Chapter 3 (14q)

1. What are the benefits of a well-designed set of specification?

(bộ tiêu chí chất lượng, quy cách phẩm chất)
A well-designed set of specifications offers vital protection for both sides:
- The importer is protected against inferior products.
- The seller is protected also-through more subtly. If the products are fully specified
and the consignment meets the specifications, the buyer will be unable to find any
excuses for rejection or for exaggerated defects liability.

2. Pre-Delivery Inspection
Inspection of the goods in the manufacturer's factory before delivery.

3. Why is there independent inspection?

- Inspection service reports on the weight, size and most importantly, the value of the
goods.
- It prevents exporter and importer agreeing an unrealistically low invoice price in
order to avoid customs duties in the buyer's country. Such inspection also prevents
shipment of patently defective goods.

4. Defects discovered by inspection – compare

- Patent defects
Defects that are apparent, e.g., wrong items, broken, missing parts, scratches, etc
- Latent defects
Defects that only come to light after buyer's acceptance, or hidden defects, e.g structural
weaknesses, failure to operate at high or low temp, high fuel consumption

5. Define implied warranties and identify 3 types

Implied warranties are assumptions about the goods made by the Buyer, even if the exporter
gives no express warranty.
Implied warranties are usually three:
- Implied warranty of conformity with contract
In principle, the Buyer can reject the goods if they do not conform with the Contract
Ex: When you buy a new car from a car dealer, it is specified in the Contract that the
car works. If the car doesn’t work, it would violate the implied warranty of conformity
with the Contract and the Buyer can reject it.
- Implied warranty of merchantable quality
The Buyer can reject the goods that are not of merchantable quality.
 Ex: A fruit that looks and smells good but has hidden defects would violate the implied
warranty of merchantability if its quality does not meet the standards for such fruit "as
passes ordinarily in the trade".
- Implied warranty of fitness for intended purpose
If the Exporter knew the intended purpose, and if the buyer relied on the exporter's
judgement, the Buyer can reject the goods that are not suitable for their intended
purposes.
Ex: If a farmer goes to a farm supply store, and tells the salesman he needs a plow for
the rocky soil of his farm, and the salesman directs him to a particular plow, there may
be an implied warranty that the plow in question is fit for use in rocky soil.

6. So sánh Product warranty và Guarantee

A product warranty Guarantee
A promise by the exporter to cure defects A promise by the guarantor to pay the
in his products. beneficiary, made out at the request of the
There are two parties: the buyer and the principal
seller There are three parties: guarantor,
principal and beneficiary

7. Three types of latent defects

- Defective workmanship: A product with defective workmanship is incorrectly build
A radio lacks the wire connecting the loudspeaker and amplifier
- Defective materials: A product with defective materials is made of inferior or somehow
incorrect materials or parts
A drive belt made of inferior rubber falls into pieces after 5 hours use
- Defective design: A product with defective design does not meet specifications
A crane on an oil rig dangerously vibrates in high wind

8. Common exclusion of defect / What is not a defect?

- Fair/normal/natural wear and tear (hao mòn tự nhiên) - The result of normal use
e.g: a plastic handle scratches after 6-month use
- Misuse (sử dụng sai cách) - Seriously incorrect handling by the buyer
e.g: failure to check oil level in a motor

9. What is the defects liability period?

The defects liability period is the period during which the Exporter is liable for and must make
good defects that are apparent or that come to light later

10. (and example) what does disclaimer of warranty mean?

…means this item is supplied "as is" (nguyên trạng) and without support of any kind
whatsoever.
Example: software is often delivered with a Disclaimer of Warranty
11. What does the defects liability provision regulate?
- It states the length of the defects liability period and its starting point.
- It regulates the time allowed to the Buyer to notify the Exporter of defects in the
products delivered by the Exporter.
- It regulates the period during which the seller has to cure the defects.
- It seldom regulates the legal action period.

