is not integrated into the contract sentence, and then a double wording; the right’ and Guties of each party exactly balance, resulting into two mirror-image sentences. This form is fairly common in short agreements or in. a “one-page” Contract that covers many contract documents. ARTICLES OF AGREEMENT The name of the agreement is, in this case, simply a title outside the ‘grammatical structure of the contract sentence, BETWEEN... The word benween introduces the names of the two parties, This contract illustrates a common but old-fashioned usage: the first name‘Cuarren 6: Cowreact ENGLISH 85 4s sald to be “of the first part,” and the second name “of the second par” ‘Thereafter the parties are called “the party of the first part” and “the party of the second part.” Articles of Agreement Between ‘ Alan K. Whitbread, who resides at 12 Dogweed Lane New York, NY of the first part, and Elizabeth Dowell, who resides at 3 Catskill Drive , New York, NY of thé second part. The party of the first part, in consideration of nine thousand dollars ($9,000) covenants and agrees to sell to the party of the second part a 1988 ° black Ford automobile including the transfer to the party of the second part of the Certificate of Title and any other documents necessary to effectuate a complete transfer of title from the party of the first part to the party of the second part. ‘The party of the second part, in consideration of the complete transfer of title of the 1988 black 1 | Ford automobile trom the party of the first part to the party of the second part covenants and agrees | to tender payment of nine thousand dollars ($9,000) to the party of the first part in the form of cash with payment due on the date of delivery of the said- automobile. In Witness Whereof the parties hereunto have set their hands and seals the ‘seventh day January in the year one thousand nin hundred and ninety one. THE PARTY OF THE FIRST PART COVENANTS AND AGREES... ‘This contract sets out the rights and duties of the fist party in one sen- tence, and the rights and duties of the second party in a second . sentence; in both cases consideration is mentioned. IN WITNESS WHEREOF.. ‘The formula is the same as for Variation 1,86 [InrTERNATIONAL PROCUREMENT CONTRACTS: AN INTRODUCTION Concept Reviews Suspended Sentence Study the form of the contract sentence in this Memorandum of Understanding, How would you reword the document so that it makes sense grammatically? MEMORANDUM OF UNDERSTANDING This Memorandum of Understanding expresses an understanding between the Moran Corporation (hereinafter called “Moran”) and The Ministry of Public Works of the Republic of Verbena (hereinafter called “the Ministry”) regarding the development of a photovoltaic system of Power generation for use in the Republic of Verbena WITNESSETH: Whereas Moran and the Ministry have cooperated on the development of a prototype system. Now therefore the parties hereto agree as follows: 1. Moran and the Ministry shall cooperate in producing. a Plan for the installation of a pilot project plant ata site to be designated by the Ministry. (rurTHER PROVISIONS) In Witness Whereof the parties hereto have caused this Memorandum to be this day executed in the Verbena City i What ‘You Should Know 1. "English-language contracts are traditionally written as a single. } sentence. ‘This, sentence has three common variations, sii in Variation 1, the contract witnesseth (= is proof) that the parties have reached a certain agreement, aye 3._In Variation 2, the world is informed by means of “these presents” that the'parties have reached’a certain agreement.» : ab 4::]n. Variation 3, the parties undertake certain duties and obtain certain’ ights.oi "9 2 nor : : n reading a contract, it helps to find the grammatical relationship between the parts, In drafting a contract, either avoid the traditional": forms, or ensure that the grammar of the contract sentence is correct.::‘Cuarren 6; Cowraact ENGLISH 87 2. The Language of Anglo-American Contracts THE PROBLEM Anglo-American contracts often seem lengthy, complicated and repetitious. A negotiator may try to simplify the English word- ing. This is sometimes dangerous. THE PRINCIPLE Anglo-American contract law is mostly case law, so lawyers draft contracts with cases (precedents) in mind. If a judge in the past based a decision on the precise wording of a contract, later Contracts often try to avoid the implications’ of that decision. Further, to compensate for the absence of a codified law, lawyers try to cover all eventualities in the contract itself, The result is “contract English" —a language with rules of its. own. IN MORE DEPTH i Anglo-American law is largely case-law: each decision by a judge creates a precedent, If this precedent is binding, future judges always follow it. ie Anglo-American drafter knows this and writes the contract to avoid the problems created by binding precedents in the past. Study, for exam- ple, the language of the contract provision below, It is Clause 114 of the Conditions of Contract of the: Public Works Department of a country in |” East Asia within the Anglo-American law family. The Contractor shall be under ‘no liability whatscever by way of indemnity-or otherwise for or in respect of destruction of or damage to’ the Works...or to’Temporary Works.or to any Property whether of Government or third parties or for or in respect of injury or loss of life which is the consequence, whether direct or indirect, of the outbreak of war (whether war is declared or not) in which the Country shall be actively engaged, invasion of the Country, act of foreign enemies, rebellion, revolution or military or usurped power in the Country, civil war, or, otherwise than amongst the Contractor's own employees or the ‘employees of any sub- contractor'or a contractor executing any Specialist Works, riot, conmotion or disorder, (hereinafter comprehensively referred to as “the said special risks”) and the Government shall indemnify and save harmless the Contractor against and from the same and against and.from all claims, demands, proceedings, damages, costs, charges and expenses whatsoever arising therefrom or in connection therewith and shall compensate the Contractor for any loss of or damage to Property of the Contractor used or intended to be used for the purposes of the Works, and occasioned either directly or indirectly by the said special risks.88 IDvrenvaTionat PROCUREMENT CONTRACTS: AN INTRODUCTION This clause uses the word or many times. In each case the drafter has a Particular problem in mind. Let's take three examples: Example 1 ‘The clause mentions “the outbreak of war.” This seems clear enough, but the drafter adds “whether war is declared or not.” Why? The reference is probably to the war in Vietnam. Officially the United States calls this a Conflict, not a War, since war was not declared, During the 1970's, contracts that excluded liability for problems caused by “war” ran into Jeeal problems, and so drafters adopted the habit of adding “whether war is declared or not.” Example 2 The drafter writes of “property...used of intended to be used for the Purposes of the Works.” "The wording here perhaps reflects a judgment in 4 particular case where the judge distinguished between property “used for the purposes of the Works” and property delivered to the site but not yet in use, ‘The drafter covers both possibilities, Example 3 One phrase here is typical of Anglo-American drafting: “all claims, demands, proceedings, damages, costs, charges and expenses whatso, ever.” The drafter is probably making no difference between claims and demands or between charges and expenses. He.uses this list of terms for safety’s sake: whatever the situation, the contract covers it, This need for safety reflects a major principle of case law: it is impossible to know the lav until the case has been decided, So, don’t simplify the language of an Anglo-American contract until a lawyer has studied it carefully A case in point: Courts in the United States have trouble with know-how contracts. Is know-how the same thing as rade secrets? And do both ‘mean the same as confidential information?’ The position is unclear. ‘Accordingly: we find in a lawbook this recommendation: ‘The following conclusion can be drawn from an analysis of the terminology used by the courts: (a) the cases are not reconcilable if itis assumed that the different phrases (Know-How, trade secrets, confiden: tial information) are intended to define dissimilar legal concepts; (b) the Contract drafter who wishes to cover as many fulure contingencies as Possible should use an allemative expression [=an expression containing altematives} on the theory that subject matter which might elude one label will surely be covered by another. Thus an altemative phrase such as “confidential information, Know-How, and/or trade secreis” should over most contingencies; the altemative “and/or” provides the projected enforcer with maximurn flexibility in selecting that specific characteriza tion of the misused property which appears best sulted to the facts and the law of the forum (Staples and Bertagnoli, p.264). Two points emerge here: First, case-law leads to considerable confusion about the meanings of words; itis often necessary to use several wordsCuarres 6: Conreact Ents 89 rather than one to ensure that the true meaning is covered. using several words rather than one gives the lawyer great flexil ccontract becomes the subject of a court case, Concept Reviews Too Much Language? 1. Study this extract from a warranty for advanced electronic equipment: Any defects or faults detected or occurring must be notified by the Buyer to the Seller within 30 days of the defect or fault being detected or occurring. 8. Can aclear distinction be made between faults and defects in a warranty? Q yes QNo b. Ifno, why do you think the drafter used both terms? ©. Cana fault be detected unless it has occurred? Q YES QNo d. Ifno, why do you think the drafter used both terms? #2, 2. Study this extract from a contract for electrical parts in’a shipbuilding project: All component's used in the manufacture of the Goods shall be new and unused and not of an age which would impair their operation. Reconditioned or refurbished component's shall not be used Is there a clear distinction between the terms new, unused, and not of an age which would impair their performance? Q YES QNo b. Ino, why do you think the drafter used all three terms? , . Is there a clear distinction between reconditioned and refurbished parts? Q YES QNno d. If no, why do you think the drafter used both terms? ©. The second sentence seems to repeat the idea expressed in the first sentence. Is there really one idea or two here? Done Qtwo £. If one, why do you think the drafter decided to use two sentences? ,,90 TERNATIONAL PROCUREMENT CONTRACTS: AN INTRODUCTION hould Know | 4) FSR otis! “uglsee ican contract law is predominantly case 1 é Ansar : ; 2,[In'a case-law.system, the law/is not known with cert “has been decided. 77/117" eS EE Hee 3. Jn drafting a contract, the lawyer considers all the precedents that will’ i influence a judge's decision and then drafisithe;contract:to, gaint _ the best outcome in an uncertain situation,» 2 (Thee opeat itself.) E He 5. Itis sometimes danigerous to simplify the language of a contract: asa {4 Perhap: yeonte fted in,a case law.environment use Janguage that seenis “@Vgeneralule}‘try to discover the legal thinking behind the languagestii) 3. Clause Patterns in Contract English THE PROBLEM Long sentences quickly become confusing in English. Especially in the international arena, the drafter must know, and work within, the limits of basic English clause structure when combin- ing ideas into longer sentences, THE PRINCIPLE Four basic patterns of combination are effective in English; with- out making it into a religion, many drafters. try to limit themselves to these patterns, especially if English is not the first language of either party. IN MORE DEPTH English is a mix of French (from the Normani conquerors of 1066) and Anglo-Saxon (the German dialect of the invaders who filled the vacuum left by the Roman withdrawal from England). When languages combine (or creolize), two results are common: + An oversize vocabulary with blurred distinctions of meaning; + A simplified grammatical structure with usage and idiom replacing “logical” rules. Both results occurred in the case of English. Because English grammar is thin on rules and rich in “illogical” usages, it is difficult to express com- plex, logical relationships among ideas. As a basis for expression, try 10(Cearrer 6: Contract Enousit 91 work with the four basic clause structures that underlie most well written contract provisions. Structure 1: Main Clause Plus Main Clause ‘Two sentences (main clauses) joined by and (or a similar conjunction) — this is the most frequently used structure in the English language, Because most languages freely use and, but or or between main clauses, this construction presents no problems internationally. ed Example: The stipulated prices are fixed, and they are to be understood delivered paid to the place of destination, \ ‘The headings and marginal notes in these General Conditions shall not be deemed part of this Contract, and they shall not be taken into consideration in the interpretation thereof. . Structure 2: Main Clause Plus One Subordinate Clause | The simplest relationship betweett tivo idéas is to make one into a main clause and the other into an explanatory or subordinate clause. These