LEARNING MATERIAL

EXPORT IMPORT
MANAGEMENT
(Chapter 1 & 2)

CHAPTER 1: SPECIALIZED FOREIGN TRADE CONTRACTS

Learning Objectives:

CHAPTER 1: SPECIALIZED FOREIGN TRADE CONTRACTS

For internal usage
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 CHAPTER 1: SPECIALIZED FOREIGN TRADE CONTRACTS

Learning Objectives:

After studying this chapter, you will be able to understand:

 International commercial outsourcing agreement/ processing contract

 Complete equipment import contract
 Technology transfer agreement
 License agreement

1.1. THE INTERNATIONAL COMMERCIAL OUTSOURCING AGREEMENT/

PROCESSING CONTRACT
1.1.1. The concept of commercial outsourcing/ processing

Commercial processing means a commercial activity whereby a processor uses part or

whole of raw materials and materials supplied by a processee to perform one or several
stages of the production process at the latter’s request in order to receive remuneration.

Benefits
Outsourcing can provide some significant benefits for companies. Advantages of
outsourcing include:
 Lower labor costs: Companies typically outsource to businesses in developing
countries where the cost of labor is significantly cheaper. Lower labor costs will improve
the company's bottom line.
 Less regulation: Developing countries often have a low level of regulatory
restrictions, which can also reduce the cost of operations and increase productivity. For
example, there may not be limits on overtime or on work health and safety issues.
 Focus on core competencies: Companies that outsource lower-level work, or work
the business is not optimized to perform, can then focus on the work activities at which they
excel. This will increase productivity, efficiency and effectiveness. For example, a tech
company in Silicon Valley may be better off outsourcing its manufacturing operations to a
company in China so it can focus on research and development.
 Reduced overhead: Outsourcing can also reduce a company's overhead costs
because the outsourcing company uses its own facilities, equipment and personnel to
perform the work. In fact, it's theoretically possible to engage in massive manufacturing
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ventures out of a room in your house if you outsource all the manufacturing to a factory
overseas.
 Flexibility: Outsourcing means that you can stay lean and mean, which makes it
easier to adapt to change. For example, you don't have to invest a bunch of money and
resources into new plant and equipment that may become obsolete quickly. Instead, you can
pass that risk off to the outsourcing firms.
1.1.2. Legal bases in Vietnam for processing business
 In accordance with Vietnamese Commercial Law 2005, commercial
processing is stipulated in following articles:
Article 179. Processing contracts

Processing contracts must be made in writing or in other forms of equivalent legal validity.

Article 180. Goods for processing

1. Goods of all types can be processed, except for goods banned from business.

2. In case of processing of goods for foreign traders for overseas consumption, goods banned
from business, goods banned from export or import may be processed if so permitted by
competent state agencies.

Article 181. Rights and obligations of processees

1. To hand over part or whole of raw materials and materials for processing in accordance
with processing contracts or transfer money for purchase of materials with agreed quantities,
quality and at agreed prices;

2. To take back all processed products, leased or lent machinery and equipment, raw
materials, auxiliary materials, supplies and discarded materials after the liquidation of
processing contracts, unless otherwise agreed.

3. To sell, destroy, donate or give as gifts on the spot processed products, leased or lent
machinery and equipment, raw materials, auxiliary materials, redundant supplies, faulty
products and discarded materials according to agreements and provisions of law.

4. To send their representatives to examine and supervise processing activities at processing

places, to assign experts to guide production technology and inspect quality of processed
products according to agreements in processing contracts.
5. To be responsible for the legality of the intellectual property rights over processed goods,
raw materials, materials, machinery and equipment for processing handed over to
processors.

Article 182. Rights and obligations of processors

1. To supply a part or whole of raw materials and materials for processing as agreed upon
with processees in terms of quantities, quality, technical standards and prices.

2. To receive processing remunerations and other reasonable expenses.

3. In case of processing for foreign organizations and individuals, to be entitled to export on

spot processed products; leased or borrowed machinery and equipment, raw materials,
materials, redundant supplies, faulty products and discarded materials under the
authorization of processees.

4. In case of processing for foreign organizations and individuals, to be exempt from import
tax on machinery, equipment, raw materials, auxiliary materials and supplies, that are
temporarily imported for the performance of processing contracts according to the
provisions of tax law.

5. To be responsible for the legality of goods processing activities in cases where goods
being processed are those banned from business, export or import.

Article 183. Processing remuneration

1. Processors may receive processing remunerations paid in cash or in processed products,

or machinery and equipment used for the processing.

2. In case of processing for foreign organizations and individuals, if processors receive

processing remunerations in processed products, machinery and equipment used for
processing, regulations on import of such products, machinery and equipment must be
complied with.

Article 184. Technology transfer in goods processing with foreign organizations and
individuals.

Technology transfer in goods processing with foreign organizations and individuals shall be
carried out in accordance with agreements in processing contracts and the provisions of
Vietnamese law on technology transfer.
  Law on Foreign trade management
Article 51.
Traders undertake processing of goods for foreign traders, except goods on the list of goods
banned or suspended from import and goods on the list of goods banned or suspended from
export.
For goods to be imported or exported under permits, traders may sign contracts only after
obtaining permits of the Ministry of Industry and Trade
 In accordance with Decree No. 69/2018/ND-CP on detailing the
implementation of the Law on Foreign trade management, commercial processing is
stipulated in following articles:

Processing Of Goods For Foreign Traders

Article 38. Traders undertaking processing of goods for foreign traders

Article 39. Processing contracts

A processing contract must be made in writing or in another form of equivalent legal validity
in accordance with the Commercial Law and must include at least the following clauses and
terms:

1. Names and addresses of the contracting parties and the direct processor.

2. Names and quantities of products to be processed.

3. Processing price.

4. Payment time limit and method.

5. List, quantities and values of imported raw materials, auxiliary materials and supplies and
home-made raw materials, auxiliary materials and supplies (if any) for processing; use
norms of raw materials, auxiliary materials and supplies; norms of supplies consumption
and wastage rates of raw materials in processing.

6. List and value of machinery and equipment (if any) hired, borrowed or donated for
processing.
7. Measures to handle waste materials, scraps and faulty products and principles of disposal
of hired or borrowed machinery and equipment and unused raw materials, auxiliary
materials and supplies after the termination of the processing contract.

8. Place and time of goods delivery.

9. Trademarks and appellations of origin of goods.

10. Validity duration of the contract.

Article 40. Use and consumption norms and wastage rates of raw materials, auxiliary
materials and supplies

1. Use and consumption norms and wastage rates of raw materials, auxiliary materials and
supplies may be agreed upon by the parties in processing contracts, taking into account
norms and wastage rates established in relevant production and processing sectors of
Vietnam at the time of signing such contracts.

2. At-law representatives of traders directly undertaking the processing shall take

responsibility before law for using imported raw materials, auxiliary materials and supplies
for proper processing purposes and the accuracy of use and consumption norms and wastage
rates of raw and auxiliary materials for processing.

Article 41. Lease, borrowing and importation of machinery and equipment of procesees for
the performance of processing contracts

Processors may rent or borrow machinery and equipment of procesees for the performance
of processing contracts. The lease, borrowing or donation of machinery and equipment must
be agreed upon in processing contracts.