12. What is eternal warranty? How to avoid it?

- "eternal warranty" - An endlessly renewed liability for defects.
- Exporters normally reject the clause together, if rejection is impossible, they can – and
should – break the chain warranty with a cut-off clause (điều khoản chấm dứt)
- Ex: "The total warranty period shall in no case (shall not in any cases) exceed three
years."

13. How can defects be made good?

- Repair: in domestic trade: cheapest; in international trade: costly
- Allow the Buyer to repair at the exporter’s cost: unsafe
- Replace: keep goodwill/ just defective part
- Reduce the price
- Return the goods and refund the price: the least favourable for the Seller

14. What is the least favorable curing action for the Exporter?
Returning the goods and refunding the price seems to be the least favorable for the exporter
because this can be considered a cancellation of the contract. Often defective goods are not
worth the cost of returning shipment to the exporter's country. That means the deal is a total
loss for the exporter.
Chapter 4 (12q)
1. Compare Continental and Anglo-American law
Continental Law Anglo-American Law

Goal Consistency (nhất quán) and Justice in individual case

Uniformity (thống nhất) of
Enforcement

Court Decisions Predictable Not fully predictable

Length of Contract Short and lacking in details Long and details
Acceptance Not internationally accepted Internationally accepted

2. What are the 3 principles of an enforceable Contract?

- The parties achieve a "meeting of minds" through a process of offer and acceptance
(One side makes an offer and the other side accepts it)
=> mutual agreement
- The parties are capable of entering a contract
=> contractual capacity
- The purpose of a contract is legal

3. Who are unable to sign the Contract?

Those who lack contractual capacity
- Children
- Feeble-minded
- Drunks

4. What does “Ultra vires” mean?

- “Ultra vires” means “beyond its power”
- A contract that is ultra vires is unenforceable
- Under the public law (company law) of many countries, a company can only sign a
contract within its power

5. What does the partial invalidity provision say/mean?

Partial invalidity provision says that the invalidity of one part of the contract does not
invalidate the rest

6. What is one-sided agreement? Give example

- An agreement in which one party has only duties and the other party has only rights
- Release from an obligation
Example: In principle, when the B makes late payment, the B will have to pay some
interest to the S. But the S agrees to release the B from an obligation to pay interest in
case of late payment. This agreement is one-sided.
 - Agreement to modify a contract
Example: In principle, when the B wants to make some changes in the Specifications
agreed under the Contract, the B will have to pay additional charges. However, the S
agrees to change the specifications.

7. Should the Exporter treat the recital as a chance to promote its skills and excellence
of his products?
Shouldn’t
If the contract gets into trouble, such recital is used by the importer to beat the exporter. "You
told me you were the best—and I acted on that belief.”

8. When is a Contract discharged by performance?

When both parties perform their duties exactly according to the contract, and the last duty is
fully performed

9. compare all 3 (termination, cancellation, rescission)

Termination Cancellation Rescission

The Contract allows one side to One side breaches the contract Both parties agree to end the
end the contract contract

one-sided procedure one-sided procedure two-sided procedure

10. Define 4 cases in which a contract is discharged

- Discharge by performance
When both parties perform their duties exactly according to the contract, and the last
duty is fully performed
- Cancellation
When one party breaches a contract, the other has the right to demand cancellation of
the contract.
Only fundamental breach leads to cancellation of the Contract
- Rescission
The parties may simply agree to end their contractual relationship.
It is a kind of two-sided termination. Both Parties see the continuing of the contract is
useless for them.
- Impossibility and Frustration
Impossibility and Frustration occur when a contract is discharged because it is
impossible or totally pointless to continue with it.
 11. Compare between Arbitration and Litigation

Arbitration Litigation

- Private - Public
- Quicker - Expensive
- Costs are predictable - Time-consuming
- Decision is business-oriented rather - The results are often legalistic rather
than law-oriented than business like

12. Why is litigation before the court internationally the least attractive?
Litigation before the courts is internationally the least attractive:
- It is public
- It is expensive
- It is time-consuming
- The results are often legalistic rather than business like