Chaper 5

International
Contract
MSC Tăng Minh Hưởng
 General Knowledge about International Contracts:
• Export Processing Zone: It is a special industrial zone. In the Export Processing
Zone, there are manufacturing companies with the purpose of exporting goods.
• Goods coming from the Domestic Market -> Export Processing Zone and vice versa
must go through customs procedures. The Contract signed between a company in
the Export Processing Zone and a company in the Domestic Market -> Domestic
Sales Contract. Goods have not crossed geographical borders but have crossed
customs borders.
• An International Contract is a trade contract with foreign elements.
• The International Contract is usually prepared and sent by the seller to the
partner.

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 B. Detailed Content of the Domestic Sales Contract
(HĐNT)
1. Introduction Section
Name: Sales Contract, International Contract, Contract, Agreement, ...
PROFORMA INVOICE (P/I) => WRONG
Contract number: (No.) It should be set according to a specific format. The format should
not be too long. If it's too long, payment documents may be prone to errors.
HNP-APPLE-300823
APPLE-COM-090823
Date:
08/03/2023 or 03/08/2023 => wrong
=> 08TH March, 2023

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 2. Information about the Parties of the Domestic
Sales Contract (Exporter & Importer)
Name (full name): JSC, LTD, PLC, Co...=> Should be clearly stated
Company Co Corporation Corp Corporate
Address: City, Country. Eg: Berlin, Germany
Eg: HaiPhong Port, Hai Phong, Viet Nam
Tel/fax : ++0084 (country code......). Email: ............ Website:
Tax Code/ Registration Number/Business License Number
Represented by...... Position: Legal representative of the company. If the authorized person is absent, a
Letter of authorization for another person to sign is required.
Banking Information: For Payment terms.
Continuation: After negotiation between the two parties, the seller agrees to sell, and the buyer agrees to
purchase goods and services under the following terms and conditions:

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 3. Main Content Section of the Contract
Art. 1: Commodity / Goods/Cargo (tên hàng hóa)
• Art. 1: Commodity / Goods/Cargo (name of the goods)
• The type of goods for transaction, accurately stating the name of the goods. If there is
a scientific name, it should also be included.
• Vietnamese long-grain rice
• Name of the product + Origin label/model of the product/condition of the product
• SH MODE MOTOR BIKE
• Komatsu
• Used...

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 3. Main Content Section of the Contract
Art.2: Quantity
• According to the standards of ISO (International Standard Organization) for measuring units
• Tạ, yến, phân, ly, thửa.....=> WRONG
• Length: M, dm, cm, mm, inch = 2.54 cm, mile (dặm) = 1.6km
• Liquid: litre, m3, 1 CBM= 1M3 cubic meter, gallon...
• Weight: g, Kg, ton. Note: MT (mét tấn).
• 1 MT (Metric Ton) = 1,000.00 kg (SI unit). 1 Short ton (ST- Tấn ngắn) = 907 kg (US). 1 Long ton
(LT- Tấn dài) = 1,016 kg (UK).
• 10,000.00 MT Rice ;
• 1,000,000.00 MT;
• 10.000 MT Rice=> WRONG

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 3. Main Content Section of the Contract
- Tolerance
• Goods measured in units such as Piece, set, package, carton, box, case, can... do not
have tolerance.
• Eg: no tolerance for 10 packages of iPhones (+/-3%)
• Bulk goods measured in units such as l, kg, MT... have tolerance.
• Eg: 100,000.00 MT RICE (+/-10%) => the exporter must deliver within the range of
90,000.00 MT < x < 110,000.00 MT.
• Errors arising from incorrect delivery quantities
• Short shipment
• Over shipment

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 3. Main Content Section of the Contract
+ Component tolerances and total tolerances:

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 Art. 3: Quality
- New/used. Year of manufacturing/Crop:
- Date of production: Expiry date:
- Origin:
- Manufacturer:
- Specification:
EX: Rice + Moisture <2%
+ Broken < 1%
+ Foreign Matter <0.5%
+ Aflatoxin < 0.01%
+ Brightness....

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 Art. 3: Quality
• Consult IT, Technical team, Boss, Seller, Manufacturer.
• Avoid vague regulations: Quality as per exporter’s standard. The more detailed the
regulations, the better. If too lengthy, include them in Annex of this contract Quality as
per annex A of this contract.
• Take photos of the products, include links in the annex of the contract.

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 Art. 4: Packing and marking
• Packing: The more detailed, the better. For exporters, attention should be paid to
packing to ensure the quality of goods while still saving packaging costs.
• Marking: Basic information includes:
• Commodity, Manufacturer, origin, buyer, Carton/lot number, expiry date...
• Special symbols of the goods.