Article 42. Rights and obligations of procesees and processors

1. Procesees:

a/ To deliver all or part of raw materials and supplies for the processing as agreed upon in
processing contracts;
b/ To receive back all processed products; machinery and equipment rent or borrowed by
processors; raw materials, auxiliary materials, supplies and scraps after the liquidation of
processing contracts, except when they are permitted to be exported on the spot, destroyed
or donated under this Decree;

c/ To send experts to Vietnam to provide technical guidance on production and inspect the
quality of processed products as agreed upon in processing contracts;

d/ To take responsibility for the right to use trademarks and appellations of origin of goods;

dd/ To strictly observe relevant Vietnamese laws on processing activities and terms and
clauses of signed processing contracts;

e/ To export on the spot processed products; leased or lent machinery and equipment; unused
raw materials, auxiliary materials and supplies; faulty products and scraps under written
agreements of involved parties in accordance with current regulations on goods import and
export management, and perform tax and other financial obligations as prescribed by law.
2. Processors:
a/ To enjoy exemption from import duty on machinery, equipment, raw materials, auxiliary
materials and supplies temporarily imported within prescribed norms and wastage rates for
the performance of processing contracts; to enjoy exemption from export duty on processed
products;

b/ To hire other traders to conduct processing;

c/ To be supplied with part or the whole of raw materials, auxiliary materials and supplies
for processing as agreed upon in processing contracts; and to pay export duty in accordance
with the Law on Import Duty and Export Duty for quantities of domestically purchased raw
materials, auxiliary materials and supplies;

d/ To receive remunerations from procesees in the form of processed products, except

products on the list of goods banned or suspended from import. Products on the list of
imports subject to permits or goods subject to specialized management permits must comply
with regulations on grant of permits and specialized management;

dd/ To observe the Vietnamese law on processing activities, export, import and domestic
manufacture of goods, and terms and clauses of signed processing contracts;
e/ To carry out procedures for on-the-spot export of processed goods; leased or borrowed
machinery and equipment; unused raw materials, auxiliary materials and supplies; faulty
products and scraps as authorized by procesees.

3. Conditions for the on-the-spot export of processed products; leased and borrowed
machinery and equipment; unused raw materials, auxiliary materials and supplies; and
faulty products and scraps specified at Point e, Clause 1 and Point e, Clause 2 of this Article
are prescribed as follows:

a/ Strictly complying with regulations on import and export management, taxes and other
financial obligations prescribed by law;

b/ Having sale and purchase contracts signed between foreign traders or their lawful
authorized persons and importing traders.

Article 43. Intermediary processing

Traders may undertake intermediary processing, whereby:

1. Processed products under a processing contract are used as raw materials for another
processing contract in Vietnam.

2. Processed products under the first-stage processing contract are delivered under the
principal’s designation to traders under the next-stage processing contract.

Article 44. Liquidation and settlement of processing contracts

1. Upon the termination of a processing contract or when a processing contract ceases to be

effective, the contracting parties shall liquidate the processing contract and carry out the
procedures for settling the contract with customs offices.

The Ministry of Finance shall guide procedures for settlement of processing contracts by
processors with customs offices.

2. The bases for liquidation of a processing contract are the quantity of imported raw
materials, auxiliary materials and supplies and the quantity of exported products according
to the use norms of raw materials, auxiliary materials and supplies, consumption norms of
supplies, and wastage rates as agreed in the processing contract.

The bases for settlement of a processing contract are the quantity of imported raw materials,
auxiliary materials and supplies, the quantity of re-exported raw materials, auxiliary
materials and supplies, and the quantity of exported products according to the use norms of
raw materials, auxiliary materials and supplies, consumption norms of supplies, and wastage
rates conformable with the practical performance of the contract.

3. Machinery and equipment leased or borrowed under the contract; unused raw materials,
auxiliary materials and supplies, faulty products and scraps must be disposed of as agreed
upon in the processing contract and in accordance with Vietnamese law.

4. The destruction of waste materials, faulty products and scraps (if any) may be effected
only after obtaining written approval of provincial-level Natural Resources and
Environment Departments, and is subject to customs supervision. If destruction is not
permitted in Vietnam, they must be re-exported as designated by principals.

5. The donation of machinery, equipment, raw materials, auxiliary materials, supplies,

scraps and faulty products is provided for as follows:

a/ The procesees will make a written document on the donation;

b/ The donation recipient shall carry out import procedures according to current import
regulations; pay import duty and other taxes (if any), and make property registration
according to current regulations;

c/ Scraps and faulty products within the use norms and wastage rates and on the list of scraps
permitted for import are not required to go through customs procedures, are exempted from
import duty but liable to value-added tax and enterprise income tax.

Article 45. Customs procedures

The Ministry of Finance shall guide customs procedures and financial obligations for
processed goods for export, and supervise the import and export related to processing
contracts.

Article 46. Other forms of processing

The prime minister considers and decides the processing of goods for foreign traders for
overseas consumption which are goods on the list of goods banned or suspended from
import and goods on the list of goods banned or suspended from export.
 In accordance with Customs law 2014

Article 59. Responsibilities of customs authorities in customs inspection and supervision of

goods imported for export processing and production
Article 60. Responsibilities of entities engaged in export processing and production

 In accordance with Decree No. 08/2015/ND-CP on providing specific

provisions and guidance on enforcement of the customs law on customs procedures,
examination, supervision and control procedures

Article 36. Customs procedures, customs supervision and inspection processes for exports
and imports used for processing; imports used for manufacturing exports

Article 37. Responsibility of organizations or individuals importing goods used for

processing purposes or productions of commodities for export

Article 38. Responsibility of customs authorities

Article 39. Examination of processing and producing facilities and capability

Article 40. Checking use of raw materials and inventory of raw materials, machinery and
equipment

Article 41. Financial reporting regime; examination of financial reporting of current use of
raw materials, machinery and equipment

 Decree No. 59/2018/ND-CP

 In accordance with Circular No. 38/2015/TT-BTC on customs procedures,
customs supervision and inspection, export tax, import tax, and tax administration
applied to exported and imported goods

Article 54. Imported materials/supplies

Article 55. Practical norms for inward processing, manufacturing of goods for export

Article 56. Notification of processing/manufacturing facilities, locations where

materials/supplies, machinery, equipment, and exported products are stored

Article 57 Inspection at the processing/manufacturing facility, inspection of

processing/manufacturing capacity

Article 58. Customs places

Article 59. Inspection of the use and inventory of materials/supplies, machinery, equipment,
and exported goods

Article 60. Statement

Article 61. Procedures for importing materials/supplies, machinery, equipment, and
exporting products

Article 62. Customs procedures for subcontracting processing

Article 63. Procedures for delivering and receiving goods forwarded for further processing

Article 64. Procedures for handling excess materials/supplies, waste, rejects,

hired/borrowed machinery and equipment

Article 65. Actions against late submission of the statement of use of materials/supplies,
machinery, and equipment, late initiation of customs procedures for excess
materials/supplies, hired/borrowed machinery and equipment upon completion or expiration
of the processing contract

Article 66. Actions against the hiring party that abandons excess materials/supplies,
hired/borrowed machinery and equipment, or processed products

Article 67. Procedures for export of materials/supplies serving outward processing and
import of processing products

Article 68. Procedures for temporarily export processing products for recycling, then re-
import them into Vietnam.