times enough to express quite elaborate contract provisions. Ea + | SESE Example: The Employer has the right to terminate this contract if construction work is not carried out in accordance with local by-laws. You can also begin with the subordinate clause, especially when using the if-clause; the addition of the word shen makes the relationship particularly ~ clear: ot cE - a92 [INTERNATIONAL PROCUREMENT CONTRACTS: AN INTRODUCTION, Example: If construction work is not carried out in accordance with local by-laws, then the Employer has the right to terminate this contract. Structure 3: The Daisy-Chain In contracts, a string of conditions is often attached to a main provision, Then you must “daisy-chain” the clauses: Main CLAUSE + yf sonorpouts | 4 [ suporpnate x ‘CLAUSE (TYPE, A) CLAUSE (TYPE A)“ Naturally, the main clause can also come after the daisy-chain. You should repeat the conjunction, for example, jf, at the start of each clause. A good example occurs in these Terms for Deliveries Abroad: The delivery time has been adhered to if the consignment is ready for despatch ex works within the agreed period and if notice to this effect is sent to the purchaser This structure is common in whereas-recitals: “whereas..., whereas..., whereas..., and whereas....”” Structure 4: Playing the Ends Against the Middle ‘Where a sentence contains clauses of several types (let's say an if-clausé | and a because-clause), you should place these clauses on either side of the | main clause: i smomname _SlausecteE 4) Example: Where the contract provides for deliveries in lots or instalments, penalties for late delivery shall be calculated on the basis of the value of each lot or installment, provided that the late delivery does not impede the general performance of the contract .Cuavren 6: Covreact Excuistt 93 Concept Reviews Perestroika I In the two cases below, the sentences need restructuring. If delivery occurs late, and in the event that such jate delivery causes idle time on the site, should such idle time exceed one shift, the Supplier shall be léable for liquidated damages in the sum of $1,200 per shift lost. If the Licensee becomes avare of any trade-mark infringements in the territory, so that the Licensor may take appropriate legal action, the Licensee shall notify him immediately What You Should Know appears at the end of Section 5.94 IDeTBRNATIONAL PROCUREMENT CONTRACTS! AN INTRODUCTION 4, The Negotiated Muddle THE PROBLEM During negotiations, each party makes changes to contract clauses until the grammar breaks down completely. If one of the parties asks a judge/arbitrator to interpret the language, the result is dangerously unpredictable. THE PRINCIPLE When negotiation produces very complicated sentences, try to tewrite and simplify them, IN MORE DEPTH Negotiations often go like this: PURCHASER: I have a clause I want to include: “Ifa consignment of chemicals shall be deemed by the Purchaser to be defective, then the Purchaser may return the consignment to the Supplier at the Supplier's expense.” SUPPLIER: Deemed at your discretion—I can’t accept that. You have to test the stuff. PURCHASER: Shall I add: “After a laboratory test has been made"? SUPPLIER: Okay, but “by a laboratory which is independent of the Purchaser''—add that too. PURCHASER: Okay now? SUPPLIER: What sort of test are we talking about? PURCHASER: Standard tests for purity and so on. ‘SUPPLIER: There are no standard tests. You can test the stuff several ways and get slightly different results PURCHASER: Okay. Let’s say tests which you approve, SUPPLIER: Fine. Read the clause over. Let's see what we have. PURCHASER: “If a consignment of chemicals shall be deemed by the Purchaser to be defective after a laboratory test has been made by a laboratory which is independent of the Purchaser and which is approved by the Supplier, then the Purchaser may return the consignment to the Supplier at the Supplier's expense.” ‘The resulting clause has two serious loopholes. It seems to discuss an unlikely situation: the Purchaser deeming chemicals defective after a labo- ratory test; the real idea is that the chemicals can be sent back after the test. Another point: it looks as though the laboratory making the test must be dependent and approved by the Supplier; in fact, it is the rest, not the laboratory, that must be approved, In general: Thoroughly rewrite any clauses that you renegotiate in detail.Ciarren 6: Conreacr Evoustt 95 Concept Reviews Perestroika II Rewrite the following confused, negotiated sentence. If any claim is raised by the Purchaser against a member in respect of any matter concerning the Purchase contract for which claim another Member or Members is (are) responsible whether the claim is attributable to his (their) share(s) of supply or to a failure by him (them) to carry out his (their) obligations under the Purchase contract in a timely and correct manner or to any other reason, then the responsible Member(s) shall immédiately save harmless from all obligations the Menber held liable by the Purchaser. An explanation of the text may help you here. Briefly this is the situation. A group of three suppliers (a consortium) is selling to a Purchaser. Each member of the consor- tium has his own “scope of supply.” If the Purchaser has a claim against the consor- tium, he can bring it against any member, the members are said t0 be “jointly and severally liable.” Among themselves, however, the members make an agreement: ifthe Purchaser makes a claim against the “wrong guy,” then, of course, the “wrong guy” will have to pay, but the guilty party will compensate the “wrong guy” in full. (As a purchaser, you may sometimes deal with consortium agreements; it is common practice for the employer to have the right to see the relevant consortium contract of his contractors.) What You Should Know appears at the end of Section 5.96 5. Passive Forms THE PROBLEM Contract English is rich in passive verbs. Unluckily for lawyers, modern English is moving away from the passive because passive forms often “test out” badly—readers respond slowly and inaccu- rately to passive-form instructions. Further, many languages have no passive; their speakers have no “feel” for this form, THE PRINCIPLE Avoid using passive verbs where active verbs convey your meaning clearly. IN MORE DEPTH Passive verbs test out badly, especially in instructions, Readers respond slowly and less accurately when instructions use passives. For example: Passive: For the watch to be set, both the command-button and the recessed set-button must be used. If the set-button is to be depressed, use should be made of a small object such as a paper- clip. Damage could be incurred by the watch if a larger object is employed. Active: When you set your watch, you'll have to use both the command-button and the recessed set- button, Use something small, a paperclip for example, to depress the set- button. IF you use something bigger, you could damage your watch, The passive is sometimes dangerous if you assign a duty but fail to say who must perform it. For example: A monthly progress report | The Contractor should send should be sent to the a monthly progress report Employer at his registered T to the Employer at his office | registered office Ori Cuarrer 6: Conraact EnoList 97 Payment is required on ox J The Licensee shall pay the before 13th of each month, |* Licensor on or before 13th | Of ech monen. The problem is acute with oriental languages which ofien have no passive form. A Chinese-speaker, for example, may miss the difference between ‘The Licensee's personne] were given training (Passive) and ‘The Licensce’s personnel were giving training (Active) Where possible, therefore, try to avoid the passive, Concept Reviews Staying Active Rephrase these sentences in the active form: Corrections to drawings shall be discussed (Passive Verb) and agreed (Passive Verb) by such members of the Consortium as are thereby affected (Passive Verb). A unanimous decision is required (Passive Verb) on all technical questions by which members of the Consortium are affected (Passive Verb), and, as far as single members are concerned (Passive Verb), their express written approval is required (Passive Verb).98 [bye TionAt PROCUREMENT CONTRACTS: AN INTRODUCTION tend to grow during negotiations # a i at fully reword pens imAPPENDIX: MODEL PROCUREMENT CONTRACT.LOW VALUE. 1 To be reherned- . ICC MODEL INTERNATIONAL PROCUREMENT . CONTRACTS (by DR JIM PINNELS) CONTRACT FOR THE PURCHASE OF GOODS BETWEEN .. hereinafter called “the SELLER” hhereinafter called "the BUYER” PREAMBLE (NOTE: The Preamble is optional) ‘The agreement between the parties to this Contract is based on the following understandings: (NOTE: The following clauses are examples only. Delete as appropriate) 1. The BUYER is acting partly on its own behalf and partly as a purchasing agent for other companies. 2. The BUYER is acting as purchasing agent for 3, Both parties understand that Goods made to the Buyer's special specifications may have no value, or very limited value, on the open market, 4, The SELLER understands that the BUYER in specifying the Goods has relied to a large extent on the expertise of the SELLER. 5. The SELLER understands that the BUYER is under contract to resell the Goods, and that if the Goods are defective or non-conforming in quality or quantity, the BUYER may be liable for damages in an amount exceeding . i 6. The SELLER understands that the BUYER intends to install the Goods as a component part in equipment to be resold, and that if the Goods are defective or non- conforming in quality or quantity, the BUYER may be liable for substantial damages. 1, " name of Prinoipal 2 Currency and amount 3 List of additional background understandings between the partis. Z INTERNATIONAL PROCUREMENT CONTRACTS, DRM PINNELLSAPPENDIX: MODEL PROCUREMENT CONTRACT-LOW VALUE, 2 1. Applicable Law This Conta, and all questions relating io is formation, valid, interpretation or performance shall be governed by the law of... Seer (NOTE: The sub-clause below s optional) This Contract shall not include, incorporate or be subject to the provisions of the "United Nations Convention on Contracts for the International Sale of Goods". 2. Definitions i In this Contract the words below have the meanings ascribed to them unless the context otherwise clearly dictates: 2.1. Unless expressly modified by the parties, "FOB", "CIF" and other trade terms have the meanings and obligations ascribed to them in Incoterms 2000, Publication 460 of the Intemational Chamber of Commerce, Paris. 2.2. “Contract" means this Contract, its preamble and appendices, as well as all documents expressly listed as Contract documents or otherwise expressly mentioned in this Contract. 2.3. "Goods" means the Goods specified in Clause 4 below. 2.4. “Price” means the Price as specified in Clause 9 below payable to the SELLER. for the Goods. 2.5. “Delivery” means Delivery as specified in Incoterms 2000 under the Incoterm or Incoterms agreed in this Contract. 2.6. “Day” means a calendar Day. For the purposes of this Contract, Saturdays, Sundays and all holidays are considered as Days. 2.7. "Direct” costs and losses are costs and losses arising in immediate connection with any failure to deliver, any delay in Delivery or any defect in Goods delivered under this Contract. Such costs and losses must have an immediate, foreseeable and provably causal connection with the delay or defect. All other costs and losses are deemed by this contract to be “indirect”, In particular, loss of profit, loss of use, and loss of contract ate considered indirect losses. 2.8. “Government” means national Government, local Government, local authorities, and their agencies. In particular customs and/or excise departments ate considered as Government agencies. 2.9 "Termination" means the discharge of the Contract by one of the parties under any right expressly granted by this Contract. The discharge of the Contract by any other right arising from the applicable law or any other source is deemed to be “cancellation” of the Contract. 2.10. "Name of country 2 list of additional definitions agreed between the parties __ INTERNATIONAL PROCUREMENT CONTRACTS RJA PINNELLSAPPENDIX: MODEL. PROCUREMENT CONTRACT-LOW VALUE, 3 3, Entire Agreement and Contract Documents This Contract constitutes the entire agreement and understanding between the parties. ‘There are no understandings, agreements, conditions, reservations, or representations, oral or written, that are not embodied in this Contract o that have not been superseded by this Contract. (NOTE: The sub-clause and list below are optional) In addition to the text of Contract itself, the documents listed below shall form part of the Contract. All listed documents and the clauses of this Contract shall be read, if possible, so as to be consistent. In the event of conflict, the order of precedence for the provisions and documents which constitute this agreement shall be as follows: (NOTE: The list below contains examples only, Delete as appropriate) 1. Any alterations made on the face of ¢2¢ Grinted Contract; b. The Contract itself; . Specifications; d. Manufacturing drawings; e. The BUYER’s Special/General Conditions of Purchase; 1, The SELLER’s Special/General Conditions of Sale; Bees 4. Scope of Supply ‘The Goods to be delivered under this Contract are specified ... 