UFM_ENG_GDTMQT_09.2023

INTERNATIONAL COMMERCIAL
TRANSACTION
DEPARTMENT OF COMMERCE
1
INTRODUCTION
1 • NUMBER OF CREDITS
2 • COURSE OBJECTIVE
3 • COURSE CONTENT
4 • REFERENCES
5 • CLASS REGULATIONS
6 • STUDENT ASSESSMENT
2
1. NUMBER OF CREDITS: 3
2. COURSE OBJECTIVE:
Skills:
3
2. COURSE OBJECTIVE:
Types of International Commercial
Transactions, Incoterms, The International
Sales Contract, Performance of the import -
export contract
Skills: Presentation, group working,

independence, time management…
Self-control, self-responsibility, creativity,

working under pressure...
4
3. COURSE CONTENT
1 Introduction to International Commercial
Transactions
2 Essential Types of International Commercial

Transactions
3 International Commercial Terms (Incoterms)
4 The International Sales Contract
5 Performance of the Import - Export contract

5
4. REFERENCES
• Learning material provided by UFM

• Pham Ngoc Duong et al. (2022), International
commercial transaction
• Doan Thi Hong Van (2021), Export Import
Management
• Incoterms 2020, ICC
• ….
6
5. CLASS REGULATIONS
• Attending at least 90% of classes
• Reading beforehand all materials requested by the
lecturer
• Doing exercises and study cases given by the lecturer
• Being active in class
• Looking for and reading materials related to the course
in library or via the Internet
7
6. STUDENT ASSESSMENT SYSTEM
 Periodic assessment: 40%

✓ Regular participant: 10%
✓ Being active, good attitude: 10%
✓ Group exercises: 30%
✓ Mid-term test: 50%
 Final test assessment: 60%
(not allowed to use materials)
8
Week Schedule
1 Chapter 3: Incoterms
2 Chapter 3:Incoterms
3 Chapter 3:Incoterms
Chapter 2:Types of International commercial transactions
GP (1): Present 1 type of International commercial transactions and relate the case in VN
4 Chapter 4: Contract
GP (2): Sale contract: collect, translate & analyze
GP (3): Purchase contract: collect, translate & analyze
8 Chapter 5: Contract performance
GP (4): A real export contract performance in VN
GP (5): A real import contract performance in VN
Mid-term test
Review
• File submission deadline on Ms Teams (Files): latest 2
days before class
• Files should be named: <week>_<class>_ <group
number>
EX: W7_01_G1
• Showing tasks of every group member
• All submission should be in 1 word file & 1
PowerPoint file.
Topic 2,3: a real contract should be submitted.
Topic 4,5: a real contract and documents (if any)
should be submitted.
CHAPTER 1:
INTRODUCTION TO INTERNATIONAL
COMMERCIAL TRANSACTIONS
11
Content
Concept and roles of International Commercial transactions
Main factors influencing International Commercial Transactions
Functions of International Commercial Transactions
The Governing laws for International Commercial Transactions
12
Concept and roles of international commercial
transactions
❖ Concept:
• International commercial transactions

- Be business transactions of parties who have their places of
business in different nations or in exclusive customs zones
according to the provisions of law
(Article 27, 28 - Law on commerce 2005)
- Involve the movement of goods, services, technology, or capital

across the boundaries of different nations
13
❖Concept:
• International Commercial Transactions:
- Are the sphere of economic activity

- Aimed at the interaction between a company and subjects of the
international market by means of import, export, creation of
contractual obligations and other actions connected to entering
foreign markets.
14
Concept and roles of international
commercial transactions (cont.)
❖ Roles:
- Affect the balance of trade
- Impact the public’s perception of the health of the economy
- Open up untapped markets for sellers and increase the home country’s
productivity as workers are employed to make the goods according to
international standard
- Maximize profits for owners
- Provide all of the goods and resources that a country cannot effectively
produce itself 15
Main factors influencing International
Commercial Transactions
political legal social technological
human
environmental geographical economic resources
management
capital system of a …
company
16
Commercial Transactions (cont.)
• Political stability attracts the investment and trade.

While conflicts and riots occur in many parts of the
world, Vietnam is considered as a country with a
Political stable politics
factors
• Political stability of the country, political disputes,
military confrontation hinder business expansion in
other countries
17
Legal factors are enablers / obstacles for the
commercial transactions
• Reduction in tax rates obtained from trade
agreements
Legal • Export credit
factors • Control of goods according to the regulations
prohibiting export and import of domestic law
• International law: regulations on products at
imported countries
18
• Inflation rate, interest rate, employment

rate, government’s budget allocation to
Economic industries => Domestic manufacturing
and social • Growth of one country
factors • Difference in customs, lifestyles among
countries
19
Development of the banking system
 convenience in international settlement
Finance
and among partners in different countries
banking
system  Provide businesses with capitals to
encourage production / trading
Facilitate the export-import activities
20
Environmental
- Geographical size
and - Climatic challenges recently happening
Geographical - Natural resources available on a specific territory
factors
- Population distribution in a country
21
Functions of International Commercial
Transactions
Planning
Organizing
Staffing
Directing
Controlling
22
Transactions (cont.)
• Organizations decide how to do business,
implement international commercial
transactions globally
Planning • How to export or to operate as a multinational
company
• To develop plans and procedures, an
organization should monitor environments such
as currency instability, political instability
23
• Companies should ensure that their policies

adjust the culture of the host country
Organizing
• The international business must be organized in
such a way so that it can be adapted to
environmental and cultural differences
24
• The efficiency of international commercial

Staffing transactions highly depends on staffing
• Companies must closely examine how to select
the appropriate staff
25
• Be more difficult due to the employee’s attitude