Article 69. Customs procedures for handling excess materials/supplies, rejects, waste;
machinery and equipment temporarily exported to serve outward processing

Article 70. Procedures for importing materials/supplies and exporting products

Article 71. Procedures for handling waste and rejects sold domestically

Article 72. Procedures for destruction of materials/supplies, waste, rejects

Article 73. Customs procedures for selling products to another exporter

 Circular No. 39/2018/TT-BTC

1.1.3. Classification
 Based on the ownership of materials in the manufacturing process of products:
 Receiving materials and delivery finished products
 Selling all materials then buying finished products
 Combining
 Based on the processing price:
 Cost plus contract
 Target price
 Based on the proportion of material supply:
 Total
 Main raw materials
 Not any raw materials
 Outsourcing can be applied in:
 Human resources
 Project development management
 Service management.
 Outsourcing agreement can be:
 All stages
 A specific stage
 Transitional
 Outsourcing relationships can be described as:
 Two parties
 Many parties
 Period of outsourcing can be on:
 Long term
 Short term
 Location of the supplier is:
 International (offshore)
 Regional (near shore)
 Closer to the customer
 Based on the obligation of the processor:
 CM (cutting and making)
 CMP (cutting, making and packaging)
 CMT (cutting, making and trimming)
 CMP+Q (cutting, making, packaging and quota fee)
 CMA+Q (cutting, making, accessories and quota fee)
 CMT+Th (thread)+Q
1.1.4. Processing contract
International processing contract is an agreement between the processee and the processor
in different countries, which specifies the rights and obligations of the parties during the
processing.

The content of the contract:

1. Processed products
 Commodity
 Quantity
 Quality/Specification
 Sample
2. Processing price
 Unit price, delivery term, payment currency
 Total amount (in figures, in words)
3. Payment
 Payment method
 Time of payment
 Payment documents
4. Raw material, machinery and equipment
 Types of raw material, machinery and equipment
 Consumption rate, wastage allowances rate
 Raw material tolerance
 Amount/number of machinery and equipment is hired/borrowed, transfer method and
instruction for use
 Quantity, time, place of material delivery, inspection, notice of shipment, partial
shipment or total shipment
 Quality, price, delivery term
 Shipping documents
 Method for handling wasted materials, discarded stuffs and hired/borrowed
machinery and equipment, extra raw materials after liquidation of processing
contract, environmental protection issues as well as environmental pollution in
processor ‘s country…
 Ex: the remaining balance of raw materials of the annex or contract will be taking
over or next annex or next contract at the expiry term of the annex or contract. Sides
A agrees to re-export all scrap material, defective products to side B or to annihilate
them at Vietnam (if have approved by Vietnam ‘s consultant organization) when both
sides agree to dis-continue co-operative.
5. Employee training
 Quantity of employees
 Training quality
 Type, time, place of training
 Training cost
6. Finished products
 Production condition: the processor only organizes production when the processee
meets some requests such as machine supplied or raw material supplied
synchronously…
 Packing
 Marking
 Trade mark
 Time of shipment
 Means of transport
 Port of loading/discharging
 Notice of shipment
 Partial shipment or total shipment
7. Insurance
8. Penalty
9. Force majeure
10. Claim
11. Arbitration
12. General condition

1.2. COMPLETE EQUIPMENT IMPORT CONTRACT

1.2.1. The concept of complete equipment
 In international trade, people often understand complete equipment is a collection of
machines, equipment and tools necessary to perform certain technological process. In many
cases it may just be the devices for a production line, mainly including the basic equipment
relevant to the work of this chain. They usually constitute separate workshops or to be the
parts of an factory are under construction or already built. In other cases, they are not only
a collection of machines, equipment and tools, but also are auxiliary equipment.
1.2.2. Terms of complete equipment import contract
Complete equipment import contract usually has following terms
- Object of the contract
- Definitions
- Price and value of contract
- Delivery time
- Inspection/control of goods
- Technical Documents
- Warranty
- Installation, Commissioning
- Technical assistance
- Penalty for a breach of the contract
- ….

1.3. TECHNOLOGY TRANSFER AGREEMENT AND LICENSE AGREEMENT

1.3.1. Technology Transfer Agreement
1.3.1.1. Technology transfer
Technology transfer refers to the process by which an owner of technology gives access to
its technology to another. Access can consist of the transfer of complete ownership through
a sale or assignment of the technology or the transfer of a more limited right such as a right
to use of the technology through a licensing agreement.
1.3.1.2. Contents of International Technology Transfer Agreement

Terms and conditions from an International Technology Transfer Agreement of ESCAP

(Economic and Social Commission for Asia and the Pacific) are as follows
Preamble
1. Definitions
2. Scope of Technology
3. Territory and Exclusivity
3.1. Use of Technology and Manufacture of Productions
3.2. Sale of Productions
3.3. Transfer of the Technology by the Receiver to Third Parties
4. Transfer of Technology
4.1. Documentation
4.2. Training
4.3. Technical Assistance
4.4. Time Schedule
4.5. Certificate of Readiness of Commercial Production
5. Price
5.1. Price payable
Option 1:
Price payable includes a lump sum of USD….and periodic payment (royalty payment) of
….% on the net selling price/net revenue/pre-tax profit.
Option 2:
Price payable is made by installment of USD…..for each time of payment

5.2. Most favorable price

The transferor commits that the agreed price will not be higher than the price charged to
any third party, taking into account the price of the same comparable conditions.

If the transferor offers lower price to this third party, the transferor should immediately
reduce the price for this contract accordingly and repay the balance payment to the
transferee.

6. Payment
Option 1:
The date to calculate the periodic payment (royalty payment) is the last days of March,
June, September and December annually.
The notice of periodic payment should be sent to the transferor within …days from the date
of calculation. This notice should include net selling price, the price and the quantity of
products for each order. Periodic payment term is…..days from the calculation date.
Transferee should keep and file fully and carefully all invoices, documents, records…which
is necessary for periodic payment‘s checking and investigation.
Along with the notice, the Transferee allows the Transferor, a representative of the
Transferor or an independent auditing firm appointed by the Transferor to inspect the
records. The inspection must be conducted during working hours and for the sole purpose
of checking of the periodic payment‘s notice.
Option 2:
A lump sum should be paid to the transferor within ... days after each time as follows:

 The contract is entered into effective.

 Full list of documents is received by the transferee
 The beginning of the training program.
 Certificate of readiness for production is issued.
7. Taxation
8. Improvements and innovations
8.1. Research and development
8.2. Obligation to transfer Improvements and Innovations
8.3. Cost of transfer Of Improvements and Innovations
9. Warranty
9.1. Warranty of Technology
9.2. Procedure in case of a failure of Technology
9.3. Cost ensuring
10. Environmental Protection and Harmful Effects
11. Infringement of Third Party’s Industrial Property
12. Secrecy
13. Force Majeure
14. Approvals and Coming into Force
15. Duration, Renewal and Termination
15.1. Duration of the Contract
15.2. Expiry and Renewal
15.3. Termination in the Event of Change of Ownership
16. Assignment of Rights and Duties
17. Notices
18. Partial Invalidity
19. Entire Agreement and Modifications
19.1. Entire Agreement
19.2. Modifications
20. Language
20.1. Contract language and Contract Originals
20.2. Language of correspondence and other communication
21. Applicable 1aw
22. Settlement of Disputes
22.1. Method of Settlement
22.2. Place and Language of Arbitration
22.3. Number of Arbitrators
1.3.2. License agreement
The ownership of the right to possess or otherwise use or dispose of a product created by
human work, including patents, trademarks, industrial designs and copyright. Intellectual
Property Rights are transmitted and sold through license agreements

A contractual arrangement in which the licensor´s patents, trademarks, service marks,

copyrights or know-how may be sold or otherwise made available to a licensee for
compensation negotiated in advance between the parties. Such compensation may consist
of a lump sum royalty, a running royalty (based on volume of production), or a combination
of both. Licensing enables a firm to enter a foreign market quickly and poses fewer risks
than setting up a foreign manufacturing facility. Furthermore, it allows parties to overcome
tariff and non-tariff barriers trade. In international markets the license agreement most
commonly used are the International Trademark License Agreement and the International
Manufacturing License Agreement.

