Topic 1: Introduction

1. The concept of International Trade

● Definition
International trade is the exchange of goods, services or performance and capital (đối
tượng của thương mại quốc tế) across international borders or territories
performance: công lao động (một phần của service hoàn chỉnh)
the world is flat: không còn rào cản trong thương mại quốc tế giữa các nước (EU, ASEAN),
hàng rào thuế quan và phi thuế quan được giảm bớt → bình đẳng trong việc tiếp cận các cơ
hội trong kinh doanh (except labour)
borders or territories? (territories rộng hơn borders → sử dụng or thay cho and vì nghĩa của
hai từ có thể bị bao trùm lên nhau)
- border: a line separating two political or geographical areas,
especially countries
- territory: an area of land under the jurisdiction of a ruler or
state - phân chia về mặt pháp luật (các bang của Mỹ, khu chế xuất - luật quản lý hàng hóa áp
dụng cho hàng hóa bên trong và bên ngoài khu chế xuất là khác nhau- special customs
supervision areas)
jurisdiction: the official power to make legal decisions and judgments (quyền thực thi pháp
luật)
What do we exchange? Why do we need to exchange?
→ Normally, we exchange something that is surplus for something that is scarce or
unavailable
Read the article on pages 1, 2 & 5 and answer the question:
What are the motivations of international trade to Buyer/ Seller?
The motivation of all parties is to gain, by exchanging something that is surplus to
requirements for something that is scarce or unavailable. That ‘something’ could be a
physical good, or it may be a service or performance or skill. Originally, the exchange was
goods for goods or service for service − basically a form of barter. Obviously, money
comes into play nowadays, but the principle of all trade remains: that each party should
gain from the transaction (page 1)
● What are the motivations of international trade to a Buyer?
- require raw materials or components for production that cannot be sourced from domestic
market
- would need to look to overseas markets and buy the product from overseas suppliers →
importing
- unable to manufacture in the domestic market or purchase the products in the domestic
market (processing)
- it is cheaper to have products manufactured overseas → outsource
- import products for reselling (middle man, intermediaries: distributor, agent - purchase
goods for its own sales)
● What are the motivations of international trade to a Seller?
- it is no domestic market for their products (high price, quality)
 - an export market offers an additional customer base → revenue → profit → additional
income
- reduce business risk (recession)
Who is the Buyer? Who is the Seller?
Buyer: importer, customer/consumer/end-user/client, middle man - intermediaries
(agent/distributor - retailer), consignee, drawee
Seller: exporter, supplier/ manufacture, intermediaries, consignor, drawer (a draft)
What are the objectives of international trade? Are the objects of international trade
always things that can be seen?
- The objectives of international trade: goods, services, performance and capital (physical
capital - money, factory, premises, raw materials,... & human capital - employees & their
skills & experience - assets - education, training, intelligence,...)
- Products (goods): tangible goods
- Services and performance: intangible goods (banking services, transportation services,
processing, tourism)
Differences between absolute advantage (lợi thế tuyệt đối) and comparative advantage
(lợi thế tương đối)? between competitive advantage (lợi thế cạnh tranh) and
comparative advantage?
absolute advantage (country)→ lower production costs giảm chi phí sản xuất(giờ làm việc,
nhân công, máy móc, chi phí đầu vào)
comparative advantage (country) → lower opportunity costs chi phí cơ hội thấp hơn
→ lead to specialization (limited resources) dẫn đến chuyên môn hóa (nguồn lực hạn chế)
→ Ricardo’s theory applied for country
secret of national wealth: specialization and division of labor
competitive advantage (company) → superior value (lower price, high quality or both of
them) → company not country
→ Porter’s competitive theory/strategy

2. Risks and risk mitigants

Factors How do they create difficulties in international trade?

Languages, culture and time zone make communication difficult and can
differences cause additional delays, costs and misunderstandings
language: tốn chi phí thuê phiên dịch, dễ
gây hiểu nhầm trong giao tiếp culture differences → negotiation, marketing communication →
time zone: chênh lệch múi giờ, giảm hiệu culture traps = misunderstanding + additional cost
quả công việc
culture: khác biệt trong văn hóa dẫn đến
khó khăn trong quá trình đàm phán
(negotiation), marketing communication

Business partner located in another It is more difficult to enforce contractual rights and
country obligations against a business located in another country
enforcing contractual rights: thực thi các quyền theo hợp đồng
Law and regulation
law: luật quốc gia
regulation: hiệp định, hiệp ước dỡ bỏ
hàng rào thuế quan, phi thuế quan
(page 10, page 22)
Foreign currencies
Shipping goods from one country
to another
Documentation complex
● Risks involved in the international trade
Operational risk (rủi ro
hoạt động) = risk occurs
during business operations
(production, sales and
marketing, logistics,
management,...) (page 10)
Legal issues
Counterparty risk rủi ro
đối tác
Exchange rate risk (page
22) rủi ro tỷ giá
- The laws and regulations will be different between the
countries, and smaller businesses may not have the resources to
employ legal expertise to deal with this
common law - thông luật (precedent - case law - án lệ + civil
law); civil law - luật thành văn
- Overseas governments could intervene by introducing new
legislation (non-tariff barrier) or taxes (tariff), which could
make the deal uneconomic
- There may be complex formalities in relation to the movement
of goods
- Political considerations inevitably can be a significant factor in
international trade, as governments may seek to impose tariffs or
quotas, and may pass laws that hinder trade → regulation
- fail to update new laws and regulation → legal risk
Foreign currencies may be used for settlement, which can lead to
unexpected financial gains or losses unless managed very
closely
It may take additional time to ship goods from one country to
another, and additional costs relating to transport and
insurance could be incurred
Invoice, Bill (transportation bill), Certificate of Origin,
Phytosanitary certificate, Fumigation certificate, Sanitary
certificate, Customs clearance, Letter of Credit, Carrier: Bill of
Lading (B/L - Seaway), Airway bill...
There is a greater probability of operational risk - Có xác suất rủi ro hoạt
động cao hơn (such as employee error - vô tình, employee fraud - cố tình,
failed systems, poor communication) in international trade unless stringent
precautions are taken - trong thương mại quốc tế trừ khi có các biện pháp
phòng ngừa nghiêm ngặt
failed systems - website, fanpage
Risk occurs due to differences in legal system of different countries
(common law/ civil law, different regulations) of failure in updating laws
and regulation
The risk that the counterparty fails to fulfill contractual obligations
Counterparty risk is higher in international trade because the
counterparty is located in another country
An unexpected profit or loss (in domestic currency) in a transaction
due to the movement of exchange rate, or in other words, the fluctuation of
one currency (strengthening or weakening) against other currencies

Financial risks rủi ro tài
chính
Credit risk rủi ro tín dụng
Transport risk (page 22)
Fraud (lừa đảo) or risks
related to financial crime
(page 10&25)
Factors that influence the choice of currency: It is largely down to relative
bargaining power and custom and practice as to the choice of currency
used to settle the transaction
eg. the seller is in strong bargaining power → settled in the seller‘s currency
oil = USD → custom and practice
Financial risk occurs when a company fails to make payment to lenders
(suppliers, banks, informal lenders) - rủi ro tài chính là rủi ro con nợ không
trả nợ, vỡ nợ
Financial risk is higher when we have longer working capital cycle
working capital is the difference between a company’s current assets such as
cash, accounts receivable (customers' unpaid bills) and inventories of raw
materials and finished goods, and its current liabilities, such as accounts
payable (suppliers, banks)
working capital cycle: the time gap between the receipt of payment from the
customers and the payment for materials/components/goods to the suppliers
Khoảng cách thời gian giữa việc nhận thanh toán từ khách hàng và thanh
toán nguyên vật liệu / linh kiện / hàng hóa cho nhà cung cấp
The working capital cycle for an international trade transaction is usually a
great deal longer than that for a domestic transaction (longer time for
shipment - shipment of materials, finished goods, in order to secure an export
sale, the seller may have to grant extended sales term - payment)
→ This additional time may put a strain on the working capital facility of a
business and it may need additional finance in order to fund the (working
capital cycle) time gap between shipment and receipt of payment (for
example, the buyer may make a deposit or the seller use some trade finance
products provided by banks)
Credit risk will not only include the risk of the buyer not paying for the
underlying goods but can also incorporate the country of the buyer's
government - rủi ro tín dụng là người mua không thanh toán tiền hàng
For example, a country with a poor credit risk rating may have difficulties in
its ability to make funds available to buyers to pay for goods or services
purchased from overseas
The length of time the goods will need to travel to get to their final
destination will be much further than for a domestic transaction. This
poses additional risk that there will be more chance/probability of the goods
being damaged or tampered (lost) with while in transit
→ Solutions: Appropriate insurance is available to cover such risks
Fraud is easier to commit: for example, forged documents (làm giả chứng
từ) or money may be sent to bank accounts under the control of fraudsters
instead of to the seller’s bank.
- money laundering
- tax evasion (trốn thuế)
- breach of sanctions
Phân biệt Credit risk và Financial risk?
Credit risk: buyer không thực hiện nghĩa vụ thanh toán (poor credit rating) → seller không
có tiền để thanh toán cho các khoản vay cho lenders (suppliers) → working capital cycle
không khép kín → Financial risk
Phân biệt với Counterparty risk - KHÔNG thực hiện nghĩa vụ trong hợp đồng - rộng hơn
Credit risk
● Risk mitigants (tổ chức làm giảm thiểu rủi ro trong TMQT)
Vì rủi ro trong thương mại quốc tế và nhu cầu làm giảm rủi ro từ phía doanh nghiệp → đơn
vị, tổ chức, định chế được hình thành để có những dịch vụ làm giảm rủi ro trong thương
mại quốc tế

