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Explanatory Notes - Import Indoor Furniture From Malaysia (CPT, L - C)
Explanatory Notes - Import Indoor Furniture From Malaysia (CPT, L - C)
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MID-TERM ASSIGNMENT
Group 6
TOPIC: DRAFT INTERNATIONAL SALE OF GOODS CONTRACT
Party A (hereinafter referred to as “Seller”) - Full name: Bristol Technologies Sdn Bhd
Address: Lot 5178, Balakong Jaya Light Industry, 43300 Seri Kembangan, Selangor Darul Ehsan,
Malaysia.
Telephone: +60 3-8962 3233
Email: export@bristol.com.my
Representative: Mr. William Ng - Director
Account number: 123456789
Bank: CITIBANK BERHAD, MALAYSIA
AND
The background of the contract is Agreements, Decree, the volunteer, and need of the
parties. It has been agreed on that the Seller agrees to sell and the Buyer agrees to buy the
undermentioned goods on the following terms and conditions.
ARTICLE 1. COMMODITY AND QUANTITY
Since it is an Industrial product, the commodity name consists of commodity and brand name.
ARTICLE 2. QUALITY
The quality terms of the product is listed by the main ingredient/content.
3.3. Remedies for major defects are based on the Commercial Law, Art.41 about the Remedies
for delivery of goods which are in insufficient quantity or not appropriate to contracts.
‘Article 41.- Remedies in case of delivery of goods in insufficient quantity or delivery of
goods not appropriate to contracts
1. Unless otherwise agreed, and where the contract only provides for a time limit for delivery of
goods and does not determine a specific time for delivery of goods, and the seller delivers goods
before the expiration of such time limit but in insufficient quantity or goods not appropriate to the
contract, the seller may still deliver the deficit quantity of goods or provide substitute goods which
are appropriate to the contract or remedy the inappropriateness of the goods within the remaining
duration.
2. Where the seller, when applying the remedies provided for in Clause 1 of this Article, causes
disadvantages or unreasonable costs to the purchaser, the purchaser shall have the right to request
the seller to deal with such disadvantages or bear such costs.’
3.4. The liability for goods of each party in case the defects cannot be found by common measures
is based on the Commercial Law, Article 41, Clause 5.
‘Article 5.- Remedies in case of delivery of goods in insufficient quantity or delivery of goods
not appropriate to contracts
The seller shall be liable for defects of goods already examined by the purchaser or the
purchaser’s representative if the defects of the goods cannot be detected in the course of
examination through common measures and the seller knew or should have known such defects
but failed to notify them to the purchaser.’
4.1. PACKING
This is the first shipment placed by Woodin Limited Company to Bristol Technologies Sdn
Bhd, the number of goods purchased under contract number No.BRIS WOO/09/23 is 33 cubic
meters. Therefore, standard container 20ft should be used.
For the ease of transportation, handling and loading as well as saving cost and possible
damage, standard layers of the external package should be at least 2 layers and lined with rigid
paper to be damp-proof and shock-proof.
Goods purchased in parts to be installed upon arrival, small units of screws, knobs should
be packed in separate sealed and marked bags on which types, numbers and its relative main parts
to prevent loss and confusion to Woodin Limited Company.
4.1.1. Packaging quality
Goods purchased are made from wood, therefore, according to Vietnam regulations
effective on June 05, 2005, ISPM 15 regulations should be obtained. As the certification
increases the health quality of wood packaging and the security against the introduction of
pests in the domestic forest.
4.1.2. Packaging specification
a. Placing “fragile” on the sides of packages increases freight burdens. Therefore, for
every package of below 1,000 USD, “fragile” label should not be placed, exempt
for any special cases discussed and mutually agreed by both parties.
b. According to OSHA regulations for stacking bulk pallets, loose stacks should not
reach more than 7 feet in height and tapered back 2 inches for every foot of height
past 4 feet. Therefore, no more than no more than 3 boxes are stacked together,
and/or stacked to a maximum of 70 inches high.