• Language barriers also create communication
Directing difficulties
• Organizations used to direct employees in cross-
cultural management
26
• Helping in monitoring the current

performance
Controlling
• Making the necessary alterations to keep the
organization moving towards its objectives
27
The Governing laws for International
Commercial Transactions
• CISG 1980
• INCOTERMS
• UCP
• National laws: Law on Commerce of Vietnam 2005; Law on Foreign
Trade Management 2017; Decree on guidelines for the Law on
Commerce and the Law on Foreign Trade Management No.
69/2018/ND-CP; Vietnam Customs law 2014
28
- United Nations Convention on Contracts for the
International Sale of Goods
CISG 1980 - In Vienna, 1980
- Apply whenever contracts for the sale of goods
are concluded between parties with a place of
business in Contracting States
29
- Be published by ICC
- International Commercial Transaction
INCOTERMS - Latest version: ICC Publication 2020
- Rules defining the responsibilities of buyer and
seller in the arrangement of transportation and
other responsibilities.
- Be in conjunction with a sales agreement
30
- Be published by ICC
- Uniform Customs and Practice for Documentary
UCP Credits
- Latest version: UCP 600
- Govern the operation of Documentary credit
payment method
31
- No.36/2005/QH11 by The National Assembly
Law on - Effective: 01/01/2006
Commerce - Govern commercial activities
of Vietnam - Commercial activities: sale and purchase of
2005 goods, provision of services, investment,
commercial promotion and other activities for the
profit purpose
32
- No. 05/2017/QH14 by The National Assembly
- Effective: 01/01/2018
Law on
Foreign Trade
- Manage foreign trade and settlement of disputes
Management
about application of foreign trade management
measures
- Annul some clauses of Commercial Law No.
36/2005/QH11.
33
- No. 69/2018/ND-CP
Decree on
- Effective: May 15, 2018
guideline for
Law on Foreign
- Provide guidelines for the Law on Commerce and
Trade
Management the Law on Foreign Trade Management
- Repeal the decree No. 187/2013/ND-CP on
guidelines for the Law on Commerce
34
Stipulate the state management of customs with
regard to:
Vietnam + Goods permitted to be imported, exported
Customs law or transited
2014 + Vehicle of domestic and foreign entities
which are on exit or entry or in transit within the
customs territory
35
CHAPTER 2:
ESSENTIAL TYPES OF INTERNATIONAL
COMMERCIAL TRANSACTIONS
36
Essential types:
Based on parties Based on operation

involved ways
•Direct transactions •Ordinary int’l sales
•Indirect transactions • Specific int’l sales
37
Purchase
goods through
intermediaries
Export Counter
Transfer
trade
through
border-
gates
Transfer
through Import Temporary
border- export for Processing
gates Ordinary re-import
Specific
Temporary
Temporary Temporary
import for Auction
export for import for re-export
re-import re-export
Trading at
fairs & Bidding
exhibitions
EXPORT
Export of goods means the bringing of goods out of the territory of

the Socialist Republic of Vietnam or into special zones in the
Vietnamese territory, which are regarded as exclusive customs zones
according to the provisions of law.
Article 28, Law on commerce 2005
39
IMPORT
Import of goods means the bringing of goods into the territory of the
Socialist Republic of Vietnam from foreign countries or special zones
in the Vietnamese territory, which are regarded as exclusive customs
zones according to the provisions of law.
40
TEMPORARY IMPORT FOR RE-EXPORT
Binging of goods into Vietnam from foreign countries or special zones

regarded as exclusive customs zones with the completion of the
procedures for importing such goods into Vietnam, then procedures
for exporting the same goods out of Vietnam.
41
TEMPORARY EXPORT FOR RE-IMPORT
Bringing of goods overseas or into special zones in the Vietnamese

territory which are regarded as exclusive customs zones according to
the provisions of law, with the completion of procedures for
exporting such goods out of Vietnam, then procedures for importing
the same goods back into Vietnam.
42
TRANSFER OF GOODS THROUGH BORDER-
GATES
Purchase of goods from a country or territory for sale to another
country or territory outside the Vietnamese territory without carrying
out the procedures for importing such goods into Vietnam and the
procedures for exporting such goods out of Vietnam.
43
TRANSFER OF GOODS THROUGH BORDER-
GATES (cont.)
Goods are transported directly from the exporting country to the
importing country:
a/ …without going through Vietnamese border-gates
b/ …through Vietnamese border-gates without carrying out the
procedures for importing the procedures for exporting
c/… through Vietnamese border-gates and brought into bonded
warehouses or areas for transshipment of goods at Vietnamese ports
44
COMMERCIAL PROCESSING
❖Commercial activity whereby a processor uses part or whole of raw

materials and materials supplied by the processee to perform one or
several stages of the production process at the latter’s request in
order to receive remuneration.
❖ Rights and obligations of processees
❖ Rights and obligations of processors
(Articles 178 – 184, Law on commerce 2005)
45
❖ Characteristics of Processing
Trading object: labour force
Processing: exporting goods
Commodities in processing: labour intensive
Processors: developing countries
46
❖ Main forms of Processing
• Processee hands over part or whole of raw materials and
materials, unfinished products
Title to
• Processee sells materials and then buys finished products
materials
• Processee supplies main materials and processor supplies
auxiliary materials
Processing • Cost plus contract

remuneration
Processing • Two-party processing

relation • Multi-party processing
47
❖ Advantages and disadvantages of processing
48
PURCHASE AND SALE OF GOODS THROUGH
THE GOODS EXCHANGE
Commercial activities whereby the parties agree to purchase and sell a
defined quantity of goods of a defined type through the Goods
Exchange under the standards of the Goods Exchange, at a price agreed
upon at the time of signing the contract, and with the time of goods
delivery determined to be a specific point of time in the future.
49
INTERNATIONAL AUCTION OF GOODS
❖Commercial activity whereby sellers themselves conduct or hire

auction organizers to conduct public sale of goods to select
purchasers that offer the highest prices.
❖ Modes
- Upward auction mode
- Downward auction mode
Article 185 – 213, Law on commerce 2005
50
❖ Types of International Auction
Commercial Non-commercial
• The goods are • Buyers sell the

often classified goods as they
and sold for are to clear
traders stock
51
❖ Procedures of an International Auction
Contract
Preparation Examination Auction signing &
delivery
52
BIDDING FOR GOODS
Commercial activity whereby a party purchases goods or services

