Class 3-6

International
Trade
Negotiation
Operation

NEGOTIATION AND CONFLICT MANAGEMENT

2/23/21 1 7-1
 Learning outcomes

• After the lecture the student should:

- Get general overview of international sales of
goods: International Commercial terms
(Incoterms), International sale contract
- Negotiation Strategy
- Communication and Information in negotiation

7-2
 GENERAL VIEW OF
INTERNATIONAL SALES OF GOODS
1. Definition
Purchase and Sale of Goods VN
Commercial Law 2005: Purchase and
sale of goods mean commercial
activities whereby the seller is obliged
to deliver goods, transfer ownership
of goods to the purchaser and receive
payment; the purchaser is obliged to
pay to the seller and receive goods
and the ownership thereof as agreed.
2/23/21 3 7-3
 INTERNATIONAL COMMERCIAL TERMS
1. Definition
- Incoterms® are the ICC rules for the
interpretation of trade terms were created by ICC
with the aim of facilitating international trade.
-The Incoterms® rules explain a set of three-
letter trade terms reflecting business-business
practice in contracts for the sale of goods.
-The Incoterms rules describe mainly the
obligations, costs and risks involved in the
delivery of goods from the seller to buyer.

2/23/21 4 7-4
 INTERNATIONAL COMMERCIAL TERMS

2/23/21 5 7-5
 INCOTERMS 2020

VS

7-6
www.themegallery.com Company Logo
 2. Characteristics
• Incoterms are ICC rules but no obligations of
applying to the Contract.
• Use in the Contract for sale and purchase of goods.
• Choose one appropriate Incoterms rule in the
Contract.
• Define exactly specific edition of Incoterms .
• Incoterms does not deal with many issues arising
in or relating with the Contract.
• Make additions, adjustment of Incoterms rules in
the Contract but keep principles and features
unchanged. 7-7
 Incoterms 2020 obligations
NGHĨA VỤ NGƯỜI BÁN (A) NGHĨA VỤ NGƯỜI MUA (B)
A1. Nghĩa vụ chung/ General Obligations B1. Nghĩa vụ chung/ General Obligations

A2. Giao hàng/ Delivery B2. Nhận hàng/ Taking Delivery

A3. Chuyển giao rủi ro/ Transfer of Risks B3. Chuyển giao rủi ro/ Transfer of Risks

A4. Vận tải/ Carriage B4. Vận tải/ Carriage

A5. Bảo hiểm/ Insurance B5. Bảo hiểm/ Insurance
A6. Chứng từ giao hàng/ chứng từ vận tải -/ B6. Chứng từ giao hàng/ chứng từ vận tải -/
Delivery/ Transport Document Delivery/ Transport Document
A7. Thông quan xuất nhập khẩu/ Export Import B7. Thông quan xuất nhập khẩu/ Export Import
Clearance Clearance
A8. Kiểm tra, đóng gói bao bì, kẻ kí mã hiệu/ B8. Kiểm tra, đóng gói bao bì, kẻ kí mã hiệu/
Checking, Packaging, Marking Checking, Packaging, Marking
A9. Phân chia chi phí/ Allocation of Costs B9. Phân chia chi phí/ Allocation of Costs

A10. Thông báo/ Notices B10. Thông báo/ Notices

7-8
ANY MODE OR MODES OF
TRANSPORT

EXW, FCA, CPT, CIP, DAP, DPU, DDP

7-9
 INCOTERMS® 2020

SEA AND INLAND WATERWAY

FAS, FOB, CFR, CIF

 INTERNATIONAL COMMERCIAL TERMS

2/23/21 127-12
 Risk and Cost division
Seller Buyer

Simultaneous: Different points:

Group E Group C:
Group F CFR, CIF: Risk passing like
Group D FOB. The Seller bear all
transport cost and charges
to the destination port.
CPT, CIP: Risk passing like
FCA. The Seller bear all
transport cost and charges
to the destination place.
2/23/21 137-13
7-14
 Negotiating and signing an
international contract