Risk mitigants Service they provide Type of risk they can mitigate

International chambers of translation Operational risk

commerce (ICC)
(a business organization, documentation Counterparty risk, Legal risk,
for-profit) Operational risk

legal advice Legal risk

Banks (a financial provide derivatives such as forward Exchange rate risk

institution/ a business exchange contracts to help reduce the
organization) effect of unexpected changes in foreign
exchange rates

provide specific undertakings or Counterparty risk

guarantees (for example, documentary
credits, and indemnities for release of
goods without bills of lading)
Seller and Bank of buyer:
Letter of Credit → bảo lãnh cho
khả năng người mua thanh toán
cho người bán
Buyer and Bank of buyer:
Application form for L/C →
ngân hàng cam kết với người
mua chỉ thanh toán nếu nhận
được bộ chứng từ (B/L,
certificates) mà người bán cung
cấp

produce economic reports on individual Operational risk, Credit risk,

countries, giving information about the Legal risk
standard of living, consumer
expenditure, and the state of the
country’s foreign exchange reserves,
indicating the degree to which it might
be difficult to get paid and other
regulations and controls that apply to
imports into the country
 obtain credit information Credit risk, Counterparty
(creditworthiness) and reports on both risk
potential customers and suppliers

provide third-party inspection and Counterparty risk, Fraud or

quality-control services so that a buyer risks related to financial
can ensure that a supplier is meeting crime
contracted standards

advise the buyer or seller on all aspects
of making and receiving payments
overseas, the risks involved and the
mechanisms it can offer to minimize
risk
Credit risk, Financial risk
(Seller), Counterparty risk
(Buyer)

provide advice about the types of Credit risk

trade documents that are required,
transport documents, types of invoice
and insurance documents

advise their customers about currency Exchange rate risk

risks and how they may be covered

provide details on the various trade Financial risk

finance products that may be available,
and advice and literature on how these
work

Specialist freight forwarders
describe the organizations that
manage the movement of
goods internationally using
the appropriate mode of
transport
book space on the appropriate transport Transportation risk
mode
→ help to transport goods safely
arrange for the goods to be collected Transportation risk,
from the seller’s premises and delivered Operational risk
to the carrier at the appropriate time -
liaise with its overseas offices to
coordinate delivery to the buyer
warehousing

final assembly and packaging of goods Operational risk

managing customs requirements, Legal risk, Operational risk

including customs clearance of import
freight and delivery to final destination
Insurance companies the term ‘marine cargo insurance’ Transportation risk
goods are in transit covers transport of goods in any mode,
including road, rail and air as well as by
sea

Government or provide insurance against Credit risk

quasi-government sources buyer default

provide guarantees to help sellers to Financial risk

obtain finance that may not be available
on normal commercial criteria

3. Parties involved in international trade

a. Business organization
Definition
A business involved in buying and selling goods and services with the aim of making profit
Classifications
Limited or Unlimited
- Limited: the owners of the company have limited responsibilities for any debts
outstanding, which are equal to the value of the shares they have in the company
- Unlimited: the owners of the company have unlimited liability. This means that if the
company is unable to pay its creditors, the creditors can pursue the owners for
repayment
One owner or more than one owner
Private or public
- Private: NOT trade on the open market share
- Public: company’s share may be offered for sale to the general public and are traded
on the open market

Types of the One Two Unlimited Limited Shares are Shares are
business owner owners Liability Liability traded on not traded on
organization and more the open the open
market market

Sole x x x
proprietor/trader

Partnership x x x

Limited liability x x x
partnership

Limited x general limited x

partnership partner(s) partner(s)
Limited x x x x
corporation

Private limited x x x
companies

Public limited x x x
companies

b. Freight forwarder (Hints: See page 61)

Organizations that manage the movement of goods internationally using the appropriate
mode of transport → help to transport goods safely
Discussion: What does the phrase “manage the movement of goods” mean?
- book space on the appropriate transport mode which could be, for example, by
aircraft, ship, rail or road
- arrange for the goods to be collected from the seller’s premises and delivered to the
carrier at the appropriate time and can liaise with its overseas offices to coordinate
delivery to the buyer
- offer additional services such as
+ warehousing;
+ final assembly and packaging of goods (particularly useful if the importing country has its
own specific regulations);
+ managing customs requirements, including customs clearance of import freight and
delivery to final destination
→ Because transport is so complex, instructions should always be given to a freight
forwarder in writing

c. Insurance companies (Hints: See page 62)

Discussion:
- What to insure?
Whenever goods are in transit, there is an obvious risk of loss or damage, which could have
serious consequences for either the buyer or the seller or both. The term ‘marine cargo
insurance’ covers transport of goods in any mode, including road, rail and air as well as by
sea
- Why to insure?
- Who must buy insurance? The seller or the buyer?
Seller (CIP & CIF - Incoterms)
Who needs to buy insurance? The party that bears more risks during the transportation of
goods

d. The World Trade Organization

- Formed on 1/1/1995
- General Agreement on Tariffs and Trade (GATT) - Tiền đề → Marrakesh → WTO
- 164 members
 - Multilateral trade law (NOT world trade law)
The WTO provides a forum for negotiating agreements aimed at reducing obstacles to
international trade and ensuring a level playing field for all, thus contributing to economic
growth and development
The WTO also provides a legal and institutional framework for the implementation and
monitoring of these agreements, as well as for settling disputes arising from their
interpretation and application

e. The International Chamber of Commerce (ICC)

- Founded in 1919
- 130 countries
- Main activities:
+ Rule setting (NOT law) → voluntary
+ Dispute Resolution
+ Policy Advocacy
→ dispute settlement
- Publications: Incoterms, UCP, ISBP

Topic 2: International Trade Environment

1. External factors affecting international trade
Context [PESTEL analysis]
Political: political stability (war, conflict,...), institutional quality (corruption, bribery, legal
system, enforcement of laws and regulations), international relations (animosity), general
policies for business/specific industries
Economic: GDP, GDP per capita, unemployment, fiscal/monetary policy, standard of living,
customer expenditure, inflation, recession, customer expectation → supply and demand,
foreign exchange reserve (credit risk)
Social: demand for a specific product
Technology: innovation in production process (advanced technologies applied in the
industry, marketing innovation, innovation in business management,
Environmental: weather and disaster, pollution and natural resources (production, supply,
demand), greenism, environmental awareness, green purchase behavior
Legal: specific laws and regulations that directly affect the products/ exports/demand for
those products, environmental tax, regulation and standards…, tax…
Phân biệt Political and Legal?
● Political: vận hành yếu tố chung nhất của một quốc gia
● Legal: văn bản pháp luật, luật lệ được ban hành được thể hiện bằng văn bản

2. Marketing research

What, when and why to do market research?

- What:
 International trade environment (PESTEL)

- When:

+ Before providing/ launching

+ After business failure

+ Enter/ Expand into a new market

- Why:

+ Reduce risks/ operation risk

+ Change marketing strategy

How to research?
- Primary data: survey, interview (focus group, in-depth), observation
- Secondary data: website, report, date set

Sources (page 25) Types of information

Government - Give advice

department - Provide information of exporters
- Embassies in overseas territories can be a good source of information for
prospective buyer/seller
- Data on government departments’ website

Chambers of commerce country report, market research, information of both buyers and sellers, details of
exhibitions and trade shows, networking, introductions to lawyers and
accountants, publications, advice on technical requirements of local products
exported to particular markets
Trade missions, - Trade mission: An initial market research which provides overview
exhibitions and shows = information about the new market
trade expo - Exhibitions and trade shows: information about the buyer and the seller,
customers’ responses to market offerings, information about competitors

Banks - Economic reports on individual countries, information about standard living,

customer expenditure, the state of the country’s foreign reserves (assessing credit
risk)
- Credit information and reports on both potential customers and suppliers
- Advice on currency risks and how they may be covered, payment method and
trade finance

Credit reference Creditworthiness of a company (any company)

agencies

Credit ranking Creditworthiness of a company (of large businesses which has raised capital on
agencies international markets)

Credit insurers Creditworthiness of a company (based on credit report and credit limit)

The internet and the - Websites: company size, history, product range, testimonials, get a feel for the
media counterparty
- Trade journals and magazines: sector-specific information
- SEO (Search engine optimisation) tool (Google.com)

Networking Seminars & Conferences held by local chambers of commerce or trade

associations: Other people who have recent experience in international trade are
often an excellent source of advice and information

