CHAPTER 3: NEGOTIATING INSPECTION (KIỂM ĐỊNH) AND DEFECTS

LIABILITY (TRÁCH NHIỆM LỖI)

• Why do companies have quality assurance (đảm bảo chất lượng) program?

• To ensure that customers get what they pay for/to ensure customer satisfaction (đảm bảo là
khách hàng nhận được hàng tương đương với số tiền bỏ ra).

• Why may conflicts arise (xung đột phát sinh) in negotiating specifications?

• Because it’s a difficult process. The manufacture is often tempted to (dễ bị làm gì…) be over-
optimistic and to agree to impossible specifications, which is very risky in business. Conflicts
can arise even within the exporter’s own team: the marketing manager is eager to sell (quảng
cáo) brilliant products, but the production department knows that it cannot make them.

• What is the benefit of a well – designed set of specifications (bộ quy cách phẩm chất
được xây dựng kỹ lưỡng)?

• It protects both the buyer and seller: the buyer is protected against inferior products (poor
quality product) as it can reject any products that fail to meet specification; the seller can
protect its reputation and avoid costs.

• What is pre – delivery (trước khi giao hàng) inspection?

• Inspection of the goods in the manufacture’s factory before delivery

• What kind of goods needs pre – delivery inspection? Give example (ktra gk)

• All kinds of goods need pre – delivery inspection, especially sophisticated items or capital
equipment (tư liệu sản xuất).

• What are the functions of independent inspections? Why is there independent

inspection (kiểm định độc lập) ?

• It reports on the weight, size and most importantly, the value of the goods. It prevents
exporter and importer agreeing an unrealistically low invoice price in order to avoid customs
duties (trốn thuế) in the buyer’s country. Such inspection also prevents shipment of patently
defectives (lỗi hiển thị rõ) goods.

• What is the real inspection for goods?

• That is inspection by the buyer, or “open package inspection” (kiểm định bang cách mở
hàng)
• How long is the defects liability period?

• The defects liability period is negotiable this is likely to be several months from date of
delivery or the date of arrival.

• What are 5 steps in negotiating the Defects Liability Period? (ko thi)

• Step1: inspections

• 2: Terms (thuật ngữ): warranty or guarantee (bảo hành/ bảo lãnh) or defects liability

• 3: Definitions: what is, and what is not, a defect?

• 4: timing: how long is the defects liability period? When does it begin? What about other
time?

• 5: Corrective action (biện pháp khắc phục): what must the seller do to cure defects (khắc
phục lỗi)?

• What counts as patent defect (opened defect)? Give example

• Defects that are apparent, e.g., wrong items, broken or missing parts, scratches, etc

• What counts as a latent defect (lỗi ẩn tỳ)? give example

• Defects that only come to light after buyer’s acceptance, or hidden defects, e.g., structural
weaknesses, failure to operate at high or low temp, high fuel consumption.

• What are the 3 type of latent defects?

Defects may be in workmanship, in materials, or in design.

• Defective workmanship (lỗi trình độ tay nghề): a product with defective workmanship is
incorrectly built.

• Defective materials (lỗi nguyên vật liệu): defective materials are materials or parts of a
product that are inferior (poor quality) or somehow incorrect (không đúng nguyên vật liệu).

• Defective design (lỗi thiết kế): defective design means that a product does not meet
specifications.

• What are implied warranties (bảo hành mặc nhiên)?

• Assumption about goods made by the buyer, even if the exporter gives no express warranty.

• What are 3 types of Implied Warranties? Give example?

• Implied warranty of conformity with the Contract (bảo hành mặc nhiên đối với hợp đồng):
the Buyer can reject the goods if they do not conform with the Contract. (phủ định của cụm
sau of)

• Implied warranty of merchantability (bảo hành mặc nhiên về khả năng tiêu thụ của hàng
hóa): the Buyer can reject the goods if the goods are not of merchantability. (hàng không tiêu
thụ được thì bị từ chối)

• Implied warranty of fitness for intended purposes (bảo hành mặc định với mục đích hàng
hóa): The Buyer can reject the goods if the goods are not suitable for their intended
purposes. (từ chối nếu khác mục đích)

• What is a Product warranty (bảo hành sản phẩm)?

• A promise by the exporter to cure defect in his products. There are two parties: the buyer
and the seller./ exporter ??

• What is a Guarantee?

• A promise by the guarantor to pay the beneficiary, made out at the request of the principal.
There are three parties: guarantor, principal and beneficiary.

• What are the similarities and differences between a guarantee and a warranty?

• Similar: Both are promise(cam kết) about performance, payment is only made when there is
non – performance of product or of parties involved.