4.1.3. Packaging price
The terms used in this contract is CPT. Packaging price is paid forward by Bristol
Technologies Sdn Bhd
4.2. MARKING
The product is 180x60cm in size, and the carton box should be around 190x65cm. The
marking of 20x6cm will take up nearly 9% space of each slide of the carton, just enough for
notification and other labels such as consignee’s mark, destination and order number to be labeled
on.
ARTICLE 5. PRICE
5.1 Currency: Specify the currency in which the prices are quoted. Both parties understand the
monetary units being used for all transactions.
5.2 Unit Price: Clarify the unit price for the imported goods suitable for incoterm condition, not
including packaging cost
5.3 Total Price: Calculate and outline the total price for the entire shipment or service based on
the unit price and quantity, ensuring indicated applicable taxes, duties, or additional fees.
ARTICLE 6. DELIVERY
ARTICLE 7. PAYMENT
7.1 Payment Currency: Specify the currency in which payments will be made. This ensures that
both parties understand the monetary units being used for all transactions.
7.2 Payment Terms: Explain the payment terms and conditions, including due dates, accepted
methods of payment (e.g., bank transfer, letter of credit), and any penalties or interest for late
payments.
7.3 Payment Method: Clearly specify the accepted methods of payment, such as bank transfers,
letters of credit, open account terms, or other mutually agreed-upon methods.
ARTICLE 8. WARRANTY
8.1. This warranty is given to the initial end user of new products purchased from Bristol. The
warranty is valid for FIVE (5) Years from the date of manufacture. If a product is defective and
if written notice of the defect is given to Bristol within the Applicable Warranty Period, then
Bristol at its option will either repair or replace the defective product with a comparable component
or product.
8.2. During the Applicable Warranty Period, the Buyer shall, in written form, notify the Seller of
the warranted defects. Upon the receipt of notification, the Seller at its option will either repair or
replace the defective product with a comparable component or product.
8.3. All the repairing cost shall be borne by the Seller.
8.4. If the replacement and repairing are done within the warranty period, it will be warranted for
SIX (6) months from the day of repairing and replacement.
8.5. In case all of the shipped products work perfectly under precise quantity and quality, the Seller
will have no warranty obligation to the Buyer. Therefore, the Buyer must complete their payment.
8.6. This warranty shall not be applicable to:
8.6.1. The products are defected during their stay on the vessel.
8.6.2. The products are defected owing to the Buyer’s failure to undertake suitable
preservation procedures, which is specified in the guidelines that is emailed ONE (1) day
after buying products on the website and attached in the packaging.
8.6.3. The products are expired warranty.
9.1. This clause refers to the textbook Practice of International trade (Nguyen, TH., 2017), Force
Majeure clause of CISG, The Force Majeure (Exemption) clause of the International Chamber of
Commerce and other practical contract samples, edited based on the actual conditions of the parties
entering the contract.
9.2. The Force Majeure (Exemption) clause of the International Chamber of Commerce (ICC
Publication No. 421) is the foundation for regulating definition, presumed events and other related
information for this Force Majeure article. In fact, most legal systems are familiar with the idea of
force majeure, however the concepts developed in national laws might indicate substantial
variations. In order to resolve this problem, parties usually incorporate Force Majeure clauses in
their contracts to aid in the creation and negotiation of such clauses.
9.3. The clause on the maximum time to notify the parties in the event of a Force Majeure is
intended to minimize the loss of time and opportunity costs of failure to deliver goods or failure to
perform obligations of the contract. In order for the parties to understand clearly and provide
smooth information, it is the foundation for maintaining the cooperative relationship between the
parties.
9.4. Provisions regarding the parties' actions upon the occurrence of a Force Majeure event and
termination of the contract are added and revised at appropriate intervals. The Force Majeure
extension time is negotiated and agreed upon by both parties at 30 (thirty) days. This is because
the furniture is necessary for the company's work, the delay cannot be too long, so it is necessary
to specify the time contract expires in case of Force Majeure.
