24/07/2023

FOREIGN
TRADE
OPERATIONS

PHAN VŨ NGỌC LAN – MDE

International Business Administration Department
lanpvn@huflit.edu.vn

INTERNATIONAL
SALES
CONTRACT

CHAPTER 3
PART 3

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IN THIS CHAPTER
1. Concept of International sales contract

2. Requisites to the effect of an international sales

contract

3. Main contents of an international sales

contract

4. Major terms and conditions in international

sales contracts

5. Execution of International sales contracts

4. MAJOR TERMS AND CONDITIONS IN INTERNATIONAL

SALES CONTRACTS
1. [Description of ] Goods/Commodity/Scope of supply
2. Quality and specifications
3. Quantity
4. Packing and marking
5. Price
6. Terms of delivery/Shipment
7. Transportation
8. Insurance
9. Terms of payment and documents
10. Non-conformity/Inspection and claims
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4. MAJOR TERMS AND CONDITIONS IN INTERNATIONAL

SALES CONTRACTS
11. Warranty
12. Force majeure (excuse for non-performance)
13. Dispute resolution/Dispute settlement/Arbitration
14. Applicable law
15. Damages/Penalty
16. Performance guarantee
17. Transfer of risk and title/Transfer of property/Retention of title
(optional)
18. Entire agreement & effectiveness (optional)
19. Non-performance (optional)
20. Pre-shipment inspection [Inspection of the Goods] (optional)
21. Limitation of liability (optional)
22. Avoidance of contract and restitution (optional)
Jul-23 BY PVNLAN 5

4.7. TRANSPORTATION TERMS

Stating how the goods will be transported.
Including mode of transportation and related problems. (by
road, rail, ocean, air or, in other cases, a combination of these
modes (multi-modal transport))
In sea transport: Define the mode of vessel chartering: Liner,
Voyage chartering or Time chartering.
 define the vessel, time of loading, loading/discharging cost,
freight rate and payment, demurrage/dispatch money…

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4.8. INSURANCE
Liability of obtaining insurance: To be fulfilled by the
seller or the buyer? -> closely relates to the terms of
delivery, based on:
-Characteristics of goods
-Means of transportation
-The voyage
-Possible risks…
Regulations related to obtaining insurance: Insurance
terms, Amount insured.

4.9 PAYMENT TERMS [PAYMENT CONDITIONS]

Time of payment Method of payment

(When payment is (How payment will be
due?) made?)

Details of
Amount to be paid Beneficiary’s bank
(How much?) account (Where
payment is going?)

The documents to be
presented

Jul-23 BY PVNLAN 9

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PAYMENT BY CASH IN ADVANCE & OPEN

ACCOUNT
1. Method of payment: Telegraphic transfer (T/T) in advance
2. Amount to be paid (total price or part of the price and/or
percentage of contract value] . . . . . . . . .
3. Latest date for payment to be received by Seller’s bank. . . . . . . .
.
4. Bank details of Beneficiary . . . . . . . . . . . . . . . . . .
5. Documents:. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6. Documents shall be sent by fast courier to the following address
not later 3 days after shipment:. .. . . . . . . . . . . . . .
7. Special conditions applying to this payment [if any] . . . . . . . . . .
.Jul-23. . . BY PVNLAN 10

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4.9.1. TIME OF PAYMENT

-Advance payment / Down payment

-Prompt / Immediate payment
-Deferred payment

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Risk Comparison
INTERNATIONAL
METHODS OF PAYMENT

4.9.1. TIME OF PAYMENT

• Within [period] after signing the contract
1 • Within [period] before shipment

• Upon receipt of documents or goods, which would

2 invariably (always) be sent direct to the buyer.

• After a period of typically 30, 60, or 90 days after a

3 specified date (eg date of invoice.)

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ADVANCE PAYMENT
Advance payment: payment made after the contract
signing but before delivery date
credit offered by Buyer (Seller is short of capital)

Purpose: as Performance Bond, guaranteeing the contract

performance.
e.g. Payment before the delivery date x days (short time,
usually 10 to 15 days).

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PROMPT PAYMENT
Prompt payment: with many points of time to
identify: from the time goods are ready for
dispatch to the time the goods reach Buyer.
4 types:
a. After the Seller fulfils his obligations to deliver
the goods to carrier at the named place of
delivery, Seller issues order for payment. Upon
receipt of such order, Buyer makes payment:
C.O.D (Cash on Delivery).