through bidding (bid solicitor) in order to select, among traders
participating in the bidding (bidders), a trader that satisfies the
requirements set forth by the bid solicitor and is selected to enter into
and perform a contract (bid winner).
Article 214 - 232, Law on commerce 2005
53
BIDDING FOR GOODS (cont.)
Forms Modes
Open bidding One dossier bag
Restricted bidding Two dossier bags
54
BIDDING FOR GOODS (cont.)
Opening procedure
One period bid
Two period bid
55
COUNTER TRADE
❖Concept:
Countertrade is any commercial arrangement in which sellers or
exporters are required to accept in partial or total settlement of their
deliveries, a supply of products from the importing country.
56
❖Characteristics of counter trade
Exporter is also importer
Currency is not a payment tool
Types of commodity are diversified
57
❖ Types of counter trade
Compensation
Barter
trade
Buy
Types Offset
back
Switch Counter
trading purchase
58
❖Advantages of Counter-trade
Transfer of
technology
Other benefits Alleviating BoP

difficulties
Maintenance of Entering new

stable prices markets
59
❖ Disadvantages of Counter-trade
Uncertain value Time-

Complexity
proposition consuming
Higher Uncertainty on
Logistical
transaction the goods’ value
issues
costs and quality
60
❖ Measures to ensure the
implementation of Counter-trade
Reciprocal L/C Special account
A third party
Penalty
controls documents
61
OVERSEAS TRADE FAIR AND EXHIBITION
Trade fairs and exhibitions mean commercial promotion activities

conducted in a concentrated manner at particular locations and for
given periods of time for traders to display and introduce their goods
and/or services for the purpose of promoting them and seeking
opportunities for entering into contracts for sale and purchase of goods
or service contracts.
(Article 129 – 140, Law on commerce 2005)
62
Revision questions
1. List essential types of Int’l business transactions
2. Define types of Ordinary Int’l Sales, and give example for each type
3. Distinguish processing and temporary import for re-export. Give

example.
63
CHAPTER 3:
INTERNATIONAL COMMERCIAL TERMS
64
Content
Introduction to Incoterms
Contents of Incoterms 2020
Notes on use of Incoterms
Some international variations from Incoterms
65
INTRODUCTION TO INCOTERMS
• Definition
• Purpose of Incoterms
• Scope of application of Incoterms
• Terminology
• History of Incoterms
• Structure
66
What is incoterms?
• INCOTERMS = INTERNATIONAL COMMERCIAL TERMS
• The Incoterms® rules:
are essential terms of trade for the sale of goods
published by ICC
provide specific guidance for buyers and sellers in delivery of goods
Thu Duc Cat Lai port Osaka port Osaka 67

Purpose of Incoterms
• Divide the obligations of both the seller and the buyer
(Arrange carriage, insurance, export, import and security-related
clearance,…)
• Divide the costs
(which party is responsible for)
• Divide place to transfers risks from seller to buyer
Thu Duc Cat Lai port Osaka port Osaka

68
Scope of application of Incoterms
- Deal with transport and delivery of goods
- Not be law => to apply to sales contract,
parties must incorporate an Incoterms rule in the contract
- NOT deal with:

+ Specifications of the goods sold
+ Time, place, method or currency of payment
+ Remedies for breach of the contract of sale
+ Consequences of delay or breaches in the contract performance
69
Terminology:
• Delivery • Carrier
• Pre-carriage • Door-to-door
• Main-carriage • Port-to-port
• Onward carriage • Multimodal
• On-board
1 2 3 4
70
History of Incoterms
• Incoterms 1936: 7 terms
71
Structure of Incoterms 2020
Group 1: Rules for any mode or Group 2: Rules for sea and inland
modes of transport waterway transport
• EXW (Ex Works) • FAS (Free Alongside Ship)
• FCA (Free Carrier) • FOB (Free On Board)
• CPT (Carriage Paid To) • CFR (Cost and Freight)
• CIP (Carriage and Insurance • CIF (Cost, Insurance and
Paid) Freight)
• DAP (Delivered at Place)
• DPU (Delivered a Place
Unloaded)
• DDP (Delivered Duty Paid)
72
Structure of Incoterms 2020
• Format of each rule
73
CONTENT OF INCOTERMS 2020
• Four categories of Incoterms rules
• E: EXW
• F: FCA FAS FOB
• C: CPT CIP CFR CIF
• D: DAP DPU DDP

Incoterms put simple. If the abbreviation
begins with…
Sellers: prepare goods;
E Deliver under buyer’s F Seller: prepare goods; clear
goods for export, delivered
disposal at seller’s factory goods to an agreed place in
origin/seller’s country.
C Seller: prepare goods;

clear goods for export; pay D Seller: prepare goods; clear goods
for export; pay main carriage to
main carriage to named/ named/ agreed destination place
agreed destination place and bear risks in bringing goods
destination place
1. EXW – Ex Work
EXW (named place of delivery, Incoterms® 2020)
✓ The seller fulfills his obligation by placing the goods unloaded at

the disposal of the buyer at the seller’s premises or another named
place.
✓ The seller does not need to clear the goods for export.
✓ Seller’s minimum obligations.

