UNIVERSITY OF ECONOMICS HO CHI MINH CITY

IBC05 – K41

SALE CONTRACT

MEMBERS OF GROUP 1:
1. Mac Kinh Vinh Hien.
2. Le Thi Van Anh.
3. Nguyen Ngoc My Linh.
4. Nguyen Ngoc Nhu Y.
5. Pham Le Phuong Tam.
 GROUP ASSIGNMENT.
Analyzing the errors and missing of the following terms and conditions, and draft (write) the export
contract correctly?
EXPORT CONTRACT
Party A: ABC Trading Co, Ltd. (Vietnam)
Address:
Fax:
Represented by: Hereinafter referred to the Seller
Party B: NZ Co, Ltd. (Japan).
Address:
Fax:
Represented by: Hereinafter referred to the Buyer
Both parties have agreed to sign the contract with the following terms and conditions
1. Commodity: Rice
2. Quality: as standard of export rice
3. Quantity: 1,500 MT more or less 10%
4. Price: USD 400 FCA or FOB
5. Payment: L/C and D/P. The seller will present following documents:
− Profoma Invoice.
– Certificate of Quality and Quantity in three originals.
– Bill of Lading marked Freight to collect at destination made out to order of any bank.
– Certificate of Origin form D
– Certificate of Insurance
6. Delivery: not later than 10/12/2017.
Partial shipment: allowed.
The buyer will advise the seller the name of vessel not later than three (03) days before shipping date by
fax.
7. Arbitration: all disputes arising out of this contract or breach thereof which cannot be settled amicably
by the parties concerned shall be settled by the Arbitration
8. Effective date: the contract will come into force from 20/12/2017
 CORRECTING ERRORS
1. Commodity: did not specify the sciencetific facts of the commodity.
Correction: Rice → Vietnam Long Grain White Rice 5% Broken.
2. Quality: did not mention the details of the standard as well as the quality.
Correction: As standard of export rice → As the sample or the standard agreed by both
parties.
3. Quantity: did not mention the buyer’s choice of tolerance.
Correction: 1,500 MT more or less 10% → 1,500 MT more or less 10% as the buyer’s option.
4. Price: did not give out the detail of what year of the INCOTERMS that the prices are
based on and the place of delivery or the named port of shipment are not mentioned.
Correction: USD 400 FCA (Named place) or FOB (Named port of shipment) based on
INCOTERMS 2010.
5. Payment:
- This term must declare the time of payment and details about the beneficiary’s
bank.
- This term should mention the percentage of participation between the payment
term L/C and D/P. Example: 50% L/C & 50% D/P or 0% D/P & 100%L/C.
- Profoma Invoice should not be included in the document collection, the original
Commercial Invoice must be included instead.
- “Made out to order of any bank” → “Made out to order of”, blank endoresed.
- The B/L should be Clean B/L.
- The term must mention about the amount and what the form of B/L is.
- C/O form D only apply for ASEAN countries. Instead, the seller should present
C/O form AJ or C/O form VJ because the buyer’s country is Japan.
- Since the incoterms agreed by both parties were FOB or FCA so Certificate of
Insurance is not required.
- Packing list and Customs Declaration must be included in the document
colletion.
Correction:
- By L/C 60% value of the contract within 10 days upon receipt copy of B/L
and 40% value of the contract by D/P The Buyer within 3-5 days upon the
first presentation of the bill (s) of exchange.
- Beneficiary’s Bank:
 Beneficiary: ABC Trading Co, Ltd. (Vietnam)
Bank Account No: XXXXXXXXXXXXXX
Advising Bank Name: XYZ Bank
Swift code: XXXXXXXX
Bank Address: No 123 A Street, B Wards, C District, Ho Chi Minh City.
The following documents required:
 Signed commercial invoice 02 copies issued by the seller.
 Certificate of Quality and Quantity issued by Manufactuner 02 copies.
 3/3 clean on board Bill of Lading made out to order of L/C opening
bank marked freight to collect at destination and notify the Buyer.
 Certificate of Origin form VJ issued by Import and Export
Management Department of the Ministry of Industry and Trade.
 Detailed packing list 02 copies.
6. Delivery:
- This term must contain detail about the Port of loading and Port of Discharge.
- The deadline of shipping must be later than the valid day of the contract.
- The word “advise” is not suitable for this contract. Instead, the word “inform”
should be used.
- The buyer must inform the seller the name of the vessle before the shipping
date.
Correction:
 Delivery of good will be made FOB.
 Time of delivery: Not later than 10/12/2017.
 Port of loading: Saigon.
 Port of discharge: Tokyo.
 Total shipment: allowed.
 Transshipment: not allowed.
 The buyer will advise the seller the name of vessel not later than three
(03) days before shipping date by fax.
7. Arbitration:
- This term must mention what the name of the arbitration association is and
under what term should be use to settle if there are any disputes arising.
Example: VIAC, SIAC, …
Correction:
In case of dispute / claim occuring out of concerning this contract, if
contractual parties can not reach an amicable settlement within 30 days from
its occurrence, the case shall be transferred to the VIETNAM
INTERNATIONAL ARBITRATION CENTRE (The VIAC) in accordance
with its Arbitration rules. The arbitration award will be binding to for both
seller and buyer. The losing party will bear all expenses thereof.
8. Effective day:
- The contract must be valid from the moment of its signing by both contracting
parties, not at a specific day later than the moment it was signed.
 Correction: The contract shall come into force after signature by both parties.
9. Others:
- An exporting rice sales contract must contain terms about Specifications,
Fumigation and Phytosanitary, Packing, Import and re-export, Taxation and
term about amendment or supplement to the contract.
 DRAFTING A CONTRACT
Party A: ABC Trading Co, Ltd. (Vietnam)
Address:
Fax:
Represented by: Hereinafter referred to the Seller
Party B: NZ Co, Ltd. (Japan).
Address:
Fax:
Represented by: Hereinafter referred to the Buyer
Both parties have agreed to sign the contract with the following terms and conditions:
1. Commondity: Vietnam Long Grain White Rice 5% Broken.
2. Quality: As the sample agreed by both parties.
3. Unit price: USD400/MT FOB HOCHIMINH CITY PORT, VIETNAM. This price is
subject to INCOTERMS 2010.
4. Total Quantity: 1500MT (+/-5% depends on the buyer’s option).
5. Payment: 60% value of the contract by Letter of Credit and 40% balance by Documents
againts Payment.
By an Irrevocable at sight Letter of Credit with TT Reimbursement allowed to be opened
by the buyer and Documents against Payment in favour of the seller through the
international first class bank within 10 days from the contract date and to be available
through: ABC bank (the beneficiary’s bank). ADD: 123 XYZ STR., X DIST., HO CHI
MINH CITY, VIETNAM. Swift code: XXXXXXXX.
All banking charges inside Vietnam for seller’s account. All banking charges outside
Vietnam for Buyer’s account.
The Seller is responsible for presenting these following documents:
- Commercial invoice issued by the seller in triplicate.
- Full set of 3/3 originals + 3 non – negotiable copies of clean on board bill of
lading made out to order, blank endoresed and marked “Freight to collect”.
- Certificate of Quality issued by an Independent inspection company in
triplicate.
- Certificate of Origin form VJ issued by Import and Export Management
Department of the Ministry of Industry and Trade.
- Certificate of Quantity issued by an Independent inspection company in
triplicate.
- Phytosanitary Certificate and Fumigation Certificate issued by an authorized
organization under the Ministry of Agriculture and Rural Development of
Vietnam.
- Packing list in triplicate.
6. Shipment:
- Time of Shipment: in the first half of December 2016.
 - Port of Loading: HCM city ports, Vietnam.
- Port of Discharge: Port of Akita, Japan.
- The buyer will inform the seller the name of vessel at least five (5) days
before shipping date through facsimle machine and by E-mail.
- Total Shipment: Allowed.
- Transshipment: not allowed.
7. Origin: Vietnam.
8. Taxation: All past, present and future customs taxes and / or duties and / or levies on the
cargo in the country of origin shall be for seller’s account.
9. Arbitration:
In case of dispute / claim occuring out of concerning this contract, if contractual parties
can not reach an amicable settlement within 30 days from its occurrence, the case shall be
transferred to the VIETNAM INTERNATIONAL ARBITRATION CENTRE (The
VIAC) in accordance with its Arbitration rules. The arbitration award will be binding to
for both seller and buyer. The losing party will bear all expenses thereof.
10. Other terms and conditions:
1. The seller guarantee the quota and export lincense.
2. The buyer guarantee the quota and import lincense.
3. Any amendment or supplement to this contract shall be valid if they are in writing
and signed by both contracting parties.
4. The contract shall come into force right after the moment of its signed by both
contracting parties. The contract signed through facsimle machine or scanned by
email is acceptable.
5. Re-export: If the buyers want to re-export to Vietnam concentrated markets
including: Indonesia, Cuba and Iraq, they have to get the Seller’s acceptance. The
Seller is just to accept the Buyer’s re-export to these markets after obtaining the
approval from the Ministry of Industry and Trade of Vietnam.