2/23/21 157-15
I. GENERAL VIEW OF CONTRACT FOR
INTERNATIONAL SALES OF GOODS

Parties

Contract
Goods laws and Content
regulatio
ns

Form

7-16
 Trade

freedom
Freewill,
Legal Identities r

VN
Good Conten
s commerce t
Law 2005

Formati Writing forms or

Unforbidden

legally equivalent
Legally

on
manners

7-17
 Negotiating and signing
an international contract
The differences between an international and a domestic sales
contract
Form of the contract (evidence of an agreement)
Contractor
Goods/ commodities
Applicable law
Content of the contract
Currency
Language

7-18
 Form of the International sales contract

CISG: Act.11: a contract of sales can be proved by any means

(including witnesses)
Commercial law of Vietnam:
Atc.24: (domestic/ in general) Contract for purchase and sales of
goods…
can be made: orally
in writing
by specific conduct
Atc. 27: International contract for purchase and sales of goods: in
writing or equivalent legal validities

7-19
contractor
• Vietnamese trader: business registration
• Foreign trader: conform to the law of the country where
foreign trader’s headquarter

7-20
 Goods/ commodities

• Conduct custom procedure

• 3 groups:
• Banned from import, export
• Imported under permits of (and subject to specialized
management by) ministries
• Common imported/ exported commodities

7-21
 Applicable law

• International law:
• International agreement
• National law
• International commercial practice:
• Incoterms
• UCP 600
• Court precedent

7-22
• Use of foreign currency
• Foreign language
• international Business and communication cultural

7-23
Preamble of the contract

Name and serial number of the contract

Date and Place signing the contract (if any)
Name of the trader
Address
Represent person
Other information: fax number, phone number, email
add, website…

7-24
Article in an international sales contract

Commodities of the contract Packaging

Quality/ specification International
commercial terms
Quantity Arbitration
Delivery Claim
Price Force majeure
Payment

7-25
COMMODITY
- Normal name + Commercial + scientific name
Adhesive Additives: I+G (Disodium 5’-Inosinate 50% & Disodium 5’-
Guanylate 50%)
- Name + Origin of product.
Buon Me Thuot coffee, Phu Quoc fish sauce
- Name + Main technical specification
Long grain rice (6mm), 25 MT truck
- Name + basic function/utility of product.
Anti-rust paint

7-26
COMMODITY
- Name + Manufacturer.
Honda motorcycle, Heiniken beer
- Name + Trademark/brand name.
333 beer, 555 cigarette
- Name + HS code (Harmonized Commodity Description
and Coding System):
09.10 Ginger, Saffron, Turmeric (Curcuma), Thyme, Bay leaves,
Curry and other spices
09.10.10.00.00 Ginger
2501.00.49.20: Salt

7-27
COMMODITY

- E.g.

- Vietnamese Long grain rice IR 504, 5% broken, Oct/2017

crop in the South

- Automatic Soldering machine, Model CI-250BSS, KiKo

brand, AC 220V/50Hz, high output 30,000 Units per hour
with standard conveyor speed 0.8m/min

7-28
Quality

• There is normal phenomena in International trade that poor

quality goods has been refused by the buyer. It cause lot of
expenses for both the parties’
• In order to limit this case, we should pay more attention to the
contract negotiation
• There must be main points in negotiation
1. Together setting out the agreed level of quality
2. Define the cases consider as defective/ inferior commodities
3. Agree on the time and place of quality inspection.
4. Agree on period of defective liability
5. Agree on type of warranty/ guarantee
6. Agree on how the Seller can fix the defected commodities 7-29
1- Setting out the agreed level of quality

There are many method to define the level of quality

As per sample
As per export standard
As per technical material
As per specifications
As it is/ tale quale
As per proportion/content of main element
As per pre- inspections
As per natural weight
As per descriptions
As per commercial practice
7-30
2- Define the case consider as defective