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PROMPT PAYMENT
b. The Seller fulfils his obligations to deliver the goods on
board of the transport means, Buyer makes payment after
getting the notice from the shipmaster that the goods
have been on board at the port of departure
c. C.A.D (Cash Against Documents) // D/P (Documents
against Payment)
d. Payment made after taking delivery of the goods

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DEFERRED PAYMENT

- Payment shall be made x days after:

+ the delivery date
+ the date of document presentation
+ the date of taking delivery
+ the date of guarantee completion

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COMBINED/MIXED TIME OF PAYMENT

-X1 days after the contract becomes effective, the Buyer shall pay
3% of the contract value.
-X2 days before the first shipment, the Buyer shall pay 5% of the
contract value.
-Right after the first shipment, the Buyer shall pay 5% of the
contract value.
-Right after the last shipment, the Buyer shall pay 10% of the
contract value.
The Buyer will keep 10% of the contract value and pay that upon
the completion of guarantee obligation. The remaining shall be
paid in 4 years, each year an equal amount.

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4.9.2. METHOD OF PAYMENT

Means of Payment:
Cash
Cheque
Payment cards
Bill of Exchange / Draft
Promissory Note

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4.9.2. METHOD OF PAYMENT

Modes of Payment:
Cash payment
Open account
On consignment
Remittance / Transfer (T/T)
Collection (Clearn or Documentary)
Documentary Credit (L/C)

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4.9.2. METHOD OF PAYMENT

3 popular modes:
Remittance / Transfer: Telegraphic transfer – T/T (not TTR)/
mail transfer -M/T
Collection: clean, documentary collection (D/P or D/A)
Documentary credit: Letter of credit L/C

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REMITTANCE: T/T IN ADVANCE

RiskINTERNATIONAL
Comparison
METHODS OF PAYMENT

(4) Ships/Delivers the

goods
(5) Sends out the docs
EXPORTER/ IMPORTER
SELLER /BUYER

(3) Pays to (1) Sets up

the wire
beneficiary transfer/re
mittance
order

(2) Transfers/Remits

Jul-23
Exporter’s bank Importer’s
22 bank
BY PVNLAN

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REMITTANCE: T/T AFTER SHIPMENT

1. Goods delivery
3
Ex bank Im bank 2. Order of remittance
3. Remitting
4 2
4. Paying to Beneficiary

Ex Im
1

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CLEAN COLLECTION

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CLEAN COLLECTION
3
Ex bank Im bank
Remitting bank Collecting bank
5
2 5 5 4

Exporter 1 Importer
Principal Drawee

1. Goods delivery, prepare 3. 4. Bank sends Collection

docs, send to Importer. instruction to Correspondence
bank -> Importer.
2. Draw B/E and send
collection instruction to bank. 5. Importer pays.

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DOCUMENTARY COLLECTION: DOCUMENTS AGAINST

PAYMENT (D/P)

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DOCUMENTARY COLLECTION
3
Exporter’s bank Importer’s bank
Remitting bank Collecting bank
5
2 5 5 4

Exporter 1 Importer
Principal Drawee

1. Goods delivery without 3. 4. Bank sends C I to Corre

docs bank -> importer.
5. Importers checks docs, pays
2. Seller prepares docs and
collection instruction or accepts to pay, the gets docs

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CLEAN COLLECTION V.S DOCUMENTARY

COLLECTION
DOCUMENTARY
CLEAN COLLECTION
COLLECTION

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Risk Comparison
INTERNATIONAL
METHODS OF PAYMENT

LETTER OF CREDIT
(DOCUMENTARY CREDIT)

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L/C – MAIN PARTIES TO THE

CREDIT
ISSUING BANK [BUYER’S BANK]:
The bank that issues a credit at the
request of an applicant or on its
own behalf.
ADVISING BANK [SELLER’S BANK]:
The bank that advises the credit at
the request of the issuing bank.

APPLICANT [BUYER]: BENEFICIARY [SELLER]:

The party on whose request the The party in whose favour a credit
credit is issued. is issued.