Based on the Insurance regulation of CPT method under Incoterms 2020, which clearly states that
neither The Seller or The Buyer has the obligation to make a contract of insurance. However, in
order to minimize the cost of loss during transportation, we as The Buyer and The Seller agree to
stipulate additional insurance terms. According to this regulation, The Buyer bears the expense to
procure a cargo insurance complying with the cover provided by Clauses (C) of the Institute Cargo
Clauses (LMA/IUA), because the furniture item is not an item of too high value, it is appropriate
to purchase C insurance for the goods. Also according to the provisions of CPT under Incoterms
2020 and clearly stated in the Insurance clause of this contract, The Seller must provide The buyer,
at The buyer's request, risk and cost, with information in the possession of The Seller that The
Buyer needs to obtain insurance.
ARTICLE 11. PENALTY
11.1. This clause refers to the textbook Practice of International trade (Nguyen, TH., 2017), CISG,
edited based on the actual conditions of the parties participating in the contract.
11.2. The penalty clause is stipulated to ensure that The Seller and The Buyer fully fulfill their
commitments on time and obligations in the contract. The provisions of this article include the
conditions of violation, the time limit for payment of indemnity after the violation occurs and the
amount of indemnity. There are 3 (three) cases of violation specified in this clause of the contract
including delayed shipment, the goods delivered are not up to the required quantity and quality
and late payment.
11.3. In case of delayed shipments, the indemnity level is set to increase gradually according to
the weeks of delayed delivery. This content creates conditions for The Seller to quickly transfer
goods to The Buyer. The contract is canceled after the 30th day, The Seller pays 5% of the contract
value as compensation for the loss of The Buyer not getting the goods.
11.4. In case the delivered goods are not up to the required quantity and quality, The Seller has the
right to immediately cancel the contract and perform the contract with another party at The Buyer's
expense. There are contracts that allow The Seller to redeliver the goods, but in order to ensure
reliability and meet delivery time, The Buyer has the right to implement the contract. Contract
with another more suitable party is paid by The Seller.
11.5. In case of late payment, except in force majeure, the unpaid amount shall be interest-added
from the overdue date. Such interest rate is calculated on the bank's interest rate of overdue debts,
plus 2%. In fact, the contract can use a fixed amount or calculate according to the interest rate for
the overdue range, however this contract stipulates the interest rate to ensure synchronization and
closely follow the value of the goods in the contract.
12.1. NEGOTIATION
International Law Handbook (United Nations, 2017), Book 1, VI. Peaceful settlement of
international disputes: 10.States should, without prejudice to the right of free choice of means,
bear in mind that direct negotiations are a flexible and effective means of peaceful settlement of
their disputes. When they choose to resort to direct negotiations, States should negotiate
meaningfully, in order to arrive at an early settlement acceptable to the parties. States should be
equally prepared to seek the settlement of their disputes by the other means mentioned in the
present Declaration.
12.2. ARBITRATION
The UNCITRAL Arbitration Rules provide a comprehensive set of procedural rules upon which
parties may agree for the conduct of arbitral proceedings arising out of their commercial
relationship and are widely used in ad hoc arbitrations as well as administered arbitrations.
12.2.1 UNCITRAL Arbitration Rules - Place of arbitration (article 16)
Article 16
a. Unless the parties have agreed upon the place where the arbitration is to be held,
such place shall be determined by the arbitral tribunal, having regard to the
circumstances of the arbitration.
b. The arbitral tribunal may determine the locale of the arbitration within the country
agreed upon by the parties. It may hear witnesses and hold meetings for
consultation among its members at any place it deems appropriate, having regard
to the circumstances of the arbitration.
c. The arbitral tribunal may meet at any place it deems appropriate for the inspection
of goods, other property or documents. The parties shall be given sufficient notice
to enable them to be present at such inspection.
d. The award shall be made at the place of arbitration.