5. Delivery 5.1. Date, Place and Terms of Delivery Delivery of the Goods shall be made «The scheduled date of Delivery shall be vnuout Risk and title to the Goods shall pass from. the SELLER to the BUYER on Delivery The place of Delivery under this Contract is 5.2. Naming and arrival of Vessel (NOTE: This clause is intended primarily for use in FOB and FAS contracts.) ‘The BUYER shall advise the SELLER of the name of the vessel not later than Days before the agreed Delivery date. If the vessel named by the BUYER fails to artive on or before then the SELLER may athis discretion deliver the Goods toa bonded warehouse in the port * Further contract documents 4 Agreed date of delivery * Use “below” or the name of the annex where the goods are specified Agreed Incoterm 1 Date of arrival of ship 5 Agreed place of delivery. Note: In FOB, FCA, CIF and CIP (ete) contract, this is port of shipment. ! Number (of days) INTERNATIONAL PROCUREMENT CONTRACTS DRAM PINNELLSAPPENDIX: MODEL PROCUREMENT CONTRACT-LOW VALUE, 4 of and shall be deemed to have fulfilled his Delivery obligations under this Contract. In this event, the SELLER must notify the BUYER of the full circumstances of the Delivery to the warehouse. With Delivery to the warehouse, all costs, including but not limited to cost of storage and insurance are to the BUYER's account. 5.3. Shipping Marks and Packaging (NOTE: The following two sub-clauses are examples; reword as appropriate.) On the surface or each package delivered under this Contract shall be marked: the package number, the measurements of the package, gross weight, net weight, the lifting pesiton, the let of credit number, the words RIGHT SIDE UP, HANDLE WITH CARE, KEEP DRY, and the mark... Goods are to be packed in. and are to be well protected against dampness, shock, rust or rough hand!’ . The SELLER shall be liable for any damage to or loss of the Goods attributable to improper or defective packaging (NOTE: The following sub-clause is relevant only to deliveries in Germany). 5.4, Disposal of Packaging Responsibility for the disposal of any packaging shall be the BUYER’s 6. Notification of Delivery (NOTE: This clause applies largely to contracts under which delivery takes place in the country of the seller.) Immediately on Delivery, the SELLER shall notify the BUYER of Delivery by This notification shall include: 7. Inspection before Shipment 7.1. Inspection by the Buyer The BUYER may, at the BUYER’s option, inspect the Goods prior to shipment. At east...unn® Days before the actual Delivery date, the SELLER shall give notice to the BUYER, or to any agent nominated by the BUYER, that the Goods are available for inspection, The SELLER shall permit access to the Goods for purposes of inspection at a reasonable time agreed by the parties. (NOTE: Customs requirements for importation of goods into Indonesia and the Philippines require inspection by SGS prior to shipment from the Seller's country. The following clause is recommended for sales to these countries). 7.2. Inspection by Inspection Service ‘The parties understand that importation into. von’ Requires inspection of Goods by SGS before shipment from the SELLER’s country. The SELLER agrees 10 ‘cooperate fully with the SGS in providing access to and necessary information about the Goods for the purpose of such inspection. * Port of shipment ‘List of documents and information required 2 Shipping mark «Number (of days) » Description of required packing Name of country Means of notification, ¢g., FAX — INTERNATIONAL PROCUREMENT CONTRACTS DRJIM PINNELLSAPPENDIX: MODEL PROCUREMENT CONTRACT-LOW VALUE, 5 8, Early Delivery, Partial Shipment, Delay in Delivery 8.1. Early Delivery (NOTE: The three sub-clauses below are alternatives, Delete as necessary). Barly Delivery is Delivery up not permitted to. : up under this Days carly is permitted; 1 Days Contract. however, payment shall early is permitted; in this not become due until the case, payment shall fall date agreed for payment due as though the actual in this Contract. Delivery date were the Delivery date agreed in the Contract. 8.2. Partial Shipment (NOTE: The two sub-clauses below are alternatives. Delete as necessary). Partial shipment is not Partial shipment is permitted under this Contract, permitted under this, subject to the agreement of both parties; Contract. however any costs arising from partial shipment shall be to the account of the... 8.3. Delay in Delivery In the event of late Delivery for reasons other than force majeure as defined in Clause 17 below, the SELLER shall pay as liquidated damages and not as a penalty the sum of : 3 of the value of the undelivered part per Day of late Delivery up to a maximum of “ of the Contract Price, Payment of liquidated damages shall be due without the BUYER having to fumish proof of any loss, damage or injury. (NOTE: The two sub-clauses below are alternatives. Delete as necessary) Payment of liquidated damages Payment of liquidated damages by the SELLER cot Cais io and shall not preclude the BUYER from seeking complete satisfaction of any compensatory damages from the SELLER for claim of the BUYER against any loss, injury or damage arising from or in an EDae in connection with late Delivery of any: Goods. In Sfany In pa Pisin ke particular, the BUYER shall be ‘entitled to eerie a Yabie ae ‘compensation from the SELLER for any indirect any indirect loss or damage, as ‘or consequential loss or damage, including but defined in Clause 2.7 above, not limited to loss of profit, loss of usé or loss of arising from or in connection Contract, arising from or in connection with late with late Delivery of any Delivery of any Goods. However, payments Goods. made as liquidated damages shall be offset against any compensatory damages recovered from the SELLER for the late Delivery of any Goods. ' Number (of days). 2 Figure 2 BUYER or SELLER “Figure INTERNATIONAL PROCUREMENT CONTRACTS BRIM PINNELLSAPPENDIX: MODEL PROCUREMENT CONTRACT-LOW VALUE 6 8.4. Termination for Delay In the event that the SELLER becomes liable to pay the maximum sum payable as liquidated damages under Clause 8.3 above, then the BUYER shall, upon due notice, have the right to terminate the Contract. 9. Price ‘The Price for the Goods to be delivered under this Contract is 10. Terms of Payment Payment shall be made by means of an irrevocable, confirmed letter of credit. The BUYER shall open the letter of credit on or before ? on the terms agreed by the parties and annexed to this Contract as Appendix ... This Contract shall not come into force under Clause 16 below until the SELLER has received advice that the letter of credit has been opened in his favor and has ascertained that the terms are in accordance with those agreed between the parties. Any discrepancy between the terms agreed by the parties and the letter of credit as issued shall be notified by the SELLER to the BUYER immediately. 11. Inspection of the Goods 11.1, Duty to Inspection and Notify Discrepancies ‘The BUYER shall inspect the Goods on their arrival at the place of destination. If the Goods fail to conform with the Contract in either quality or quantity, then the BUYER shall notify the SELLER of any discrepancy without delay. 11.2. Failure to Notify Discrepancies If the BUYER does not notify the SELLER of any such discrepancy within ........° Days of the arrival of the Goods, then the Goods shall be deemed to have been in conformity with the Contract on arrival 11.3. Buyer’s Rights in the Event of Discrepancy in Quantity If a material discrepancy in quantity exists and is duly notified to the SELLER, the BUYER at his discretion and subject to Clause 8.2 above may either: Accept the delivered portion of the Goods and require the SELLER to deliver the remaining portion forthwith; or Accept the delivered portion of the Goods and terminate the remaining portion of the Contract upon due notice given to the SELLER. If any material discrepancy in quantity exists such that .......6 and if such discrepancy is duly notified to the SELLER, the BUYER maj at his discretion: | Currency symbol and figure «Appendix number * Currency and figure in words. 3 Number (of days) {Date of opening of leter of credit «Description of fundamental discrepancy INTERNATIONAL PROCUREMENT CONTRACTS DRM PINNELISAPPENDIX: MODEL PROCUREMENT CONTRACT-LOW VALUE. 7 a, Adopt either of the remedies prescribed above in this clause; 'b. Reject the delivered portion of the Goods and recover from the SELLER all payments made to the SELLER as well as all costs, expenses and customs duties incurred by the BUYER in association with the shipment, movement through customs, insurance or - storage of the Goods. (NOTE: Clause 114 Below may note necessary i'SGS inspection takes place before shipment) 11.4. Buyer's Rights in the Event of Discrepancy in quality Discrepancies in quality shall be considered as defects and shall give rise to claims under the defects liability provision of this Contract in Clause 12 below. However, a fundamental discrepancy in quality shall give the BUYER the right to refuse Delivery of the Goods in whole or in part and to recover from the SELLER all payments made for the unaccepted portion of the Goods as well as all costs, expenses and customs duties incurred by the BUYER in association with the shipment, movement through customs, insurance or storage of the unaccepted portion of the Goods. 12. Defects Liability 12,1 Seller's Liability for Defects ‘The SELLER warrants that the Goods supplied under this Contract shall at the date of their Delivery: a. Be free from defects in material; b. Be free from defects in workmanship; ¢, Be free from defects inherent in design, including but not limited to selection of ‘materials, and be fit for the purpose fir which such Goods are normally used. It any defect provably present in any of the Goods on the date of Delivery comes to light during. the defects liability period, then the BUYER shall forthwith notify the SELLER. The SELLER, without undue delay, shall at his own risk and cost and at his discretion repair or replace such item or otherwise make good the defect. ‘The SELLER's liability for defects is subject to the BUYER having adhered to all procedures and instructions applicable to the. .-' of the item, and expressly excludes damage to the Goods caused by fair wear and tear or by misuse occurring after Delivery. 12.2 Defects Liability Period ‘The SELLER shall be liable for defects which come to light during @ period of. Days from .. 2 After the end of this period, the BUYER shall have no right to raise claims of any kind against the SELLER for any defect in any Goods of the SELLER's supply. * Condition of use (e.g, “storage, installation, use or operation”). ? Number of days) ________ sate of start of defects liability period INTERNATIONAL PROCUREMENT CONTRACTS. DRI PIINELLS.APPENDIX: MODEL PROCUREMENT CONTRACT-LOW VALUE 8 The defect liability period shall be prolonged by the length of any period during which the Goods cannot be used by the BUYER because of a defect. However, if new Goods are delivered to replace defective Goods, the defects liability period shall not begin again on the replacement Goods. 12.3. Limitation of Defects Liability (NOTE: The two classes below are alternatives. Delete as necessary) ‘The duty to repair and replace or otherwise to make good defects is the only duty of the SELLER in the event of the Delivery of defective Goods. In particular, the BUYER shall not be entitled to compensation from the SELLER for any indirect loss or damages as defined in Clause 2.7 above, arising from or in connection with Delivery of defective Goods. 13. Liability to Third Parties (NOTE: The two clauses below are alternatives. (hee eee sone! Shall compensate and hold harmless. the von? from’ any award of damages, reasonable costs, expenses or legal fees, in the event of any action or lawsuit by a third party resulting from any injury, loss or damage to the third party caused by a defect in the Goods delivered under this Contract. In the event of any such lawsuit, the .! shall immediately notify the ........? and shall fully cooperate with th in taking any necessary legal action. 