The International Manufacturing License Agreement establishes a relationship between two

companies, Licensor and Licensee, whereby the Licensor grants a license of Intellectual
Property Rights (patents, trademarks, utility models, industrial designs, know how) that are
required in order for the Licensee to manufacture and sell the products in a defined territory,
usually a country.
In the most important aspects of the contract (technology, exclusivity, royalties, termination
of contract, applicable law and competent jurisdiction, etc.) different alternatives have been
provided, for the most appropriate one to be selected according to who drafts the contract
(Licensor or Licensee).
In the event that Licensor only grants to Licensee the use of the trademark but not patents
or other Intellectual Property Rights, the International Trademark License Agreement
should be used.
In the International Trademark License Agreement the proprietor (Licensor) of a registered
trademark gives authorization to another company (Licensee) to manufacture and distribute
products under this trademark. The license is given for a specific range of products (typically
consumer and fashion products) for which the licensee obtains exclusivity in a distinct
territory (typically a country).
In exchange for the rights granted, the Licensee shall pay to the Licensor a certain amount
of money and a percentage (royalties) based on the sales value of the products sold under
the license.
This agreement is distinctively worded to cover the granting of trademark licenses in
international markets, but with slight changes it may also be used when the Licensor and the
Licensee are based in the same country.

The content of the license agreement

A license agreement has some main terms as follow
- The parties to the contract
- Object of the license contract
- Types of license contract
- Payment conditions
- Responsibility of the seller
- Responsibility of the buyer
- The effective duration of the license - conditions for termination of the contract license
- ….
CONCEPT REVIEW QUESTIONS

1. Name the terms of outsourcing contract, complete equipment import contract,

technology transfer agreement and license agreement.
2. Compare the international processing contract with the international sale contract.
3. Compare the complete equipment import contract with technology transfer agreement.
4. Compare the technology transfer agreement with license agreement.
5. What is the content of each term of outsourcing contract/ complete equipment import
contract/ technology transfer agreement/ license agreement?
6. Collect and analyze an outsourcing contract, a complete equipment import contract, a
technology transfer agreement and license agreement.

EXERCISES
1. Analyse and correct (if any) the below contract

PROSESSING CONTRACT

No: 07 VFC-JC/GC

SIDE A: THE VOLUNTARY YOUTH’S FOREST-AGRO PRODUCTS EXPORT

COMPANY (VYFACO)

Add: 716 Kinh Duong Vuong St., Dist. 6, Hochiminh City, Vietnam.

Tel: 84.8.751922 – 84.8.9120268

Fax: 84.8. 7508507

Represented by: Mr. Tran Quang Thuan, Vice Director

A/C No.: 710 B00925 at Incombank Branch No. 5 – HCMC

SIDE B: JCO WOODEN WARE CO., LTD.

Add: No. 78 see. 4 ChangshuiRd., PiTouChanghwa Taiwan R.O.C

Tel: 886.4.8926944-4

Fax: 886.4.892599

Reprensented by: Mr. FAN XUAN CHENG – Managing Director

A/C No.: 032.05.006596 – The International Commercial Bank

Today, November 25, 2008 at VYFACO office, after discussion, both sides have agreed to
sign this processing contract with following articles and conditions:
ARTICLE 1: COMMODITY – QUANTITY – PROCESSING PRICE

1.1/ Side A agrees to process wooden products for side B for export such as Table, Chair,
Rack, Bed, Cabinet, etc… The wooden products have to be complied with the Decision no.
46/2001/QD-TTg of Vietnam Government and Decision 62/2001/TT-BANN of the
Ministry of Agriculture.

1.2/ Quantity: 40,000 M3 Wooden products

1.3/ Processing price: 220USD/ M3 Wooden products

1.4/ Amount: 8,800,000USD

1.5/ Both sides have agreed to process the wooden products with flow sheet:

Arranging the timber parts for products => Joint-fingers => Moulding => Planning =>
Painting => Assembling => Packing => Quality control=> Finishing products for export.

ARTICLE 2: THE SUPPLY OF RAW AND MATERIAL

2.1/ All of the raw material and accessories to process the products will be supplied from
side B (Delivery term: CIF Hochiminh City Port), consisting of:

a/ Raw: Saw Timber

- Kind of timber: Pine wood, Rubber wood,… and the timbers

- Quantity of saw timber: 80.000M3

b/ Material:

- Materials are used directly into products such as: MDF, MFC, Screws, Nut, Epsheet,
OPP tape, Paint, Thinner,…
- Materials are used indirectly into products such as: Abrasive belt, Wooden brush,
Drill, Screws driver, Saw-blade…
- Some of raw material such as: Carton, Packing sheet, Plywood etc… will be supplied
by side A according to side B’s request (if any)

2.2/ Loss percent of Raw and Material:

- For timber: 1.6/1.0…2.0/1.0 (Sawn timber/ wooden product)

- For MDF, MFC, Plywood: 1.2/1.0

- For other material: 1.03/1.0

- The Balance of raw materials and product will be agreed by both sides in annexes.

2.3/ All the finishing materials supplied by side B such as: Lighting set, Neon lamp… must
be fix into the processing products.

2.4/ The remaining balance of raw material of the annex or contract will be taking over or
next annex or next contract at the expiry term of the annex or contract. Side A agrees to re-
export all scrap material, defective products to side B or to annihilate them at Vietnam (if
have approved by Vietnam’s consultant organization) when both side agrees to discontinue
co-operative.

2.5/ Both sides have engaged do not import the prohibited chemical of the circular letter
no.01TT/BCN, 04TT/BCN & 08TT/BCN.

ARTICLE 3: TRADE MARK - ORIGIN OF EXPORT PRODUCTS

Side B has to be responsible in using trade mark, name and origin of export products and
also any claim (if any) relating to these cases.

ARTICLE 4: MACHINERY AND EQUIPMENT

4.1/ In the implement of this contract, side B agrees to lend to side A some of machines and
equipment for processing products. Appendixes of machine & equipment have to be agreed
by both sides and which also keep on the polices of Vietnam Government.

4.2/ At the expiry term of the contract all the machines & equipment will be taking over to
the next contract or others factor result in failing to continue production side A agrees to
return all machine & equipment to side B.

4.3/ Side B supplies all replacing spare parts of machine in order to keep the production line
operation. The expenses of installing machine are in side B account.

ARTICLE 5: DELIVERY

5.1/ All of the product will be only for export from Hochiminh City port – Vietnam to any
ports on over the world.
5.2/ Shipment date: From the signing this contract to Dec. 21. 2008

5.3/ Delivery term: FOB Hochiminh city port, Vietnam

5.4/ To control the quality of products, side B’s the representatives will be in side A’s factory
to sake the technical guidance and inspection products before export.

ARTICLE 6: PAYMENT

Side B will make the transfer of payment by T.T to side A’s account 60 days after shipment
date.

