SALES CONTRACT

Lecturer: LE MAI TRANG

According to the Commercial Law of Vietnam: “A contract for the sale of goods is a
commercial activity whereby the seller is obliged to deliver the goods and transfer the rights
of the goods owner to the buyer and the buyer is obliged to pay the seller, receive the goods
and take ownership of the goods as agreed”
A legally valid foreign trade contract must satisfy two characteristics:
Firstly, the contract satisfies the conditions of sale of goods contract
Secondly, the contract is international
Characteristics of foreign trade contracts
Firstly, the subject of the contract is the parties having
business offices located in different countries. here we are
interested in the place of business of the parties and this
place must be different countries, not the nationalities of
the contracting parties.
Second, foreign trade contracts are signed based on the voluntariness of
the parties. One of the basic principles of the market economy is that
buying and selling transactions must be 'done on a voluntary basis'
between the parties, that is, when supply and demand meet
Third, the object of foreign trade is goods that are moved across the
territorial border or customs border of a country.
what is the customs border? Understandably, customs borders are
places where a country's Customs Law takes effect and regulates
import and export activities.
Fourth, payment currency is foreign currency for either
party, or for both parties. Normally, during the
transaction process, the parties will choose a freely
convertible, popular and low inflation payment
currency.
Fifth, the agency to settle contract disputes is a court or
commercial arbitration. Here we distinguish court from
commercial arbitration. The court is a powerful organization
of the state, the judgment of the court is legal and obligatory
by the parties. Meanwhile, commercial arbitration is a non-
governmental organization, the award of commercial
arbitration is not legal and must be implemented.
Finally, the source of law regulating contracts is complex, diverse, including national
law and international law. From the perspective of international law, we have
Incoterms, international trade practices, documents regulating international payment
methods of the International Chamber of Commerce such as UCP 600 – Uniform Rules
of Documentary Credit Practices, URC 522 – Uniform Code of Practice for Collection of
Payment... There is also the 1980 Vienna Convention on Contracts for the International
Sale of Goods. From the perspective of national law, we have the Commercial Law 2005
and the Law amending and supplementing the Commercial Law 2017
Drafting foreign trade contracts
1.Important Rules
2.Basic Rules
1. COMMODITY AND
SPECIFICATION
2. QUANTITY/UNIT PRICE
3. SHIPMENT/DELIVERY
4. PAYMENT
5. INSURANCE
6. FORCE MAJEURE
7. CLAIM
8. ARBITRATION
9. PENALTY
10.GENERAL CONDITION
ARTICLE 1: COMMODITY AND SPECIFICATION
 Commodity Terms - NAME
For the purpose of the parties to determine the type of goods to be purchased and sold,
therefore, the description must be accurate. To do that, using notations after:
1. Name of goods including common name, trade name, scientific name (applicable to
chemicals and plant varieties)
2. Enter the name of the product with the name of the place where it was produced
3. Write the name of the goods together with the main specifications of the goods.
4. Include the name of the item with the manufacturer's name. This form applies to famous
products of reputable brands
5. Write the name of the product with the use of the product. In this way one adds the main
use of the product, customarily if When the contract is written with a utility, the seller
must deliver the goods that meet that use, even though the price is high
6. The name of the goods and the HS code of the goods
Combine many ways:
1.  Commodity: Vietnamese white rice long grain, crop 2010, 10% broken.
2.  Commodity: Frozen black Tiger shrimps (Pennnues Monodon).
3. Commodity: Urea Fertilizer. Origin: Indonesia Specification:
Nitrogen 46% min.
 Commodity Terms - QUALITY
“Quality” is a term that speaks to the “quality” side of goods purchased and sold such as
features, effects, capacity, performance. . . of the goods that. Determine the specific
quality of the product, which is the basis for determining the price. Therefore: determining
good quality conditions, leading to determining a good, right price, and buying the right
product for you. There are many methods to determine the quality of goods, below are
some of the main methods:
1. Define Quality Based on Standards
2. Methods of determining quality based on trademarks
3. Qualifications based on technical documentation
4. Determination of quality based on the content of a certain substance in the product
ARTICLE 2: UNIT PRICE – QUANTITY AND TOTAL AMOUNT

Unit price *quantity=Total amount

 Điều khoản giá cả (Price)

1. Currency
2. Price
- Fixed price
- Price determined later
- Rivesable price
- Sliding scale price
3. Conditions of respective delivery facilities (Incoterms)
UNIT PRICE
 Method of quantity determination