14. Taxation ‘The SELLER shall indemnify and hold harmless the BUYER against any loss or damage however arising whether direct or indirect which shall be suffered by the BUYER as the result of defective or faulty Goods delivered by the SELLER. Delete as necessary) Tre the event of any action ot lawsuit by a third party resulting from any injury, Joss or damage to the third party caused by a defect in the Goods delivered under this Contract, the party against whom the action ot lawsuit is brought shall bear all costs, expenses, awards of damages or legal fees arising therefrom . All income taxes, value added taxes, customs duties, excise charges, stamp duties or other fees levied by any Government, Governmental agency or similar authority shall be borne exclusively by the party against whom they are levied. ' Name of the party giving the indemnity (BUYER or SELLER) 2 Name ofthe party receiving the indemnity (BUYER or SELLER) INTERNATIONAL PROCUREMENT CONTRACTS. DRJIM PINNELLSAPPENDIX: MODEL PROCUREMENT CONTRACT-LOW VALUE 9 15. Assignment of Rights and Delegation of Duties ‘The rights under this Contract may not be assigned nor the duties delegated by either party without the prior written consent of the other party 16, Coming Into Force ‘This Contract shall come into force after signature by both parties and after: a, “The issuance of a letter of credit in accordance with the terms of Clause 10 above; b, ..2 Days of its signature by both If the Contract has not come into force within... parties, al its provisions shall become mull and void. 17. Force Majeure (NOTE: The word duty is marked by an asterisk in this clause: for contracts under Philippines law, the word duty should be replaced by the word obligation). If either party is prevented from, or delayed in, performing any duty* under this Contract by an event beyond his reasonable control, then this event shall be deemed force ‘majeure, and this party shall not be considered in default and no remedy, be it under this Contract or otherwise, shall be available to the other party. (NOTE: The sub-clause below contains examples only. It should be modified as necessary.) Force majeure events include, but are not limited to: war (whether war is declared or not), riots, insurrections, acts of sabotage, or similar occurrences; strikes, or other labor unrest; newly introduced Laws or Government regulations; delay due to Government action or inaction, or inaction on the part of any inspection agency; fire, explosion, or other unavoidable accident; flood, storm, earthquake, or other abnormal natural events. (NOTE: The sub-clause below on non-force-majeure events is optional.) Force majeure event do not include ..... If either party is prevented from, or delayed in, performing any duty under this Contract, then this party shall immediately notify the other party of the event, of the duty affected, and of the expected duration of the event, If any force majeure events prevents or delays performance of any duty under this Contract for more than... 2 Days, then either party may on due notification to the other party terminate this Contract. "List ofevents which must occur before contract comes into force 2 Number (of days) > List of events not considered to be “force majeure events” INTERNATIONAL PROCUREMENT CONTRACTS DRJIM PRINELLSAPPENDIX: MODEL PROCUREMENT CONTRACT:LOW VALUE 10 18. Termination Notice of Termination as defined in Clause 2.9 of this Contract shall be in writing and shall take effect... Days from the receipt of such notice by the party notified, In the event of Termination, the duties of the parties shall be as incurred up to the date of Termination. In particular, the SELLER shall receive the full Price of any Goods delivered and accepted by the BUYER. The provisions of this Agreement dealing with defects liability, arbitration, and such other provisions as are necessary in order to resolve any post-Termination disputes shall survive Termination, 19. Partial Invalidity If any provision or provisions of this Contract are invalid or become invalid, then this shall have no effect on the remaining provisions. Further, the parties agree to replace any invalid provision with a new, valid provision having, as far as possible, the same intent as the provision replaced. 20. Modification and Waiver Modification of the terms and conditions of this Contract shall be binding on both parties even without consideration if the modification is in writing, is signed, and is expressly stated to be a modification of this Contract. Any waiver of any right under this Contract is binding on the party making the waiver even without consideration provided the waiver‘is in writing, is signed and is expressly stated to be a waiver of the said right. 21, Language ‘The language of the Contract, of all contract Documents, and of all correspondence and other communication between the parties shall be English. 22, Notices Notices served by one party to the other under this Contract shall be made, in the first instance by facsimile transmission (hereinafter called “FAX”). A further copy of each notice shall be sent by registered mail and signed. “The effective date of the notice shall be the date of FAX transmission. In the event of a dispute about the receipt of a FAX, however, the effective date of the notice shall be the date of receipt of the registered letter or a date seven Days after the registered mailing, whichever is earlier. Notices shall be sent to the following addresses and FAX numbers: FAX Number: BUYER: .. Address: FAX Number? r . Any change in an address of FAX number shall be the subject of a required notice under this Contract. Number (of days) INTERNATIONAL PROCUREMENT CONTRACTS. DDRLIM PINNELLSa APPENDIX: MODEL PROCUREMENT CONTRACTLOW VALUE, i 23, Settlement of Disputes Al disputes arising in connection with this Contract shall be finally settled under the Rules of Conciliation and Arbitration of the International Chamber of Commerce by «1.0.0! arbitrators appointed in accordance with the said rules. ‘The place of arbitration shall be......?. The language of arbitration shall be English. (NOTE: The three sub-clauses below are alternatives. Delete as necessary). In the event of arbitration, |In the event of arbitration, | In the event of arbitration, ‘each party shall bear its own | the court shall assess the | the party against whom the costs. amount of the costs to be | award is made shall bear the ‘bore by each party. entire costs.of both parties to the action. ‘The parties agree that any award made in accordance with the provisions of this clause is final and binding on both parties. * Execution ‘The parties, intending to be legally bound, have signed this Contract on the dates and at the places stated below: For and on behalf of: For and on behalf of: SELLER BUYER Title: Title: Date: Date: Place: Place: (NOTE: The witnessing of signature is not required by all national laws.) Witness of SELLER's Signature Witness of BUYER's Signature Nuraber (of arbitrators) 2 Name of the place (city) of arbitration _ INTERNATIONAL PROCUREMENT CONTRACTS DDRIIM PISNELLSwoe" is SUMITOMO CORPORATION CP.O Box 1524, Tokyo, 100-91, Japan (SUMITOMO SHON KAISHA, LTD) Telex: 122202, 122203 Cable address: Sumitomo Tokyo TOKYO OFFICE: 2-2 Telephone (03) Hitotsubashi I-chome, Chiyoda-ku TOKYO, JAPAN SALES CONTRACT SUMITOMO CORPORATION, as SELLER, confirms having sold to the buyer the following goods by contract made on the date below and on the terms and conditions SET FORTH HEREUNDER AND ON THE REVERSE SIDE HEREOF. BUYER DATE CONTRACT No BUYER'S REFERENCE No GOODS QUANTITY UNIT PRICE TOTAL AMOUNT SHIPMENT ‘Time of Shipment Transshipment permitted/not permitted Port of Loading Partial shipment permitted/not permitted Port of Destination PACKING MARKING: PAYMENT: , ‘The letter of credit shall bear this Contract’s numbet as reference. INSURANCE: To be covered by Buyer/Seller Insured Amount Condition INSPECTION: OTHER TERMS & CONDITIONS: ACCEPTED ON.. sor ZOD SUMITOMO CORPORATION BY: .- (BUYER) sess (SELLER) lease sign and return one copy. 12GENERAL TERMS AND CONDITIONS SHIPMENT OR DELIVERY The obligations of Seller to ship or deliver the goods specified on the face of this Contract (“Goods”) by the time or within the period specified on the face of this Contract shall be subject to the availability of the vessel or the vessel’s space. If, under the terms of this Contract, Buyer is to secure or arrange for the vessel or vessel’s space, Buyer shall secure or arrange for the necessary vessel or vessel’s space on berth terms basis and give Seller shipping instructions within a reasonable time prior to shipment, including but not limited to the name and detailed schedule of the vessel. If Buyer fails to give such instructions within a reasonable time prior to shipment, Seller may, at its sole discretion and for Buyer's risk and account, arrange for the vessel or the vessel’s space and make shipment of the Goods without prejudice and in addition to any other rights and remedies Seller may have under this Contract or at law or in equity or otherwise. In case of shipment or delivery in installment, any delay or failure in shipment of one installment shall not be deemed a breach of this Contract giving rise to a right of Buyer to cancel this Contract or refuse to accept performance with respect to other instalimenss, PAYMENT If payment for the Goods shall be made by a letter of credit, Buyer shall establish in favor of Soller an irrevocable letter of credit through a prime bank of good international repute immediately after the conclusion of this Contract in a form and upon terms satisfactory to Seller. If Buyer’s failure to make payment, to establish a letter of credit or otherwise to perform its obligations hereunder is reasonably anticipated, Seller may demand that Buyer provide, within a reasonable time, adequate assurance satisfactory to Seller of the due performance of this Contract and may withhold shipment or delivery of the undelivered Goods until such assurance is given. Bayer shall pay the price specified on the face of this Contract without set-off, counterclaim, recoupment or other similar rights which Buyer may have against Seller, which rights shall be exercised in separate proceedings between Buyer and Seller. Any new, additional or increased freight rates, surcharges (bunker, currency, congestion or other surcharges), taxes, customs duties, export or import surcharges or other governmental charges, or insurance premiums, which may be incurred by Seller with respect to the Goods after the conclusion of this Contract shalll be for the account of Buyer and shall be reimbursed to Seller by Buyer on demand, 13If Buyer fails to pay for the Goods in accordance with this Contract, Buyer shall pay to Seller as liquidated damages and not as a penalty overdue interest at the rate of the lower of eighteen percent (18%) per annum or the maximum interest rate permitted by the laws of Buyer’s country, calculated from the due date for such payment until the actual date of payment calculated on the 360 day a year basis for the actual number of days elapsed, FORCE MAJEURE If the performance by Seller of its obligstions hereunder is directly or indirectly affected or prevented by force majeure, including but not limited to Acts of God, flood, typhoon, earthquake, tidal wave, landslide, fire, plague, epidemic, quarantine restriction, perils of the sea, war declared or not or threat of the same, civil commotion, blockade, arrest or restraint of government, rulers or people, requisition of vessel or aircraft, strike, lockout, sabotage, or other labor dispute, explosion, accident of breakdown in whole or in part of machinery, plant, transportation or loading facility, governmental request, guidance, order or regulation, unavailability of transportation of loading facility, bankruptey or insolvency of the manufacturer or supplier of the Goods, or any other causes or circumstances whatsoever beyond the reasonable control of Seller or manufacturer or supplier of the Goods, then Seller shall not be liable for loss or damage, or failure of or delay in performing its obligations under this Contract and may, at its option, extend the time of shipment or delivery of the Goods or terminate unconditionally and without liability the unfulfilled portion of this Contract to the extent so affected or prevented. DEFAULT In case of (i) Buyer’s failure to perform any provision of this Contract; (ii) Buyer'sinability to "pay its “debts” generally “as theybecome~due; (ii) Buyer’s bankruptcy or insolvency or (iv) appointment of a trustee, receiver or liquidator of Buyer or of any material part of Buyer’s assets or properties (“Events of Default”), Seller may, at its sole discretion, (j) terminate this Contract or any part thereof; (ii) declare all obligations of Buyer immediately due and payable; (iii) resell the Goods; (iv) hold the Goods for Buyer’s account and risk; (v) postpone the shipment of Goods; or (vi) stop the Goods in transit, and Buyer shall reimburse Seller for all losses or damages arising directly or indirectly from such Events of Default. ‘The rights and remedies of Seller hereunder are cumulative and in addition to Seller's rights, powers and remedies existing at law or in equity or otherwise. INTELLECTUAL PROPERTY RIGHTS Nothing herein contained shall be construed as transferring any patent, trademark, utility model, design, copyright, mask work or any other intellectual property rights in the Goods, all such rights being expressly reserved to the true and lawful owners thereof. 4Seller shall be neither responsible nor liable for any infringement or unauthorized use with regard to any patent, trademark, utility model, design, . copyright, mask work or any other intellectual property rights. WARRANTY, CLAIME UNLESS EXPRESSLY STIPULATED ON THE FACE OF THIS CONTRACT, SELLER MAKES NO WARRANTY OR CONDITION, EXPRESSLY OR IMPLIEDLY, AS TO THE FITNESS OR SUITABILITY OF THE GOODS FOR ANY PARTICULAR PURPOSE OR USE OR THE MERCHANTABILITY THEREOF. If any warranty exists, Seller's liability shall be limited to replacement or repair of the defective Goods, Any claim by Buyer of whatever nature arising under or in relation to this Contract shall be made by registered airmail within thirty (30) days after the arrival of the Goods at the port of destination, or solely with respect to claims alleging the existence of a latent defect in the Goods, within six (6) months after the arrival of the Goods at the port of destination, and any such claim shall contain full particulars with evidence certified by an authorized surveyor. LIMITATION (1) All disputes, controversies or differences arising out of or in relation to this Contract or the breach thereof which cannot be settled by mutual accord without undue delay shall be settled by arbitration in Tokyo, Japan, in accordance with the rules of procedure of the Japan Commercial Arbitration Association. The award of arbitration shall be final and binding upon both parties, and judgment on such award may be entered in any court or tribunal having jurisdiction theteof. This Contract shall be, in all respects, governed by and construed in accordance with the laws of Japan. The trade terms herein used, such as FOB, CFR and CIF, shall be interpreted in accordance with “INCOTERMS 1990”. (2) The failure of Seller at any time to require full performance by Buyer of the terms hereof shall not affect the right of Seller to enforce the same. The waiver by Seller of any breach of any provision of this Contract shall not be construed as a waiver of any succeeding breach of such provision or waiver of the provision itself. (3) This Contract constitutes the entire agreement between the parties hereto and supersedes all prior or contemporaneous communications, agreements or undertakings with regard to the subject matter hereof. This Contract may not be modified or terminated except by a written agreement of Seller and Buyer, (4) Buyer shall not transfer or assign this Contract or any part thereof without Seller's prior written consent. 