This term helps the parties to clarify the type of defective

at the time of delivery. In facts, conflicts often raise from
the hidden defect
There are 3 types of defective
defective workmanship normally hidden and discover in
use
defective materials, normally hidden and difficult to
discover;
defective design (the goods have the wrong specification
Defective do not include tearing, normal depreciation,
wrong/ incorrect use of the goods

7-31
3- Qualities inspection

Place:
ex manufacturer place
ex delivery place (loading place/ unloading place)
ex user place
Who:
manufacturer
government agent
third party
Certificate of quality: final/ temporary

7-32
Quantity

• Unit:
• Stipulation: fixed/ tolerance
• Weight determination
• Quantity inspection

7-33
Quantity

Flexible quantity stipulation (Tolerance

allowed)
•Range of tolerance
•Parties to decide the tolerance
•Price of goods within range of
tolerance

7-34
Part 1. CONDITIONS AND TERMS OF
COMMODITY

Specific Delivered
Quant. quantity?

Trading
Quantity
Tolerance
Payment?

7-35
2.4. Quantity Checking and Inspection.
2.4.1. Place
- Departure: Shipped point, the Seller’s
premises
- Destination: Landed point, factory of
the Buyer.
- Other places.
2.4.2. Party
- The Seller, Buyer.
- Inspecting bodies: SGS, Vinacontrol,
etc.
7-36
2.4.3. Certificate of Quantity.
E.g.
Gross weight for net: MT 3000+- 5% at the
charterer’s option. Final certificate of
Quantity issued by Vinacontrol at HaiPhong
port.

7-37
How can you negotiate on a place of quality /
quantity inspection
• The seller insist on manufacture quality certification
• The seller insist on loading quality inspection
• The buyer insist on unloading inspection

7-38
Delivery

• Delivery period: concrete time, customary time,

conditional time
• Delivery places: place of shipment, place of
destination, place of transshipment
• Delivery notice: number of notice (E&F: 3 times, C&D:
1 time), content of notice (M.V, B/L, cont. list. GW,
NW. ETD, ETA, etc.)
• Instruction to delivery

7-39
Price

• Unit price: currency

• Method of Price stipulation: fixed price, flexible price,
deferred price, sliding price
• Trade terms
• Other cost and expenses

7-40
 Price
• fixed price: The parties agree on a concrete price in the
contract and do not allow adjusting it during contract
implementation
• flexible price: At the date of conclusion of the contract, the
parties agree on a concrete price but also agree on the rules
to adjust the price at time of delivery if the market price
highly fluctuated
• deferred price: At the date of of conclusion of the contract,
the parties do not agree on a concrete price but agree only
on the rules to determine the price at time of delivery//
Agree conditions of price definition later like time, reference
price, etc.
• sliding price: In the contract, the parties agree on an initial
price. However, the final price will be determined at time of
delivery, depend on the initial price and change in price of
each components 7-41
Negotiation for price terms

Preparation:
• cost and expense
• other seller’ price
• buyer’ price range
• Other terms to be trade in for a deduction or increase
in price

7-42
Negotiation for price terms

Choosing trade terms: understand the buyer and the

seller’s obligation in the agreed terms.
Bear in mind all related cost and expense. Make it clear
of which cost and expense is included in the quoted
price.
Exchange rate and its fluctuation
Understand the relationship between the price and
quality, price and quantities, price and payment terms.

7-43
Negotiation for price terms
• Setting the higher position in starting the price
negotiation
• Set the price that equal to real value of the good. To
set the higher price, prepare for at least 3 reasons for
your price and distinguish your products.
• Be caution with large discount. You tend to reduce
your price to maintain the potential relationship.
However when you have many potential customers,
you will easily let the hard customer go.
• Prepare for small concessions for trading in
• Be confident
7-44
Payment

Payment period: advanced, at sight, deferred

Payment currency
Payment method: Cash, Deposits instruments,
Remittance, Open account, Collection,
Documentary credit (L/C)