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TYPES OF DOCUMENTARY CREDITS

STANDARD DOCUMENTARY CREDITS

Revocable
Irrevocable L/C (noncancellable by the buyer) L/C
(cancellable
by the buyer)

L/C
Usance L/C Deferred L/C
[L/C at sight]

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TYPES OF DOCUMENTARY CREDITS

STANDARD DOCUMENTARY CREDITS

Revocable
Irrevocable (noncancellable by the buyer) (cancellable by the
buyer)

Unconfirmed L/C Confirmed L/C

(payment (payment
guaranteed only guaranteed by a
by the issuing second bank, in
bank) addition to the
issuing bank)

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Risk Comparison
SETTLEMENT/PAYMENT
INTERNATIONAL
METHODS OF PAYMENT

(1) After being satisfied with the L/C terms and (7) Uses the title
conditions, arranges for shipment & obtains the document to claim the
transport document from the carrier goods from the carrier

Beneficiary/Seller/Drawer Applicant/Buyer
Carrier (5) (6)
(2) Prepares & Presents the Reimburses
presents the docs as doc on
required in the L/C package comlying
presentatio
(5)
n
Pays

(3) Reviews & presents the doc package

(4) Reviews & pays on complying

presentation

Advising
Jul-23
bank/Drawee Issuing bank/Drawee
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BY PVNLAN

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DOCUMENTARY CREDIT
Types of L/C
Revocable L/C
-Irrevocable L/C
-At sight L/C
-L/C with deferred payment
-Confirmed L/C/Unconfirmed L/C

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4.9.3 AMOUNT TO BE PAID

Total price

Part of the price (or percentage of

contract value)

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Risk Comparison
INTERNATIONAL
METHODS OF PAYMENT

4.9.4 DETAILS OF BENEFICIARY’S BANK

ACCOUNT
Beneficiary details including:
• Full beneficiary name (exporter name)
• Full business address of beneficiary
Bank details of beneficiary including:
• Name of bank
• Address of bank
• SWIFT code
• Account number

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MIXED PAYMENT TERMS – EXAMPLE

Mixed payment terms – EXAMPLE

• Payment for the Goods shall be made by the

Buyer in accordance with the agreed payment
schedule as follows:
• 40% of contract value will be paid by T/T in
advance not later than 5 days from date of
signed contract.
• 60% of contract value will be paid by
irrevocable L/C payable at sight in favour of
the Seller.
Jul-23 BY PVNLAN 39

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PAYMENT CONDITIONS –
IMPORTANT NOTES
Estimate of the • should lead to sensible choices
risks involved with regarding the method of
certain customers payment and the credit terms
and certain granted.
markets

• Is essential to all exporters and

Credit risk starts at the beginning of the
management process, NOT at the end when
attempting to collect money.

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DOCUMENTATION/SHIPPING DOCUMENTS

Work in group, read the contract sample and

answer the following questions:
What documents must be presented to the
Buyer’s nominated bank?

Jul-23 BY PVNLAN 41

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TYPES OF DOCUMENTS
Financial documents Commercial
documents

Bills of exchange Commercial Invoices

Promissory notes Transport documents

Cheques, etc. Packing list

Insurance policy/
Certificate

Certificate of origin, etc.

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Documentation/Shipping documents
• Commercial invoice . . . . . . . . . . . . . . . . . . . .
• Transport documents (i.e bill of lading, seaway bill,
airway bill).
• Packing list . . . . . . . . . . . . . . . . . . . . . . . . . . .
• Weight list . . . . . . . . . . . . . . . . . . . . . . . . . .
• Insurance documents . . .. . . . . . . . . . . . . .
• Certificate of origin (C/O) . .. . . . . . . . . . . . . . . . . .
• Certificate of inspection (C/I) . . . . . . . . . . . . . . . .
• Certificate of analysis (C/A). . . . . . . . . . . . . . . .
• Certificate of quantity & quality . . . . . . . . . . . . . . .
.
• Certificate of phytosanitary . . . . . . . . . . . . . . . .
• Other documents . . . . . .
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SHIPPING DOCUMENTS – EXAMPLE

