Chapter 1:

Negotiating Delivery
I. The Five Steps in
Negotiating Delivery
1. The two parties should negotiate
delivery systematically.
2. A step-by-step overview of
delivery procedure is an
important aid to planning.
Timing: Date of delivery,
delay, and results of delay
Location : Place of delivery
and alternatives
Transport: Mode of
transport to be used
Risk, Title and Insurance: Transfer of risk,
transfer of ownership, and insurance

Terms/Rules of trade: Incoterms

to be used
Step 1: Timing: When
must Delivery Take Place?
(When?)

The date of delivery lies at the heart

of a sales contract – the key to
many contract events.
Step 2: Location: What is the Place of
Delivery? (Where does the delivery take
place ?)
Step 3: Transport (How are the
goods delivered?)
Step 4: Transfer of Risk,
Transfer of Ownership,
Insurance
When is the risk/ownership
transferred to the buyer? Who
arranges insurance?
Step 5: Terms/Rules of trade
Incoterms
 1. Timing
The problem:
Naming a delivery date is the
first step in negotiating the timing
of an export deal.
Complex issues concerning
coming into force, delay and
compensation for delay also be
negotiated.
The principle:
Delivery delay classification:
- Excusable
- Non-excusable
a. Naming the Date
- Use a straightforward calendar
date: 31st December 2011.
- Not/No later than 31st December
2011
- Delivery in Feb/July at Buyer’s
option.
How many steps do the two parties often
plan for the contract to come into
existence?

The signature day (Date

of execution)

The date of coming into

force (effective day)
What is the date of coming into
force?
When the last precondition is met.
- Receipt of import and/or export
approval;
- Receipt of foreign exchange
approval from a central bank;
- Issuance of a letter of credit or
bank guarantee;
Making of a down-payment by the
buyer;
Issuance of an insurance policy;
Issuance of a certificate of origin;
Delivery by the buyer of plans,
drawings or other documentation
What is a cut-off date?
If the contract has not come into force
within a certain of time, then it becomes null
and void.
Cut-off date is the last date when the
contract can come into force within a certain
time.
ˌnull and ˈvoid ( law ) ( of an election,
agreement, etc. ) having no legal force; not
valid
The contract was declared null and void.
Coming Into Force
` agreement shall come into force after
This
execution by both parties on the date of the
last necessary approval by the competent
authorities in the country of the Seller and
the Buyer.
If the contract has not come into force
within ninety days of execution, it shall
become null and void.
What is the delivery date?
The delivery date is normally
fixed for a certain number of days
after the contract has come into
force.
The date of delivery shall be
twenty-eight days after the date of
coming into force of the contract.
 Delay
1. Excused/ Excusable Delay
2. Unexcused/ Non-excusable
Delay
Excused/Excusable Delay and
the Grace Period.
The clause on late delivery.
For each week of late delivery
the Seller shall pay the Buyer
0.1% of the contract price.
 20/5