7-45
How can you negotiate for payment terms

Think of the cost of payment procedure and your trust

on the other partyà then consider the suitable
payment method.
Think of the currency
The parties’ position which determine the payment
period

7-46
How can you negotiate for payment terms

• Seller insist on a confirmation L/C

• Buyer insist on a revocable L/C
• Payment period

7-47
Arbitration

Place of arbitration
Arbitration fee
Type of arbitration: Institutional arbitration, Ad hoc
arbitration

The term “agreement in writing” shall

include an arbitral clause in a contract or
arbitration agreement, signed by the
parties.
7-48
How can you negotiate for an arbitration
agreement
• Applicable law
• Arbitration fee
• Place of arbitration:

7-49
Force majeure
Characteristics
- Unforeseeable
- Outside the control of the parties
- Make performance impossible or at least not
reasonably sustainable.
- Happen after signing Contract.
Rights and obligations
- Non – performance/ exemption from liability.
- Contract termination without remedy.
- Immediate Information and confirmation.

7-50
 Don’t bargain over positions

2/23/21 517-51
Customer Shopkeeper
How much do you want for this That is a beautiful antique, isn’t it? I
brass dish? guess I could let it go for $75

Oh come on, it’s dented. I’ll give you Really I might consider a serious
$15 offer, but $15 certainly isn’t serious

Well, I could go for $20, but I would
never pay anything like $75. Quote
me a realistic price
$25
You drive a hard bargain, young
lady. $60 cash, right now.
It cost me a great deal more than
that. Make me a serious offer

$37.50. That’s the highest I will go Have you noticed the engraving on
that dish? Next year pieces like that
will be worth twice what you pay
today

2/23/21 527-52
Don’t bargain over positions

• Any method of negotiation may fairly

judged by 3 criteria:
• It should produce a wise agreement if
possible
• It should be efficient
• It should improve or at least not damage
the relationship between parties

2/23/21 537-53
Arguing over positions produces
unwise agreements
• When negotiators bargain over positions,
they tend to lock themselves into those
positions (the more you clarify your positions and
defend it against attack, the more committed you become
to it)
• More attention is paid to positions, less
attention is devoted to meeting the
underlying concerns of parties

2/23/21 557-55
Arguing over positions is inefficient

• Take a lot of time

• Create incentives that stall settlement
reached is favorable to you (the more extreme
the opening positions and the smaller the concessions, the
more time and effort it will take to discover whether or not
agreement is possible)

2/23/21 567-56
Arguing over positions endangers
an ongoing relationship
• Becomes a contest of will (each side tries to force
the other to change its position)

• And bitter feelings generated by one such

encounter may last a lifetime….
2/23/21 577-57
When there are many parties,
positional bargaining is even worse
• In fact, almost every negotiation involves
more than 2 persons
• The more people involved in, the more
serious the drawbacks to positional
bargaining. (Since, to whom you make a
concession?)
• If some 150 countries are negotiating, as in various United
Nations conferences, positional bargaining is next to impossible
• In such situations, positional bargaining leads to the formation of
coalitions among parties who shared interests (such as the North
and the South, the East and the West)

2/23/21 587-58
Being nice is no answer

Soft or hard game???

• Soft negotiating game emphasizes the importance of
building and maintaining a relationship.
• Soft negotiating game tends to be efficient since it
produces results quickly
BUT produces a sloppy agreement
• Soft negotiating game make you vulnerable to someone
who plays a hard game
• In positional bargaining, a hard game dominates a soft
one