60% of contract value by irrevocable L/C shall be paid against the
complying presentation of below shipping documents in English
language:
 Full set [3/3] of Original clean on board Bill of Lading made out
to order of issuing bank, marked “freight prepaid", and notify
the Buyer/Applicant
 Duly signed Commercial Invoice in 03 originals
 Duly signed Detailed Packing List 03 originals
 Certificate of Origin form_______[ex. form AI] issued by
competent authority [ex. Indian Chamber of Commerce] in 01
original and 01 triplicate
 Duly signed Certificate of Quality and Quantity [Certificate of
Analysis] in 03 originals
 Insurance policy/Certificate in duplicate, blank endorsed, for
110% of invoice value covering Institute Cargo Clauses (A),
Institute War Clauses and Institute Strike Clauses showing claims
payable in Vietnam.
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4.10. CLAIM
Claim: refers to the fact that one party must request their losses
and damages to be resolved by the other party who has
caused such inconveniences or violate their commitments.
Common of Claims:
-inadequate quantity and quality of delivery
-inferior packing,
-documents discrepancy,
-delayed delivery, etc.

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4.10. CLAIM

Terms of claim:
Claim procedures,
Time limit for lodging claims,
Rights and obligations of the relevant parties,
The methods of resolving claim.

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4.10.1. CLAIM PROCEDURES

Form: In written form

Content: Specifying the commodity of which the buyer
want to claim, together with relevant shipment and
delivery information.

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4.10.2. TIME LIMIT FOR LODGING

CLAIMS
Time limit for lodging claims means the period of time in
which the buyer’s claim will be considered.
Time for claims of improper quantity/ weight < quality
 clearly stipulated in the contract.

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Article 318.- Time limit for lodging complaints – Commercial

Code of Vietnam 2005
a/ Three months from the date of delivery of goods for
complaints about quantity of goods;
b/ Six months from the date of delivery of goods for complaints
about quality of goods. Where goods are under warranty, the
time limit for lodging complaints shall be three months from the
expiry of the warranty period;
c/ Nine months from the date on which the breaching party shall
fulfill its contractual obligations; or in the case of a warranty,
from the expiry of the warranty period, for complaints about
other violations.`

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4.10.3. RIGHTS AND OBLIGATIONS

The Buyer shall:
Maintain the current status of goods, inform the seller of the
storing place for inspection.
Invite surveyors from inspection agency, appointed to inspect the
shipment status.
Send a letter of claim in the time limit for lodging claims with all
necessary documents.
The Seller shall:
Receive the letter of claim from the Buyer.
Settle claims by methods as agreed.
Inform the Buyer of the progress and result of claim settlement.

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4.10.4. METHODS OF RESOLVING CLAIMS

Making additional delivery.

Receiving goods returned, and refunding the buyer.
Repairing defective items with the cost at the seller’s
expense.
Replacing the defective items.
Reducing the price

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4.11. WARRANTY

Jul-23 BY PVNLAN 52

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4.11. WARRANTY

Work in group, read the contract sample of the

text book and answer the following questions:
1. What does the Seller warrant?
2. What does the Seller not warrant?
[In what cases shall warranties be canceled?]
3. How long are warranties provided?

Jul-23 BY PVNLAN 53

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4.11. WARRANTY

A warranty is a promise you make about your

own performance.
The word is used in many contexts: a warranty of
title, for example, is a promise to a buyer that the
exporter really owns the contract goods.
A product warranty is a promise by the exporter
to cure defects in his products.
Warranty period is a chance to put things right

Jul-23 BY PVNLAN 54

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4.11. WARRANTY

A warranty protects both the exporter and the buyer.

The exporter is protected against an accusation of
breach of contract if
goods are provably defective on the date of delivery.
(Pinnells, p134)

Jul-23 BY PVNLAN 55

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4.11. WARRANTY
Warranty is the guarantee of the seller about the quality in a
certain of time, known as the warranty period.
In terms of warranty, parties can agree on:
- Warranty coverage
- Warranty period.
- Seller’s responsibility during the warranty period.

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4.11.1. WARRANTY COVERAGE

Define what counts as

a defect

Define what does not

count as a defect

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PRODUCT DEFECTS
Design defects
• Means that a product does NOT meet specifications

Material defects
• Materials or parts of a product that are inferior or somehow
incorrect

Manufacturing defects
• The product was designed fine, but the error or dangerous
aspect (defect) was unintendedly introduced during the
making of the product

Marketing defects
• Fail to provide proper warning labels or clear instructions to
help consumers avoid injuries
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PRODUCT DEFECTS
Patent/visible/apparent
defects

Latent/hidden defects

Jul-23 BY PVNLAN 60

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ART. WARRANTY – EXAMPLE 1 (FOR CHEMICALS)

1. The Seller voluntarily warrants, that the purchased Goods
meet the specifications stipulated in the Contract at the time
of delivery
2. Any other condition or warranty as to the quality of the
Goods furnished hereunder, merchantability or fitness for any
particular purpose is hereby excluded.