ARTICLE 7: GENERAL CONDITION

Both sides will be obliged to implement all the terms and conditions of the processing
contract. During the execution of this processing contract, if disputes arise, they will be
settled in spirit of friendship and mutual benefit. Any amendment will be made up by written
form or by cable which be confirmed by the signature of both sides.

This processing contract is made in 06 English originals & 06 Vietnamese originals with
authentic equity, each side keeps 03 English originals & 03 Vietnamese originals. It comes
into effect from the date of signing to December 31, 2008

SIDE B SIDE A

2. Analyse and correct (if any) the below contract

PROCESSING CONTRACT

No: 01/03 L_H

Date: Dec. 15th. 2012

Between: H

Hereinafter referred to as H on the one hand.

And: L

Hereinafter referred to as L on the other hand.

RECITALS

WHEREAS, H is willing to reserve the production capacity of L for the purpose of

producing spring and winter Coats, Jackets upon the terms and conditions set forth in the
present agreement.

WHEREAS, L is willing to transform the material and accessories delivered by H into

spring and winter Coats, Jackets for H upon the terms and conditions set forth in the
present agreement.

NOW, THEREFORE, THE PARIES HAVE AGREED AS FOLLOWS:

Article 1:

L will produce for H 320,000 Pcs including: 70,000 Pcs for Coat and 250,000 Pcs for Jacket.

Estimated CM price for Coat: USD 6.50/pc

Jacket: USD 5.50/pc

Style No: Will be fixed by annex

Total amount of Agreement: USD 1,830,000.00

Expiry date of Agreement: Dec. 31, 2012

These Garment will be exported to GERMANY, SWITZERLAND and SINGAPORE

Article 2:

L warrants that it owns all the necessary workers (including qualified workers and
technicians, machines, spare parts…), to perform its obligations regarding the production of
garments provided in this agreement.

L especial warrants that it owns or will own within one month preceding the beginning of
the production, all the ironing machines required to fulfill its obligation.

Article 3:
The detail style, quantity of each style and CM price will be agreed by both parties, each
season, within the month preceding the beginning of the production and will be attached
here to as ANNEX.

The CM price includes packing material and carton box.

Article 4:

H undertakes to provide to L full orders, materials and accessories to cover all the production
capacity reserved by L for H during the existence of this agreement.

H shall supply to L all the materials and accessories necessary to allow L to produce the
goods required, according to a consumption rate which will be agreed by both parties, plus
3% of waste alllowance.

H shall also provide all the accessories for packing such as pollybag, scotch tape and plastic
pin.

Each season H shall provide L with a production schedule, including the delivery time, the
type, quantity and quality of goods…

Article 5:

H shall deliver the materials and accessories to L in the CIF/ HOCHIMINH City and PORT.

H shall provide L with all the necessary information and documents regarding the material
and accessories delivered to L before the arrival of the shipment and, at the latest, within 7
days before the arrival of shipment.

Upon unloading of materials and accessories in L warehouse, representatives of both parties

will check the quantity of all items delivered to L and will jointly establish a control report
which will be sent to H within 7 days following the arrival of the materials, accessories
delivered by H

If the control report does not mention any differences between the quantity and quality of
the materials received by L and the one that has been delivered by H, L shall be deemed to
have accepted the goods delivered and no reclamation shall be accepted.
Should there be any delay in the delivery by H of the materials and accessories and if this
delay either has prevented the production to begin or has terminated the production, the
delivery time will be increased of same delay.

Article 6:

H shall provide L with all technical conditions and appropriated documents such as master
samples, paper patterns, consumption rates, size specifications and assortments, color
cards…

L undertakes to respect the quality requires by H and to base the production on the samples
approved by a representative of H, and according to the technical know – how of H.

A representative of H will survey and control the production and attempt to solve all
technical problems arising from the execution of this agreement.

In the event quality production is below the quality level which was agreed by both parties
at the time of the agreement, and, if L remains in default to remedy the default within 15
days of their noting, H shall have the right to terminate the agreement all damages incurred
in respect of the default.

Article 7:

L shall deliver the finished garments to H, according to the production schedule on FOB
Hochiminh City and Port basis.

The name of the vessel and the destination of the garment will be clearly instructed by H
Destination port.

All other specification regarding to the documents will be specified in the further
announcements.

Article 8:

H will inspect the finished garment upon reception.

Should there be any shortage in quantity, non-respect of the quality required by H, or any
other defects, H shall within 15 days following the discovery of the default, and in any case
not later than 30 days following the reception of the garment, notify L thereof in writing and
L undertake to remedy the defects within 30 days upon receipt of the written notice
mentioned here above.

Should L remain in default to remedy the defect, H shall be entitled to the reparation of the
prejudice caused by this default.

Article 9:

H will make payment to L by TTR in favor of L to the account No. at INDOVINA BANK
HOCHIMINH City upon reception of the shipping documents required by H.

The amount of payment shall be in United States Dollars

Article 10:

L is responsible for any delay in delivery which will cause shipment by air instead of sea
airfreight, Airfreight cost will be paid by L.

Article 11:

H must prove their legal right in using any registered trade marks which are put on their
goods and also allow L to use those ones for H goods.

H also guarantees that they will take full responsibility for any of trade marks claim.

Article 12:

The present agreement, as well as any agreement in connection therewith, shall be governed
by the laws of BELGIUM.

Any dispute rising out of or in connection with the present agreement shall be finally settled
in accordance with the Rules of Conciliation and Arbitration of the International Chamber
to the sail rules.

The arbitration procedures shall be governed by the laws of BELGIUM.

IN WITNESS WHEREOF the parties here to have caused this agreement to be signed by
their duly authorized officers, on the date first above written. This agreement is made 04
English copies which 02 for L and 02 for H with the same validity.

H International N.V L Company

3. Analyse and correct (if any) the below contract

CONTRACT

No: 05/DL – ES/13

Date: Apr. 11. 2013

Between:

ES – C

Tel:

Fax:

Represented by:

Hereinafter called: “Party A”

And:

Company Ltd.

Tel:

Fax:

Represented by:

Hereinafter called: “Party B”

Both parties have agreed to sign this contract under the following term and conditions:

I. Object of the contract:

Processing garments in the frame of job work in which:

1.1. Party A supplies all fabric and accessories together with technical documents
& necessary conditions basing which Party B organizes production to meet Party A’s
requirement in quantity, quality and shipment time.
 1.2. Part B secures necessary capacity in the Party B’s factory to carry out
production in accordance with fabric, accessories and technical conditions provided by party
A to ensure complete quantity, quality, delivery time. The factory involved in producing
garment shall be accepted by two parties.
II. Commodity, unit price, value, label
2.1. Commodity, unit price, value, label

No Commodity Quantity CMP price (USD) Value (USD)

01 Jacket 250.000 pcs 2,00 500.000
02 Training suits 150.000 sets 2,50 375.000
03 Pants 250.000 pcs 1,60 400.000
04 Shorts 150.000 pcs 0,80 120.000
Total 650.000 pcs 1.395.000
150.000 sets
Say: US dollar one million three hundred ninety five thousand only.

The above unit price includes cutting, making, packing, thread, small PP bag, embroidery
thread and carton box.

Other materials to be supplied by Party A.

Finished products export to all countries.

2.2. Label/ Trade mark:

The Party A will supply main label and guarantees that trade mark of goods have right
to use by trade mark registry certifying and will be fully responsible if any dispute occurs.

III. Delivery time:

3.1. Delivery time:

Material delivery time ETD: to be advised later.