Self-check Through visiting the other party and face-to-face meetings (goodwill, costly)

Phân biệt Credit reference agencies and Credit ranking agencies?

cả hai đều cung cấp creditworthiness
● Credit reference agencies: đưa ra bản báo cáo về tình hình tín dụng (đánh giá
chung), áp dụng cho mọi công ty, tổng hợp thông tin từ nhiều nguồn để đưa ra bản
báo cáo tham khảo tín dụng
● Credit ranking agencies: đưa ra hạn mức xếp hạng, chỉ áp dụng với doanh nghiệp
được niêm yết trên thị trường chứng khoán, dựa vào bản báo cáo của doanh nghiệp
hàng năm để phân tích
Credit insurer: provide credit reports and credit limits
→ creditworthiness of company
Credit limits: số tiền lớn nhất mà credit insurers có thể thay mặt người mua trả cho người
bán cho rủi ro người mua không trả được nợ (không trả 100% giá trị hợp đồng, hạn mức phụ
thuộc vào khả năng tài chính của công ty)
Expected expenditure = Probability (Credit risk) * Credit limits
Nguyên tắc: Expected expenditure của các khách hàng là bằng nhau, nếu rủi ro vỡ nợ càng
lớn thì credit limits càng thấp
3. Methods of entering an overseas market
 ● Manufacture “at home”
Discussion:
1. What are the advantages/disadvantages of direct exporting ?
2. What are the advantages/disadvantages of indirect exporting?
3. When should a company adopt direct exporting/indirect exporting?
If the company have no knowledge experience, no brand reputation and limited resources
(human and capital) → should use indirect exporting (make profit)
Sau đó, thay vì bán cho các kênh phân phối dài (thông qua nhiều trung gian) thì sẽ cố gắng
chuyển qua bán cho các hệ thống phân phối cuối cùng (retailer, supermarket + market
research + enhance more resources)
→ ready for direct exporting

Page 30 Direct exporting Indirect exporting

Sell direct to the foreign end users Engage the services of an intermediary that
specializes in finding foreign markets and
buyers

Advantages - more control over the whole export process, provides a route to international market
potentially higher profits with less risks due to export services of the
- close relationships with overseas customers intermediary
which can help with future marketing efforts

Disadvantages - require of more time, depending on the scale - loss of market control
of the company and export sales - shared profits
- more cost to employing more staff with control is loss over how the good are sold
specialist experience and marketing as well as the potential cost
- higher risk incurred

Indirect exporting
 + agents
+ distributor
See pages 32 & 33 and fill out the table
Obligations/ Rights Agent Distributor

Find and contact the foreign markets/ buyers x x

Employed by the principal (manufacturer, another agent/ x

distributor) on a commission basis and retainer fee (fixed)

Take ownership of the goods x

Assume higher risks x

Purchase the goods outright and resell x

Set the price in overseas markets x

Negotiate the sale on behalf of the principal x

Negotiate the sale on behalf of itself x

Earn a profit (???) x x

Provide after-sales support x

Type of distributors
- Exclusive distributor/ Sole distributor: the easiest to reach customers
- Selective distributors: more competition
- Intensive distributors: high barriers to entry
→ Number of distributors selling the same products in a particular market increases

Discussion: The following intermediaries are agents or distributors?

Hints: See page 31 & 32
Intermediaries Agents Distributors

Export management companies x x

(small: acts as export department; (small) (large)
large: provide immediate payment for exporting goods)

Export trading houses (based in home market but sell to overseas x

market) - purchase the goods directly from the manufacturer and sell
them on in an overseas market; able to sell them to whoever they wish
and at whatever price they choose

Confirming houses (buy domestic products for overseas business clients) x

Buying agents (buy overseas products for x

domestic business clients - based in host country ???) - trong sách: based
in home country

Phân biệt Confirming houses and Buying agents?

● Confirming houses: mua hộ doanh nghiệp nước ngoài nguồn hàng từ nước mình →
tìm giá rẻ nhất mà buyer đưa ra
● Buying agents: thuê một công ty nước mình để mua nguồn hàng từ nước ngoài ???
(based in host country)
→ quyền kiểm soát lớn hơn trong việc tìm kiếm nguồn hàng: toàn quyền tìm kiếm nguồn
hàng, được ký kết hợp đồng thay cho người mua
Note:
Agents chuyên về thu mua: Confirming houses & Buying agents
Tìm agents để bán hàng: Export management companies (loại nhỏ)
Bán đứt cho một công ty: Export management companies (loại to), Export trading houses

+ co-marketing

Supplier B (exporting country) → Supplier A (intermediary) → Importers (found by

Supplier A)
→ Supplier B uses co-marketing

● Manufacturing “abroad”
1. Joint Venture - co-operative agreement
The company wishing to export would find a local overseas company with which it would
look to work together in the targeted country
Each party involved in the JV would bring different skills and expertise to the newly formed
entity
Reach an agreement on
- share of the revenues, expenses, assets
 - the control of the newly formed enterprise
eg. A Finish firm, a German firm and a Brazilian firm create a joint venture in Vietnam
An Italian firm creates a joint venture with a Vietnamese partner to enter the Vietnamese
market (local knowledge, reputation, business premises available,...)

A JV approach is attractive when countries impose high tariffs or quota restrictions in

order to protect their domestic manufacturers. In some territories, the country’s laws
may not permit foreign nationals to operate alone (advantages)

Advantages Disadvantages

- reduce entry risks to overseas market by
using local partner
- the local partner will have greater
understanding of the legal framework and
business culture of that country
- reduce labour and overhead costs
compares to manufactoring in the domestic
country and exporting to the overseas target
country
- imbalance is the levels of investment and
expertise provided by one party → easily
conflict
- potentially conflicting management styles
as well as strategic objectives
- complex to set up, take a great deal of time
and money to find the right partner

2. International Licensing (NOT include business model)

3. International Franchising (business model: different from Licensing)

Compare licensing and franchising

Licensing Franchising

Limitation (to use product, x

etc)

Control x

Type of business product-based service-based

The advantage to the licensor is that they are able to establish a presence in the overseas
market, with the licensee committed to developing the market.
The main disadvantage to the licensor is that they lose control over the
manufacture of their product and, as such, run the risk that an inferior product in their name /
brand will be sold in the overseas market

The advantages of franchising or licensing

- there is greater commitment on the part of licensees than is found among traditional
agents or distributors;
- there is greater control over presentation and pricing of products (franchising);
- there are lower start-up costs compared with JVs or traditional selling techniques;
- there is closer involvement with the overseas marketplace (franchising)

Indirect Direct Franchising Licensing Joint venture

export export
No international experience x x

Good international x x x
experience

Weak financial back-up x x

Strong financial back-up x x x

Huge similarities between x

home market and host
market

Huge differences between x x x

home market and host
market

No global brand reputation x (licensee)

Strong global brand x (licensor)

reputation

Topic 3: Contract and Documents

1. The ordering process
A. Make an enquiry (Buyer)
H. Receive an enquiry (Seller)
C. Consider the enquiry and make modifications if any (counter = offer) (S)
L. Check the creditworthiness of the buyer (S)
M. Write a quotation and submit (S)
G. Accept the quotation (offer) & place an order (the same or not the same as the quotation)
(B)
I. Accept the order by sending order confirmation (S)
F. Sign a contract (S&B)
B. Arrange for shipment of the goods (S)
D. Ship the goods (B & freight forwarder)
K. Forward relevant documents (S)
E. Receive the goods and make payment (B)
Vocabulary check:
What are the following forms called in Vietnamese?
- Enquiry: hỏi hàng
- Firm offer: chào hàng cố định
- Free offer: chào hàng tự do
- Quotation: báo giá = offer
- Order: đặt hàng
- Order confirmation: xác nhận đặt hàng
- Contract: hợp đồng
2. The contract and contract management
2.1. Definition of “Contract”
An agreement between two or more persons or entities, which may or may not contain
specific terms, in which there is a promise to do something in return for a consideration

2.2. Conditions for a valid contract to come into effect

• A firm offer + An entire acceptance of a firm offer (chào hàng cố định + chấp nhận thư chào
hàng cố định)
• An intention to create a contract (ý định để tạo lập hợp đồng)
• Consideration - each party provides something to the other (money/ goods)
• Capacity to contract - for a limited company that means that the nature of the business is
within the objectives set out in the company’s memorandum and articles (các bên có năng lực
để thực hiện hợp đồng)
• Consent must be given without duress or based on false information (the contract is an
agreement) (sự đồng thuận không bị cưỡng ép hay dựa trên thông tin sai lệch)
• The purpose must be legal (hàng hóa được phép XNK)

• Firm offer: Convention 1980, luật dân sự Việt Nam; I would like to
make a firm offer, due date (deadline for acceptance); I would like to make an offer with
engagement
• Free offer: Chào hàng tự do (This offer is subject to changes/ market
fluctuation; I would like to make an offer without engagement)