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ART. WARRANTY – EXAMPLE 2 (FOR MACHINE)

1. The Seller voluntarily warrants, that the purchased Goods meet
the specifications stipulated in the Contract at the time of
delivery and that it shall be free from material defects, and
manufacturing defects.
2. No liability will be assumed by the Seller in the following cases in
particular: unsuitable or improper use; faulty installation or initial
startup by the customer or third parties; natural wear and tear;
faulty or negligent handling; improper maintenance; perishable,
electrical, and electronic items.
3. The voluntary warranty period is 12 months from the date of
commissioning or 14 months from the date of dispatch from the
Seller’s works, whichever is reached first.
4. After the end of this period, the Buyer shall have no right to raise
claims of any kind against the Seller for any defect in any Goods
of the Seller's supply. (optional)

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What counts as a What does not Warranty period?

defect? counts as a defect?

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Natural wear and Misuse by the Faulty or negligent

tear buyer handling

Improper Perishable items Electrical, and

maintenance electronic items
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4.11.2 WARRANTY PERIOD

The warranty period can be calculated from when:
Delivery is made.
Commissioning of the machine (put into use?)

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4.11.3 SELLER’S RESPONSIBILITY DURING

THE WARRANTY PERIOD
Repair
Replacement
Price reduction
Receipt of goods returned
Agreed indemnity

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4.12. EXEMPTION / FORCE MAJEURE

Refers to where the parties are free from some or all the
obligations as stipulated in the contract.
Force majeure refers to cases that are
- beyond the parties' control
- reasonably unforeseeable and
- reasonably inevitable
(International Chamber of Commerce (ICC) publication no. 421)

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4.12.1. WAYS OF STIPULATION

EXEMPTION CASE
Presenting criteria to decide whether the incident is the force
majeure case or hardship case.
Listing the specific events to be considered as force majeure
or hardship cases.
Refer to the ICC’s documents:
“The force majeure (Exemption) clause of the International
Chamber of Commerce (ICC Publication No. 421) is hereby
incorporated in this contract.”

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4.12.2. METHODS FOR HANDLING

EXEMPTION CASE
Parties are exempted from their obligations partly or fully,
Extention time for contract execution.
Termination of the contract if the time extends for a certain of
time.

 During exemption case, parties should: notify the other,

enclose.

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ART. FORCE MAJEURE – PART 1 –

EXAMPLE

A party affected by Force Majeure shall NOT be

liable for any non-performance

• Neither the Seller nor the Buyer shall be liable for any
delay in or failure of performance of any of its
obligations hereunder where and to the extent that such
performance has been delayed, hindered, or prevented
by any Force Majeure circumstance which is not within
the reasonable control of that party.

Jul-23 BY PVNLAN 71

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ART. FORCE MAJEURE – PART 2 –

EXAMPLE

Specify what “Force Majeure” may include

• The Force Majeure may be including without limitation

of generality of: strikes, lockouts, war, civil commotion,
Act of God, Act of Government or civil authority, or
any other occurrence whatsoever, whether connected
with the Contract or not, of the like nature or otherwise,
not in the reasonable contemplation of the parties at
the date of entering into the Contract, and which
frustrates the purpose of so entering into the Contract.

Jul-23 BY PVNLAN 72

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ART. FORCE MAJEURE – PART 2 –

EXAMPLE

A party affected by force majeure shall not be

deemed to be in breach of contract but it must notify
the other party within a reasonable time.

• If any force majeure occurs in relation to either party

which affects or is likely to affect the performance of
any of its obligations under this contract, it shall notify
the other party within a reasonable time as to the
nature and extent of the circumstances in question and
their effect on its ability to perform.