1. EXW – Ex Work
EXW (named place of delivery, Incoterms® 2020)
78
Exercise - EXW
Exporter (PD, Go Vap district, Hochiminh city, Vietnam) sells the goods
under EXW seller’s warehouse Incoterms 2020.
Port of shipment: Cat Lai; Port of discharge: Kobe, Japan.
1) Who is responsible to load the goods on the mean of transport which is
arranged by the buyer at PD warehouse?
2) Who is responsible to load the goods on board vessel at Cat Lai?
3) Who is responsible to hire a carrier to ship the goods from seller’s
warehouse to Cat Lai?
4) Who is responsible to clear the goods for export?
5) Who is responsible to hire a carrier to ship the goods from Cat Lai to Kobe?
6) Where is the place to transfer risk from the seller to the buyer?
7) Who organizes the insurance for the shipment?
8) Who is responsible to clear the goods for import?
79
2. FCA - Free Carrier
FCA (named place of delivery, Incoterms® 2020)
Place: where the shipment originates such as the seller’s premises

or another place agreed within the seller’s country
Neither party is required to insure
Transport mode: All
80
81
❖ 1st: named place is the seller’s premises, seller must load the goods
on the means of transport arranged by the buyer
❖ 2nd: named place is a place other than seller’s premises
Seller loads the goods on the seller’s means of transport →reach the
named place and ready for unloading at the disposal of the carrier or of
another person nominated by the buyer (with export clearance)
82
83
Exercise _ FCA
Exporter (PD, Go Vap dist, HCM, Vietnam) sells the goods under FCA
Cat Lai port C/Y, Incoterms 2020.
Port of shipment: Cat Lai; Port of discharge: Kobe, Japan.
1) Who is responsible to hire a carrier to ship the goods from seller’s
warehouse to Cat Lai?
2) Who is responsible to load the goods on board the vessel at Cat Lai?
3) Who is responsible to clear the goods for export ?
4) Who is responsible to make a contract of carriage to ship the goods
from Cat Lai to Kobe?
5) Where is the place to transfer risks from the seller to the buyer?
6) Who organizes the insurance for the shipment?
7) Who is responsible to clear the goods for import ?
84
3. FAS: Free Alongside Ship
FAS (named port of shipment, Incoterms® 2020)
Named port: alongside a vessel arranged by the buyer at a named port

of shipment.
Seller: Prepare goods, clear the goods for export, bring goods to
alongside the ship designated by the buyer at the port (with export
clearance)
Transport mode: Vessel only
85
86
4. FOB - Free On Board
FOB (named port of shipment, Incoterms® 2020)
Named port: loaded on a vessel at a port in the exporting country

 Seller: delivers goods on board the vessel designated by the buyer at
the port on the seller’ country (with export clearance).
87
88
5. CPT: Carriage paid to
CPT (named place of destination, Incoterms® 2020)
Named place: in the importing country
 Seller: clear goods for export, delivers goods to the carrier for
transportation to the named place of destination, pay all
transportation costs
89
90
6. CIP: Carriage and insurance paid to
CIP (named place of destination, Incoterms® 2020)
Named place: on the buyer’s side

 Seller: delivers goods to the carrier for transportation to the
named place of destination and pay all transport costs thereto
(with export clearance).
• Seller must provide insurance A.
91
92
7. CFR: Cost and freight
CFR (named port of destination, Incoterms® 2020)
Named port: on the buyer’s side.

 Seller: delivers goods on board vessel designated by seller at the
port on the seller’s side, pays transportation costs to the agreed
port on the buyer’s side and arranges export clearance.
93
94
8. CIF: Cost, insurance & freight
CIF (Named port of destination, Incoterms® 2020)
Named place: on the buyer’s side
 Seller: delivers goods export packed on board vessel designated by
the seller at port on the seller’s side, pay all transportation costs to
agreed port on the buyer’s side and arranges export clearance.
• Seller must provide insurance at least minimum coverage.
95
96
9. DAP: Delivered at place
DAP (Named place of destination, Incoterms® 2020)
Named place: on the buyer’s side.

Seller: arrange export clearance and deliver goods to the named
place of destination, pay all transportation costs thereto, ready for
unloading
Who bears all risks until the goods are delivered to the named place?
97
98
10. DPU: Delivered at Place Unloaded
DPU (Named place of destination, Incoterms ® 2020)
Named place: a place on the buyer’s side
Seller: clear goods for export, deliver goods to the named
destination place, pay all transportation costs thereto and unload at
the named place
99
100
11. DDP: Delivered duty paid
DDP (Named place of destination, Incoterms® 2020)
Named place: on the buyer’s side.
Seller: arrange export clearance, deliver goods (cleared for import)
at the named destination place, pay all transportation costs
thereto, ready for unloading
Who bears all risks until the goods are delivered to the named place?
101
102
Changes of Incoterms 2020 compared to
Incoterms 2010
Version 2010: Version 2020

- DAT - DPU
- I in CIF and CIP is Institute Cargo - CIF: Institute Cargo Clause C;

Clause C - CIP: Institute Cargo Clause A
103
NOTES ON USE OF INCOTERMS
• It is not mandatory to use Incoterms in a sales contract
=> Incorporate Incoterms rule into the contract
• Incoterms are not price clauses, but do have an impact on the
pricing
• Sales contracts which are based on a former version (e.g. Incoterms
2000, 2010) remain valid according to the terms of that version
• Buyers and sellers should refer to the appropriate version of
the Incoterms
104
VARIATION FROM INCOTERMS
1. Additions to EXW
2. Additions to FOB
3. Additions to FCA
4. Additions to C-terms
105
CHAPTER 4:
INTERNATIONAL SALES OF
GOODS CONTRACTS
106
Content
2. Terms and conditions

• Commodity
3. Contract samples
1. Overview • Quality • ….
• Quantity
• Concepts • ….
• Delivery
• Features • Prices
• Conditions • Payment
• Classifications • Packing and
• Structure marking
• Warranty
• Insurance
• Penalty
• Force majeure
• Claim
• Arbitration
107
CONCEPTS:
An international sale of goods contract is a contract
under which the ownership and possession of goods, or entitlement to

a service, is transferred from a seller to a buyer
in exchange for a specified sum of money (or its equivalent)
• - According to business dictionary-
108
An international sale of goods contract on its nature is an agreement
between the buyer and the seller (shall be conducted in form of
export, import, temporary import for re-export, temporary export for
re-import and transfer through border-gates) in different countries or
between parties which have head offices located in the same territory,
but one in domestic area, and the other in special zones which are
regarded as exclusive customs zones according to the provisions of law
Under Law on Commerce of Vietnam 2005, article 34-62
109
FEATURES
• Parties
▪ Under Article 1.1, CISG 1980 :
Parties have places of business in different states:
- States are Contracting States; or
- rules of private international law lead to the application of the law of
a Contracting State.
▪ Under Law on Commerce 2005:
- Parties own places of business in two different countries, or both in
the same territory, but one in domestic area, and the other in special
zones
110
• Payment currency
may be foreign currency for at least one party
• Object
+ Under CISG 1980: the object may be moved across the
border
+ Under Law on Commerce of Vietnam 2005: the object must be
moved across the border
111
CONDITIONS OF A VALID CONTRACT
Legal Legal Legal Legal Voluntery