15EXAMPLES OF CONTRACT IN ENGLISH Example 1. CONTRACT FOR RICE me CONTRACT FOR THE PURCHASE AND SALE OF RICE No. 018/VNEF/ 200..... Between. GALLUCK LIMITED Flat A 3/R, Causeway Tower, 16-22 Causeway Road. Causeway Bay HONGKONG Tel: 8153084, 8955992; Fax: 5764980 Telex: 61355 WSGTC HK (hereinafter called the Buyer) And HANOI FOOD EXPORT IMPORT COMPANY 40 Hai Ba Trung Street, Hanoi VIETNAM Tel: 256771, Telex: 411526— VNE VT Cable Address: VINAFOOD HANOI (hereinafter called the Seller) It has been mutually agreed to the sale and purchase of rice on the terms and conditions as follows: 1, Commodity: Vietnamese White Rice 2. Specifications: - Broken: 35% max - Moisture: 14.5% j = Foreign matter: 0.4% : = Crop: 200...— 200... 3. Quantity: 100,000 MT more or less 5% at Seller’s option 4.Price: 250 USD per metric ton net for June September 200... shipment, 1Total value: a- Dunnage, bamboo mat for Ship owner’s/ Buyer's account; b- Shore tally to be at Seller’s account; c- Vessel’s tally to be at Buyer’s/ Ship owner’s account; 4- All export duties, taxes, levied in the country of destination and outside Vietnam shall be for Buyer’s account; - All import duties, taxes, levied in the country of destination and outside Vietnam shall be for Buyer’s account. ime or Shipment: 20-25 days after L/C opening date. 6. Packing: Rice to be packed in single new jute bags of 50 kilos net each, about 50.6 Kilos gross each, hand-sewn at mouth with jute twine thread suitable for rough handling and sea transportation. The Seller will supply 0.2% of new jute bags free of charge out of quantity of bags shipped. 7.Insurance: ‘To be arranged by the Buyer. 8. Inspection and Fumigation: a The certificate of quality, weight and packing issued by Vinacontrol at loading port to be final and for Seller’s account; b- Fumigation to be effected on board the vessel after completion of loading with expenses to be at Seller’s account; But expenses for crew on shore during the fumigation period including transportation, accommodation and meals at hotel for Ship owner's account; c-.Time for fumigation not to count as laytime. 9, Loading terms: a Buyer shall advise vessel’s ETA and its particulars 15 days and Captain shall inform vessel’s ETA, quantity to be loaded and other necessary information 72/48/24 hours before the vessel’s arrival at loading port; b- Laytime to commence at 1. PM if N.O.R given before noon and at 8.AM next working day if N.O.R. given in the aftemoon during office hours. In case, vessel waiting for berth due to congestion, time commence to count 72 hours after NOR. submitted;| | 1 { | | 4 © Loading rate: 800 MT per weather working day of 24 consecutive hours, Sundays, holidays excepted even if used, based on the use of at least four to five normal working hatches/holds and all cranes/ derricks and winches available in good order, if less, then, prorata; 4. Seller shall arrange one safe berth of one safe port for the vessel of 10,000 MT ~ 20,000 MT capacity to load the cargo; e- Time between 17.00 PM on Saturday and the day preceding a holiday until 8 AM next working day not to count as laytime even if used; £ Before submitting N.O.R,, the vessel must be in free pratique. Immediately after vessel at berth, captain shall request Vinacontrol to inspect the hatches/hiolds and issue a certificate certifying the hatches/holds are clean, dry, free from harmful factions and suitable for food loading with such expenses to be at ship owner's account and time not to count as laytime; g- Demurrage/ Dispatch if any, to be as per C/P rate. But maximum 4,000/ 2,000 USD per day or prorata and to be settled directly between Seller and Buyer within 90 days after B/L date; h- For the purpose of obtaining Shipping Documents such as: =» Commercial Invoices; - Certificate of quality, weight and packing; - Certificate of origin; The responsible party shall Cable/ Telex/ Fax advising shipment particulars within 24 hours after completion of loading. In order for the Buyer to obtain insurance, a Bill of Lading shall be issued immediately after completion of- loading and before fumigation and provided immediately to the Buyer. i In case, cargo is ready for shipment as scheduled in this contract, but Buyer fails to nominate the vessel to load, then all risks, damages, and associated expenses for cargo to be borne by the Buyer based on the Seller’s actual claim. In the event no cargo is available to be loaded on nominated vessel at loading port, then dead freight to be paid by Seller based on Buyer's’actual claim and the Buyer will submit the following 3documents to Vietcombank for receiving P.B: (time counted: 20-25 days from L/C opening date): - NOR. with Seller’s signature; - Report signed by the Captain and the Seller confirming that the vessel has already arrived at the port to receive the cargo but the Seller has no cargo to loads - Vietcombank’s confirmation, 10. Payment: a- After signing the contract, the Buyer or the Buyer’s nominee (SHYE LIAN (HK) MANUFACTURING CO. LTD or other nominee) will telex asking the Seller to open P.B of 1% of total L/C amount at Vietcombank Hanoi. Within two days thereof the Seller shall open P.B and inform the Buyer. Then, fourdays after receiving Vietcombank’s confirmation, the Buyer will open a telegraphic, irrevocable and confirmed L/C which is in conformity with this contract by an international first class bank at sight with T.T.R acceptable for 40,000 MT in favour of Vinafood Hanoi through the Bank for Foreign Trade of Vietnam. For 60,000 MT the Buyer or Buyer’s nominee will open a telegraphic, irrevocable and transferable at sight L/C which is in conformity with this contract with TTR acceptable. In case, the Seller requests the confirmation of L/C, the L/C will be confirmed for Seller’s account, In the event that the Buyer fails to open. L/C four days after receiving confirmation (of P.B opening) from Vietcombank then the Seller shall collect P.B from Vietcombank and then the contract is automatically cancelled. The Seller will collect the P.B against presentation of shipping documents at Vietcombank, b- Presentation of the following documents to the Bank for Foreign Trade of Vietnam, payable within 3-5 banking days after receipt of the telex from Vietcombank certifying that documents have been checked in conformity with the L/C terms: 1, Full set of “Clean on board” B/L ~ in three (3) originals marked “Freight to collect”; 2. Commercial invoice in three (3) fold; 43. Certificates of quality, weight and packing issued by Vinacontrol to be final at loading port in six (6) fold; 4, Certificate of origin issued by Vietnam Chamber of Commerce in six (6) fold; 5. Certificate of fumigation issued by the Competent authority of Vietnam in six (6) fold; 6. Phytosanitary certificate issued by the Competent authority of Vietnam in six (6) fold; 7. Cable/ Telex/ Fax advising shipment Particulars within 24 hours after cofnpletion of loading. 11. Force Majeure: The Force Majeure (exemption) clause of the Intemational Chamber of Commerce (ICC publication No.421) is hereby incorporated in this contract. 12. Arbitration: Any discrepancies and/or disputes arising out or in connection with this contract not settled amicably shall be referred to Arbitration in accordance with the Rules and Practices of the International Chamber of Commerce in Paris or such other place agreed by both sides. 13. Other terms: Any amendment of the terms and conditions of this contract must be agreed to by both sides in writing, This contract is made in 06 originals in English, three for each party. This contract is subject to the Buyer’s final confirmation by telex (June 18", 200..... latest) Made in Hanoi, on 9" June, 200... FOR THE SELLER FOR THE BUYER Director Managing Director (Signed/sealed) (Signed) ‘Nguyen Due Eddy S.Y.ChanEFM Holding GmbH Hoafenstrafe 6 48480 Spelle.Germany Company Registration Number: 46100938 ‘VAT Number: 0£230178673 ‘Telephone: 2491522045600 CONTRACT AGREE ENT CONTRACT NUMBER: KAZ0040-41/C/0017 DATE: 19" OCTOBER 2017 THIS AGREEMENT MADE AND ENTERED BETWEEN: AS THE SELLER: Company Name :EFM Holding GmbH Address: Hafenstrafe 6, 48480 Spelle.Germany Register-Nr. HRB100938 VAT Number .0€230178673 Tels49152 104 AS THE BUYER: Company Name: SAANEN COMPANY LIMITED Tax Code: 0107991113 Head Office Address: No. 19 Lane 221, Doan Ke Hanoi, Vietnam Tel: 0977075307 ien Street, Mai Dich Ward, Cau Giay District, HEREINAFTER CALLED THE "BUYER” 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; AND WHEREAS: THE SELLER AND THE BUYER BOTH AGREE TO FINALIZE THIS CONTRACT UNDER THE TERMS AND CONDITIONS, IT IS THEREFORE AGREED AS FOLLOWS: PRODUCTS: ALFALFA HAY QUANTITY: 1 X 40Ft Container PR ERM: 90€/Tonne ce ‘TOTAL PRICE FOR 40Ft CONTAINER: 2520 EUROTERMS: TT (TELEGRAPHIC TRANSFER! 100% T/T of prepayment against proforma invoice. LOADING port: Hamburg Port, Germany DESTINATION / PRODUCT DISCHARGE port: Hal Phong Port, Vietnam PRODUCT DELIVE ERY: PROMPT AFTER RECEIPT 100% TT PREPAYMENT FOR THE SHIPMENT DELIVERY TIME: WITHIN 12 DAYS MAXIMUM. SELLER SHALL BEGIN SHIPMENT IMMEDIATELY AND SHIP CARGO WITHIN 3 BUSINESS DAYS AFTER RECEIVE OF THE DEPOSIT PAYMENT, THE RIGHT TO DELIVER EARLIER THAN AGREED IN THIS CONTRACT GIVING NOTICE TO ALL DESIGNATED PARTIES AS REQUIRED HERE IN. THE PRODUCT SHALL BE TRANSPORTED REGISTERED TO THE RELEVANT PROVISIONS OF THIS CONTRACT. TOTAL SHIPMENTS SHALL BE ACCORDING TO TRANSPORT SCHEDULE. CONTRACTED QUANTI : 28 TONNES THE TOTAL QUANTITY OF THE CONTRACT SHALL BE DETERMINED BY THE CERTIFICATIONS OF WEIGHT ISSUED BY A REPUTABLE INSPECTION COMPANY AND BY THE OCEAN BILL OF SHIPMENT THAT WAS IN EFFECT DELIVERED TO THE BUYER. PRODUCT WEIGHT AND QUALITY: THE SELLER GUARANTEES THAT EACH SHIPMENT OF GOODS SHALL BE PROVIDED WITH AN INSPECTION CERTIFICATE (OF WEIGHT AND QUALITY AT TIME OF LOADING AND SUCH CERTIFICATE SHALL BE PROVIDED BY THE SGS, BUREAU VERITAS OR SIMILAR RECOGNIZED AUTHORITY AT SELLER'S EXPENSE, AND SHALL BE DEEMED TO BE FINAL, THE SELLER SHALL INSTRUCT THE SAID AUTHORITY TO CARRY OUT THE INSPECTION IN STRICT ACCORDANCE WITH THE INTERNATIONAL CHAMBER OF COMMERCE (1.C.C.) RULES. THE BUYER HAVE THE RIGHT TO REQUEST A RE- INSPECTION BY SGS OR SIMILAR AT UN-LOADING PORT BY BUYER'S ACCOUNT TO RECONFIRM THE WEIGHT AND quaulty IF DISCREPANCIES SHOULD AT ANY TIME AND IN PARTICULAR CASE RESULT IN RELATION TO THE INSPECTION CERTIFICATES, ARBITRATION SHALL BE EMPLOYED TO DETERMINE THE APPROPRIATE JUDGMENT. BOTH PARTIES AGREE TO BE BOUND BY THE ARBITRATOR'S DECISION FOR OR AGAINST EITHER BUYER OR SELLER Quantity: THE TOTAL QUANTITY OF THE CONTRACT SHALL BE DETERMINED AS VARIABLE (QUANTITY/ORDER SUBJECTED TO CHANGE WITHOUT AFFECTING PRICE QUOTE/MT WHICH REMAINS STANDARD THROUGHOUT CONTRACT DURATION) PARTIAL DELIVERY IS POSSIBLE TO BE DELIVERED WITHIN THE SHORTEST POSSIBLE TIME PERIOD WITH CERTIFICATIONS OF WEIGHT ISSUED BY THE INSPECTION AUTHORITY AND BY THE OCEAN BILL OF THE SHIPMENT ‘THAT WAS IN EFFECT BE DELIVERED TO THE BUYER AND OTHER DOCUMENTS LISTED IN THIS CONTRACT. PRODUCTS DOCUMENTATION PER LIFT: . ‘OCEAN BILL MARKED "FREIGHT PREPAID" AND CLEAN ON BOARD ISSUED TO THE ORDER OF. CERTIFICATE OF ORIGIN= CERTIFICATE OF WEIGHT AND QUALITY BY SGS, BUREAU VERITAS OR OTHER INTERNATIONAL, ‘STANDARD CERTIFICATION COMPANY. EXPORT DECLARATION ~ _ PHYTOSANITARY CERTIFICATE CARGO INSURANCE CERTIFICATE PACKING LIST PRODUCTION LIST/TRACE ABILITY PRODUCT SPECIFICATION: AS AGREED BY BOTH PARTIES PRODUCT INSURANCE: THE SELLER SHALL PROVIDE INSURANCE COVERAGE OF 110% FOR THE VALUE OF EACH SHIPMENT AT SELLER'S SOLE EXPENSE AND RESPONSIBILITY. DEMURRAGE: [AT THE LOADING PORT IT IS ON SELLER'S ACCOUNT. AT THE DISCHARGE PORT, IT IS ON BUYER'S ACCOUNT. FORCE MAJEURE: NEITHER PARTY TO THIS CONTRACT SHALL BE HELD RESPONSIBLE FOR BREACH OF CONTRACT CAUSED BY AN ACT OF GOD, INSURRECTION, CIVIL WAR, WAR, MILITARY OPERATION OR LOCAL EMERGENCY. THE PARTIES DO HEREBY [ACCEPT THE INTERNATIONAL PROVISION OF "FORCE MAJEURE” AS PUBLISHED BY THE INTERNATIONAL CHAMBER OF COMMERCE, GENEVA, SWITZERLAND, AND AS DEFINED BY I.C.C. RULES UNIFORM CUSTOMS AND PRACTICE. DISPUTES AND ARBITRATION: THE PARTIES HEREBY AGREE TO SETTLE ALL DISPUTES AMICABLY. IF SETTLEMENT IS NOT REACHED, THE DISPUTE IN QUESTION SHALL BE SUBMITTED AND SETTLED IN GENEVA COMMERCIAL ARBITRATION BOARD IN SWITZERLAND. AUTHORITY TO EXECUTE THIS CONTRACT: ‘THE PARTIES TO THIS CONTRACT DECLARE THAT THEY HAVE FULL LEGAL AUTHORITY TO EXECUTE THIS. DOCUMENT [AND ACCORDINGLY TO BE FULLY BOUND BY THE TERMS AND CONDITIONS. EXECUTION OF THIS CONTRACT ‘SELLER AND BUYER SHALL SIGN AND RETURN COPIES OF SIGNED CONTRACT ELECTRONICALLY (BY EMAIL) OF WHICH ‘SHALL BE DEEMED AS ORIGINAL AND LEGALLY BINDING. NON-CIRCUMVENTION AND NON-DISCLOSURE: BUYER AND SELLER RESPECT THE CONFIDENTIAL NATURE OF THIS AGREEMENT AND AGREE TO MAINTAIN IN SSTRICTEST CONFIDENCE THE NAMES OF THE PARTIES WHOSE IDENTITIES MAY BECOME KNOWN TO ONE ANOTHER ‘THROUGH EITHER THE TENDERING OF DOCUMENTS OR ASSEMBLY OF BANKING OR GOVERNMENT APPROVALS. THE PARTIES AGREE TO MAINTAIN STRICT CONFIDENTIALITY CONCERNING THE IDENTITIES OF THE PARTIES DIRECTLY OR INDIRECTLY INVOLVED IN THIS TRANSACTION. BUYER AND SELLER ACCEPT AND AGREE TO THE PROVISIONS OF THE INTERNATIONAL CHAMBER OF COMMERCE FOR NON-CIRCUMVENTION AND NONDISCLOSURE WITH REGARDS TO BUYER AND SELLER BEING INVOLVED IN THIS CONTRACT, ADDITIONS, RENEWALS AND THIRD PARTY ASSIGNMENTS WITH FULL RECIPROCATION. ALL DATA REMAIN THE PROPERTY OF THE PARTY WHO HAS BROUGHT THE RESPECTIVE DATA INTO THIS TRANSACTION. ANY OF THE PARTIES BREACHING THIS RULE WILL BE LIABLE FOR ANY DAMAGESRESULTING FROM SUCH ACTION, REGARDLESS OF WHETHER THEY ARE COMMITTED DELIBERATELY OR BY NEGLIGENCE, CONTRACT SIGNATORIES: IN WITNESS THEREOF, THE PARTIES HAVE SIGNEO BELOW TO ACCEPT AND APPROVE ALL TERMS AND CONDITIONS CONTAINED IN THIS CONTRACT. FROM THE DATE OF SIGNING OF THIS CONTRACT, ALL-PREVIOUS RESPECTIVE NEGOTIATIONS AND ‘CORRESPONDENCES BY TELEPHONE, FAX, MAIL OR E-MAIL ARE NULL AND VOID. THIS CONTRACT IS NOT CONNECTED. WITH OTHER CONTRACTS OF THE SELLER AND THE BUYER, FROM WHICH JURIDICAL OR FINANCIAL CONSEQUENCES, May OCCUR. ‘A SIGNED COPY OF THIS DOCUMENT BY EMAIL SHALL HAVE THE SAME VALUE AND EFFECT AS AN ORIGINAL AND ALL SIGNED COPIES IN WHAT EVER FORM TRANSMITTED ARE DEEMED AUTHENTIC AUTHORIZED AUTHORIZED SELLER Buyer SIGNED & SEALED SIGNED & SEALED.