Shipment date of finished production: Note later than June 30. 2013

If materials are sent late to Party B, the shipment date of finished products shall be
delayed accordingly.

3.2. Delivery term: FOB Saigon port – Incoterm 2010.

 3.3. Fabric and accessories: Party A will supply fabric and accessories to Party B
free of charge on CIF Saigon port by container basis in complete and sufficient quantity
with good quality up to schedule to ensure production progress.

Quantity and description of goods must be correctly and clearly indicated in B/L and
other shipping documents to enable Party B to fulfill import’s formalities. 3% of fabric and
3% of accessories shall be added to consumption rate for production wastage allowance.

Party A shall advice party B by Fax details of fabric and accessories shipment at least 01
week before landing the first lot to fulfill import formalities.

Shipping documents of fabric and accessories include:

1 Origin B/L marked “Freight prepaid” consigned to DOLIMEX HOCHIMINH CITY

VIETNAM and mentioned this contract number.

1 Signed invoice.

1 Packing list.

Shipping documents shall be informed to Party B to attention of the Export dept, within
03 days after shipment.

Any expense happened due to late documents from Party A shall be on Party A account.
With 7 days after arrival of fabric and accessories in the factory, representative from
both parties will check the content of each package, and have control report made, signed
and sent to Party A.

3.4. Finished garments:

Party B will ship the finished garments according to stipulated schedule.

Destination, packing method and shipping mark will be instructed by Party A in

technical documents so that Party B can arrange export formalities on time.

Shipping documents of finished goods include:

Original clean on board “Bill of Lading”: 3 original & 2 copies.

Commercial invoice duly signed in triplicate.

 Packing list in triplicate.

Certificate of Origin.

Export license (if any).

Inspection certificate.

Shipping documents will be sent to Party A within 07 days after receiving B/L and
Customs declaration.

IV. Technical stipulation and quality:

4.1. Party A shall provide Party B with all technical documents and conditions
such as master sample, paper patterns, markers, size specs fabric and accessories, sample
cards etc, consumption rates, at least 10 days before production stars.
4.2. Quality of garment will be based on fabric and accessories supplied by Party
A and approval samples confirmed by both parties before production.

V. Payment:

Payment will be made by TTR covering the amount of the Commercial invoice
of the actual shipment in favor of … to the account No:…through VIETCOMBANK
HOCHIMINH S.R.V after shipment date, but before Party A receives a set of exporting
Doc.

VI. Inspection:
6.1. Authorized representative from Party A will come to inspect the goods during
production and before shipment, and together will Party B has responsibility to solve any
problem arising from this contract execution, avoiding interference with production
progress and shipping schedule.
6.2. Party A shall inspect finished garment at the Party B’s warehouse and issue
the final inspection to accept exporting the above goods mentioned.

VII. Claim and Arbitration:

7.1. Party B shall inspect fabric and accessories upon receipt. Should there be any
shortage in quantity and/or defect in quality, Party B shall advise Party A by telex or fax
within 10 days, and have a survey report made and sent to party A within 20 days after
receive of goods. Party A shall ship immediately supplement or replacement to ensure
complete production.
7.2. Claim and disputes, if any should be settled amicably by consultation between
the two parties in case no settlement can be reached, each party is entitled to submit the
relevant claim or dispute to the Economic Court at Hochiminh City, Vietnam due to its
Arbitration rule.

VIII. General condition:

Both parties confirm their willingness to fulfill contract’s obligations.

It is fully understood that this contract shall be carried out in strict accordance with the
stipulations and instructions outlined herein and under the terms and conditions listed in this
contract.

Any enclosure, supplement, amendment, or modification to this contract shall be valid

only a written agreement has been duly signed by both parties.

In case violation by either party of this contract’s terms and/or conditions causes
financial losses to the other party, the violating party shall bear full responsibility to
compensate the affected party with reasonable amount agreed upon by both parties.

IX. Expiry:

Expiry of the contract to June 30, 2013.

This contract is made in Hochiminh City on Apr. 11, 2013 in 06 copies, each party keeps
03 copies of equal validity with effect from the signing date.

PARTY A PARY B

For and on behalf of For and on behalf of

4. Comment on the following terms of a complete equipment import contract and correct
mistakes/ re-draft the terms:
 Price:
The price is USD 1,800,000
 Installation, Commissioning:
The Seller shall send 1 expert who is skilled, has experiences, speaks English and is in
good health condition to Vietnam to install the production line.
5. Comment on the following terms of a technology transfer agreement and correct
mistakes/ re-draft the terms:
 Territory and Exclusivity:
The Transferee has the right to use technology in Vietnam
 Technoly transfer:
Transferor agrees to transfer and assign to Transferee the property right in the Know-
How.
6. Comment on the following terms of a license agreement and correct mistakes/ re-draft
the terms:
 Grant of license:
The Licensor agrees to grant the license to the Licensee only within the territory of
Vietnam.
 Intellectual Property Right:
Any intellectual property right or other technical information granted by the Seller to
the Buyer shall remain the property of the Seller
 CHAPTER 2: EXPORT IMPORT DOCUMENTATION
Learning Objectives:

After studying this chapter, you will be able to understand:

 Commodity documents
 Transportation documents
 Insurance documents
 Customs documents
 Financial documents

2.1. COMMODITY DOCUMENTS

2.1.1. Commercial Invoice
An invoice is a fundamental document of prime importance. It contains the names of the
exporter, importer, and the consignee, and the description of goods.
It is a requisite for the invoice to be signed by an exporter or his agent. Normally, the
invoice is prepared first, and several documents are then prepared by deriving information
from the invoice.
2.1.2. Packing List
The Packing List is a consolidated statement in a prescribed format, detailing how the goods
have been packed. It is informative and itemizes the material in each individual package,
such as a drum, box, or carton. It is a very useful document for customs at the time of
examination and for the warehouse keeper of the buyer to maintain a record of inventory
and to effect delivery.
The packing list will have many details common to those in an invoice. However, it does
not indicate the unit rate and the value of the goods.
Subject to the instructions of the buyer, a specific number of copies of the packing list is
prepared.
2.1.3. Quality Certificate
Quality Certificate may be issued by the manufacturer, or an independent testing
organization or a professional authority. It is used to prove the accordance between the real
quality and the one stipulated in the contract or L/C.
2.1.4. Quantity/Weight certificate
Quantity/Weight certificate is a document certifying the quantity/weight of goods that the
seller has delivered to the buyer. This certificate may be issued by the exporter or by an
independent testing organization. It is used to prove the accordance between the real
quantity/weight and the one stipulated in the contract or L/C.