parties form content object contract
112
CLASSIFICATIONS
❖ In terms of period of time:
Short-term contract
Long-term contract
❖In terms of business relations:
Export contract
Import contract
Temporary import for re-export contract
Temporary export for re-import contract
Transfer through border-gates contract
113
❖In terms of forms of contracts:
▪ Under Article 27.2: written contracts or other forms of equal legal
validity
▪ Under Article 3.15: telegraph, telex, facsimile, data message and
other forms provided for the law
▪ Under Article 3.5: Data message means information created, sent,
received and stored in electronic media
114
STRUCTURE
❖Opening
Contract name, contract No.,
Signing date
Parties
Basis to establish the contract
❖Terms and conditions of contract
115
TERMS AND CONDITIONS OF CONTRACT
▪ Fundamental clauses:
commodity, quality, quantity, price, shipment, payment, packing
and marking.
▪ Customary clauses:
be prescribed in laws, legal documents -> may or may not be
stipulated in the contract.
▪ Discretionary clauses:
clauses on fine for breach, force majeure, governing law,
arbitration …
116
1. Commodity
❖ For industrial products:
Commodity + Origin
Commodity + main specifications:
Commodity + brand name:
❖ For agricultural products
Commodity + scientific name
Commodity + origin
Commodity + use/ usage
Commodity + main specifications
Or combine some ways to specific the commodity

117
• Swiss watches
• White long grain rice
• Sony TV, 55 inches, model 55X8000H
• Robusta coffee
• Buon Me Thuot coffee
• Ready-to- wear shirt
• Long sleeve lady shirt – 70% Rayon 30% cotton
118
2. Quality
• By sample
• By standard
• By the main ingredient/ content
• By technical document
• By trade- mark
• By natural weight
• By prior examination/ inspection
119
❖By sample
• Case to apply: for commodity hard to standardize its quality
• The quality of the sample is the base to check the quality of the bulk
order.
• Who provides samples?
- By seller
- By buyer: in this case seller has to produce counter samples. Two
parties will sign contract basing on counter samples.
• Date of providing samples
• Who is keeping the samples?
120
The products shall be of quality as per sample No 04 dated May 25th
20xx provided by the seller with two parties’ signatures. The sample
makes the integrate part of the Contract. The sample shall be made
into three pieces, each party keeps one and the remaining shall be
kept by a third party appointed by the two parties to resolve later
disputes (if any).
121
❖By standard
• Case to apply: For products having official standards, parties will
base on these standards to define quality.
• Parties must investigate the content of the standard before usage.
• State clearly No., year of publishing, by Agency
The quality of Green coffee must be as per Vietnamese coffee standard:

TCVN 4193:2005 dated 1/1/2005 by Ministry of Science and
Technology.
122
❖By the main ingredient/ content
(Fill out by “max” or “min”)
Vietnamese Long Grain White Rice 10% broken

Broken : ….. 10 %
Moisture : …… 14%
Foreign matter : …… 0.5%
Whole Grain : ….. 50%
Damaged Grain : ….. 1%
Chalky Grain : ….. 7%
Red kernels : ..…. 2%
123
❖By technical document
Technical documents can be catalogues, installation instructions,
operation instructions …
Motorbikes with qualifications as stipulated in the technical

document No. 435, published in 20.., provided by the manufacturer,
including design manual/ instructions with signatures and stamps of
the two parties. Those technical documents are in English and
Vietnamese and are an integral part of the contract
124
❖ By trade mark
Trade marks: letters, words, names, signatures, labels, shapes, colors
…
Sony TV, 55 inches, model 55X8000H
125
❖By natural weight
• Natural weight: Weight of goods per a volume unit
• It reflects impurities of the goods and is used to evaluate quality.
LPG: 1 litre = 0.53 kilogram;

Motor fuel: 1 litre = 0.745 kilogram
Petroleum: 1 litre = 0.79 kilogram
Lubricants: 1 litre = 0.88 kilogram
126
❖By prior examination/ inspection
• Cases to apply: Commodity with small quantity, not standardized like
liquidated goods, auctioned ones
• Buyer inspected goods and approved before signing the contract.
Quality of the products: Inspected – Approved.
• Buyer shall inspect the products after signing the contract and by the
delivery
Buyer or buyer representative shall inspect the quality of the
products within 10 days after the signing date of the contract. If the
products do not meet the buyer’s requirement, the contract will be
cancelled.
127
• By the actual state of the commodity
The seller just deliver the goods according to the name and is not
responsible for the quality of the goods
The quality of products: “As it is ” or “as arrival”
128
129
3. Quantity
1,000 MTS more or less 5%
a) Measurement unit
b) Ways to stipulate quantity
❖ By exact figure: valuable and countable goods
EX: 100 motorbikes
❖ By approximate figure: (with tolerance)
Goods in mass like fertilizer, ore, grain …
About, approximate, more or less, from … to …
EX: 1,000 MTS more or less 5%
130
❖ Gross weight
❖ Net weight
❖ Commercial weight Gcw = Grw x 100% + Wsh
100% + Wrh
Where:
Gcw: commercial weight of the commodity
Grw: real weight of the commodity
Wsh: standard humidity of the commodity (%)
Wrh: real humidity of the commodity (%)
131
• 05 units of VinFast Lux 2.0 AT
• 200 MTS +/- 5% at the seller’s option.
132
4. Delivery
a) Time of delivery
b) Place of delivery
c) Notice of shipment
d) Other instructions
133
a) Time of delivery
- Specific time :
20 Dec 2023
- Period of time:
By end of Dec, 2023
- Based on another condition:
Within 30 days after the opening date of L/C
134
b) Place of delivery:
- Port of loading
- Port of discharge
Specific port or Many ports