% MO HINH DICH VU ETC (DU THAO) S6/No.: /2015/TASCO-ETC Hop dng nay duge lip ngdy thang 03 nim 2015, tai try sé ctia Cong ty Cé phiin Tasco, tang 4, Toa nha MS, 86 91 Nguyén Chi Thanh, phtrdng Léng Ha, quan Déng Da, thanh phé Ha Noi, Viét Nam. Gita: CONG TY CO PHAN TASCO . : Dia chi: Tang 4, Tda nha MS, s6 91 Nguyén Chi Thanh, phudng Lang Ha, quan Déng Ba, thanh phé Ha NO, Vigt Nam Dia cht nhgn thong bdo: = Dign thoai: 084-37738558 Fax:084-37738559 = $6 tdi khoan:21310000119776 - Tai: Ngan hang Dau tur va Phat trién Viét Nam — Chi nhanh Nam Ha N6i - Mas6 thué:0600264117 = Dai dign: Mr. Vu Quang Lam ~ Chie vy:Téng giam abc cnd pAUT (Sau day goi tit la Chi: déu tw hodie CDT). ‘TU VAN: CONG TY TNHH FAR E: - Dia chi: 2F, s6 419 dudng Ruel Guang, Dai Bic, Dai Loan ERN ELECTRONIC TOLL COLLE - ja chi nhan théng béo: Dign thoai:886-2-77106666 Fax:886-2-77106868 = $6 tai khodn: 16340032269 ~ Tai: First Commercial Bank Fushing Branch, Taipei, Taiwan R.O.C SWIFT CODE: FCBKTWTPXXX - Ma sé thué:98770235 - Dai dign: Mr.Chang Yong Chang, Chite vu:Téng gidm déc (Sau dy goi tt Ia Tw vdn) XET RANG (@) Chi déu tuduge chi dinh bdi BO Giao thong Van tai Vit Nam thye hign cung edp he théng thu phi khOng dimg va kiém sot ti trong xe trén Quéc 19 1 va Quée 16 14 (durong H6 Chi Minh doan qua Tay Nguyén), va da yéu cau Tu van cung cép cée dich vu te van theo quy dinh tai Hop dng nay (sau day goi la "Dich vu"); (©) Tw vin 4a tng thi [4p he tng thu phi khong, dig tai Bai Loan va dang, cung ofp dlich vy tr van thiétké hg théng thu phi khéng ding véi sir cho phép cia Uy ban quan Ly durdng cao t5e Dai Loan, theo xc nhén cba Chii dau twr ring Tw van o6 cde KY ning chuyén mén, nhéin sur va ngudn Iuc ky thud cin thiét, va da dng ¥ cung cép Dich vu theo digu khoiin, diéu kién quy dinh tai Hop ding nay. (©) Cée nha du ur va tu van da ky két hop déng tw van thi ké co ban yao thing 11 nam 2014 va ca hai bén ding y tién hanh cée dich vy tw vin vé vige thank lp_mé hinh dich vu ETC va khung theo cae diéu khoan va diéu kign quy dinh trong hgp dong nay. Phase 1.5 contract Page 1Vi VAY, hém nay céc bén thoa thugin nhur sau: Didu 1: Gidi thich tir ngir Trir khi ngit canh yéu cdu khac di, cae thuat ngit duge sir dung trong Hyp ding nay c6 ¥ nghia nhu sau: 11. “Lu@t ap dung” 1a cfc lugt va eéng cy khéc 6 higu lye php luat theo quy dinh cia Chinh phi, hofe 6 nude khie e6 thé duoc quy dinh trong Hop déng, duge ban hanh va o6 higu lye tuy ting thoi diém, 1.2, "Tv van" la CONG TY TNHH FAR EASTERN ELECTRONIC TOLL COLLE ION 1.3, "Hop dng" [a Hop ding ky gitta cée Ben va toan b6 Phy Iuc kém theo Hop dong, va tit cd bat ky nhiing sita 46i bé sung kém theo Hyp dong. 14. "Phi Tu vdn" 06 nghia la gia tra cho vige thye hign cdc dich vy, phi hgp vai Dieu 4. 1.5, "Ney higu lue" 14 ngay Hop déng nay e6 higu lye theo quy dinh tai Khoan 3.1. 1.6, "Ngoai té" la loai tién khéc dng tin cla quée gia cba Chit dau tu. 1.7. "Chinh phi" 1 Chinh pha cia quéc gia cia Cho dau tu. 1.8. "N6i 16" 14 ddng tién ca quéc gia cia Chi dau tw 1.9. "Bén" la Chi dau te hode Ter vin, tiy trang hop, "cde Bén" c6 nghia la ca hai bén. 1.10, "Nhan vién" la ngwoi do Tu van ho&c Tu van phy thué va giao nhigm vy thye hign m@t phan hogic toan b6 Dich vu; 1.11. "Dich vu" cong vige Tu van durge thye hign theo hgp d&ng nay, duge mé t8 trong ede Phi! ue 1.12. "Te vn phy" fa cé nhan hode td chite bat ky do Tw van thué dé thye hién phan nao dé trong Dich w 1.13.“Ngay” hoc “Cae ngiy” theo Hop déng nay c6 nghia 14 ngiy theo diong lich theo quy dinh eta Chinh phi. 1.14."Hop ding dic nhuong * trong Hop déng nay cé nghia la cée hyp dng BOO hofe BOT ky két gitta chit div tu va BO GTVT. 2: Pham vi cong vige va nOi dung djeh vu Chi dau tw dng ¥ d8 tw van tham gia trong vige thanh Ip m6 hinh kinh doanh eo bin va khudn khd cho cfc hoat dong ETC tiép theo, nhwr chi tiét ligt ké trong Phy lye 1 Digu 3: Lich trinh cong Hop déng nay cé higu lyre ké tir ngay ky va hét higu lyre khi ca hai bén dng y va / hoge tat c& cée cing vige mé {4 trong phy lue 43 duge hodn thinh ding, theo tién d6 da ky két gia hai bén. Mac di vay, Nha dau tu thira nbn ring Tw van da bat du cung cp ede dich vu cho nha dau tu theo sy hiéu biét Kin inhau ciia ede bén tir thing 03XX XX dénXXI, im 2015, ma gié Hop déng sé durge tra cho Tw vén, Didu 4 4.1 Phi tr van: XXXX USD, . Phi tu van 1a téng s6 tién, bao gém tat ca céc chi phi cn thiét cho cdc chuyén gia tur van dé thyre hin cac dich vu quy dinh tai Diéu 2 ctia Hyp ddng nay va cdc Phy luc 1. Bat ky céng viée bd sung ngoai cée noi dung cla cde dich vu duge ligt ké trong Phu lye 1 duge tinh theo ngiy cing theo Phy lye 2. i tri Hyp dang va thanh toan 4.2. Thanh todn Phi Tw vain Phi tw van sé due tra boi Nha dau tu cho Tu van thanh bén (4) dot nhu sau * Thanh vin 1: 30% Phi tu vn sé duoc tr béi_ Nha dau tu cho Tur van trong vong 07 ngay ké tir nay ky két Hop déng nay va Nha dau tw da nhan duge héa don hop phap cia Tur van. + thanh todn 2: 50% Phi tu van sé durge tra béi Nha dau tu cho Tu van trong vong 07 ngay sau khi nhén durge cae van bin quy dinh tai khodn 2 cha Phu luc 2 va Nha dau tur da nhdn duge héa don hop phap ota Tw van +thanh toan 3: 10% Phi tir van sé duge tra boi Nha dau tu cho Tu van trong vong 07 ngay sau khi Phase 1.5 contract Page 2rnhdn duge cée van ban quy dinh tgi khodn 3 cia Phy lye 2 va cée nha daw tu da nhan durge héa don hop php ciia Ver van + Thanh tofn 4: 10% Phi tu van sé durge tra boi Nha dau ter cho Tw van trong ving 07 ngiy sau khi ky két Hop ding de nhuong (nh quy dinh tai Bigu 1.14) va Nha dau tu da nhan duge héa don hop phip cia Tw vim; véi dieu kign Id néu Hop dng df nhugng khong durge ky trong thd han 53 ngay sau khi bit dau dim phén Hop dng die nhuong , Chit du tw 6 tréch nhigm thye hign than tod 4 cho Tw van trong vong 07 ngay sau khi nhfn duge héa don hyp phép ciia Tw van khan 42 4.3 Déng tién thanh ton: Dé la M¥/ US Dollar, h thie thanh todn: Bing chuy Didu 5: Bio dim thue hign hyp ding 5.1, Bao lanh thye hign hop ding: a)Tu van phai nép cho Chi dau tr mét ther bao lanh cia Ngan hang cé tru sé/vin phong giao dich Vigt Nam c6 gia trj bing 05% (Nim phan tram) Gid tri hop déng dé bao dam thye hign Hop ing (“Thu bdo léinh thee hién hop déng”). NOi dung thu bao lanh thye hién hop déng theo mau kem theo Hgp déng nay. b) Higu lye cia ther béo lain thye hign hgp déng: Thue bao lanh thye hign hgp dng c6 gif tri XXXXXké tir ngdyHop déng ¢6 higu lye va két thic khi Tw vin hodn thanh nghfa va ella minh theo céc Phu Ic, Néu Tur vén chua hoan thanh ede nghia vu eta minh theo Hop déng vio thei diém 15 ngay truée ngay hét han, Tw vin phai gia han thoi hen cia thir bao lanh thye hign Hop dng cho tdi khi cdng vige da durge hodn thanh va moi sai s6t 44 duge sita chia xong, hanh toan bat ky va tat c@ ede khodn thanh todn cla Hop dng nay. c) Bao inh thye hign Hop ddng sé duge ding cho Chii dau tr do 16i cia Tw van theo céc diéu kho: d) Thu bao anh thye hign Hop déng sé duge hoan tra cho Tu van khi da hoan thanh cde céng vige theo théa thudn cia Hyp ding. Diéu chinh gia tr] Hyp ding 6.1 Phitirvin duge digu chinh trong céc truong hop sau day: 2) Phat sinh _khdi egg ngoai pham vi cdng vige cia Hop déng. b) Céc trudng hop bit kha khang (néu 6), 6.2 Cae chi phi phat sinh ma duge xée dinh li do 18i ca Tu van thi Tw van khéng duge thanh ton cho phan chi phi phat sinh nay. 6.3. Néu nhiing tring hop trén ndy sinh h xu huéng nay sinh, Tw vin phai thong bao cho Cha du tu trude kh thye hign e6ng vige 6.4. Chi phi phat sinh se durge Chi du ter kiém tra, xem xét phé duyét hoge trinh edp 66 thé quyén phé duyét. Tw van chi duge thanh toan kit phan chi phi phat sinh ny khi duge hai bén throng thao va ky Phy lye hop dng bd sung véi diéu kign [a cd hai bén phai tac vi mt cdch cé thién chi 8 tham gia ky két Phu luc khong chim tré. 7: Quy’ 7.1. Cung cp tit cf cde thong tin lién quan dén dy an va thiét trong mét thai gian hgp ly (tdi da 7 ngay) theo yéu cau ctia Tw van dé thye hign nghia vy cla minh theo Hyp déng nay. va nghia vy etia Chi dau tw 7.2. Chit dau tw sé chi dinh m@t dai dign (dudi day duge goi la Dai dign cia Chi dau tu) dé thay mat Chi dau tu theo doi dy én, Dai dién cia Chi dau twsé dua ra quyét dinh kip thei vé hd so duge trinh np béi Tw van dé trinh anh huéng chém tré dén qué trinh va tién a6 thiét ké cita Tu van. Kiém tra, giém sat Tw van trong qué trinh thye hign Hop dong. ‘Thong bio bing van bin dén Tw vin vé_ bat ky 181 hode thigu sét trong dy an, bao gdm ede Idi, bd s6t hay sr mau thuin trong céc hé so thiét ké ciia Tur van. Tur vin s@ cit ngudi d8 gia quyét theo yéu cau chinh ding eta Chi daw tur ma khéng tinh thém chi phi nao. 7.5, Chi diw te hd try Tw van va thu hign ede nhigm vy sau: Phase 1.5 contract Page 3a)Théng béo ngay cho Tw van vé nhing thay déi cé thé anh hudng dén viée thye hign Hop déng, bao gém vige thay déi dia diém va phép luat. b) Bé tri dia diém (6 chite cdc cude hop lién quan dén dich vy tu van. c)Cung cp théng tin day dit va cae diéu phdi vién cing lam cho mdi doan cho Tw van vé tién 46 dy fn 7.6. Khéu trir céc logi thué, phi ma Tw van phai chju theo quy dinh cia Phap lugt Vigt Nam va ndp thué thay cho Tw van trong pham vi Hop déng nay. 7.7. Chi dau tu sé thue hign cae quyén va nghia vy khac theo quy dinh cia Hop dong Dida 8: Quyén va nghia vy cia Tw van 8.1. Tu van thye hign Dich vy va nghia vy theo Hop déng nay mdt cach tich cye, higu qua va kinh té, phi hop vi chudin myc nghé nghiép, thing 1@ durge chp nhén. 7, 8.2. Tuvan s& cung cp cho Chi dau ter cde dich vu quy dinh tai Hop déng nay. 8.3. Tu van sé thy hign céc dich vy mét cach chuyén nghigp theo -tién 4 dy én quy dinh tai Hop ddng nay. Tw van sé ndp mét lich trinh ca dich vy dya trén Phy Ive 1 cho nha dau tu phé duyét, cen thiét, Lich trinh e6 thé duge digu chinh néu can thiét cho tién 4 chung cita dy an. The agian thigt lap trong lich trinh da duge phé duyét bdi Chi dw tir sé khOng duge gia han bai bat ky Bén nao, ngoai trir cé ly do thich hop quy dinh tai Hop dng nay hoae trir trudng hop quy dinh Khée tai Hop déng nay. 8.4. ‘Tuvan phai c6 diy di kinh nghigm, nang Ive va nhan sv’ dé trién Khai cde dich vy thiét ké cho Dyr 4n phii hop véi cde quy dinh trong Hop déng nay. Bat ky van dé phét sinh lién quan dén vige thiét ké, dac biét [a lign quan dén cdc giai phap ky thuat, cdc mau thiét ké, cOng nghé xdy dyng phai duge giai quyét kip thdi véi cde chuyén gia tu van cé kinh nghiém va ning lye. 8.5. Tu van ctr ngudi lam dai dign lién lac trong sudt qué trinh thye hign hyp ddng. Trong qué trinh thye hign Hop déng, Tw van phai béo céo tién 46 cho Chir dau tu mot (01) tudn mt (01) lan. Trong trrdng hop can thiét, sé giri bdo céo dét xudt néu Chi dau tur yéu cau. Tw van phai hd tro Chi dau tur mét cach hop ly bing chi phi cia Chi dau tr néu Chi dau tu o6 yéu edu kiém tra dt ut vige thyte hign Hop déng va nhan Iye thye hign, 8.6, Tw yan vi Chit du tr sé cung cdip danh séch cée cé nbn tham gia dy an véi théng tin vé tén tudi, nghé nghigp, nang lye va cdc van bang, chitng chi lién quan t6i cOng viée dim nhan 8.7. Uy quyén cho Chit dau tw n6p thay cho Tw van cdc khoan thué, phi ma Tu van phai chiu theo quy inh cla phdp ludt Vigt Nam hign han lién quan dén Hop déng nay. 8.8. Cée quyén va nghia vy khac theo céc diéu khoan cia Hop déng Dibu 9: Bio mac 9.1. Tw van phai chju tréch nhigm bao mét thong tin nhn duge tir Cha dau tu theo quy dinh cita Cho dau tu, ngoai trir cée théng tin dé I trai phép ludt, cfu thanh rdi ro anh hudng nghiém trong dén cng déng hofe ngin chin Tu van thiét Kip mot yéu cd hog bign hg trong tién trinh xét xi. ‘Tur van s@ yéu cu cée ¢6 van cia Tu van dua ra cée théa thug tong ty dé duy tri syr bio mat thong tin duge Chi dau tu quy dinh, 9.2, Tat ed cée théng tin va tai figu duge thye hign b3i mdt bén va chia sé cho bén kia, cho dit bin hoie ban sao, [a tai sin chung cia Bén cung cp. Bén nhdn duge théng tin dé sé khéng tiét 19 cho mot Bén thir ba, bat ky ngudi nao hod bat ky cng ty, va cé trach nhigm gitr bi mat théng tin dé. 9.3. Cc yéu clu bdo mat quy dinh tai cdc Diéu 8.1 va 8.2 néu trén khéng dp dung cho bat ky sw kign sau day: (1) cde théng tin da tré than théng tin eéng cOng trén ede trang mang, (2) cfc théng tin Tu van nhgn dug mot edch hgp phép tir e4e nguén khde chit khong phai nhan duege tir Chi du ter, (3) ode théng tin duge phat trien boi Tw van mét edch adc lap, hoge (4) vige tiét 16 durge thye hign voi syt dong ¥ cia Chi dau tu hoge duge thye hign theo yéu cau cia php lugt ctia Chinh phi hose Cong hda Trung Quéc hoa lénh cia cde chinh phid o6 lién quan. Didu 10; Cée ti ligu dich vy 10.1, Ban vé, théng s6 ky thudt va cdc tai ligu khée, bao gdm oa cdc dinh dang dign tir duge chudn bj boi Phase 1.5 contract, Page 4cdc chuyén gia Tu van va cia Tw vn phy va cung céip cho Chit dau tw chi duge thyre hign cho dyr n nly. Tu vin vi cia Tu van phu sé duge coi la the gia va chi sé hitu cia ede tai ligu dich vu va due bao vé boi Ivat ban quyén va quyén sé hitu tri tué khéc trong thong luét, bao gdm ca tac quydn. 