12.2.2. UNCITRAL Arbitration Rules - Language (article 17)
Article 17
a. Subject to an agreement by the parties, the arbitral tribunal shall, promptly after its
appointment, determine the language or languages to be used in the proceedings.
This determination shall apply to the statement of claim, the statement of defence,
and any further written statements and, if oral hearings take place, to the language
or languages to be used in such hearings.
b. The arbitral tribunal may order that any documents annexed to the statement of
claim or statement of defence, and any supplementary documents or exhibits
submitted in the course of the proceedings, delivered in their original language,
shall be accompanied by a translation into the language or languages agreed upon
by the parties or determined by the arbitral tribunal.
12.2.3. UNCITRAL Arbitration Rules - Form and effect of the award (Article 32.2)
Article 32.2
The award shall be made in writing and shall be final and binding on the parties.
The parties undertake to carry out the award without delay
12.2.4. The SIAC Rules 2016 are cost-effective, flexible, and transparent. Parties have
complete freedom of choice of counsel in arbitration proceedings.
12.2.5. The SIAC Rules 2016 - Rule 11 Three Arbitrators
Rule 11
11.1. If three arbitrators are to be appointed, each party shall nominate one
arbitrator.
11.2. If a party fails to make a nomination of an arbitrator within 14 days after
receipt of a party’s nomination of an arbitrator, or within the period otherwise
agreed by the parties or set by the Registrar, the President shall proceed to appoint
an arbitrator on its behalf.
11.3. Unless the parties have agreed upon another procedure for appointing the third
arbitrator, or if such agreed procedure does not result in a nomination within the
period agreed by the parties or set by the Registrar, the President shall appoint the
third arbitrator, who shall be the presiding arbitrator.
12.2.6. The International Chamber of Commerce (ICC) is the largest, most
representative business organization in the world. ICC has three main activities:
rule setting, dispute resolution, and policy advocacy. Because its member
companies and associations are themselves engaged in international business, ICC
has unrivalled authority in making rules that govern the conduct of business across
borders. Although these rules are voluntary, they are observed in thousands of
transactions every day and have become part of international trade.
13.1. The use of the UNIDROIT Principles as a means of interpreting and supplementing uniform
law instruments is particularly relevant with respect to the CISG. Notwithstanding the different
scope of application of the two instruments – international commercial contracts in general in the
case of the former, international sales contracts in the case of the latter – the instruments deal with
many of the same issues concerning contract formation, interpretation, performance, non-
performance and remedies. Since the provisions contained in the UNIDROIT Principles are more
comprehensive and in general more detailed, they may in many cases provide a solution for
ambiguities or gaps in the CISG.
13.2. Article 7 of the CISG states that “in the interpretation of this Convention regard is to be had
to its international character and to the need to promote uniformity in its application […]”
(paragraph 1) and that “questions concerning matters governed by this Convention which are not
expressly settled in it are to be settled in conformity with the general principles on which it is based
and, in the absence of such principles, in conformity with the law applicable by virtue of the rules
of private international law” (paragraph 2).
15.1. This clause is to specify the number of copies of the contract to be made and retained by each
party. In this case, each party is entitled to retain two copies for each language.
15.2. Due to the various languages in which the contract is written, it is essential to specify which
version shall prevail in case of arising disputes.
15.3. By this clause, the validity of the contract could be retained in case of any disputes leading
to the renegotiation of some temporarily invalid provisions. This brings both parties the benefit of
contract continuity even when there are disputes waiting to be resolved.
15.4. The amendment and additional provision is included in the contract with a view to expressly
stipulating that neither of the parties is entitled to make changes to the contract without agreement
in writing from the other. By this, it is safer for both parties as the contract stays consistent before,
during, and after its performance.
REFERENCES