EX:
- Port of departure: Hai Phong/ Da Nang/ Hochiminh City
- Port of arrival: Liverpool
135
c) Notice of delivery:
❖ Before delivery:
- Commodity‘s availability for delivery
- Details of of mean of transport
❖ After delivery:
- Delivery situation
- Scanned copy of documents
Note: time / who / what/ how (means to inform)
136
d) Other instructions:
- Partial shipment: allowed or not?
- Transshipment: allowed or not?
- Stale bill of lading: acceptable or not?
- Inspection
- Loading and unloading terms in voyage vessel chartering
137
Shipment/ Delivery:
▪ Time of shipment: Not later than 15th Dec 2023.
▪ Port of loading: Indonesia main port
▪ Port of discharge: any port in HCM city
▪ Partial shipment: Not allowed
▪ Transshipment: Not allowed
▪ Notice of shipment:
- Within 10 days before the delivery date, the seller should notify the
buyer about the preparation of goods, and carrier / vessel information.
- Within 2 days after the sailing date of the carrying vessel, the Seller
shall notify by email to Buyer the following information: L/C number,
Amount, Name of the vessel, B/L number/ date, ETD, ETA.
138
5. Price
- Currency
- Unit price (Incoterms rule) / Price determination
- Total amount
- Delivery term
- This price shall be understood to be including packaging or not
- Discount (if any)
139
❖Price determination
• Fixed price:
Unit price: USD 250/MT FOB Haiphong port, Incoterms 2020
Total amount: USD250/MT x 200MT = USD 50,000
(Says: fifty thousand US dollars only).
This price shall be understood to be including packaging
• Deferred price:
- Time, place and how to identify the price.
- Cases to apply: price fluctuates, market power belongs to the buyer.
Coffee price shall be identified as the trading price at London Commodity
Exchange at the time of delivery.
140
• Revisable/ Flexible price
Unit price: USD 600/MT
Total price: USD 600/MT x 500MT = USD 300,000
At the time of delivery, if coffee price on the London market is of 5%
different from the above price, market price shall be applied
• Sliding scale price

Sliding scale price is often used for goods that need long time to
produce and of high value
141
• Discount:
In terms of discount reasons:
- Purchase of big quantity
- Seasonal discount
- Returning the purchased goods
In terms of ways to calculate discount:
- Single discount
- Double discount
- Progressive discount
- Bonus
142
• Delivery term:
Prices are always written next to a certain delivery term.
EX: Price of a rice contract

Unit price: USD 475/MT FOB, Cat Lai port Hochiminh City
(Incoterms 2020)
Total amount: USD 4,750,000.00
Say:……………………………………..
143
6. Payment
a) Currency of payment
Currency of the seller’s country, the buyer’s country or a third
country.
b) Time of payment
Prompt payment
Advance payment
Deferred payment
Combined/ mixed time of payment
c) Methods of payment
Documentary credit, Collection, Cash against documents,
Remittance Open account
144
d) Payment documents
Commercial Invoice
Packing list
Certificate of Origin
Bill of Lading
Draft/ Bill of Exchange
Certificate of Quality
Certificate of Quantity/ Weight
Insurance policy/ Insurance certificate (If CIF or CIP is applied)
Other documents
145
Payment:
• By L/C for the full amount of the contract value.
- L/C beneficiary: Truong Thanh Furniture Corporation.
- L/C advising bank: Agribank (Vietnam Bank Agriculture and Rural Development).
- Bank of opening L/C: Barcelona Bank, Spain.
- Time of opening L/C: Not later than Oct. 10, 2014
• Documents required:
1/ Bill of lading: 2/3 set of clean on board marine bill of lading made out to order of shipper and blank
endorsed, marked “Freight collect”.
2/ Signed Commercial Invoice issued by the Seller in 03 originals and 03 copies.
3/ Packing list in 03 originals issued by the Seller indicating net, gross weight and measurement for 01
container.
4/ Certificate of origin form A: Certificate of origin by the Vietnam Chamber of Commerce and Industry
in 01 original and 03 copies.
5/ Fumigation certificate: Fumigation certificate by Vietnam fumigation company in 01 original and 02
copies. 146
7. Packing, marking
a) Packing:
▪ Parties often reach an agreement in:

- Packing quality: Packing material, form, size
- Way to pack
- Who supplies packaging?
- Price of packing
147
❖ Regulations on packing quality:
General regulation:
Packing quality must suit a specific means of transport
Specific regulation:
- Requirements on material of packing.
- Requirements on form of packing: cases, bales, drums, rolls,
bags, crates …
- Requirements on size of packing.
- Requirements on layers of packing and their formation.
- Requirements on hoops and splints of packing …
148
❖ Methods to determine packing price:
- Be calculated as the commodity price
- Gross = net + tare = gross weight for net
- Packing charges are included in the commodity price
- Packing charges are excluded in the commodity price
149
b) Marking:
Marking is a symbol, a word, picture,.. to instruct transportation
and maintenance.
150
Requirements of marking:
- Must be written by paint or colorfast ink.
- Easy to read and see.
- Must be 2cm or more than 2cm in size
- Must not affect the commodity quality.
- Must be in black or violet; red for dangerous commodities, orange
for hazardous commodities
- Must be in a specific order
- Must be on at least two adjacent faces
151
Coffee packing:
• Packing: As per export standard which can withstand with sea
transportation.
• Packing: In jute bags with 60 kgs net/ 60.7 kgs gross, 300 bags per
container. New uniform bags required for the whole lot, to be closed
by cotton yarn double stick.
• Marking: Green coffee
PO No. : SL13
Vendor: Hong Tam
NO HOOK
152
8. Warranty
- Time of warranty: needs to be stipulated clearly.
- Contents of warranty:
The goods are warranted within 2 months from the delivery date. The
seller undertakes to guarantee all quality standards, specifications in
accordance with the contract if the buyer follows all instructions on
use and maintenance stipulated by the seller. In the time of warranty, if
the buyer finds any defects in commodities, the seller must repair free
of charge or replace another one.
153
9. Insurance
- Who arranges insurance?
- What is the condition of insurance?
- Which kind of Insurance documents needs receiving from insurance