Discussion:
Seller X sends a firm/ free offer to Buyer Y. Which reactions of Y will form a contract:
A. Give entire acceptance (firm offer)
B. Give acceptance but with reservations (make changes) or conditions
(counter-offer: hoàn giá/ mặc cả)
C. Reject the offer entirely

2.3. Usual terms of a contract (điều khoản hợp đồng)

Terms What is included

Commodity name (tên hàng) must-have

Quality (SL) must-have

Quantity (chất lượng) must-have

Price (giá cả) must-have

Delivery (giao hàng) must-have

Payment (thanh toán) must-have

Packaging (đóng gói) may or may not include

2.4. Contract management
See page 45 and answer the following tasks belonging to which department:
Tasks Departments in charge

Find the buyers/ Receive enquiries (tìm sales depart

kiếm khách hàng/ gửi thư chào hàng)

Quote delivery dates and prices sales depart & production or supply depart

Prepare export documentation (chuẩn accounts or export depart (phòng kế toán

bị chứng từ XK) hoặc phòng xuất khẩu)

Decide method of settlement/payment credit control depart (phòng kiểm soát tín
(qđ hình thức thanh toán) dụng)

Fulfill the contract all

Manage contract processing and export order management (export

check progress department)
2.5. Sources of laws governing the contract
Convention or agreements among/ between countries (Convention 1980) → Laws of a
specific country → International practices and customs (ICC - Incoterms)

3. UN Convention on Contracts for the International Sale of Goods (CISG)

Read the article on page 46 & 47 and answer the question:
1. What is the CISG about?
Legal issues regarding the formation of contracts, basic obligations and rights of the buyer
and the seller regarding the sale of goods
1. Who developed the CISG? When? Ai là người xây dựng CISG? Khi nào?
CISG was developed by the United Nations Commission on International Trade Law
(UNCITRAL). CISG was signed in Vienna in 1980 (11 countries) but come into force in
1998 (được ký ở Áo Vienna vào 1980 và có hiệu lực vào 1998)
3. Is the CISG signed by whom? CISG được ký bởi ai?
By contracting states/ country members
4. How many countries have ratified the CISG?
CISG Có bao nhiêu thành viên 88 TV (2021) - 80 (2013)
5. Who will use the CISG? (ai là người SD CISG) contracting parties (các bên trong hợp
đồng - các doanh nghiệp) (to avoid choice of law), courts (tòa án) and arbitrators (trọng tài
viên)
6. What are the benefits of the CISG? (lợi ích của việc SD CISG)
The CISG is written in a style that uses plain language (sử dụng ngôn ngữ tối giản) and is
translated into six languages (được dịch bằng 6 thứ tiếng thông dụng trên TG). Each text is
translated so that it can be easily interpreted by the contracting states (có thể giải thích một
cách dễ dàng các điều khoản trong hợp đồng) and avoids local domestic legal terminologies
(trách được những từ ngữ địa phương)
Small and medium-sized enterprises and traders located in developing countries can often
have a relatively weak bargaining position (thường có vị thế yếu hơn) when dealing with
larger counterparties from the developed world. In addition, they generally lack access to
legal advice when negotiating a contract. By providing fair and uniform regulations for
contracts (các quy định công bằng và đồng nhất trong hợp đồng) falling under its scope, the
CISG can be particularly beneficial to such businesses
(tăng vị thế và giảm bớt rào cản tham gia thương mại quốc tế cho các nước nhỏ và vừa các
nước đang phát triển)
Content of the CISG
Part 1: Sphere of application and general provisions
Part 2: Formation of the contract
Part 3: Sales of goods
Part 4: Final provisions
Discussion:
- What are the downsides of the CISG?
In the event of breaches in contract, decisions made by the courts can be inconsistent between
different contracting countries. This is because the CISG is naturally interpreted by judges
using the underlying principles and methods that are common in their domestic law
There is also criticism of the multiple-language versions of the treaty in that the versions are
not totally consistent with each other − although this could be said about all treaties that are
translated into multiple languages
There are also criticisms that the CISG is incomplete. For example, the CISG does not
consider electronic contracts, nor the sale of services, and it does not govern the validity of
the contract
- If Vietnam has joined the CISG? We do not need to pass through any laws and
regulations about contracts?

4. International Commercial Terms (Incoterms)

See page 91 and answer the question:
- What are Incoterms about?
Incoterms establish a clearly defined point of delivery of the goods to indicate where the
seller's responsibility ends and where the buyer's responsibility begins → defining the scope
of the payment of freight and insurance of the goods while in transit
- What are the benefits of using Incoterms?
Provide a set of standardized terms that mean exactly the same to both parties and interpreted
in the same way by courts in every country
- What are “shipping terms” and “terms of delivery” about? - Another name of
Incoterms

5. Dispute handling and arbitration

Three basic means of resolving a dispute:
- Reaching a mutually satisfactory compromise
- Arbitration
- Presenting to courts
See page 50 and list the advantages and disadvantages of each method above

Advantages Disadvantages

Reaching a This is cheap, with no third-party fees (arbitrators One of the contracting parties
mutually or lawyers) and, if successful, will not get in the having lower bargaining power
satisfactory way of future opportunities for doing business will be at a disadvantage
compromise (đưa together
ra phương án giải → reach a mutually satisfactory compromise
quyết cho 2 bên)

Arbitration Involves both sides agreeing to an independent Take a lot of time to resolve a
(trọng tài viên) means of resolving a dispute (close) and deciding dispute
(1985) what each party should do to resolve matters There are costs involved
→ fairer for both side than self-agreement

Presenting to A legal remedy involving lawyers and courts,
courts (đưa ra tòa maybe in unfamiliar jurisdictions. After both
án) sides have taken legal advice, they may agree to
compromise or take matters before a court for a
decision. When a general principle of law is at
issue, this may be the only option
An application to a court for a
decision to resolve a dispute is
usually a last resort (open),
because of the uncertainty of
outcome, the cost and the bad
feeling that is often engendered
between the parties
High-cost

Overseas agents can prove to be most useful when a dispute arises. In fact, a reputable agent
should prevent a dispute from arising in the first place. However, that is not always the case.
Agents, frequently of the same nationality and culture as the overseas customer, can stray
from full support of their principal’s interests, particularly if regular communication is not
maintained
6. Documents used in international trade
Types of documents
Types of docs Docs

Financial docs Bill of exchange (B/E) or draft; Promissory Notes

Transport Bill of Lading (B/L) vận tải đường biển ; Non-negotiable seaway bills &
docs Air waybills vận tải đường bay
Road transport documents vận tải đường biển; Rail consignment notes
vận tải đường ray
Parcel or courier receipts vận đơn chuyển phát nhanh

Commercial Commercial invoice giá cả; Packing/ Weight list

docs Certificate of Origin giấy chứng nhận chất lượng; Pre-shipment
inspection certificates; Phytosanitary inspection certificates giấy chứng
nhận kiểm dịch thực vật
Export licenses; Import licenses giấy phép xuất khẩu/nhập khẩu
 Insurance Insurance policy (Đơn bảo hiểm); Insurance certificate (Giấy chứng nhận
docs bảo hiểm)

6.1. Financial documents

● Bill of Exchange
Discussion:
Read pages 77-80 and answer the following questions:
1. Is there any different way to call a Bill of exchange? (Draft)
2. By which law Bill of exchange is governed?
Bills of Exchange Act (UK); Laws on Negotiable docs (Vietnam) bộ luật các chứng từ có
giá/ giấy tờ chuyển nhượng
What are the characteristics of a Bill of exchange? DDN về hối phiếu
According to the UK Bills of Exchange Act 1882:
“A bill of exchange is an unconditional order in writing, addressed by one person to another,
signed by the person giving it, requiring the person to whom it is addressed to pay on demand
or at a fixed or determinable future time a sum certain in money to or to the order of a
specified person or to bearer”
hối phiếu là một lệnh đòi tiền vô điều kiện bắt buộc viết bằng văn bản, được ký phát bởi 1
bên cho 1 bên khác (drawer -> drawee) ký bởi người ký phát ra nó (seller), yêu cầu người bị
ký phát (buyer) trả thanh toán ngay hoặc thanh toán trả chậm (có time rõ ràng - fixed hoặc 1
time trong tương lai - determinable future) 1 khoản tiền nào đó cho 1 người cụ thể hoặc theo
lệnh của 1 ng cụ thể
(?) Time of payment: on demand (at sight - trả ngay), fixed /determinable future time
(?) Who is the beneficiary of a B/E (đối tượng hưởng thụ hối phiếu)
- to a specified person - 1 người cụ thể
- to the order of a specified person - theo lệnh của 1 ng cụ thể
- to bearer (hối phiếu vô danh)
How many types of Bill of exchange?
Maturity date At sight bill/ On demand bill/ Sight draft (Hối phiếu trả ngay)

Usance bill/ Time bill/ Term draft/ Usance draft (Hối phiếu trả
chậm)
- The issue of acceptance: The drawee accepts the obligation to pay
on a future date by signing the draft on its face and adding the word
“accepted” → They become the acceptor and they are legally
committed to pay on the due date. The seller's bank will hold it until
maturity, present it for payment and then remit the funds to the seller -
khi người bị ký phát chấp nhận nghĩa vụ trả tiền trong 1 khoảng
thời gian trong tương lai và điền vào “accepted” -> họ sẽ trở thành
“acceptor” và họ sẽ có nghĩa vụ trả tiền đúng hạn. Ngân hàng của
NB sẽ giữ phiếu và cho đến ngày đáo hạn, xuất trình để thanh toán
và sau đó chuyển tiền cho người bán
- The issue of discounting: The seller's bank can discount it by paying
the seller immediately the face value less a discount to represent
 interest for the period between the date of payment and the maturity
date - NH NB có thể chiết khấu bằng cách trả ngay cho người bán
mệnh giá trừ đi khoản chiết khấu để thể hiện lãi suất trong khoảng
thời gian từ ngày thanh toán đến ngày đáo hạn.