Jul-23 BY PVNLAN 73

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ART. FORCE MAJEURE – PART 3 –

EXAMPLE

In what event the Parties may terminate the contract

upon notice

• In the event that the circumstances causing the said

delay or failure of performance is of a continuing or
permanent nature and does continue for more than 90
days, the either party may at its option terminate the
Contract without further liability, on giving not less than
14 days written notice to the other party.

Jul-23 BY PVNLAN 74

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ART. FORCE MAJEURE –

COMPARE THE EXAMPLES EXAMPLE 2
EXAMPLE 1
In the event that the circumstances
causing the said delay or failure of
performance is of a continuing or
permanent nature and does continue
for more than 90 days, the either
party may at its option cancel the
Contract without further liability, on
giving not less than 14 days written
notice to the other party.
If such events of force
majeure and circumstances
continue for a period of
ten days or more, the
Seller are entitled to
terminate the contract
immediately upon notice.

Jul-23 BY PVNLAN 75

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4.13. ARBITRATION
Institutional Arbitration: The arbitrator works regularly
according to an available regulation.
Ad hoc Arbitration: established to solve a case and dispersed
after that.  parties need to deal with:
+ Place of arbitration
+ Sequence of arbitration
+ Applicable laws
+ Enforcement of arbitral awards

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ART. DISPUTE RESOLUTION –

ALTERNATIVE 1: BY ARBITRATION
What arbitration institution?

Under the rules of what arbitration institution?

How many arbitrators and appointed by what

institution or whom?

Where is the place of arbitration?

What is the language of arbitration?

Who shall bear the arbitration costs?

Jul-23 BY PVNLAN 77

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ITC MODEL CONTRACT: DISPUTE

RESOLUTION
Dispute
resolution

Under the rules Under the rules

of arbitration of state courts

Jul-23 BY PVNLAN 78

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ART. DISPUTE RESOLUTION –

ALTERNATIVE 1: BY ARBITRATION

Convention on the
Recognition and
Enforcement of
Foreign Arbitral
Awards
(New York, 1958)

Jul-23 BY PVNLAN 79

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4.13.1. PLACE OF ARBITRATION

Set at a fixed place; or
Defined at the defendant country.

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4.13.2. SEQUENCE OF ARBITRATION

Arbitration agreement  reached on signing contract or on
having conflict arising.
Organizing Arbitration Committee
Coming up for court  Final and binding settlement
Arbitration fee and other costs

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4.13.3. APPLICABLE LAW

Defined by:
Both parties; or
Arbitration Committee

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ART. APPLICABLE LAW

By what laws shall the contract be governed?

What laws shall not apply to the contract?

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ART. APPLICABLE LAW – EXAMPLE

Applicable law.

• This Contract is governed by the laws of

Singapore.
• The United Nation Convention on Contracts for
the International Sale of Goods shall not apply
to this Contract.

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ITC MODEL CONTRACT: ART. APPLICABLE LAW

Questions NOT settled by the

provisions in the contract shall be
governed:

by the national
by Vienna Sales by the UNIDROIT laws of the
Convention of Principles Seller’s, the
1980 (CISG) Buyer’s, or a third
country.

Jul-23 BY PVNLAN 85

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ITC MODEL CONTRACT: ART. APPLICABLE LAW

1. Questions relating to this contract that are not settled by the
provisions contained in the contract itself shall be governed by
the United Nations Convention on Contracts for the International
Sale of Goods (Vienna Sales Convention of 1980, hereafter
referred to as CISG).

Jul-23 BY PVNLAN 86

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ITC MODEL CONTRACT: ART. APPLICABLE LAW

2. Questions not covered by the CISG shall be governed by the
UNIDROIT Principles of International Commercial Contracts
(hereafter referred to as UNIDROIT Principles), and to the
extent that such questions are not covered by the UNIDROIT
Principles, by reference to [specify the relevant national law by
choosing one of the following options:
a) The applicable national law of the country where the Seller
has his place of business, or
b) The applicable national law of the country where the Buyer
has his place of business, or
c) The applicable national law of a third country (specify the
country).]
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ART. APPLICABLE LAW – IMPORTANT NOTES

• Free choice of governing law
Freedom of contract.