company?
154
The Seller shall buy marine insurance for the Buyer’s risk of loss or
damage to the goods during the carriage at trust insurance company
with 110 % invoice value covering ICC (C), showing claim payable at Bao
Viet Insurance Company, Ho Chi Minh city Branch in invoice currency.
155
10. Penalty
❖ Cases of penalty
- Delay in delivery
- Delivery not in conformity with quantity and quality
- Late payment
❖Resolution
- Cancel the contract
- Do not pay compensation
- Replace the fault goods with on the account of the seller
- Require the interest for the delayed payment
156
• In case the delivery time is
delayed more than 2 weeks, buyer
is entitled to cancel the contract.
• In case payment for the goods is

delayed, the buyer will be fined
1%/day per the amount of late
payment
157
11. Force majeure
❖ Features:
- Unforeseeable
- External to the parties of the contract
- Unavoidable
❖ Force majeure includes three sub-clauses:

- Events of force majeure
- Procedure to certify force majeure
- Corollary of force majeure
158
EX:
Force majeure shall be understood to be unforeseeable and
unavoidable event beyond the control of both the contracting parties,
which in fact, causes difficulties directly preventing the performance of
the contractual obligation.
Force majeure circumstances must be notified by cable by each party
to the other within 7 days and confirmed by written notice within 10
days from the cable together with a certificate of Force majeure issued
by the Chamber of Commerce concerned. Beyond this time Force
majeure circumstances shall not be taken into consideration.
159
12. Claim
- Time to claim
- Obligations of parties
- Methods to settle claim
Any claim about quality must be in written form and sent to the seller
within 60 days from the shipment date. Within 15 days since receiving
the buyer’s claim, the seller must send his or her representative for
counter inspection. If the goods are not up to stipulation in the
contract, the seller is liable for replacing new goods compatible with
the contract. If the seller fails to do so in due time, the buyer is allowed
to have Vinacontrol inspection. The inspection result by Vinacontrol
will be final and binding both sides.
160
14. Arbitration
- Who is responsible for jurisdiction in case dispute cannot be
resolved amicably? (National Court or Arbitrator)
- Law applicable
- Place to execute arbitration
- Arbitration fees
Any dispute arising from the contract that is unable to be resolved

through amicable agreement shall be brought to the Vietnam
International Arbitration Center beside the Chamber of Commerce and
Industry in Hanoi based on law on Commerce of Vietnam and Awards
by the arbitraction shall be final and binding both parties.
161
CHAPTER 5:
PERFORMANCE OF THE
INTERNATIONAL SALES OF GOODS
CONTRACT
162
Content
Performance of Export contracts
Performance of import contracts
163
Procedures to perform export contracts
1 • Export license application
2 • Initial work related to payment
3 • Goods preparation
4 • Pre-shipment inspection
5 • Customs clearance
6 • Arranging carriage
7 • Cargo insurance
8 • Making delivery
9
• Setting up payment documents
10
• Claims (if any)
11
• Contract liquidation
164
1. Export license application
- Subject to the government’s export – import controls in the certain
period of time
- Refer: Decree on guidelines for the Law on Commerce and the Law on
Foreign Trade Management No. 69/2018/ND-CP
+ List of prohibited exports / imports
+ List of exported or imported goods by designated traders
+ List of exported or imported goods requiring licences
165
2. Initial work related to payment
❖ By L/C
Remind the buyer to open a L/C
Check the content of L/C an
Ask for amending the L/C (if any)
Make delivery
❖ By CAD
Remind the buyer to open a Trust account
Contact the bank to check payment terms
Make delivery
❖ By advance T/T
Remind the buyer to make full payment
❖ By collection: ?
166
3. Goods preparation
❖ Exporters are manufacturers

Produce products
Check finished products in terms of quality, packing, marking … in
order to conform to the contract
❖ Exporters are import-export traders
Check the situation of preparing products from supplier
Check and follow up the packing condition, delivery date,…

167
4. Pre-shipment inspection
- Inspection and quarantine will be done at factory or/ and at
border.
❖ Inspection: be often performed at factory by QA
❖ Quarantine: be performed by Plant Protection Dept. or
Veterinary Station, Quarantine – Diagnosis For Animal Centre
- Inspection and quarantine can be done by an independent agency
168
169
170
5. Customs clearance
❖According to Article 21 of Law on Customs of Vietnam, a
customs declarant shall:
- Declare and submit customs declarations; submit documentary

evidence of customs documents;
- Send goods and vehicle to proper places for physical inspection;
- Pay taxes and fulfil other financial obligations
171
172
173
6. Arranging carriage
BY SEA BY AIR
Liner: - Case to apply
- Case to apply? - Procedure to book space
- Procedure to book space
Voyage Vessel:
- Case to apply?
- Procedure to book vessel
Vessel under a time chartering:
- Case to apply?
- Procedure to hire vessel
174
❖Liner chartering
• Case: The goods’ quantity is not much (dry goods, packed goods)
• Procedure:
- Cargo owner request carrier to let certain space of ship for him
to transport the goods from one port to another port. This can
be booked directly to shipping line or through forwarders
- Booking request
• Feature:
- Fixed trade routes under uniform rates and common terms
available on the back of printed B/L.
- Formalities are simple
175
❖Voyage vessel chartering
Case:
The goods are often in mass quantity like grain, mineral,
fertilizer
Procedure:
The charterer hires the whole vessel or only a part of the
vessel to convey the goods from one port to some other ports.
Features:
The goods is often conveyed full of the vessel (from 90 –
95%).
Two parties must negotiate to sign charter-party.
Bill of lading is Charter party B/L.
Brokers are often used.
Formalities are complicated
176
❖Time vessel chartering
Case:
Cargo owner has huge amount of cargo needs carrying or
charterer wants to hire vessels to expand their transporting business
Procedure:
Advise the requirement and look for vessel to hire. This can be worked with
brokers.
Brokers find suitable vessels
Charterers sign a contract to hire a vessel for a specific period of time from a
shipowner
F.eatures:
Renting a whole ship for a period of time.
Shipowner employs the crew, is responsible for nautical operation, insurance,
technical operation, maintenance of the ship and supervision of the cargo
Charterer is responsible for commercial aspects, pay vessel fuel consumption and port
charges
177
7. Cargo insurance
• Choose suitable insurance clause