With or • Clean bill - hối phiếu trơn

Without • Documentary bill - hối phiếu kèm chứng từ
accompanied
documents

Beneficiary • Nominal bill: to a specified person (Hối phiếu đích danh)

• Holder or bearer Bill: to bearer (Hối phiếu vô danh)
• Order bill: to the order of …
The issue of endorsement:
The draft shows the beneficiary's name and notes “To order”. The
beneficiary can negotiate the draft by endorsing it (signing on the
back of the draft and name the payee) Hối phiếu ghi tên người thụ
hưởng và ghi chú “to order”. Người thụ hưởng có thể thương lượng hối
phiếu bằng cách ký hậu (ký tên vào mặt sau hối phiếu và ghi tên người
thụ hưởng)
eg. to order of seller (người bán có thể chuyển nhượng quyền thụ
hưởng hối phiếu cho bank hoặc creditor), lúc này
- seller: endorser - người ký hậu
- bank/creditor: payee
- buyer (người ký chấp nhận hối phiếu): payer

Unconditional: No conditions are allowed (Lệnh đòi tiền vô điều kiện)

In writing: including print
Addressed by one person: the drawer - the seller (maybe also the payee or not)
To other: drawee (the buyer's bank)
On demand or at a fixed determinable future time: payment on immediate presentation to
the drawee or for payment at a determinable due date (90 days after the date of the draft or 90
days after the arrival date of the goods???)
A specified person or to bearer: the named payee or the person holding if payable to the
bearer

Seller Goods Buyer

Drawer: the originator of a B/E Drawee: the buyer/ the

draft (who draws a draft) buyer's bank (to...)

Payee: the beneficiary of the Payer

draft

Time bill Acceptor: the drawee

Buyer sell goods to

 Company X (Debtor) →
Acceptor

Endorsor Order bill (to order of

seller)
Creditor of seller: Payee

Discussion:
Read carefully pages 78,79 and answer the following questions
1. So as to force seller to comply with obligation specified in the contract, the buyer
requires the seller to include a clause in the B/E that this B/E will be invalid if the seller
violates contract terms. Is it allowable?
A draft stands alone from any contract that might have caused it to be
written. Therefore, a holder of a draft who takes it in good faith and for
value takes it free from any defect in the title to it of the person from whom the holder took it.

2. Can every B/E be negotiable? Explain why?

B/E is a negotiable instrument unless specifically stated not to be. Negotiable instrument
means an unconditional promise or order to pay a fixed amount of money and is transferable
from one person to another person

● Promissory Notes
According to the UK Bills of Exchange Act 1882:
“An unconditional promise in writing made by one person (buyer) to another (seller) signed
by the maker (buyer), engaging to pay, on demand at a fixed or determinable future date a
sum certain in money to, or to the order of, a specified person or bearer.”

1. Who issues the Promissory note?

2. Why is the B/E popular as a negotiable instrument but promissory note which is
mostly used as debt instrument?
Promissory note vừa là debt instrument vừa là negotiable instrument

Write ‘True’ or ‘False’ against each statement regarding a bill of

exchange: (T/F)
(i) A bill of exchange must be accepted by the payee. F -> payer
(ii) A bill of exchange is drawn by the creditor. T
(iv) A bill payable on demand is called Time bill. F -> on demand bill/ at sight bill
(v) The person to whom payment is to be made in a bill of exchange is called payee. T
(vi) A negotiable instrument does not require the signature of its maker. F -> require
(vii) A negotiable instrument is not freely transferable. F -> đc chuyển nhượng
(viii) The time of payment of a negotiable instrument need not be certain. F -> certain

Note: D/P: D/P at sight (3 ngày) Vs. D/P kỳ hạn (not acceptance)
D/A: documents against acceptance
Compare At sight Bill and Term/Usance Bill

When to How to make The issue of The issue of

make payment acceptance ‘discounting’
payment

At sight payable on payable on presentation not arise not arise

Bill demand to the drawee

Term/ payable on the drawee accepts the the drawee accepts the the seller's bank can
Usance some future obligation to pay on a obligation to pay on a discount it by paying
Bill date future date. The payee future date by signing the the seller immediately
(seller or seller's bank) draft on its face and the face value less a
holds it until the adding the word discount to represent
maturity, presents it for “accepted” interest for the period
payment or discounts it → They become the between the date of
acceptor and they are payment and the
legally committed to pay maturity date (ngày
on the due date đáo hạn)

Compare Promissory Note and Bill of Exchange

Bill of Exchange Promissory Note

Drawer/Maker It is drawn by the creditor It is drawn by the debtor

Parties 3 parties involved: the drawer, 2 parties involved: maker and

the drawee and the payee payee

Nature of Unconditional order to pay Unconditional promise to pay

payment

Issue of Require an acceptance of the Does not require any

acceptance drawee before it is presented for acceptance since it is
payment signed by the persons who are
liable to pay

Liability The liability of a drawer of bill The liability of the maker of a

of exchange is secondary and promissory note is primary and
conditional. It is only when the absolute
drawee fails to pay that the drawer
would be liable as a surety

Payee The drawer and the payee may be The maker can not pay to himself
one person

6.2. Transport documents

 ● Bill of Lading
Definition:
Documents issued by a carrier, a master or their respective agent and usually have a
quasi-negotiable status (Các chứng từ do hãng vận chuyển, thuyền trưởng hoặc đại lý
tương ứng của họ phát hành và thường có trạng thái gần như có thể thương lượng)
- Combined transport or multimodal transport documents: used when goods are
transported by container from an inland terminal to a port, on to a destination port and
finally to another inland terminal.
- Liner Bills of Lading: used for regular shipping services between two ports where the
carrying vessel has a designated berth
- Charter party bills of lading
Role:
● Evidence of the contract of carriage (minh chứng của hợp đồng chuyên chở)
● A receipt for the goods (biên lai chứng nhận giao hàng của người chuyên chở)
● Providing entitlement to receive the goods (chứng từ sở hữu để nhận hàng) chỉ có
B/L mới có đặc điểm này

Bill of lading: House B/L and Master B/L (freight forwarder cty giao nhận vận tải - book tàu)
Seller (House B/L) → (G) freight forwarder (Master B/L) → Carrier (Master B/L) → (G)
agent of freight forwarder (House B/L) → (G) Buyer
(freight forwarder lúc này là carrier (ở chặng đầu tiên nội địa) còn carrier là master (chặng
vận chuyển chính chặng quốc tế)
Read pages 82 & 83 and answer the question:
1. Who can take possession of the goods under a B/L? Ai có thể sở hữu HH theo B/L
- The nominated consignee (the entity to whom the goods are being sent or consigned) →
Nominal B/L
Người nhận hàng được chỉ định (pháp nhân mà hàng hóa đang được gửi hoặc ký gửi) →
B / L danh nghĩa
- The consignee, the shipper or the bank whose names are preceded by the words ‘to order
of’ → To order of B/L
Người nhận hàng, người gửi hàng hoặc ngân hàng có tên đứng trước các từ 'to order of'
eg. to order of Company X (sau đó ký hậu tờ vận đơn, chuyển nhượng quyền sở hữu lô hàng
cho Company Y) or to order of shipper or to order of bank
- An entity to which the B/L has been endorsed
(Một pháp nhân mà B / L đã được xác nhận)
Ngoài ra có có Bearer B/L (Vận đơn vô danh)
2. What does the term “shipped on board” marked on B/L mean?
The goods are loaded on board
● shipped on board
● received for shipment B/L
3. What is a “clean” bill of lading? (Clean B/L Vs. Claused B/L)
A clean bill of lading is a document that declares there was no damage to or loss of goods
before shipment. The clean bill of lading is issued by the product carrier after thoroughly
inspecting all packages for any damage, missing quantities, or deviations in quality upon the
receipt of the goods from the consignor
Vận đơn sạch là chứng từ tuyên bố không có hư hỏng, mất mát hàng hóa trước khi vận
chuyển. Vận đơn sạch được phát hành bởi người vận chuyển sản phẩm sau khi kiểm tra
kỹ lưỡng tất cả các gói hàng xem có hư hỏng, thiếu số lượng hoặc sai lệch về chất lượng
khi nhận hàng từ người gửi hàng không