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 Art. 5: Price/Amount
• Unit price:
• USD300.00/MT EXW FACTORY AT LOT 6B CN5 NGOC HOI IZ, THANH TRI DISTRICT,
HANOI, VIETNAM, INCOTERMS 2010
• Currency Unit + Amount/Unit of goods + Terms of delivery (Incoterms) + Incoterms
(2010/2020)
• PRICE/AMOUNT/TOTAL AMOUNT (Tolerance) = UNIT PRICE x Quantity (Tolerance)
• (In words: )

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 Art. 6: Shipment/Delivery.
- Mean of transport: By sea, air, road, railway, by tube
- Routine:
+ Place of receipt: BEIJING CITY, CHINA
+ Port of loading - POL: SHANGHAI PORT, CHINA
+ Port of discharge-POD/Port of unloading: HAIPHONG PORT, VIETNAM
+ Place of delivery/final destination: HOAN KIEM DISTRICT, Hanoi, VIETNAM
- Transshipment: (DIRECT, Transit)
+ Allowed/permitted (Transit)
+ Not allowed/not permitted/prohibited (DIRECT)

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 Art. 6: Shipment/Delivery.
• Partial shipment:
• Allowed/permitted
• Not allowed/not permitted/prohibited
• Number of shipments: Three times 10,000 MT in Sept 2023, 30,000 MT in Oct 2023, 40,000 MT
in November 2023 (Installments).
• Time of delivery:
• Specific day: On Friday, 10th Sept, 2023
• Deadline: Latest shipment date: 30th Oct, 2023
• Specific time range: within November, 2023
• Regularly: 15th (Periodically)
• Charges/surcharges... (Container Imbalance charge, DEM, DET...), transportation surcharges of
the shipment borne by the exporter and importer.

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 Art. 6: Shipment/Delivery.
- Notice of shipment:
+ Time
+ Content (POL, POD, date of shipment, commodity, quantity, air waybill no., bill of
lading no., vessel’s name, voyage...)
+ Method of notice (fax, email, tel...)
- SEA: Year of building: < 25/30 years old, nationality of flag)

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 Art. 7: Payment
- Currency: USD. Unit price: EUR (cần quy định exchange rate EUR -> USD theo tỷ giá
của các bank lớn VCB, HSBC, JP Morgan Chase...)
- Method of payment:
+ T/T (chuyển tiền): TELEGRAPHIC TRANSFER
+ Collection (nhờ thu): D/P; D/A
+ L/C (thư tín dụng): LETTER OF CREDIT
- Number of payment: two times, 3 times...
- Tenor:
+ At sight (trả ngay), in advance (trả trước) => Có lợi cho nhà XK.
+ xx days after/since/ from + 1 mốc time cụ thể => Trả chậm (NK).
VD: Payment will be made within 90 days after invoice date.
Payment will be made within 120 days after Bill of lading’s date.

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 Art. 7: Payment
• Documents required (name, quantity, content, issuer) (BCT XK nhà XK cần chuẩn bị (tự phát
hành - issue, đi xin) => gửi đi đòi tiền)
+ Commercial invoice: (Hóa đơn thương mại)
+ Packing list: (Phiếu đóng gói)
+ Certificate of origin: (GCNXX)
+ Bill of lading, Air waybill, Rail waybill....: (Chứng từ vận tải)
+ Cert of insurance/Insurance policy: (Chứng từ bảo hiểm)
+ Cert of quantity: (Giấy CN số lượng hàng hóa)
+ Cert of quality: (Giấy CN chất lượng hàng hóa)
+ Fumigation Cert: (Giấy CN hun trùng)
+ Phytosanitary Cert: (Giấy CN kiểm dịch thực vật)
+ Catch Cert: (Giấy CN đánh bắt)
+ Health Cert: (Giấy CN đảm bảo y tế)

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 Art. 7: Payment
• Notes:
The fewer, the better, preferably issued by the exporter => advantageous for the
exporter.
The more, the better, issued by a THIRD PARTY => advantageous for the importer.
• Banking Charges:
+ Banking Charges Inside Vietnam -> DN Việt Nam CHỊU
+ Banking Charges Outside Vietnam -> đối tác CHỊU
• Banking information:
Account name
Account number
Bank’s name
Bank’s address

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 Art. 7: Payment
• SWIFT CODE /BIC (Bank identifer code) : BFTVVNVX/BFTVVNVXXXX: Swift của VCB TSC,
• BFTVVNVX001: Swift of a certain VCB branch, (8-11 Characters) head office/branch
• BIDVVNVX120
• HSBCSGSG
• CHASUS33
• CITIUS33
• Notes: Banking information is absolutely accurate