20/5
20/6
When the grace period is set:
If delivery is not effected within one
month of the agreed delivery date,
then the Seller shall pay the Buyer
0.1% of the contract price.
What advantages does a one-month
grace period have?
- The seller has an early, good-faith
target to meet.
- The buyer can exert considerable
moral pressure before the penalty is
applied.
- Advantages for both: the buyer
gets the goods earlier, and the
seller receives early payment.
Excused/Excusable Delay and Force
Majeure
 Acts of God – a hurricane, an earthquake- excuse
performance of a contract.
 Unavoidable events should also excuse
performance: war, fire, new government
regulations
 strikes, lockouts, labour unrest.
 If the exporter shows absolute good faith but
simply can not deliver the goods, then his duties
under the contract can be suspended or terminated
altogether.
[ uncountable ] 1 the act of doing
deliberate damage to equipment, transport,
machines, etc. to prevent an enemy from
using them, or to protest about sth
Sabotage
a situation in which a large group of people
try to take political control of their own
country with violence
uprising
insurrection
 unrest or dissatisfaction displayed
by workers, often in the form of strikes, and
sometimes violent disputes, etc,
which disrupts normal business
industrial/labour unrest
 a situation in which a group of
people behave in a violent way in a
public place, often as a protest
riot.
 Trong trường hợp một bên bị ngăn cản hoặc bị trì hoãn
không thể thực hiện bất kì nghĩa vụ nào theo hợp đồng do
tình huống vượt ngoài tầm kiểm soát thì tình huống này
được xem như bất khả kháng, và dù hiểu theo hợp đồng hay
cách khác , bên này không có lỗi và không cần thực hiện các
giải pháp khắc phục cho bên kia. Trường hợp bất khả kháng
bao gồm nhưng không giới hạn đối với chiến tranh (cho dù
có tuyên bố hay không), sự nổi loạn, khởi nghĩa, các hành
động chống phá, hay những trường hợp khác tương tự xảy
ra như các vụ đình công hoặc tranh chấp/ bất ổn lao động,
những qui định mới ban hành của chính phủ, những chậm
trễ do chính phủ hành động hay không hành động, hỏa hoạn,
cháy nổ, hoặc những thiên tai khó tránh khỏi như lũ lụt, gió
bão, động đất hay những hiện tượng bất thường của thiên
nhiên.
 If either party is prevented from, or
delayed in , performing any duty under
this contract, then this party shall
immediately notify the other party of
the event, of the duty affected, and of
the expected duration of the event.
 If any force majeure event prevents or
delays performance of any duty under
this contract for more than sixty days,
then either party may on due
notification to the other party terminate
this contract.
1 a period of heavy rain in summer
in S Asia; the rain that falls during
this period
2 a wind in S Asia that blows from
the south-west in summer, bringing
rain, and the north-east in winter
Monsoon
Unexcused/ Non-excusable Delay and the
Buyer’s Remedies
` an exporter delivers late, this
When
normally causes some loss or damage to
the buyer.
The law provides two remedies for such
damage:
- Issuing a decree of specific performance
requiring the exporter to make delivery
as agreed.
- Requiring the exporter to pay the buyer
compensatory damages
Unexcused/ Non-excusable Delay and the
Buyer’s Remedies
Which choice is the court likely to
`
make?

- common-law countries (England, the.

United States, most of the British
Commonwealth and ex-
Commonwealth) prefer to award
damages