10.2. Theo hop ding nay, Tur van sé cho phép Chi dau tr sir dung tdi figu dich vy cia minh chi cho déw thau dir dn ETC, thich nghi cho hogt dng kinh doanh trong tong lai BTC trén Qué 16 1 vai Quée 16 14 tai Vigt Nam; véi diéu kign, Chi dau tw phai tuan th cde diéu kign va digu khodn dui day, ‘bao gdm ca thanh toan nhanh chéng cae nghia vy tai chinh phat sinh theo Hop déng nay. Didu 11: Quyén sé hivu tri tug Bat ky quyén sé hitu tri tué c6 nguén géc trong két ndi véi cdc dich vu cung cAp duéi day, bao gdm nhung kh6ng gidi han ban quyén, bang sing ché, bi mat kinh doanh, bf quyét, sé thude vé Tu van. pidu 12: Tranh chap 12.1, Cée Bén déng ¥ ring moi tranh chap phat sinh tir hoc 6 lién quan dén Hop dong nay trade hét se duge cae bén gidi quyét bing thuong lngng, hoa gidi, 12.2. Néu tranh chp gidia cdc Bén phat sinh do tir hoe c6 lién quan dén Hgp dong nay khéng thé gi: thong qua hod giai trong vong ba muoi (30) ngdy ké tir ngay mot Ben nhn duuge yéu cu c Bén con Iai, mét trong cite Bén cé quyén ndp don lén Trung tim Trong tai quée té Vigt Nam (VIAC) dé gidi quyét tranh chép theo quy tac t6 tung cia Trung tam trong tai nay wi a) Sé lwong trong tai vién la: ba ngudi b) Dia diém trong tai la: Thanh phé Ha Ni, Vigt Nam ©) Luat ép dung cho Hop déng fa phap [vat Vigt Nam. d) Ngn ngot trong tai 1a tiéng Viet ‘him ditt hoje tam hon Hop ding 13.1, M@t trong hai Bén 6 thé tam hofin Hgp dong nay néu Bén kia vi pham cae diéu khoan ghi trong Hop déng nhung phai théng bao truée cho bén kia it nhat 07 ngay truée ngay tam hon. 13.2. Chm ditt Hop déng boi Cha dau tu: Chui dw tu 66 quyén cham dist Hop dong nay trong trung hop sau va giti théng béo chim dist ‘rude ba mui (30) ngay bling van ban eho Tu vn: a) Néu Tu vin khéng khic phyc vige khéng hoan thanh nghia vu theo Hop ddng, trong vong ba mui (30) ngay ké tir ngay nhan duge thong béo hole trong khong thdi gian lau hon theo chdp thuan bing vin ban cia Chi dau tu, 'b) Néu Twvén mat kha naing thanh todn hode bi phé san. ©) Néu Tu van 6 hanh vi tham nhing, gian ln trong euge canh tranh hoa thye hign Hop ang. d) Néu, do Sy kign bat kha khang, Tu van khéng thé hoan thanh phan quan trong cia Dich vy trong khoding thdi gian tir sau muoi (60) ngay tré len. ¢) Néu Tw van khéng tuén tha quyét dinh cudi cing cia trong tai theo quy dinh tai Digu 11.2 Hop ding nay. 13.3. Cham ditt hop déng béi Tw van: ‘Tu van c6 quyn chim ditt Hop déng trong vong tir ba muoi (30) ngay tré lén sau khi giri thong bio bing vin ban t6i Chi dau te, théng bao nay durge giti sau khi dign ra mot trong cée sir kign sau a) Néu Chil dau tu khéng thanh toan cho Tw van theo Hgp trong vong ba mui (30) ngay ké tr ngiy nhdn duge théng béo bing vin ban cia Tu van vé vige qué han thanh toén. b) Néu, do Sy kign bat kha khang, Tw van khdng thé thye hign phin quan trong cia Dich vu tvong thoi fan tr séur muroi (60) ngiy tré Ie, Phase 1.5 contract Page 5tu khéng tuan thd quyét dinh cudi cing cita trong tai theo quy dinh tai Digu nay. ce) Néu Chit 11.2 Hop Dieu 14: BAt khit khang 14.1, "BAL kha khéng” ki mt sir kién ndim ngoai tim kiém soat hyp ly cia mgt Bén, khién cho Bén 46 Khéng thé hoan thanh nghia vu cla minh theo Hop dng, chang han nhw chién tranh, bao loan, hoa hoan, Iii Iut, bio, déng dat, sét, nd, dinh cong, bé xudéng, cham tré,thiéu nguén cung nang long kéo dai, hoje cée syr kign nim ngoai tim kién soat ciia cde Ben, cn tré bat ky bén ndo trong vige thue hign nghTa vy tuong ting theo Hyp ding. 14.2. Trong trvdng hop mét Bén khéng hoan thanh nghia vy theo hyp déng, Bén dé sé khéng duge coi Ia vi pham Hop déng niy néu nhur vige khong hoan thanh nghia vu dé la do su kign bat kha khang, v6i diéu kién Bén bj anh huéng bi sy kign dé (a) da thy hign tt cd bign phdp phdng ngia, xir ly ‘va cde giai phép thay thé hop IY dé thye hign dig khoan ciia Hop dng nay, va (b) dat ngay lap te théng bao cho Bén kia vé sy xudt hign ctia sur kién bat kha khang 46, 14.3. Khodng thdi gian mt Bén, theo Hop ddng nay, hodn thanh nhigm vu hode céng vige bat ky, sé duge kéo dai thém mgt khodng thoi gian bing véi thdi gian mi Bén dé khéng thé hodn thanh nhigm vy do Sy kign bat kha khéng. 14.4. Trong théi gian khdng thé thy hign Dich vy do Sy kign bat kha khang, Tu van s& duge thanh ton phan khdi lugng. cong vige da thye hign theo cde diéu khoan cia Hyp déng nay, cing nhur duge hhoan tra cée chi phi bd sung hop ly va can thiét phat sinh trong thai gian nay theo théa thudn bang vin ban giita Chu dau tu va Tu vin (néu e) vi muc dich céia Dich vy va tiép tue thre hign Iai Dich ‘sau khi hot thé thd pian e6 sir kign bat kha khang dé. bigu 15: Quy dinh chung 15.1 Hai Bén cam két ring, sau khi Tw van thye hign xong Pham vi c6ng vige theo Didu 2 ciia Hop ding nay, cac Bén s& thao hun mét cdch thign chi dé tién t6i ky két mt ban thoa thugn mdi cho vige trién khai réng rai hg thong thu phi khéng ditng va kiém soat tai trong xe trén lanh thd Vigt Nam theo nhu cau cia Chi dau tu (goi la “Ban thoa thugin méi”), 15.2 Moi thong bio hod trao déi thong tin trong Hop dng nay phai duge thye hign bing van bin (vidt tay hoje dénh may trén gidy). Théng bio hod trao di théng tin quy dinh trong Hop déng nay do ‘mot Bén giti cho Bén cdn igi, bao gm nhung khong gidi han 6 bat ky va tit c& cde dé nghi, vain ban, hole théng bao duge giti theo Hop ding nay, phai duge lip bing Tiéng Vigt va giti: (a) Tite tidp; hose (b) Bang dich vy chuyén phat thu; dén nhin théng bao ciia Bén cén Iai duge ghi trong Hgp déng nay. Méi Bén cé quyén thay di théng tin dia chi nhdn thong béo vao bit ett Ide nao Khi théng béo cho Bén cdn lai theo quy dinh cia Biéu nay. ‘Thong bao sé diroc xem nhur la da duge gir vao ede thei diém sau: n dia chi quy dinh va tiy thuge vao bién nhéin hdi bao hofe bang (a) Néu atti tru tiép, khi ching da giao khée; (b) _Néu bang dich vy chuyén phat thur, ngay thir nam sau ngay gitis 15.3 Hop déng nay c6 higu Ive tir ngiy ky va sé ring bude cée Bén, Cac Bén cam két tuén thi: nghiém chinh tit ca cde diéu khoan ctia Hyp ding nay. 15.4 Hop déng nay va cdc phy luc kém theo Hyp déng tao thanh sy théa thudin toan b6 gitta cfc Bén ddi vy6i déi turong cia Hop dang nay, va sé thay thé tat ca thao Ind, thuong Iugng va théa thudn true dé ctia cic Bén. Mgi su diéu chinh, bé sung hogc thay di trong Hop dong nay can phai c6 sy ding y bang van ban ciia hai Bén. 15.5Sy v6 higu cita bat ky didu khoan ndo cla Hyp déng nay sé khéng anh hudng dén bat ky digu khoan con lai nao eta Hop déng nay. 15.6Vige mét Bén khdng thure hién bat ky diéu khodn hoge diéu kign theo Hyp dong nay khéng c6 nghia i sy tir bé quyén etia Bén khOng thytc hign a6, Bat ky vige gi durge thue hign hode bd qua khong thye hign cua mot Bén khong duge xem nhw hog ham nghfa la tir bo, trir khi durge thé hign bing Phase 1.5 contract Page 6vain ban va durge Ben edn Iai ky. 15.7 Hop déng nay duge lap thanh tam (8) bin song ngir Vigt, Anh, co gid tri nhy nhau. Ngén ngit ca Hop ddng, thw tir, hd so ghi chép, théng tin ky thuat va cdc chi thich trong ban vé trao di gitta hai Bén sé sir dung tiéng Viét va tiéng Anh, nhung van bin tiéng Vigt s& duge wu tién sir dung néu c6 sur khac bigt. Bon vj do la hé meét, sir dung hé théng s6 A Rap, cat pAU TU TU VAN Dai dign cho: Bai dign cho. TASCO JOINT SIOCKCOMPANY FAR EASTERN ELECTRONIC TOLL COLLECTION LIMITED COMPANY Ky tén Ky ten. Neity/Date. Neay/Date: Phase 1.5 contract Page 7i) International OFFICE OF THE LEGAL ADVISER @) Form Contract for the Lease of Premises In sozurdance with fico Procedure, Leash of promises 1GDS Number 185 ‘the laced Form Canvact fr the Leace of Praises has boon prepared and approved ty al elevan unis of the ILO, Shaud smoaialons become necessary (eg, due to local reumstances), please observe the cia so out In GDS Number 185CONTRACT! FOR THE LEASE OF PREMISES BETWEEN ‘THE [NAME OF LESSOR] AND ‘THE INTERNATIONAL LABOUR ORGANIZATION THIS Contract, made and entered into this [NUMBER] day of [MONTH] in the year of two thousand and [YEAR] between [NAME] (Lessor) whose address is [FULL ADDRESS] for himseltiherself, his/her heirs, executors, administrators, successors and assignees, and the INTERNATIONAL LABOUR ORGANIZATION (ILO) represented by [NAME AND TITLE OF THE AUTHORIZED REPRESENTATIVE, NAME OF ILO OFFICE] which is located at [FULL ADDRESS}. NOW THEREFORE, the Parties hereby agree as follows: 4. DESCRIPTION 4.1, DEMISED PREMISES: The Lessor hereby leases to the ILO, and the ILO hires from the Lessor, the (AS APPROPRIATE - pattially/unfinished/finished) space located at [FULL ADDRESS] (AS APPROPRIATE - on the [NUMBER] floor) consisting of [NUMBER] square meters which are comprised of [NUMBER] ‘square meters of usable space and [NUMBER] square meters of service areas) (AS APPROPRIATE - , together with [NUMBER] parking space,) in the city of [NAME] (demised Premises), to be used as an ILO office in the country and for ‘such other purposes as the ILO may desire. 1.2. COMMON AREAS: This Contract will include the use in common with other persons entitled thereto of the entrances to the building, its public halls, corridors, elevators, stairways, public toilets and any other areas defined as such by the Parties (Common Areas). “Tho LO reserves te right to unleteraly modity thi tox at any me and without prior notce. Piaase const the 1AO' Of tine Loaal Advaer' wabat fete cert version oor vertons In oka languages. Por Lo commen rnegotalors, pease consul Ofca Procedue Leasing of ramsas, 1GQS Number 185 (Version ‘), dated 22 2040 Page 1 of 9 0 2011 Version 20 (EN) 01.08.2011 ‘ig international Labour Office2. DURATION, RENEWAL, EXPANSION AND TRANSFER fifor 2.4. TERM: For a term beginning on [STARTING DATE] and ending on [ENDING DATEF, or on such earlier date as may be herein provided, eae 2.2. RENEWAL: Upon its expiration, this Contract will be renewable at the option of panel the ILO, under the same terms and conditions as are set forth herein, The ILO will so notify the Lessor no less than [NUMBER] days prior to the expiration of this Contract. UF AN ADJUSTMENT OF RENT UPON RENEWAL IS FORESEEN, ADD TO THE END OF THE FIRST SENTENCE OF THE PRECEDING PARAGRAPH ~ “with the exception of the rent which will be adjusted within the limits agreed in ‘advance between the ILO and the Lessor on the basis ofthe rate of increase or decrease of the official consumer price index in (NAME OF CITY] or such other index for the [AS APPROPRIATE - entire period of the renewal or for each subsequent year). in no event will any increase exceed [NUMBER] per cent”] 2.3. EXPANSION: The Lessor, as soon as it becomes aware, wil inform the ILO of the termination of any other leases for rental space in the building. [AS APPROPRIATE — The Lessor] will give the ILO the first right of refusal to rent same, at the current market rate. 2.4. SALE OR TRANSFER: In the event of a sale or transfer of ttle or the creation of, €@ mortgage or any other encumbrances affecting the demised Premises, the Lessor warrants that the terms and conditions of this Contract will remain in full force without prejudice to any tights or remedies the ILO have hereunder, including but not limited to, the right to enjoy and use the demised Premises until | its date of expiry as provided in this Contract, or any extension or renewal thereof. 3. PRICE AND PAYMENT 3.1. PRICE AND PAYMENT: The ILO will pay the Lessor for the demised Premises a rent of [AMOUNT AND CURRENCY}, exclusive of VAT, for each full month of the term of this Contract. Such rent will be payable within five (5) business days of the beginning of the calendar month to which the rent payment pertains, In the event the ILO's use and occupancy of the demised Premises is for less than a full month, the monthly rent will be pro-rated. 3,2, TAX EXEMPTION: The ILO, as a United Nations Specialized Agency, enjoys a ‘special tax status in Its member States, The Lessor authorizes the ILO to deduct from the Lessor’s invoice eny amount representing taxes (including value added tax and stamp tax), duties or charges, unless the Lessor has consulted with the ILO before the payment thereof and the ILO has in each instance specifically authorized the Lessor to pay such taxes, duties or charges. The Lessor will provide the ILO with written evidence that payment of such taxes, duties or charges has been made. In the event any government authority refuses to recognize a deduction based on the ILO’s exemption from such taxes, duties or pase pled efces may nat extend beyond he project closure dat, Page 2 of 9 0 2011 Veson 20 (EN) 01.08.2011charges, the Lessor will immediately consult with the ILO to determine a IO} ‘mutually acceptable procedure. ets 4. PERFORMANCE interational Ottice 4.1, WEAR AND TEAR: The ILO will take good care of the demised Premises and the fixtures and appurtenances therein, reasonable wear and tear and damage by the elements or by circumstances over which the ILO has no control, excepted. 