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 Article 8: Installation and warranty (Machine)
a) Installation
+ Who:
+ Cost:
+ Time of installation:

b) Warranty
+ Time of warranty: 12 months =>WRONG
12 months after shipment date (24TH SEPT 2022)
3 years since the date of production
+ Cost: Who
+ Method : Replacement/Fix
+ Method of assurance:
5% - 10% of total contract amount.
The importer requests the exporter through a bank serving the exporter (in the exporter's country) to issue
a Warranty Guarantee/Bond/Security. The warranty guarantee must be issued by a reputable bank in the
exporter's country.
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 ARTICLE 9. PENALTY
Penalty clauses for both parties:
• Exporter: Failure to deliver the correct type of goods, quantity, quality, on time, failure
to provide delivery notification.
• Importer: Non-payment, delayed payment, incomplete payment...
• Penalty level: < 10% of the total contract amount.

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 ART 10. INSURANCE
• Who purchases insurance: Depends on the Incoterms conditions/agreement between
the specific exporter and importer in this contract.
• Conditions for purchasing insurance: A, B, C
• Purchase for which leg of the journey
• Insurance issued by which insurance company
• Note: Incoterms 2010 CIF, CIP, the seller is OBLIGED to purchase insurance of type C
minimum conditions.

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 ART 11: ACTS OF GOD/FORCE OF MAJEURE
When is a case considered Force Majeure:
• Due to natural phenomena: earthquakes, floods, tsunamis...
• Due to prohibitions by humans (government of countries), war, pandemics...
Handling when Force Majeure events occur:
• Time.
• Method.
• Documentary evidence.
• Responsibilities of the parties when a Force Majeure event occurs.

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 ART 12. Claim
In case the parties file complaints:
• Exporter: Incorrect delivery of goods in terms of type, quantity, quality, time, lack of
delivery notification.
• Importer: Non-payment, delayed payment, incomplete payment...
Procedures:
Time and feedback.

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 ART 13. Arbitration
Procedures for handling disputes in
foreign trade:
Items Court International
• Negotiation, mediation Arbitration (IA)
Expertise Level in X
• Mediation, reconciliation Professional Practice
• International Arbitration (IA) Confidentiality in X
Proceedings
• Court
Costs X
Enforcement of the X
• Location/law/court/language of Judgment
adjudication: Saigon, Hong Kong,
United Kingdom
• The value of the judgment is binding.
• Costs: Borne by the losing party.
• Note: Arbitral Award: Judgment by
arbitrator.

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 14. TERMINATION
Case:
• Both PARTIES HAVE FULFILLED the obligations stipulated in the contract.
• Both PARTIES AGREE while not yet fully completing obligations, responsibilities (unable
to fulfill anything/yet to fulfill a portion of the international contract).
Principle of handling:
• The PARTY causing damage to the other must compensate for the corresponding loss
(The party proposing termination of the international contract).
• The RIGHTS of the PARTIES ALREADY RECEIVED THEN THE PARTIES MUST FULFILL THE
CORRESPONDING OBLIGATIONS.

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 15. General conditions
- Language of contract:
- Amendments:
- The effective date of contract
- Originals
- Signature

On behalf of the seller On behalf of the buyer

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 Special considerations during the negotiation and signing
process of the International Sales Contract (ISC):
• Number the pages as 1/n, 2/n, ..., n/n. Avoid typographical errors and spelling mistakes.
• Seal overlap, send the red-signed copy through the Courier Parcel Network (CPN).
• When making payments, remember to confirm banking information with the Exporter -
to prevent e-commerce crimes.
• Sign and seal the ISC according to the size and color of the signature stamp.
• Price/Payment => skip => return to negotiation later.
• Have contingency plans for buying/selling goods.
• Don't leave any loopholes during the negotiation and signing of the ISC.
• Results of negotiation, transactions: Win Lost, Lost Lost, Win win.
• Be cautious with partners who seem EASY-GOING, agree to any terms => Signs of
abnormality => Potential problems ahead.

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 Exercise
Exercise 1:
a. Translate MICHEM's contract valued at USD22,000.00 into Vietnamese.
b. Identify the deficiencies in the MICHEM's contract.

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 Exercise
Exercise 2:
Based on the knowledge acquired, please draft a complete Export Commercial Contract with the
following basic information:
1. Commodity: Cassava slices. Season: 2021-2022
2. Quantity: 100,000 metric tons (+/-10%)
3. Unit Price: 82.50 USD/MT FOB Port of Hai Phong
4. Delivery Information:
1. Loading Port: Port of Hai Phong
2. Discharge Port: Los Angeles
3. Delivery Time: before 31/12/2022
4. Partial shipments are not allowed.
5. Payment Terms: Payment shall be made by T/T in advance 10% and by LC method for 90% of
the total Contract value.
6. Dispute Resolution: Disputes shall be settled at VIAC (Vietnam International Arbitration Centre).

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