- civil-law countries (most other

countries) usually enforce performance.
Unexcused/ Non-excusable Delay
and the Buyer’s Remedies
The` concept of enforced
performance presents no problems:
the judge simply orders the party in
default to perform as promised.
Damages are a more complex
issue.
Damages are sums of money paid
to compensate an injured party for
some kind of damage.
Unexcused/ Non-excusable Delay and the
Buyer’s Remedies
In setting a figure for compensatory
`
damages for late delivery, the courts usually
ask three questions, looking for the answer
"Yes" in each case:
1. Did the loss provably follow from the
breach?
2. Was the loss reasonably close to the
breach in the chain of events?
3. Was the loss "mitigated"—in other words,
did the buyer take reasonable steps to
keep the loss as small as possible?
Unexcused/ Non-excusable Delay and the
Buyer’s Remedies
` proceedings to claim compensatory
Court
damages, especially internationally
+ are expensive, the results are uncertain,
+ and law suits destroy the working relationship
between the parties.
Therefore, most international contracts specify
the Consequences of typical breaches such as
late delivery. The two sides simply negotiate a
"Iump-sum" that the exporter will pay if delivery
is late. This sum is sometimes called liquidated
damages and sometimes penalty.
Unexcused/ Non-excusable Delay
` the Buyer’s Remedies
and
- ‘Lump-sum’
- Liquidated damages
- Penalties
- Quasi-indemnity
Motives:
`Liquidated damages
To compensate the buyer fairly for
any delay in delivery
(Enforceable everywhere but
subject to increase or decrease in
some legal systems)
Penalties
`
To terrorize the exporter into
punctual delivery
(not enforceable in English
law or other common law
systems)
Quasi-indemnity
`
To relieve the exporter of
liability for delay in delivery.
(Enforceable everywhere but
open challenge as
“unconscionable”
Liquidated damages
If the seller fails to supply any of the goods
within the time period specified in the
contract, the buyer shall notify the seller that
a breach of contract has occurred and shall
deduct from the contract price per week of
delay, as liquidated damages, a sum
equivalent to one half percent of the
delivery price of the delayed goods until
actual delivery up to a maximum deduction
of 10% of the delivered price of the delayed
goods.
2. Place of delivery
In the contract, the word ‘delivery’
doesn’t mean the arrival of goods at
their destination
Considerable confusion can arise if the
parties fail to clarify what they mean by
‘the place of delivery’.
What is ‘the place of
delivery’?
- The place of delivery is the
point at which the exporter
passes responsibility for the
goods to the buyer.
Delivery can take place at a
number of places between the
manufacturer’s factory and the
buyer’s warehouse.
It depends on the agreements
between the exporter and the
buyer of choosing a term or
rule of Incoterms.
For example:
-If an FOB contract is agreed, then
the contract contains wording such
as:
Delivery of the Goods shall be
made FOB (Mombasa)
Delivery of the Goods shall be
made CIF (Durban)
 INCOTERMS®2010
 EXW- Ex Works
 FCA- Free Carrier
 FAS- Free Alongside Ship
 FOB- Free on Board
 CFR- Cost and Freight
 CIF- Cost, Insurance and Freight
 CPT- Carriage Paid To
 CIP- Carriage and Insurance Paid To
 DAT- Delivered At Terminal
 DAP- Delivered At Place
 DDP- Delivered Duty Paid
Any Mode/ Modes of Transport
(Mọi phương thức vận tải)
 EXW- Ex Works (Giao tại xưởng)
 FCA- Free Carrier (Giao cho người chuyên
chở)
 CPT- Carriage Paid To (Cước phí trả tới)
 CIP- Carriage and Insurance Paid To (Cước
phí và bảo hiểm trả tới)
 DAT- Delivered At Terminal (Giao tại điểm
tập kết)
 DAP- Delivered At Place (Giao tại nơi đến)
 DDP- Delivered Duty Paid (Giao hàng đã
thông quan xuất khẩu)
Sea and Inland Waterway Transport
(Vận tải biển và thủy nội địa)
FAS- Free Alongside Ship(Giao dọc
mạn tàu)
FOB- Free on Board (Giao trên tàu)
CFR- Cost and Freight (Tiền hàng và
cước phí)
CIF- Cost, Insurance and Freight (Tiền
hàng, phí bảo hiểm và cước phí)
Translation:
This contract, and all questions relating to
its formation, validity, interpretation or
performance shall be governed by...
- The law of (Vietnam/Singapore/the
seller’s country)
- The Vienne Convention of 1980 on
the International Sale of Goods
(CISG)
- The Unidroit Principles on the
International Commercial Contracts
(PICC)
All disputes arising out of or in connection
with this contract will be first settled
amicably. If the two parties cannot reach
an amicable arrangement, they will be
settled by...
- The Vietnam International Arbitration
Center at the Vietnam Chamber of
Commerce and Industry in accordance
with its Arbitration Rules. This arbitration
award will be final and binding on both
parties.
- The Court of the defendant
 If the vessel (1).......................... by the Buyer fails
to arrive on or before July 7, then the Seller may at
his (2).................... deliver the Goods to a bonded
(3)...................in the port of Kobe and shall be
(4)....................to have fulfilled his delivery
obligations under this contract. In this event, the
Seller must (5)...................... the Buyer of the full
circumstances of the delivery to the warehouse.
With delivery to the warehouse, all costs,
including but not (6)...................... to cost of
storage and insurance are to the Buyer’s
(7).......................
 Translate into English.

Việc thanh toán sẽ được xem là hoàn

tất chỉ khi số tiền ghi trên hợp đồng
được chuyển vào tài khoản ngân hàng
của bên bán và tùy quyền sử dụng
hoàn toàn của người bán.
Nếu việc giao hàng không được thực
hiên trong vòng một tháng kể từ ngày
giao hàng đã thỏa thuận thì bên bán
phải trả cho bên mua 0,1 % (trên/ của)
giá trị hợp đồng .
Payment shall be deemed to
have been made only when
the contract sum is paid into
the Seller’s bank account and
is at the Seller’s full disposal.
If delivery is not effected within
one month of the agreed
delivery date, then the Seller
shall pay the Buyer 0.1% of the
contract price.