4.2. QUIET ENJOYMENT: 4.2.1.The Lessor represents that the demised Premises (other than the parking ‘space) may lawfully be used for an ILO office, and for such other purposes. as the ILO may desire, ‘and covenants and agrees that the ILO will peaceably and quietly have, hold and enjoy the demised Premises for the term above-mentioned without any unlawful or undue interruption or disturbance. 4.2.2.The Lessor Is advised that a8 a United Nations Specialized Agency in [county], ILO's offices are inviolable. No officer or official of the Government, or other person exercising any public authority, will be authorized by the ILO to perform any duties within the demised Premises except with the consent of, and under conditions approved by, the ILO | Office Director or the ILO Office of the Legal Adviser (Jur@illo.ora) either generally or on a case-by-case basis. Such consent will be presumed in the event of fire or other analogous emergency requiring urgent action. Any person who has entered the demised Premises with or without the presumed consent of the ILO Office Director or of the ILO Office of the Legal Adviser, wil, if so requested, leave immediately. 4.3. MAINTENANCE: | 4.3.1.The Lessor undertakes to maintain the Common Areas in a proper state of cleanliness, as well as in good repair and tenantable condition. . The Lessor also undertakes to repaint the Common Areas at Intervals of two years, if not earlier as conditions may warrant. 4.3.2.The Lessor undertakes to maintain the demised Premises in good repair ‘and tenantable condition, including immediate repair of damage where such damage falls outside the scope of the ILO’s liability, The Lessor also undertakes to repaint the demised Premises at intervals of [NUMBER] years, if not earlier as agreed upon by the Parties. For these purposes and upon reasonable prior written notice being given to the ILO and the ILO’s agreement having been received, the Lessor may enter, inspect and make any necessary repairs to the demised Premises. In the event that the Lessor fails to maintain the demised Premises in good repair and tenantable condition, or does not repaint at the agreed upon intervals, the ILO will have the right to a proportionate rebate or reduction of the rent payments. Page 3of 9 110 2011 Veron 20 (EN) 01.08201144, 45. 46, 4.33.In the event of an emergency, the Lessor on short notice to the ILO may enter the demised Premises whenever reasonably necessary to make urgent, emergency repairs. 4.3.4.The Lessor undertakes to maintain the sidewalks, walkways, paths, and circulation areas [OR, AS APPROPRIATE] adjacent to the building, as well as access roads and tenant parking in a proper state of cleanliness, In good condition and free of any obstruction (e.g., debris, leaves, ice, snow) and to accept all responsibilty in connection therewith SERVICES TO BE FURNISHED: The Lessor undertakes to furnish, at no additional cost to the ILO, the services described in Annex A hereto, which will form an integral part of this Contract. In the event that the terms contained in the Annex are incompatible with those contained in this Contract, then the Contract will govern and prevail ALTERATIONS: The ILO will have the right to make alterations, attach fixtures, ‘and erect additions, structures, and signs in or upon the demised Premises, and to affix a flagstaff and office signs and insignia outside the building and on the demised Premises (provided such alterations, additions, structures, or signs will not be detrimental to or inconsistent with the rights granted to other tenants in the bullding). Such futures, additions or structures so placed in or upon or attached to the demised Premises will be and remain the property of ILO and may be removed therefrom by ILO prior to or within a reasonable time after the term of this Contract expires or is terminated in accordance herewith. RESTORATION: 4.6.1.Where minor alterations, renovations or additions are made to the demised Premises, the ILO, at the request of the Lessor, will restore the demised Premises to the same condition as that existing at the time of centering upon the same under this Contract, reasonable wear and tear and damage by the elements or by circumstances over which the ILO has no control, excepted. If the Lessor requires such restoration, the Lessor will sive written notice thereof to the ILO not less than thirty (30) days before the expiration or termination of this Contract. 4.6.2.Where major alterations, renovations or additions are made on the demised Promises, with the prior consent of the Lessor which will not be unreasonably withheld, the ILO will not be under any obligation to restore the demised Premises to the state and conditions existing prior to entering upon the same under this Contract. Such consent will be set forth in writing and will contain provisions on the amortization or compensation of the expenses either through offselting the expenses against rental payments, or payment for thei fair market value. 4,7. SAFETY AND SECURITY: 4.7.4.In all Common Areas, the Lessor undertakes to implement any safety and health measures as the ILO may reasonably request and mest best practice safety and health standards, including for persons with disabilities. For example, but not limited to, by prohibiting smoking, imposing and enforcing speed limits and traffic flows, organizing regular fire >, Hao aaa 6, 36942098 | Fr 06 29964756 | ofey sone Se IV. Price / Terms: Mode ofprice CFR Cat Lai port, Vietnam, - Unit price .. USD per metric ton (Net weight) (Landed Quality Landed Weight) ~ Contractual value . USD (++ 10%). | Y. Packing: ~ In seaworthy new jute bags, each bag containing about 8Okcgs net weight of raw cashew nut in shell + Tare weight ofthe bagis | Kepet bag. - Bach Jute bag shduld be ‘marked by the following details ad no other label No. 1-2,500 5057 TANZANIA DRIED RAW CASHEW NUTS IN SHELLS, NEW CROP 2014 VI. Specifications: | ~~ Outturn % : 50 Ibs min per bag of 80 kgs. | =NutCount = 200 nuts max per kg, - Moisture “10% max ~ Foreign matter’ : 0.5% max” 7 Black mold raw caste ‘nuts outside shell shall nt be inchided and the buyer does not have to retum tothe seller. VIL. Time and conditions of shipment: 1, Latest shipment date is ;DECEHBee' 2014. Cargoes were packed in containers 20”. Containers must be ventilated and free from foreign odors, mold. Container shall not be distort or puncture. 2.Portofloading :. Dare salaam Port, Tanzania; Port ofdischarge : Cat Lai Port, Vietnam 3. Shipment conditions: Page |2 ACE’ ~ International Center, yo. oa Manat, Vietnam eel me FWPartial shipment is prohibited. The seller must send shipment advice to buyer within 05 working days from B/L date and details are as per the followings: ~ Quantity: net weight and gross weight. ~ Vessel name and voyage no. - Shipment date, B/L no. < Unloading date, ~ Bill, invoice, packing list in one copy. VIL. Penalty / Premium: 1. In case the specifications are lower than guaranteed then the following Penalty /Premium limits shall be applicable: Rs z Specification Rejection Outtamn 48 Ibs /80Kgs: ‘Nut Count | Above 210 Nuts mentioned in Arise VIL, the sell does necessary action at once and in case the shipment isnot delivered in due tine, the seller should pay $% (five percents) of the Sales Contact vale fof One week delay.” 3. The Buyer and Seller both agrees to reimburse 50% of contract value for non~ performance by either party. IX. Payment: 1. Payment by irrevocable, transferable deferred L/C payable at 35 days from the date which Buyer received “Arrival Notice” from shipping line. 2. The Buyer to open L/C within 15 days after signing the contract. Page |3 —— a newsi X, Inspection: The goods shall be inspected prior to shipment at loading port by SGS Tanzania Superintendence Co,, Limited who shall issue a Certificate of approval to load the goods specifying the actual quantity and quality. Buyer have the right to get goods re- inspected at discharge port the re-inspection shall be done at buyer’s warehouse in presence of buyer's and representative together with Vinacontrol. ‘XL-Documents: The Seller shall provide shipment advice to the Buyer’s within 5 working days sailing ‘of vessel apart from this the following documents shall be provided as below: a) Original signed commercial invoice in triplicate 5) 3/8 set of original clean on-board bils of lading marked “Freight Prepaid” and notify applicant, 3. oF ¢) Original packing Jist in triplicate. 4) Original certificate of “quality and quantity. issued by SGS ‘= | Superintendence Co, "Limited in two originals and one copy. .. ©) Certificate of origin issued by the competent authorities ait the seller country in two originals and one copy: e f) Phytosanitary. eftificate issued by government competent authori ies at the seller country in two. originals and one copy. ‘vo originals and one'copy. | 2) Fumigation, certificate isoued by the competent authorities atthe seller country in 1) The Seller to be pliowéd within 15 days from bill of lading date to present documents. 2) Third party documents are acceptable’ excépt Invoice, Packing List, Bill of Exchange and Bill of Lading. 3) Typographical, spelling & punctuation errors shall not constitute discrepancy except for Description of Goods, Quantity, Price & Amount. 4) BIL date prior to LIC opening date is acceptable. 5) Insurance to Buyer's account 6) All bank charges incurred in Buyer’s bank to be bome by the Buyer, All bank charges incurred in Seller's bank to be bome by the Seller. Page| 4 2 Mem al | wating.Gyast_ GL Petia XL, Taxes & Duties: All Taxes and Duties applicable at loading port are to Sellers account and at discharge port to Buyers account, Acaicutruee 5 XIV. Arbitration: Jn case the two parties fail to reach amicable agreement, the two parties agree to choose the Vietnam International Arbitration Centre (besides the Chamber of Commerce and Industry of Vietnam) under the rules of this centre whose awards shall bbe final binding both parties. The fee arbitration shall be born by the losing party. XY. Force Majeure: During the tenure of this contract if a situation of Force Majeure arises due to Natural Calamities, Civil Disturbances,’Commotions, Riots and’ any other acts of Gods or manmade than either:party must inform the other within’7 days of such Occurrence and if the situation persists for 30 days or more the contract shall be deemed null and void without any liabilities on either side. + For the Seller For the Buyer a ISC Page |51 BQ GIAO DUC VA DAO TAO ‘i KIEM TRA GIU'A HOC PHAN a ‘Truvng Dai hoe Ngoai thong ‘Mén thi: Ng6n ngit KT thong mai 5: Giao tgp kink doanh / a PY Ho wattén thi sink: Thei glan: 60 phitt (Licu ¥:: Sinh vién c6 thé sie dung tie dién) 1. Interprete and then translate the following contract paragraphs into Vietnamese 1. This Agreement shall be interpreted in accordance with the laws of the Federal Republic of Germany, If, however, the German law conflicts with Texas or U.S. federal law regarding any dispute bebween the parties, then the parties agree to use their best efforts to negotiate an equitable compromise acceptable to both sides hereto, In the event that such a compromise cannot be reached in a timely manner, then the disputes shall be settled in accordance with the separate “Arbitration Agreement” between the parties. 2. “Contractor” means the person wiose tender has been accepted by the Employer and the legal successors in title to the Contractor but not (except with the consent of the Employer) any assignee of the Contractor. “Contract” means the agreement between the Employer and the Contractor for the execution of the works incorporating the Conditions, Specification, Employer's Drawings and Contractor's Drawings, Price and completed Schedule, Tender, Letter of Acceptance, and such further documents as may be expressly incorporated by the Letter of Acceptance. “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. Il, Translate the following into English 1. Ngudi Bén sé giao thiét bj, cdc vat tw phy ting thay thé néu trong Phy luc 3, 4 va cdc tai ligu ky thugt néu trong Phy Iyc 7 cia hyp dng may ding theo cfc ngay ghi trong Phy lye 8. 2. Vide giao cdc thiét bj, vat tu va phy tiing sé duge thyc hign trén co sé diu kién CIF cing Da ‘Ning, Vigt Nam (phi hop voi INCOTERMS 2010- Nhting diéu kign thuong mai quéc té 2010). ‘rong trudng hyp phai chuyén tdi, Ngudi Ban sé o6 tréch nhigm thong béo cho Ngudi Mua va thy hign vige giao hang phi hyp. Nguti Bén phai chju va tra moi chi phi, thué khéa lién quan dén vige vén chuyén hang héa dén cing Hai Phong, Vigt Nam. Hang héa sé duge bao hiém tir kho ‘Ngudi Ban dén kho Nguéi Mua & cng Da Ning. 3. Thiét bj s€ duge giao vi day di ce phy kién va phy ting phi hop voi lich giao hang 48 dam bio vige lip rip nha méy va chay thir cng trinh ding hgn theo céch nhanh va hgp ly nhét. 4, Ney ella van don sach 48 dua hang lén tau duge coi fa ngay giao hing; trudmg hop git dung hang khong cdc tai ligu kf thu@t thi van don hang khong s& thay thé cho van don dudng bién va gay cia dirdng bién va ngity cia van dom hing khong dugc coi fa ngay giao céc thi ligu ky thugt,