2.2. TRANSPORTATION DOCUMENTS

2.2.1. Bill of Lading
The Bill of Lading (B/L) is a document issued by the shipping company or its agent. It
acknowledges the receipt of the goods mentioned in the bill for shipment on board of the
vessel. It is also an undertaking to deliver the goods in the like order and condition as
received, to the consignee or his order, provided the freight and other charges specified in
the B/L have been duly paid. B/L is issued in the standardized aligned document format.
For vessels, there are two types of B/L (i) A straight B/L, which is non-negotiable; (ii) a
negotiable or shipper‘s order B/L. The latter can be bought, sold or traded while the goods
are in transit. The customer usually needs an original negotiable as proof of ownership to
take possession of the goods.
The B/L is generally made out in sets of three originals. All originals are dully signed by the
master of the ship or the agent of the shipping company and all the originals are equally
valid for taking the delivery of the goods. Once any one original is utilized, the other
originals become null and void. Utmost care should be exercised to ensure that the full set
of original B/L is obtained by the exporter from the shipping company and no original copy
passes into wrong hands. Extra copies of B/L marked as “NON NEGOTIABLE COPY” are
also issued for records. These copies cannot be utilized for taking the delivery of goods.
The B/L is the legal document to be referred in case of any dispute over the shipment.
It contains the following information:
 The shipping company ‘s name and address
 The consignee ‘s name and address
 The port of loading and the port of discharge
 Shipping marks and particulars
 Number of packages shipped on board with date-rubber stamp
 Descriptions of packages and goods
 Gross weight and net weight
 Freight details and name of the vessel
  Signature of the shipping company ‘s agent

2.2.2. Airway Bill/ Aircraft Bill Of Lading

The Airway Bill (AWB) is a contract between the owner of the goods and the carrier or its
agent. The receipt issued by an airlines company or its agent for carriage of goods is called
an airway bill.
A set of bills can range from 8 to 14 copies, usually 9, in which always includes three (3)
originals, and some subs (copy), numbered from 4 to 14. AWBs are distributed as follows:
The original No.1, for the carrier, green color, used for payment purpose and as an evidence
of the carriage contract. This copy is signed by the consignor.
The original No. 2, for the consignee, pink color, together with the shipment is sent to the
final destination and delivered to the consignee on delivery.
The original No. 3, for the consignor, blue color, used as an evidence of the carrier to
transport the goods and as an evidence of the carriage contract. This copy is signed by both
the carrier and the shipper.
The copy No. 4, yellow color, used as delivery receipt, available at the destination. This
copy is signed by the consignee and kept by the final carrier as a delivery receipt and a proof
of fulfillment of the carriage contract.
The copy No. 5, for destination airport.
The copy No. 6, for the third carrier, used when the goods are transported at the third airport.
The copy No. 7, for the second carrier, used when the goods are transported at the second
airport.
The copy No. 8, for the first carrier, kept by the cargo division of the first carrier when
making goods.
The copy No. 9, for the agent, kept by the issuing agent or the issuing carrier.
The copy No. 10 to 14, used for the transportation when necessary.
2.2.3. Master Air waybill-MAWB:
A bill is issued by main carrier of goods on receipt of goods from a freight forwarder/
consolidator to deliver at destination as per agreed terms. This bill adjusts the relationship
between the carrier and the freight forwarder and is a forwarding document between the
carrier and the freight forwarder.
2.2.4. House airway bill-HAWB:
HAWB is issued by a freight forwarder on receipt of goods from shipper agreeing to deliver
goods at destination. This bill is used to adjust the relationship between the freight forwarder
and the shippers and used to receive goods between the freight forwarder and shippers.
At the destination, the freight forwarder uses MAWB to receive goods from the air carrier,
then delivers goods to each shipper and collects HAWB which is issued by him at the
departure.
In short, Airway bill is a document, which is a proof of receipt of goods from shipper issued
by air carrier. If a freight forwarder or consolidator involved in a shipment, such forwarder
receives MAWB from owner of carrier or his agent as a proof of receipt of goods from such
freight forwarder. In turn, said freight forwarder or consolidator issues a document of receipt
of goods to his final shipper which is called HAWB.
2.2.5. Mate ‘s Receipt
After the cargo is cleared from the customs examination and other formalities are over, it is
handed over to the shipping company for loading. The Mate‘s Receipt is issued by the
captain of the ship. It contains the name of the vessel, shipping line, port of loading, port of
discharge, shipping marks and numbers, packing details, description of goods, gross weight,
container number, and seal number. The mate‘s receipt is exchanged for the Bill of Lading.
2.2.6. Sea waybill
A non-negotiable transport document prepared by a transportation line at the point of a
shipment, showing the point of origin, destination, route, consignor, consignee, description
of shipment and amount charged for the transportation service, and forwarded with the
shipment, or direct by mail, to the agent at the transfer point or waybill destination.
2.2.7. Booking note/Booking Agreement
It is issued by the carrier and it is signed by the carrier and the charterer. It is an agreement
for liner shipment, which normally incorporates the provisions of the carrier's standard bill
of lading, adding only the cargo and shipment details such as description of goods, voyage
name, voyage number, sailing date, delivery terms, kind of container, cargo weight, load
and discharge ports, place of receipt, place of delivery, place of stuffing, closing time, drop-
off place, rate, payment terms, etc.
2.2.8. Shipping note
It is issued by the shipper. It contains information about the goods and the companies
involved in sending, shipping and receiving them. The information is to advise the necessary
information to process and handle the goods safely and with care. It’s used by carriers, ports
and customs officials.
2.2.9. Shipping instruction (S/I)
It is issued by the shipper to provide information should be showed in B/L.
2.2.10. Manifest
Manifest serves as a tally-sheet, and gives a detailed summary of all bills of lading (or air
waybills) issued by a carrier (or its agent) for a particular voyage of a particular vessel. This
is a listing of the goods comprising the cargo (freight) carried in a means of transport or in
a transport unit. The cargo manifest which gives the commercial particulars of the goods,
such as transport document numbers, consignors, consignees, marks and numbers, number
and kind of packages, descriptions and quantities of the goods and other such information
primarily for use by the customs authorities.
2.2.11. Stowage plan – Cargo plan
Stowage plan is a complete diagram of a vessel's cargo space showing the location (both on
and below deck) of all cargo aboard ship.
2.2.12. Statement of facts - SOF
This is the document attached to a record of calculation of lay time used (the "Timesheet")
and is a record of the events that can affect the counting of lay time. In some calculation
forms, the Statement of Facts could be part of the Timesheet, preceding the columns in
which the periods for loading, discharging, shifting, inclement weather, other excepted
periods and tendering of Notice of Readiness etc… are noted.
2.2.13. Time sheet
Spreadsheet or document which indicates the hours an employee has worked, generally
separated by days of the week. Time sheets are used by the human resources or accounts
payable department for calculating paychecks.
2.2.14. Notice of arrival
Notice sent by a carrier or agent to the consignee (and to the notify party, if any) to inform
about the arrival of the shipment and number of packages, description of goods, their weight,
and collection charges (if any). It is also called arrival notice.
2.2.15. Delivery Order – D/O
A Delivery Order is a document issued by the carrier, in exchange for
 One or all duly endorsed Original Bill(s) of Lading or duly authorized and issued Bank
Guarantee
 A Telex Release confirmation from the loading port or principal confirming surrender
of one or all Original bills of lading issued for the shipment
 A copy of a Sea waybill issued releasing the cargo to the legal consignee mentioned in
the bill of lading...
Only with this delivery order the consignee can clear the cargo with customs and take
delivery of the cargo from the port or terminal or depot or wherever it is stored.
It is very important that the releasing agent issues the Delivery Order to the right entity as
this document is the final frontier before the cargo is released and it cannot be reversed under
normal circumstances.
2.2.16. Notice of readiness - NOR
A paper or telex document urgently issued by a shipmaster that advises a person awaiting a
shipment that his ship has arrived and is prepared for the cargo to be unloaded or loaded.
When a business receives a notice of readiness (NOR), it means that the company needs to
make appropriate preparations for their cargo immediately.
2.2.17. Equipment Intercharge Receipt - EIR
A document required when transferring a cargo container from one vessel to another, or to
a shipping terminal. The receipt includes the container number, vessel/voyage code,
stacking position and stowage position.
2.2.18. Report on receipt of cargoes - ROROC
It is the minutes signed by the port (the port's warehouse) with leader ship. It represents the
total number of parcels are delivered and received between them.
2.2.19. Cargo outturn report - COR
A detailed report prepared by a discharging terminal to record discrepancies in the form of
over, short, and damaged cargo as manifested, and cargo checked at a time and place of
discharge from ship.
2.2.20. Certificate of short landed cargo – CSC
It is issued by shipping agent company (Vietnam Ocean Shipping Agency - Vosa) after
examination of the goods are unloaded from the ship into port
2.3. INSURANCE DOCUMENTS
Insurance documents are used to assure the consignee that insurance will cover the loss or
damage to the cargo during transit. There are two types of insurance document: insurance
policy and insurance certificate.
2.3.1. Insurance policy
It is a document issued by an insurance company. It indicates general and regular terms and
special conditions.
- General and regular terms regulate the responsibilities of the insurer and insured party
according to each insurance condition. These terms are pre-printed.