2/23/21 597-59
Positional Bargaining: Which Game
should you play?
Soft
Participants are friends
The goal is agreement
Make concessions to cultivate
the relationship
Be soft on the people and the
problem
Trust others
Change your position easily
Make offers
Accept one-sides losses to
reach agreement
Search for the single answer:
the one they will accept
Insist on agreement
2/23/21 Try to avoid a contest of will
Hard
Participants are adversaries
The goal is victory
Make concessions as a
condition of the relationship
Be hard on the people and the
problem
Distrust others
Dig in to your position
Make threats
Demand one-sides gains as the
price of agreement
Search for the single answer:
the one you will accept
Insist on your position
Try to win a contest of will 607-60
There is an alternative
• The answer to the question of whether to use
soft positional bargaining or hard is “Neither”
• Alternative to positional bargaining: principled
negotiation or negotiation on the merits
• Basic 4 points:
• People: Separate the people from the problem (soft on
people, hard on problem)
• Interests: Focus on interest, not positions (explore
interests & avoid having a bottom line)
• Options: Generate a variety of possibilities before
deciding what to do (develop multiple options to choose
from & decide later)
• Criteria: Insist that the result be based on some
objective standard (reach a result based on standards
independent of will & be open to reason)
2/23/21 617-61
 Negotiation Strategy

2/23/21 627-62
 Key factors to determine the types
of Strategy

• Analyze your own position and other

parties’ position at the contextual issue of
negotiation
• Preparation allows you to choose suitable
strategy, other than (avoiding) negotiate
blind
• Right combination of strategy increase
the chance of successful outcome.

7-63
 Key factors to determine the types
of Strategy
• Relationship concerns
Whether there is a relationship Outcome
Whether the relationship is positive
Thinks of future relationship
The history of relationship
Level of commitment
Degree of interdependence
Open communication

Relationship
• Outcome concerns
Importance of the outcome of negotiation

7-64
 High
Accommodating Collaborative
Lose to win Win-Win

Importance of
Compromise
RELATIONSHIP
Split the difference

Avoiding Competitive
Lose-lose Win at all cost
Win Lose

Low
Low Importance of High
OUTCOME

7-65
 Avoiding Strategy (Lose-lose)

• Loss in terms of outcome and relationship

• The avoider refuses to negotiate

• Reasons for avoiding strategy

• Neither outcome and relationship is important.
• Negotiation is costly (in terms of time, money, and
relationship)
• Avoid trigger an angry from the other party
• Having a strong alternative outcome

7-66
 Accommodating Strategy
(Lose to Win)
• Sacrifice the outcome for better future relationship
• A short-term loss in exchange for a long-term gain
• Be aware of competitive (Win to lose) partner
• Use damage control and reconnection strategy to overcome
the situation.
• Normally is not a formal strategy in negotiation

7-67
 Competitive strategy (Win to Lose)

• Gain on short-term outcome while lose on (endanger)

the relationship and long-term outcome
• Reason:
• One time relationship
• Poor/not important future relationship
• The partner is hard bargaining or dishonesty
• Character:
• We-they attitude: emphasize on differences between parties

7-68
 Collaboration strategy (Win-Win)

• Key important of collaborative strategy is commitment

• Both parties committed
• To understand the other party’s needs and objectives.
• To provide free flow of information
• To find the best solutions to meet the needs of both sides

7-72
 Collaboration strategy (Win-Win)

• Developing and maintaining a relationship is important.

• Both parties are willing to understand the other party’s
needs and objectives.
• Finding a long lasting, creative solution is required.

7-73
 Compromising strategy (Splits the
differences)
• Both parties gain something in both dimensions
• Parties are in short of time or critical resources to get
to collaboration strategy
• Require: high degree of trust, openness and
cooperation
• Open and accurate communication

7-74
 Factor to choose strategy

• Situation
• Preferences
• Experiences
• Style
• Perceptions and past experience
• Other factors

7-75
There is an alternative (cont.)
• The answer to the question of whether to use
soft positional bargaining or hard is “Neither”
• Alternative to positional bargaining: principled
negotiation or negotiation on the merits
• Basic 4 points:
• People: Separate the people from the problem (soft on
people, hard on problem)
• Interests: Focus on interest, not positions (explore
interests & avoid having a bottom line)
• Options: Generate a variety of possibilities before
deciding what to do (develop multiple options to choose
from & decide later)
• Criteria: Insist that the result be based on some
objective standard (reach a result based on standards
independent of will & be open to reason)
2/23/21 767-76
1. People: Separate the people
from the problem
Negotiators are people first
- Negotiator is not representative of the ”other side” but
human being. So are you!
- Failing to deal with others sensitively as human beings
prone to human reactions can be disastrous for a
negotiation
- Asking yourself ”Am I paying enough attention to people
problem?”