• Differences:
Guarantee Warranty
Content Contract to perform the promise or State of the subject of contract
discharge liability (hợp đồng thực hiện
trách nhiệm)
Parties Tripartite (3 bên)/ three part Bilateral (song phương)/two parties
Essence Promise about somebody else
Commitment of Seller to make good
(bản chất) performance defects in products or service in a
fixed period.
Purpose • To obtain loan (vay tiền) • To enhance their value (tăng giá
• Credit purchase/sales (mua bán tín trị sản phẩm)
dụng) • Show of quality (thể hiện chất
• For good conduct or honest of lượng)
person (thể hiện tính trung thực bên • Assurance of product performance
bảo lãnh) (đảm bảo tính năng của sp)
• What are the common exclusions of defects? What are not called a defect? (loại nào
không được coi là lỗi)
• Fair/normal/nature wear and tear (hao mòn tự nhiên) – the result of normal use.

• Misuse (sử dụng sai cách) – seriously incorrect handling by the buyer.

• What is defects liability period?

• The period during which the exporter is liable for and must make good (=cure) defects that
are apparent on delivery (patent defects) or that come to light later (latent defects).

• What is disclaimer of warranty (từ chối/khước từ bảo hành)?

• Disclaimer of warranty means the items are supplied as they are and without support of any
kind.

• Ex: software is often delivered with a disclaimer of warranty.

• What types of Information are usually contained in a Defects Liability Provision (điều
khoản này được quy định như thế nào)?

• It states the length of the defects liability period and its starting point.

• It regulates the period during which the buyer must notify the seller of the defects
(Notification Period)

• It regulates the amount of time the exporter has to cure the defects (Rectification Period)
(thời hạn khắc phục)

• It seldom regulates the legal action period (thời hạn kiện tụng).

• What is Notification period?

• The time allow for the buyer to notify the Seller of the defects

What is the Rectification Period?

• The time allow for the exporter to cure the defects.

• What is “Eternal warranty” (bảo hành vô thời hạn)? how to avoid problems of an
Eternal warranty?

• An endlessly renewed liability for defects.

• The problem can be avoided with a cut – off clause (điều khoản chấm dứt) such as: the total
warranty period shall in no case exceed three years.

• What are the 5 options for curing defects? In what ways can defects be made good?
• Repair

• Allow the buyer to repair at the exporter’s cost.

• Replace

• Reduce the price

• Return the goods and refund the price.

• Which corrective method is least favourable for the seller? Why?

• Returning the goods and refunding the price seems to be the least favourable for the exporter
because this can be considered a cancellation of the contract and a total loss for the exporter.

CHAPTER 4: THE LEGAL FRAMEWORK

• Most laws belong to one of two families: Anglo – American (luật anh mĩ) or Continental (luật
châu Âu lục địa)

• What are the main differences between Anglo – American Law and Continental Law?

• Continental law is fully codified (v của code, continental law is based legal code: bộ luật);
Anglo – American Law relies on cases (án lệ) and precedents (tiền lệ)

• Give the main characteristics of continental law and Anglo – American law
Continental Law Anglo – American Law
Goal Consistency and uniformity of Justice in individual case
enforcement (mang lại công lý cho từng
sự vụ)
(Predictability and Most decisions are predictable Not fully predictable and
consistency of) court with some accuracy and decisions decisions are not
decisions (phán quyết của tòa are generally consistent consistent.
án)
The length of the Contract The contract is short and lacking The contract is long and
in details. detailed
Acceptance Not internationally accepted Widely understood and
respected. (internationally
accepted)
• What does the applicable law govern? (luật áp dụng điều chỉnh gì trong hợp đồng)

• The contract and all questions concerning the validity (thời hạn hiệu lực), interpretation (diễn
 giải) and performance of the contract.

• When a contract does not specify an applicable law, what can decide the law to apply?
(khi hợp đồng không quy định luật áp dụng, lấy luật nào áp dụng)

• The rule of international private law

• What are principles of an enforceable contract? (nguyên tắc của một hợp đồng ràng
buộc thực hiện)

• The parties achieve a “meeting of minds”(đồng thuận) through a process of offer and
acceptance.

• The parties are capable of entering a contract (có năng lực ký kết hợp đồng).

• The purpose of a contract is legal (hợp pháp).

• What creates no meeting of mind? (trường hợp nào dẫn đến không đồng thuận)

• Duress (ép buộc)

• Mistakes (nhầm lẫn)

• Fraud (gian lận) => Fraudulent (a)

• Who are unable to sign contracts? (những người nào không có đủ năng lục ký kết)

• Those who lack contractual capacity; e.g. Children (không đủ tuổi), the feeble – minded
(thiểu năng) and drunks.

• What does “ultra vires” (ngoài thẩm quyền) means?

• Beyond its powers. (ngoài thẩm quyền)

• Under the public law (company law) of many countries, a company only sign a contract that
is within its powers. (các công ty chỉ được ký kết trong thẩm quyền của mình)

• A contract that is ultra vires is unenforceable.

• Legality of purpose (tính hợp pháp mục đích của hợp đồng)

• A contract is enforceable if it has an illegal purpose.

• To avoid problems with contracts that might infringe government regulations, most contracts
include a partial invalidity provision (điều khoản vô hiệu từng phần).

• What does the partial invalidity provision say?