● Non-negotiable seaway bills & Air waybills

Read pages 84 & 85 and answer the question:
1. What are the downsides of negotiable B/L in case transporting time is short?
Nhược điểm của B / L thương phiếu trong trường hợp thời gian vận chuyển ngắn là gì?
A buyer may not receive the B/L before the ship arrives, it may face storage costs, known
as “demurrage charges”
Người mua có thể không nhận được B / L trước khi tàu đến, họ có thể phải đối mặt với
chi phí lưu kho, được gọi là "phí lưu kho"
Solutions: Use non-negotiable sea waybills or surrendered B/L
Sử dụng vận đơn đường biển không thương lượng hoặc B / L chuyển hàng
2. What are differences between a B/L and air waybills or non-negotiable sea waybills?
B/L provides entitlement to receive the goods
Air waybills and non-negotiable sea waybills do not provide entitlement to receive the goods

6.3. Commercial and other documents

• Commercial invoice (seller)
• Packing/ Weight list (seller)
• Certificate of Origin (a chamber of commerce in the exporter’s country or an embassy of
the importing country)
• Pre-shipment inspection certificates (conducted by specialist inspection organizations
mandated by the authorities of the importing country)
• Phytosanitary inspection certificates (issued to satisfy the import
regulations of some countries)
• Export licenses (government of exporting country - restrict)
• Import licenses (government of importing country)

6.4. Insurance documents: pay to insurance beneficiary - insurance company

To protect buyers, sellers and banks who finance trade transactions against risk of loss, eg.
due to weather, theft, strikes, civil commotion, war and piracy

A. This level covers loss due to:

1. Problems with the carrying vessel or train, such as collision, explosion, fire, sinking,
capsizing, running aground, washed overboard, lost on loading or unloading and derailment.
2. It also covers events such as lightning, volcanic activity and earthquakes.
3. It also covers costs incurred due to theft and non-delivery.
B. This level includes all of the risks in (1) and (2) above.
C. This level includes risks listed under (1) above only.
The insured is not covered for:
- misconduct of the insured;
- poor packing;
- any inherent vice of the cargo, such as a tendency to deteriorate over time;
- insolvency of the carrier;
- an unseaworthy vessel.
When to use Content

Insurance When there is only one shipment Details of the shipment on the
policy during a period of time preface and terms and conditions
of the contract of insurance on the
back

Insurance When there are several Details of the shipment

certificate shipments during a period of
time. For each shipment, an
insurance certificate is issued

(?) Nội dung? Tính chất pháp lý? Chuyển nhượng?

Topic 4: Method of settlement

● Open Account (ghi sổ - trả sau thời điểm giao hàng)
● Documentary Collection (nhờ thu)
● Bank Payment of Obligations (BPOs)
● Documentary Credit (tín dụng chứng từ; thanh toán bằng L/C)
● Payment in Advance (trả trước thời điểm giao hàng)

Trong thương mại quốc tế, từ khi người bán giao hàng cho đến khi người mua nhận được
hàng là khoảng trống về cả không gian và thời gian mà cả người bán và người mua đều
không kiểm soát được, ngoài vấn đề về khoảng cách địa lý dẫn đến việc người bán và người
mua không tin nhau → hai bên đều cảm thấy rủi ro → phát sinh thêm những phương thức
thanh toán khác ngoài các phương thức thanh toán thông thường trong thương mại nội địa

1. Open Account
Definition
An arrangement between the buyer and seller whereby the goods are manufactured and
delivered before payment is made
Process
The buyer and the seller will sign the contract. After signing the contract, the seller prepare
for the shipment of the goods. After receiving the goods, the buyer goes to the its bank to set
up a wire transfer. After that, based on the wire transfer requirement, the importer’s bank will
wire the amount from the buyer's account to the seller's account at the exporter’s bank. And
then, the money will go into the seller’s account in the exporter’s bank. It is the final step
(Ngày mà người mua ra ngân hàng làm lệnh chuyển tiền căn cứ vào thời hạn thanh toán theo
thỏa thuận giữa hai bên trong hợp đồng)
Notes
- A seller will despatch its goods to a buyer and send an invoice asking for payment or
agreement to pay on a specified date
- If goods are shipped by sea, the goods are consigned to the buyers and the documents of
title (bill of lading) will be sent directly to the buyer; if goods are despatched by air, then the
goods are consigned direct to the buyer (không cần chứng từ vì air waybills không phải
chứng từ sở hữu hàng hóa)
Discussion:
Read page 107 and answer the following questions:
1. What are the risks involved in open account trade?
Once goods have been despatched or services delivered, a seller will lose all control
overpayment, and is reliant on the trustworthiness and creditworthiness of the buyer to pay
→ Seller may face fraud and credit risk (not getting paid at all) or financial risk (getting paid
late → working capital cycle is longer)
Khi hàng hóa đã được gửi đi hoặc dịch vụ đã được giao, người bán sẽ mất mọi quyền kiểm
soát đối với việc thanh toán quá mức và phụ thuộc vào độ tin cậy và mức độ tín nhiệm của
người mua để thanh toán
→ Người bán có thể phải đối mặt với gian lận và rủi ro tín dụng (hoàn toàn không được
thanh toán) hoặc rủi ro tài chính (trả chậm → chu kỳ vốn lưu động dài hơn)
2. When should Open Account be used?
● Seller trusts Buyer
 ● Transactions involving regular shipments, where the importer often makes payments
at set intervals for goods received during a preceding period (Các giao dịch liên quan
đến các chuyến hàng thông thường, trong đó nhà nhập khẩu thường thanh toán theo
khoảng thời gian đã định cho hàng hóa đã nhận trong khoảng thời gian trước đó)
3. What are the pros and cons of using Open account to the Seller and the Buyer?
● Pros:
- Low-risk option for the Buyer
- Help the Seller land a sale and make the Seller more competitive, which can increase repeat
business and help them build both market share and customer loyalty (giúp cho người bán
tiếp cận và thu hút được nhiều khách hàng hơn; và tiết kiệm thời gian, giảm thiểu chi phí
giao dịch đối với giao dịch liên quan tới những chuyến hàng thường xuyên)
● Cons:
- Fraud, Credit risk and Financial risk to the Seller (getting paid late or not getting paid at all)
- If the Buyer doesn’t pay, the Seller may also incur costs trying to collect on the debt in
addition to the loss from unpaid debt itself
- Simply offering longer payment terms won’t necessarily make the Seller most competitive
4. How to minimize the risks involved (giảm thiểu rủi ro) in open account trade?
● Obtain credit insurance (được cung cấp bởi credit insurers) their overseas debtors
(reduce credit risk) - căn cứ vào creditworthiness of buyer để đưa ra credit limit
Người bán không thể yêu cầu người mua mua bảo hiểm cho mình vì trong phương thức thanh
toán này vị thế của người mua cao hơn nên người bán sẽ phải tự mua bảo hiểm
● Use an export invoice discounting (obtaining trade finance from the banks → reduce
financial risk): phải đi kèm một chứng từ có giá (B/E), chuyển nhượng quyền thụ
hưởng từ người bán sang cho ngân hàng
● Use factoring facility (obtaining trade finance from other companies and informal
institutions → reduce financial risk): các quỹ tài chính tư nhân cung cấp dịch vụ về
tài trợ thương mại cho người bán có nhu cầu về vốn nhưng không tìm được sự hỗ trợ
chính thức từ ngân hàng (chiết khấu trong trường hợp này sẽ thấp hơn so với ngân
hàng)
“Factoring is a financial transaction and a type of debtor finance in which a business sells its
accounts receivable (i.e., invoices) to a third party (called a factor) at a discount. A business
will sometimes factor its receivable assets to meet its present and immediate cash needs”

Phân biệt export invoice discounting và factoring facility

Chiết khấu hóa đơn, ngân hàng chỉ chấp nhận chiết khẩu các khoản phải thu còn đối với bao
thanh toán là mua bán nợ:
- export invoice discounting: recourse
- factoring facility: recourse or non - recourse

2. Documentary collection
Collection (nhờ thu) có hai loại: Documentary collection Vs. Clean collection
What is the difference between Open account and Documentary Collection?
 ● In a documentary collection, a seller will ship or despatch its goods. However, instead
of sending the documents direct to the buyer, it will send them via the banking
system, for holding pending payment or acceptance by the payment
● In a open account, documents are directly sent by seller to buyer

NOTE: Không tồn tại mối quan hệ giữa Principal và Collecting bank
Participating parties
● The principal: The seller who entrusts the handling of a collection to a remitting
bank
● The remitting bank (ngân hàng nhờ thu): the bank that acts for the seller, based in
the exporting country
● The collecting bank (ngân hàng thu hộ): a correspondent of the remitting bank based
in the buyer's country, as an agent of the remitting bank, will present the docs to the
drawee (usually the buyer) for payment or acceptance
● The presenting bank (ngân hàng xuất trình): the bank used by the collecting bank
where it has been identified by the collecting bank that the presenting bank is the
banker of the drawee and it's better placed to approach the drawee for a request
for payment or acceptance (but it is not common to have both of the presenting
bank and the collecting bank)
● The drawee: usually the buyer
Some other notes
● A seller would first agree with a buyer to utilize the banking system to arrange the
transfer of docs and payment or acceptance (Trước tiên, người bán sẽ đồng ý với
 người mua về việc sử dụng hệ thống ngân hàng để thu xếp việc chuyển tài liệu và
thanh toán hoặc chấp nhận)
● The seller then ships the goods and obtains the docs relating to the shipment
(commercial invoice, transport doc, certificate of origin...)
● The seller will complete and sign a collection instruction form provided by its bank
and present the docs together with the collection instruction to the bank
● Key content of the collection instruction form: the seller and buyer's names,
addresses and contact details, the name of consignee if different to that of the buyer,
the amount to be collected and details of the draft drawn on the buyer, a description of
goods and their shipment, a list and number of the docs that accompany the collection
instruction, detailed instruction (D/A terms or D/P terms...)