- Special conditions include: Insured object, Insurance value, Insurance conditions, and
Insurance premium
2.3.2. Insurance certificate
It is a certificate issued by an insurance company for the insured party to insure a specific
consignment. It is the same as Insurance Policy. However, this one does not include general
and regular terms.
2.4. CUSTOMS DOCUMENTS
2.4.1. Entry, Customs declaration sheet
It is a requisite for seeking the permission of customs to export/import goods. It contains a
description of export/import goods, the number and kind of packages, shipping marks and
numbers, value of goods, the name of the vessel, the country of destination…
2.4.2. Export/Import license
Export license
A government document granting the licensee the right to export a specific quantity of a
commodity to a specified country. This license may be required in a few countries only
under special circumstances.
Import license
A document is required and issued by some national governments (such as Ministry of
Industry and Trade) authorizing the importation of goods.
2.4.3. Phytosanitary certificate
A phytosanitary certificate is an official document issued by a plant protection organization
of the exporting country to a plant protection organization of the importing country. It
certifies that the plants or plant products covered by the certificate have been inspected
according to appropriate procedures and are considered to be free from quarantine pests and
practically free from other injurious pests, and that they are considered to conform with the
contract, the current phytosanitary regulations of the importing country and supplement
document to fulfill the import-export procedure. It indicates the name of goods, quantity,
weight, packing, marking, consignor, consignee, contract number, B/L number, mode of
transport, and comments of the plant protection organization as well as the disinfection
method for the goods.
2.4.4. Veterinary/Animal product sanitary inspection
A certificate is issued by a veterinary authority for shipper to certify that goods are free from
disease-causing bacteria for breeders, animals or animals have been vaccinated to prevent
disease. It certifies the quality of the goods and that the goods are totally in accordance with
the contract, and supplement document to fulfill the import-export procedure. It indicates
the type of animals, consignor, consignee, quantity, weight, place of destination, port of
departure, mode of transport, inspection date, effective date of veterinary certificate,
veterinarian’s attestation to the goods that products are made from healthy brutes in a safe
place free from epidemic disease, have been tested before, and all hygienic for consumers.
2.4.5. Health certificate
Some countries require a health or sanitary certificate for following products: animals,
animal products, fish, plants, and food products. These certificates confirm that the goods
are free from disease or pests (insects), and that products have been prepared in such a way
that they reach prescribed standards. Normally, these certificates are issued by the
Department of Agriculture rural and development. Also is called sanitary certificate.
2.4.6. Certificate of origin
The Certificate of Origin is a very useful document in export import trade. This certificate
indicates that the goods, which are being exported, are actually manufactured in a specific
country mentioned therein. This certificate is sent by the exporter to the importer. It is useful
for the clearance of the goods from the customs authority of the importing country.
However, it is worth noting that the certificate of origin is required by some countries only.
It is issued by the manufacturer, the exporter or the local Chamber of Commerce. It includes
name and address of the buyer, the seller; name of goods, quantity, weight, marking, the
goods owner’s statement, and the Chamber of Commerce’s authentication on the origin of
the goods.
There are many types of C/Os:
- Form A: a preferential Certificate of Origin signed on the basis of a kind of tariff preference
systems —Generalized System of Preferences that provided by developed countries to
developing countries.
- Form B: used for all countries.
- Form O: used for exporting coffee to countries of the World Coffee Association (America,
Thailand, Singapore…)
- Form X: used for exporting coffee to other countries not of the World Coffee Association.
- Form D: used for exporting goods to countries in Asean
- Form E
- Form AK
- Form AJ
- Form VJ
- Form S
- Form GSTP
- Form Mexico
- Form Venezuela
- Form Peru
- Form AANZ
- Form DA59
- Form Turkey
- Form VC

2.5. FINANCIAL DOCUMENTS

2.5.1. Bill of exchange/Draft
There are two types of draft: Sight draft and Usance draft
Sight Draft
When the drawer, that is, exporter expects the drawee, that is, importer to make the payment
immediately upon the draft being presented to him, the draft involved is called a Sight Draft.
In this case, the buyer cannot take delivery of the goods/documents without making the
payment. The corresponding terms of payment is referred to as Delivery against Payment
(D/P).
Usance Draft
When the exporter has agreed to give credit to the foreign buyer, he draws the Usance Bills
of Exchange. A draft may be drawn according to the period of credit, namely 30 days or 60
days after it is presented to the drawee (importer), who will retire the documents by
accepting the draft by writing his signature and date.
On the due date, the importer will make the payment to the bank. The bank will then forward
the money to the exporter ‘s bank.
In case the full payment is received in advance, a bill of exchange need not be drawn.
2.5.2. Promissory note
A promissory note is a financial document, in which one party (the maker or issuer) promises
in writing to pay a determinate sum of money to the other (the payee), either at a fixed or
determinable future time or on demand of the payee, under specific terms.
2.5.3. Cheque
A cheque (or check in American English) is a document that orders a bank to pay a specific
amount of money from a person/company 's account to the person/company in whose name
the cheque has been issued. The person writing the cheque, the drawer, has a transaction
banking account (often called a current, cheque, chequing or checking account) where their
money is held. The drawer writes the various details including the monetary amount, date,
and a payee on the cheque, and signs it, ordering their bank, known as the drawee, to pay
that person or company the amount of money stated.
2.5.4. Collection Instruction
A letter or form that conveys the drawer´s instructions to the presenting bank. While there
are many variations, collection instruction identifies the drawer, drawee, and any case-of-
need party; typically contains a series of boxes that apply to various instructional points.
There are two kinds of collection instruction: those originating from the drawer´s bank and
those originating from the drawers or its agent, called direct collection letters. Either way,
the presenting bank receives the collection letter, endeavors to follow its instructions, and
reports to the drawer´s bank. Also is called collection letter.

CONCEPT REVIEW QUESTIONS

1. List documents belong to commodity documents and present your knowledge about
them.
2. List documents belong to transportation documents and present your knowledge about
them.
3. List documents belong to insurance documents and present your knowledge about them.
4. List documents belong to customs documents and present your knowledge about them.
5. List documents belong to financial documents and present your knowledge about them.
6. Name the mandatory documents required to be prepared by an exporter. Discuss the
salient features of each of these documents.
7. Name the documents arising in each step of performing an export/import contract.
8. Collect documents of an export/import company and cross check the documents that this
company has prepared with the list of documents mentioned in the chapter. Discuss the
reasons for not using some specific documents which you may not see in this company.