• The invalidity of one part of the contract does not invalidate the rest. (sự vô hiệu 1 phần
không làm ảnh hưởng phần còn lại)

• Give example of what is called “one – sided agreement” (thỏa thuận 1 bên)

• “One – sided agreement” means an agreement in which one party has only duties and the
other party has only rights. (hợp đồng 1 bên là 1 bên chỉ có nghĩa vụ, bên cón lại chỉ có
quyền)

• Release from an obligation (thoát khỏi một nghĩa vụ): example: one party should have paid
some interest in the other party due to their late payment for the goods: however, the seller
sends a letter to the buyer saying that they do not have to pay any interest at all. That letter
releases the buyer from an obligation of paying interest due on late payment. The buyer in
this case has got only right and the Seller in this case has got only duty. Such a letter is a one
– sided agreement.

• Agreement to modify a contract: example: Buyer wants to change some specifications of the
Contract and Seller sends a letter to Buyer to agree with such a change without charging any
money for that change. Such a letter is a one – sided agreement in which seller has only duty
and buyer has only right.

• What is the Entire Agreement (thỏa thuận tổng thể)? (ko hoi)

• The final written version of the contract replacing all previous agreements between the
parties.

• Anglo – American law: signing a contract amount to saying: everything we the discussed so
far now dead (tất cả nhưng gì đã thỏa thuận trước đó đều bị hủy)

• Continental law: a letter that predates the contract, a memorandum, the minutes of the
meeting might have some bearing on the contract.

• What is the whereas recital (=preamble: lời mở đầu)? Why is it necessary?

• The word “whereas” means “because” or “considering that”. Whereas – clauses are not
provisions promises or conditions – they are explanations.

• A typical whereas – recital contains many types of background information.

• When the dispute arises, the judge must ask some background questions.

• Should the exporter treat the recital as a chance to promote his skill and the excellence
of his products?
• No, he shouldn’t. If the contract gets into trouble, the buyer will have a “big stick” with chich
to beat the exporter: “you told me told me you were the best – and I acted on that belief.” If
big claims are rechal(?) in black and white, the exporter is trapped.

• When is contract discharged by performance (khi nào thì hợp đồng được thực hiện
xong)?

• Both parties perform their duties exactly according to the contract and the last duty is fully
performed.

• What is termination (chấm dứt hợp đồng)? Nam the two types of termination?

• Termination: one side may have the right under the contract to end contract

• Two types:

• Termination for convenience. (chấm dứt vì sự thuận tiện)

• Terminate for default. (chấm dứt vì có lỗi)

• What is termination for convenience?

• Termination for convenience: occurs when one party (usually buyer) simply decides to drop
the contract. No reason is required. The buyer must pay for all work performed or partly
performed.

• What is termination for default?

• Termination for default: occurs when the contract names certain defaults which allow one
side (usually buyer) to terminate.

• What is Cancellation?

• When one party breaches a contract, the other has the right to demand cancellation of the
contract.

• What is difference between termination and cancellation?

• The contract is terminated under a provision of the contract.

• The contract is cancelled when one side has breached and the other simply refuses to
proceed.

• What is Rescission (từ bỏ hợp đồng)?

• The two parties may simply agree to end their contractual relationship.
• (It is a kind of two – sided termination. Both Parties see the continuing of the contract is
useless for them.)

• Distinguish termination, cancellation, rescission

Termination Cancellation Rescission
Definition The contract allows one side One side breaches the Both parties agree to end
to end the contract. contract. the contract.
One sides procedures Two – sided procedures.
• Impossibility(không thể thực hiện được) and frustration (thực hiện hợp đồng cũng
không mang lại lợi ích gì)

• Impossibility and Frustration occur when a contracts discharged because it is impossible or

totally pointless to continue with it.

• Status of the contract: four cases when a contract can be discharged(chọn 4 cái để làm)

• Discharge by performance: Both parties perform their duties exactly according to the contract
and the last duty is fully performed.

• Termination: one side may have the right under the contract to end contract

• Termination for convenience: occurs when one party (usually buyer) simply decides to
drop the contract. No reason is required. The buyer must pay for all work performed or
partly performed.

• Termination for default: occurs when the contract names certain defaults which allow
one side (usually buyer) to terminate.

• Cancellation: When one party breaches a contract, the other has the right to demand
cancellation of the contract.

• Rescission: The two parties may simply agree to end their contractual relationship

• Impossibility

• Frustration

• What are the ways of settling disputes?

• Conciliation/mediation (Hoà giải): an amicable aettlement

• Arbitration: (Trọng tài): a panel of arbitratior

• Litigation (Kiện): settlement by the court

• What are characteristics of litigation?

• Litigation before the courts is internationally the least attractive:

• It is public (công khai)

• It is expensive

• It is time – consuming

• The results are often legalistic rather than business like (phán quyết mang tính ràng buộc
về pháp lý hơn)

• What are the advantages of using a panel of arbitrators? => compare with litigation

• Private

• Costs are predictable

• Quick

• Decision is business – oriented

• What does the arbitration clause specify (điều khoản trọng tài quy định những gì)?

• The number of the arbitrator: how many arbitrators sit in the court?

• Venue of the court: where does the court sit?

• Language of court

• Who pays court costs?