1. Methods for definitively specifying the quantity

2. Method of approximation
1 tấn (T) = 1 Mectric Ton (MT) = 1.000 kg
1 tấn = 2.204,6 pound (Lb)

1 pound (Lb) = 0,454 kg

1 gallon (dầu mỏ) Anh= 4,546 lít
1 gallon (dầu mỏ) Mỹ = 3,785 lít
1 thùng (barrel) dầu mỏ = 159 lít
1 thùng (Bushel) ngũ cốc = 36 lít

1 ounce = lạng = 28,35 gram

1 troy ounce = 31,1 gram
1 Inch = 2,54 cm (1m = 39,37 inch)

1 foot = 12 inches = 0,3048 m (1m = 3,281 ft.)

QUANTITY
Gross weight = Net weight + tare
 Article 3 – Shipment –Delivery
The basic content of the "terms of delivery" is the determination of the term, the place of delivery, the
method of delivery and the delivery notice
1. Delivery time
- Delivery term has recurring
- Immediate delivery time:
+ Fast delivery (prompt)
+ Immediate Delivery
- Delivery as soon as possible
2. Delivery Point:
Specify the port (terminal) of delivery, port (terminal) of arrival and port (terminal) of customs clearance
 Article 3 – Shipment –Delivery
3. Delivery method
Stipulate that the delivery is conducted somewhere it is the preliminary delivery or the final delivery
- Preliminary delivery: the first step is to review the goods to determine the conformity in terms of
quantity and quality compared to the contract. Usually is carried out at the place of production of
the goods or of the place of shipment.
- Final delivery: confirmation of the seller's fulfillment of the delivery obligation
4. Delivery notification
Normally, before delivery, the seller informs: the goods are ready for delivery or the date of bringing the
goods to the port for delivery. The buyer informs the seller of the needs to send the goods or about the
details of the vessel to receive the goods. After delivery, the seller must notify the delivery status and
delivery results
 Article 3 – Shipment –Delivery

5. Some other regulations on delivery:

For goods with large volume, it is possible to specify: allow delivery in batches – partial
shipment allowed, or delivery once – total shipment. .
If along the way it is necessary to change the means of transport, it is possible to specify:
transshipment allowed – transshipment allowed. .
If the goods can come before the documents , then the regulation "stale bill of lading
acceptable" - Stale bill of lading acceptable.
 Article 4 – Payment

1. Time of payment
2. Method of payment
 Article 5. Insurance
In this clause, it is necessary to agree who is the insurance buyer and the
insurance conditions to buy.
- Buyer of insurance.
- Conditions of insurance.
- Type of insurance certificate
 Article 6. Force majure
Force majeure is an event that, when occurring, the contract could not be
done, without anyone being held responsible. Force majeure events have
the following three characteristics:
-Impossible to predict in advance
- Impossible to pass
- Occurs from the outside

Procedures for recording force majeure events: Stipulate the responsibility

of the party experiencing the force majeure event: notify the relevant
parties in writing, provide the event certificate of the competent authority
 Article 6. Force majure

Consequences of force majeure:

- The effective term of the contract is extended for a period
corresponding to the time of force majeure, plus the time of recover the
consequences.
–If force majeure lasts too long, the contract can be canceled without
compensation
 ARTICLE 7: CLAIM
Claim: In case upon taking the delivery, the Goods are not in strict compliance with
conditions in the contract in terms of quality, quantity and packing, the Buyer shall
submit his claim together with sufficient evidence of copy contract, Survey Report,
Certificate of Quality, Certificate of Quantity, Packing List with certification of the
authorized inspection company agreed by the two parties within 30 days upon the ship's
arrival. Upon receiving the claim, the Seller shall in a timely manner solve it and reply in
writing within 30 days, after such receipt. Incase of the Seller's fault, the Seller shall
deliver the replacements not later than 30 days after the official conclusion.
ARTICLE 8: ARBITRATION
Arbitration In the even of any agreement and differences in opinion arising
during implementation of this contract between the parties which can not be
settled amicably, such dispute shall be settled by the Vietnam International
Arbitration Center (VIAC), at the Chamber of Commerce and Industry of
Vietnam. Arbitration fees shall be born by losing party
 ARTICLE 9: PENALTY
This clause provides for measures when the contract is not performed (in whole or in
part). This provision serves two purposes at the same time:

- Prevent the other party from intending not to perform or perform poorly the contract.
- Determine the amount to be paid to compensate for the damage caused.