D/P D/A
acceptance against release of documents payment against release of the documents

When D/P terms are agreed, technically a
draft is not required as the docs will be
released upon payment by the buyer. Indeed,
in some countries where drafts are subject to
stamp duty, it is best to not enclose them
with a collection instruction, thus avoiding
payment of expensive pro-rate stamp duty
Where D/A terms are agreed, a draft
drawn on the buyer will usually be
endorsed with the docs, with details of
acceptance terms given on the collection
instruction

What are risks involved with Documentary Collection to Seller/Buyer?

D/P D/A

Time of At sight Usance/ Deferred (Time

payment bill)

Transfer payment against release of the documents acceptance against

of goods/ release of documents
docs

Time of At sight/ not use draft (replace with invoice) Usance/ Time draft
draft used
 Exporter’s - The buyer can refuse to either receive the Credit risk (usance
risk goods or make payment. In such cases, it is draft) → avalisation
usually impractical and too expensive for the - The importer can
seller to pay for return transportation. Thus, the refuse to accept the
seller is forced to sell the goods in the original goods for any reason,
country of destination at what is usually a heavy even if they are in good
discount condition
- In cases of shipments by air freight, it is possible - Has no control of
that the buyer will actually receive the goods goods and my need get
before going to the bank and paying for them paid at due date
(avalisation, to order of bank in bill of lading)
- If draft is unpaid, goods may need to be disposed
of or be delivered without payment if the
documents do not control title

Importer’s Fraud (fake docs)

risk

Avalisation (Bảo lãnh hối phiếu - Nếu như người nhập khẩu không thanh toán thì ngân hàng
sẽ đứng ra thanh toán) → reduce credit risk
In certain cases, exporters may seek out a third party - typically a bank - to guarantee
payment of a bill of exchange (bảo lãnh thanh toán cho 1 tờ hối phiếu) drawn on the
importer. The process of a third party endorsing the back of a bill of exchange (ký hậu vào
mặt sau của tờ B/E) is called Avalisation, and can be utilized at the exporter’s request in
situations where risk is high (trong trường hợp rủi ro là cao). In doing so, the exporter
has shifted potential risk onto the bank if an importer does not accept or does not pay a bill
of exchange. Banks guarantee payment of a draft by giving its ‘aval’ (Bảo lãnh hối phiếu)
● Payee’s rights of negotiability and transferability remain the same
● A party negotiating a draft thus acquires a right of getting paid from the
● Availing Bank
→ Further reduce credit risk
Discussion:
Read page 113-114 and answer the following questions:
● Who initiates (khởi xướng) documentary collection? (Seller)
● How many parties involved in the documentary collection? (5; at least 4 parties, in
case, presenting bank and collecting bank is one)
● What is the role of banks? (giữ và chuyển chứng từ hộ)
● Which law/rules govern documentary collection?
The use of The Uniform Rules for Collections is:
a. Compulsory
b. Optional
c. Compulsory or Optional depends on each country’s regulation

URC 522 (ICC,1995) sub-article 2 (a) defines a collection as being:

The handling by banks of documents,.. in accordance with instructions received, in order to
I. Obtain payment and/ or acceptance, or (CLEAN COLLECTION) - financial docs
(draft): chỉ ra số tiền và đối tượng bị ký phát chứ không có chứng từ khác đi kèm
II. Deliver documents against payment and/ or against acceptance, or (DOCUMENTARY
COLLECTION) - commercial docs + transport docs + financial docs (usance bill of
exchange - if any)
III. Deliver documents on other terms and conditions (DOCUMENTARY COLLECTION)
(pay in installments): cũng là nhờ thu kèm chứng từ nhưng đi kèm thêm những nội dung khác
mà người bán yêu cầu ngân hàng làm hộ họ (thu tiền thành từng đợt)

Clean collection Documentary collection

(Nhờ thu trơn) (Nhờ thu kèm chứng từ)

a collection of financial documents, such either the collection of financial docs

as a bill of exchange, promissory note or accompanied by commercial
cheque without any other commercial and docs or commercial & transport docs not
transport docs being part of the presentation accompanied by financial docs

What is Clean Collection?

a. The collection where Clean Bill of Lading is used
b. The collection of financial documents without any commercial documents attached
c. The collection of commercial documents without any financial documents attached

What are differences between Clean collection and Open account?

Compare the obligations of Collecting Bank/Presenting Bank?

Obligations of Collecting Bank/ Presenting Clean Documentary

Bank Collection Collection

Handle a collection received - from remitting Financial Commercial

bank and exporter (xử lý 1 lệnh nhờ thu nhận docs docs, transport docs
được) with/without
financial docs

Release documents upon receiving payment x

from the buyer (trao bộ chứng từ khi nhận được
 thanh toán)

Present only financial documents for payment x

or acceptance

Examine the collection instructions and the x

documents (kiểm tra lệnh nhờ thu và giấy tờ
liên quan)

Not responsible for the genuineness or validity x x

of any documents (Ko chịu trách nhiệm về tính
xác thực hoặc hợp lệ của bất kỳ tài liệu nào)

Release documents after obtaining the x

acceptance from the drawee

Collect charges x x

Once payment is received, transfer the funds to x x

the remitting bank

Summary
● What is documentary collection?
● What is the governing rule?
● What is collection instructions and its main content?
● What are the main parties involved?
● D/P vs. D/A
● What is avalisation?
● Clean collection vs. documentary collection
● Risks and benefits of using documentary collection
● In which cases should documentary collection be applied?
● How can documentary collection be compared to open account trading?

3. Payment in Advance
Definition
The method where full or significant partial payment is required, usually through a credit
card or a bank or wire transfer before the ownership of the goods transferred. Payment in
advance, especially wire transfers: most secure and favourable method of payment for
exporters and least secure for importers
Discussion:
● Can you compare the transaction flow of payment in advance with that of open
account?
● Discuss the advantages and disadvantages of using payment in advance to the Seller
and Buyer?
● If you were the exporter, which method of payment would you choose among open
account, documentary collection and payment in advance? Why?
● If you were the importer, which method of payment would you choose among open
account, documentary collection and payment in advance? Why?
●
4. Documentary Credit (Tín dụng chứng từ)
● Applicant (Buyer) means the party on whose request the credit is issued
● Beneficiary (Seller) means the party in whose favour a credit is issued
● Advising bank means the bank that advises the credit at the request of the issuing
bank
● Issuing bank means the bank that issues a credit at the request of an applicant or on
its own behalf
● Presenter means a beneficiary, bank or other party that makes a presentation
● Confirming bank means the bank that adds its confirmation to a credit upon the
issuing bank’s authorization or request
● Confirmation means a definite undertaking of the confirming bank, in addition to
that of the issuing bank, to honour or negotiate a complying presentation
● Nominated bank - NH được chỉ định means the bank with which the credit is
available or any bank in the case of a credit available with any bank
● Negotiation means the purchase by the nominated bank of drafts - chiết khấu
(drawn on bank other than the nominated bank) and/or documents under a complying
presentation, by advancing or agreeing to advance funds to the beneficiary on or
before the banking day on which reimbursement is due to the nominated bank