Strong bargaining • Common applicable law to be

position & preference that of the exporter’s country.
of exporters
Based on the place
where the portion of • May arrange a split jurisdiction.
the contract to be
performed
• Courts to decide
No choice of law
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4.13.4. ENFORCEMENT OF ARBITRAL

AWARDS
The party in favor of whom the arbitral award is enforced may
make a written request to the provincial-level judgment-
executing agency of the locality where the party bound to
execute the arbitral award is headquartered, resides or has its
property, to enforce the arbitral award.
Article 57 in Ordinance on Commercial Arbitration No.
08/2003/PL-UBTVQH11 25/2/2003,

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THINGS TO CONSIDER FOR ARBITRATION

TERMS
Cases chosen to be solved at Arbitration court.
Arbitrators chosen for judgement.
Rules of Arbitration
Applicable Laws
Language, Time, Place of Arbitration
Value of Arbitrators’ award.
Allocation of arbitration fees and other related costs.

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ITC MODEL CONTRACT: ART. DISPUTE

RESOLUTION
Alternative 1: By arbitration
“Any dispute, controversy or claim arising out of or relating to this
contract, including its conclusion, interpretation, performance,
breach, termination or invalidity, shall be finally settled under the
rules of UNCITRAL [specify other rules] by [specify the number
of arbitrators, e.g. sole arbitrator or, if appropriate, three
arbitrators] appointed by [specify name of appointing institution
or person]. The place of arbitration shall be [specify]. The
language of the arbitration shall be [specify].”]

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ART. DISPUTE RESOLUTION – EXAMPLE

Dispute resolution

• All disputes in connection with this Contract or the

execution thereof shall be amicably settled through
negotiation.
• In case no settlement can be reached between the two
Parties, the case under disputes shall be submitted to
Singapore International Arbitration Centre for
arbitration in Singapore in accordance with its rules of
arbitration.
• The language of arbitration shall be English. The fee
for arbitration shall be borne by the losing Party.
• The arbitration award is final and binding upon both
parties.
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ART. DISPUTE RESOLUTION –

ALTERNATIVE 2: BY STATE COURTS

Where is the place of the courts?

Where is the country of the courts?

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ITC MODEL CONTRACT: ART. DISPUTE RESOLUTION

[Alternative 2: State courts
“Any dispute, controversy or claim arising out of or relating to this
contract, in particular its conclusion, interpretation, performance,
breach, termination or invalidity, shall be finally settled by the
courts of (specify place and country) which will have exclusive
jurisdiction.”.]

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4.14. PENALTY
-Scope
-Measures
-Content of the penalty term
In case of failure in opening L/C or making delivery in
due time as stipulated in this contract, except the
reason of force majeure, the penalty for delayed
delivery or delayed L/C opening shall be counted
based on the rate of 1% of the contract value per
delayed day.

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4.15. PERFORMANCE GUARANTEE

What?
 The measure agreed by the parties in
conformity with the legal framework in order to
ensure the contract implementation as well as
prevent and cover the consequence of non-
execution or improper performance of the
obligation specified.

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PERFORMANCE GUARANTEE IN IMPORT -

EXPORT
Escrow account: an act whereby an obligor deposits a sum of
money, precious metals, gems or valuable papers into a
blocked bank account to secure the performance of a contract
obligation towards the obligee.
Guaranty: an act whereby a third party (the guarantor)
commits with the obligee (the guarantee) to perform an
obligation for the obligor (guaranteed), when the obligation
becomes due and the guaranteed has failed to perform or has
improperly performed the obligation.

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Q&A THANK YOU FOR YOUR LISTENING

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References
1. International Trade Centre. Model Contracts For Small Firms: Legal
Guidance For Doing International Business. 2010. p35-p58. Retrieved
from http://www.intracen.org/model-contracts-for-small-firms/
2. United Nations Convention on Contracts for the International Sale of
Goods 1980 (CISG)
3. James R. Pinnells. Exporting and the export contract. Prodec. 1994
4. Belay Seyoum. Export-import theory, practices, and procedures (second
edition). Taylor & Francis, 2009
5. Jim Sherlock & Jonathan Reuvid. The Handbook of International Trade -
A Guide to the Principles and Practice of Export (2nd edition). GMB
Publishing Ltd., 2008
6. Donna L. Bade. Export/import procedures and documentation (fifth
edition). Amacom, 2015
7. GS. TS Đoàn Thị Hồng Vân & ThS. Kim Ngọc Đạt. Quản trị xuất nhập
khẩu, NXB Kinh tế Tp. HCM, 2016

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