• Send insurance proposal
• Pay Insurance premium and obtain Insurance document
+ insurance policy
+ insurance certificate
In which cases is the seller liable to arrange insurance for the
shipment?
178
179
8. Making delivery
180
181
182
183
9. Setting up payment documents
• Prepare the documents required in the contract or in the L/C.

• Present full set of documents
+ to bank within the stipulated period of time to get payment.
Which payment method?
+ or directly to the buyer.
Which payment method?
184
10. Claim (if any)
❖ Sellers make claims:
- In case the buyer breaches the contract
- Documents include:
- Letter of complaint
- Relevant documents: Contract, B/L, Tally sheet, Report on receipt of
cargo, Certificate of short- landed cargo, Cargo outturn report,
Survey record, Customs inspection report,..
❖ Buyers or related offices make claims:
The seller must promptly study the documents and find solutions.
185
11. Contract liquidation
❖Time:
After the performance of the contract -> liquidate the contract.
❖ Function:
Record the completion of work in the contract
❖Purpose:
Aim to terminate the rights and obligations of the parties arising
from the contract.
186
Procedures to perform import contracts
• Import license application
1
• Initial work related to settlement
2
• Transport arrangement
3
• Cargo insurance
4
• Customs clearance
5
• Taking delivery
6
• Post inspection
7
• Claims (if any)
8
• Payment
9
10
• Contract liquidation
187
1. Import license application
Step 1:
similar to that in the procedures to perform export
contracts
Subject to the government’s export – import controls in

the certain period of time
Refer: Decree on guidelines for the Law on Commerce and
the Law on Foreign Trade Management No. 69/2018/ND-
CP
+ List of prohibited exports / imports
+ List of exported or imported goods by designated
traders
+ List of exported or imported goods requiring licences 188
2. Initial work related to settlement
❖ By L/C
Arrange to open L/C on time
❖ By CAD
Arrange to open trust account on time
❖ By advance T/T
Transfer the agreed amount of down payment to exporter
❖ By other payment methods
?
189
3. Transport arrangement
Which delivery rules in the contract require

the importer to arrange main transport?
190
4. Cargo insurance
1/ Which delivery rules in the contract

require the importer to arrange insurance
for the shipment?
2/ Is this compulsory for the importer?
Why?
191
5. Customs clearance
Step 5:
similar to that in the procedures to
perform export contracts
192
6. Taking delivery
193
7. Post inspection
❖ For Port/ Station:
- The port/station checks the seal before discharging the goods out of
the means of transport.
- Goods shipped by sea are in loss or shortage, there must be a
“report on receipt of cargo”.
- Goods by sea are in damage, there must be “report on damage”.
❖For the importer:

- Any suspicion about loss -> Letter of Reservation must be made.
- Goods are in damage, shortage and do not conform with the
contract-> inspection company to make a Survey Report
194
• Claim, Payment, contract liquidation
195

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INTERNATIONAL COMMERCIAL

Skills: Presentation, group working,

Self-control, self-responsibility, creativity,

2 Essential Types of International Commercial

3 International Commercial Terms (Incoterms)

4 The International Sales Contract

5 Performance of the Import - Export contract

• Learning material provided by UFM

 Periodic assessment: 40%

✓ Being active, good attitude: 10%

✓ Group exercises: 30%

✓ Mid-term test: 50%

 Final test assessment: 60%

(not allowed to use materials)

Concept and roles of International Commercial transactions

Main factors influencing International Commercial Transactions

Functions of International Commercial Transactions

The Governing laws for International Commercial Transactions

• International commercial transactions

- Involve the movement of goods, services, technology, or capital

- Are the sphere of economic activity

• Political stability attracts the investment and trade.

• Inflation rate, interest rate, employment

• Companies should ensure that their policies

• The efficiency of international commercial

• Be more difficult due to the employee’s attitude

• Helping in monitoring the current

Based on parties Based on operation

Export of goods means the bringing of goods out of the territory of

Binging of goods into Vietnam from foreign countries or special zones

Bringing of goods overseas or into special zones in the Vietnamese

❖Commercial activity whereby a processor uses part or whole of raw

Trading object: labour force

Processing: exporting goods

Commodities in processing: labour intensive

Processors: developing countries

Processing • Cost plus contract

Processing • Two-party processing

❖Commercial activity whereby sellers themselves conduct or hire

• The goods are • Buyers sell the

Commercial activity whereby a party purchases goods or services

Restricted bidding Two dossier bags

Exporter is also importer

Currency is not a payment tool

Types of commodity are diversified

Other benefits Alleviating BoP

Maintenance of Entering new

Uncertain value Time-

Reciprocal L/C Special account

Trade fairs and exhibitions mean commercial promotion activities

3. Distinguish processing and temporary import for re-export. Give

Contents of Incoterms 2020

Notes on use of Incoterms

Some international variations from Incoterms

Thu Duc Cat Lai port Osaka port Osaka 67

Thu Duc Cat Lai port Osaka port Osaka

- NOT deal with:

• F: FCA FAS FOB

• C: CPT CIP CFR CIF

• D: DAP DPU DDP

C Seller: prepare goods;

✓ The seller fulfills his obligation by placing the goods unloaded at

Thu Duc Cat Lai port Osaka port Osaka

Place: where the shipment originates such as the seller’s premises