NOTE: Confirming bank, Nominated bank, Issuing bank đều là nơi kiểm tra sự
phù hợp của bộ chứng từ
→ Tối thiểu là 4 (tối thiểu là 3 nếu NH thông báo và NH phát hành là chi nhánh của
nhau)
Process - Quy trình
(1) Hai bên ký kết hợp đồng → (2) Người mua đến Issuing bank (NH phát hành) mở
L/C (L/C application form: bao gồm thông tin người bán, số tiền cần thu, bộ chứng từ bao
gồm những gì?) → (3) Issuing bank phát hành thư tín dụng (căn cứ vào nội dung trong
hợp đồng) và gửi cho Advising bank (NH thông báo) → (4) Advising bank kiểm tra tính
chân thực của L/C thông báo cho người bán để người bán kiểm tra lại các thông tin xem
đã đầy đủ chưa → (5) Người bán giao hàng (có B/L) và tập hợp các loại chứng từ như
yêu cầu trong L/C → (6) Xuất trình bộ chứng từ cho Advising bank để kiểm tra lại bộ
chứng (lần 1) từ xem đã đúng như yêu cầu chưa → (7) Chuyển bộ chứng từ cho Issuing
bank kiểm tra lại lần 2 (tính xác thực, số lượng chủng loại, giá trị pháp lý của bộ chứng
từ) sau đó gửi cho người mua và yêu cầu người mua thanh toán → (8) Thanh toán cho
Advising bank và giao bộ chứng từ cho người mua (Quy trình mang tính chất tương đối)
Definition
An irrevocable undertaking given by a bank whereby it undertakes to honor a
presentation of documents submitted in accordance with the terms and conditions of the
documentary credit and in compliance with UCP 600 (ICC, 2013)
Một cam kết không thể hủy ngang được đưa ra bởi một ngân hàng, theo đó ngân hàng đó
cam kết tôn trọng việc xuất trình các chứng từ được nộp phù hợp với các điều khoản và điều
kiện của tín dụng chứng từ và tuân thủ UCP 600
Other name: Letter of Credit (L/C)
Main features
● Credit
“Credit” means any arrangement, however, named or described, that is irrevocable and
thereby constitutes a definite undertaking of the
issuing bank to honour a complying presentation
● Irrevocable undertaking (cam kết không hủy ngang) by a bank
- A revocable LC is a credit, the terms and conditions of which can be amended/ cancelled
by the Issuing Bank. This cancellation can be done without prior notice to the beneficiaries
- An irrevocable credit is a credit, the terms and conditions of which can neither be
amended nor cancelled
- In most cases, the Seller only accepts an irrevocable L/C
● ‘honor a presentation’ = make payment as promised in L/C
Honor means:
- to pay at sight if the credit is available by sight payment - có nghĩa là trả ngay nếu thư
tín dụng ghi là thanh toán ngay khi nhìn thấy bộ chứng từ
- to incur a deferred payment undertaking and pay at maturity if the credit is available by
deferred payment - thanh toán trả chậm ko có B/E vào ngày đáo hạn
- to accept a bill of exchange (“draft”) drawn by the beneficiary and pay at maturity if the
credit is available by acceptance - chấp nhận thanh toán B/E thanh toán trả chậm
● Banks only deals with documents, not the goods (B/E là thanh toán vô điều kiện,
L/C thanh toán có điều kiện)
● ‘in accordance with the terms and conditions of the documentary credit’, not sale
contract
Discussion:
Read pages 144-145 and answer the following questions
1. What are the considerations that should be agreed by the parties before the buyer
asks its bank to issue the credit? Các nội dung 2 bên nên cân nhắc thỏa thuận trước khi
người mua xin mở L/C tại ngân hàng?
- the nature of the credit required: irrevocable (ko hủy ngang), confirmed, transferable (có
khả năng chuyển nhượng)
- the payment terms: at sight, acceptance (trả chậm kèm B/E), deferred payment (trả chậm
ko kèm B/E), negotiation (chiết khấu trước ngày đáo hạn)
- the currency and amount (loại tiền và slg phù hợp vs HĐ)
- the Incoterm that will apply and the associated responsibilities for each party (ngân
hàng chỉ quan tâm đến khía cạnh chuyển giao chi phí, không quan tâm đến chuyển giao rủi
ro hàng hóa)
- the validity of the credit (giá trị hiệu lực của L/C) (i.e. the expiry date for presentation of
docs and the period for presentation)
- the latest shipment date and routing of the goods
- other shipment issues: whether partial shipment and transhipment (the change of vessel
during the shipment) is allowed or not, the type of transport doc to be presented and any other
document requirements (vận chuyển từng phần và chuyển tải)
- the description of the goods
- the insurance requirements
- whether the credit is to be confirmed by a bank in the exporter's country
- who is responsible for bank charges
- whether goods are to be inspected prior to shipment
The above information will also appear in an application form for L/C
A transferable letter of credit is a letter of credit, that additionally allows the first
beneficiary to transfer some or all of the credit to another party, which creates a secondary
beneficiary. The party that initially accepts the transferable letter of credit from the bank is
referred to as the first, or primary beneficiary
 2. Why does the bank mark the credit as a contingent liability? Tại sao nghĩa vụ thanh
toán cho L/C lại gọi là trách nhiệm trả nợ ko thể chối bỏ
As the credit is a binding undertaking to guarantee payment either at sight or at a future date,
if all terms and conditions of the credit are met, the bank marks the credit as contingent
liability
What are the options for the bank to protect it against loss? Ngân hàng có những lựa
chọn nào để bảo vệ nó khỏi bị mất mát?
The bank can protect itself from loss by:
● security independent of the transaction, such as a charge over the buyer's assets and
guarantees of the directors (ký quỹ, thế chấp)
● security provided through the docs such as:
(1) original bill of lading issued to order of the bank or endorsed by the shipper to their
order or in blank, giving the bank the ability to take possession of the goods and, if
necessary, the sale of them;
(2) the bank may be satisfied with non-negotiable transport docs that consign the goods to
the bank, give the bank control over them

Payment term
Read page 147-148 and complete the table
Sight payment Acceptance Deferred payment Negotiation

Time of payment As soon as the beneficiary
presents the required docs to
the nominated bank or the
issuing bank, along with a
draft (if any)
After the beneficiary Payment is made at a Before the due date of
presents the required docs future date an usance draft or a
to the nominated bank or deferred payment
the issuing bank, along with
an usance draft, the draft
will be accepted to mature
on the determinable due
date

Types of draft At sight draft or no draft Usance draft No draft is required No draft is required
used required

The obligation of If the nominated bank has
nominated bank confirmed the credit, it must
pay the beneficiary
immediately and to be
reimbursed
If it has not confirmed the
credit, it is under no
obligation to pay, if the
documents comply. If it
chooses not to pay, even if the
docs comply, the bank will
forward the docs to the
issuing bank for their
If the nominated bank has
confirmed the credit, it must
accept the draft to pay on
the determinable due date.
At the request of the
beneficiary, the nominated
bank can purchase the draft
and advance funds without
recourse to the beneficiary
If it has not confirmed the
credit, it is under no
obligation to accept the
draft. If it chooses not to
accept the draft, even if the
docs comply, the bank will
forward the docs to the
issuing bank for their
If the nominated bank has
confirmed the credit, it
must pay on the future
date. At the request of the
beneficiary, the nominated
bank can purchase the
draft and advance funds
without recourse to the
beneficiary
If it has not confirmed the
credit, it is under no
obligation to make
payment. If it chooses
not to make payment, even
if the docs comply, the
bank will forward the docs
to the issuing bank for
If the credit is available with
a nominated bank by
negotiation, it will either
advance funds, or agree to
advance funds, to the
beneficiary on the basis of
the complying presentation
being made. Any negotiation
made by the nominated bank
will incur a charge to the
beneficiary for interest for
the period between the date
of the advance and when it
receives reimbursement from
the issuing bank
 examination and payment examination and acceptance their examination and
deferred payment

The obligation of Payment is made immediately
issuing bank to the beneficiary once the
docs are presented and
authorized by the issuing bank
The issuing bank will then
inform the applicant and debit
its account as well as release
the docs to the applicant
If the docs are compliant, it
will be required to accept a
draft payable on the
determinable due date. The
draft and docs will then be
released to the applicant and
they will be informed on the
due date
If the docs are compliant, If the docs are compliant, the
it will be required to pay issuing bank must reimburse
on the future date. The the nominated bank on the
docs will then be released due date
to the applicant and they
will be informed on the
due date

Types of Documentary Credit

● Transferable Credits (maximum 2 beneficiaries)
● Back-to-back Credits
● ‘Red clause’ and ‘green clause’ credits
● Revolving documentary credits (regular trans)
● Standby letters of credit
5. Bank Payment Obligations (BPOs)

• Obligor bank: the bank that must make payment under the BPO
• Recipient bank: the bank that receives payment under the BPO
Step 1: Buyer and seller agreed on BPO (bank payment obligation) as a payment term on the
sales contract. Buyer send its purchase order to the seller
Step 2: Buyer provides the minimum data from the purchase order and conditions of the bank
payment obligation to the obligor bank
Step 3: Seller confirms the data from the PO and sends its acceptance of the BPO conditions
to the recipient bank. If both buyer's and seller's data are matched on the Transaction
Matching Application then the baseline is established. Both buyer and seller will be receiving
matching reports from their banks.
BPO is irrevocable but conditional payment method (payment is subject to the
electronic matching of agreed datasets)
Step 4: Seller ships the goods as agreed on the sales contract
Step 5: Seller presents the shipment data and invoice data to its bank, which submits it to
Transaction Matching Application (TMA) for matching
Step 6: Buyer receives a match report from its bank. Buyer is invited to accept any
mismatches if any
Step 7: Seller's bank informs seller about the successful dataset match. BPO becomes
operative and due according to the agreed payment terms.
Step 8: Seller sends the trade documents directly to the buyer. Buyer will clear goods from
the customs with these documents
Step 9: On the due date, the obligor bank debits the proceeds from buyer's account