2/23/21 777-77
1. People: Separate the people
from the problem
Every negotiator has 2 kinds of Interests: substance
and relationship
- Most negotiator wants to maintain a working relationship
good enough to produce an acceptable agreement if one is
possible given each side’s interests.
- In fact, with many long-term clients, business partners,
family members, fellow professionals, government
officials, or foreign nations, ongoing relationship is far
more important than the outcome of any particular
negotiation.
- The relationship tends to become entangled with the
problem. Egos tend to become involved in substantive
positions.

2/23/21 787-78
1. People: Separate the people
from the problem
Separate the relationship from the substance: deal
directly with the people problem
- To deal with psychological problems, use psychological
techniques
- Various people problems all fall into one of three baskets:
perception, emotion, and communication
Perception:
Put yourself in their shoes => Allow you to reduce the area of conflict
Don’t blame them for their problem
Discuss each other’s perception
Emotion:
Feelings may be more important than talk
First recognize and understand emotions (theirs and yours)
Allow the other side to let off steam
Communication:
Negotiation is a process of communicating back and forth
Note how often partner don’t seem to pay attention to what you say
2/23/21 Misunderstanding/ misinterpret 797-79
1. People: Separate the people
from the problem

2/23/21 807-80
2. Interests: Focus on Interests,
Not Positions
• Interests differ Positions crucially
• Interests define the Problem
• Looking to interests instead of positions make it possible
to develop a solution

2/23/21 817-81
2. Interests: Focus on Interests,
Not Positions
Behind opposed positions lie shared and compatible
interests, as well as conflicting ones
SHARED INTERESTS

Tenants and Landlord both want stability (stable tenant, permanent address)

Both would like to see apartment well maintained

Both are interested in a good relationship with each other (pay rent regularly,
responsive landlord who will carry out the necessary repairs)
DIFFERED BUT NOT CONFLICTED INTERESTS

Tenant may not want to deal with fresh paint. Landlord do not want to pay the costs of
repainting
Landlord wants the security of a payment of the first month’s rent by tomorrow. Tenant,
knowing this is a good apartment, may be indifferent on the question of paying
tomorrow
2/23/21 827-82
2. Interests: Focus on Interests,
Not Positions
Talk about interests
Make your interests come alive (To be specific)
Acknowledge their interests as part of the problem (People
listen better if they feel you have understood them)

2/23/21 837-83
3. Options: Invent Options for
Mutual Gain
Diagnosis
4 major obstacles that inhibit the inventing of an
abundance of options
- Premature judgment (Judgement hinders imagination. And under the pressure
of a forthcoming negotiation, your critical sense is likely to be sharpen)
- Searching for single answer (People see their job as narrowing the gap
between positions, not broadening the options available)
- The assumption of a fixed pie (“fixed-sum” game)
- Thinking that “solving their problem is their problem”

2/23/21 847-84
3. Options: Invent Options for
Mutual Gain
Prescription
Ways to invent creative options
- Separate inventing from deciding (No right way to run a brainstorming
session. Should tailor it to your needs and resources)
- To broaden the options rather than look for a single answer
- Look for mutual gain (identify shared interests & dovetail differing interest/
agreement is often based on disagreement)

2/23/21 857-85
4. Criteria: Insist on using
objective criteria
Deciding on the basis of will is costly
The solution is to negotiate on some basis independent of the will of either side –
objective criteria

Developing objective criteria

Market value
Precedent
Scientific judgement
Professional standards
Efficiency
Costs
What court would decide
Moral standards
Tradition
Etc.

2/23/21 867-86
4. Criteria: Insist on using
objective criteria

2/23/21 877-87
2/23/21 887-88
2/23/21 897-89