CHAPTER 3: BUSINESS CONTRACT

1. Fundamentals of Int’l Sale of Goods Contract:

1.1. Parties:
1.1.1. CISG 1980:
a. Article 1:
(1) This Convention applies to contracts of sale of goods
between parties whose place of business are in different
States:
(a) when the States are Contracting States; or
(b) when the rules of private international law lead to the
application of the law of a Contracting State.
(2) The fact that the parties have their places of business in
different States is to be disregarded whenever this fact does
not appear either from the contract or from any dealings
between, or from information disclosed by, the parties at
any time before or at the conclusion of the contract.
(3) Neither the nationality of the parties nor the civil or
commercial character of the parties or of the contract is to
be taken into consideration in determining the application
of this Convention.
b. Article 10:
For the purposes of this Convention:
(a) if a party has more than one place of business, the place
of business is that which has the closest relationship to the
contract and its performance, having regard to the
circumstances known to or contemplated by the parties at
any time before or at the conclusion of the contract;
(b) if a party does not have a place of business, reference is
to be made to his habitual residence.
c. Exercise:
- A buyer in Austria (a CISG State) purchased goods from the Swiss
branch of a company with headquarters in Liechtenstein (notably: a
non-CISG Contracting State) (CLOUT case 261).

⮲ This sale contract is governed by CISG because Swiss is a CISG State and
Swiss is the one who is eager to do the sales contract.
1.1.2. Law of Commerce:
a. Article 2:
 1. Traders conducting commercial activities as provided
for in Article 1 of this Law.
2. Other organizations and individuals conducting
commerce-related activities.
3. Basing itself on the principles provided for by this Law,
the Government shall specify the application of this Law to
individuals who independently and regularly conduct
commercial activities without having to make business
registration.

1.2. Object:
1.2.1. Law of Commerce:
a. Article 3.2
Goods include:
a/ All types of movables (động sản), including those to be
formed in the future;
b/ Things attached to land.
b. Article 27:
1. International purchase and sale of goods shall be
conducted in form of export, import, temporary import for
re-export, temporary export for re-import and transfer
through border-gates.
2. International purchase and sale of goods shall be
conducted on the basis of written contracts or other forms
of equal legal validity.
c. Note:
- Goods can be delivered across borders.
- Country’s border – customs border (Export Processing Zone (khu chế
xuất); commercial and industrial Zone (khu thương mại và công
nghiệp)…).
1.3. Payment Currency:
- Payment currency can be foreign to at least one party to the contract.
1.4. Governing Law: Article 4
1. Commercial activities must comply with the
Commercial Law and relevant laws.
2. Particular commercial activities provided for in other
laws shall comply with the provisions of such laws.
3. Commercial activities which are not provided for in the
Commercial Law and other laws shall comply with the
provisions of the Civil Code.
- We must comply the following laws in order:
 1. Specialized Law: Law on residential housing, Land law, environment law, Law
on enterprises, law on credit institution…
2. Commercial Law.
3. Civil Code.

⮲ Even if there are conflicts between these laws, we will follow the laws that is
more specific about the case, and the civil code is the highest level.
1.5. Exercise:
1.5.1. Company A (seller) located in Binh Thanh district entered a sale
of rice contract with company B (buyer) located in Binh Tan district.
The dispute arose as A failed to deliver non-conforming rice to B as
stipulated in the contract. Which law would be first applicable to
settle the dispute?
1. Law on sale of rice 2. Law on sale of goods
3. Commercial Law
4. Civil Code 5. Law on Enterprises
1.5.2. True or False:
1. Sales contract must be made in writing. (False)
- Article 24.1 of the Law on Commerce: “Contracts for sale and
purchase of goods may be expressed in verbal or written form or
established by specific acts”.
2. Franchise contract must be made in writing. (False)
- Article 258 of the Law on Commerce: “Commercial franchise
contracts must be made in writing or in other forms of equivalent
legal validity”.
3. Commercial contract is governed by the Commercial
Law only by the Commercial Law only. (False)
- Article 4 of the Law on Commerce: “Commercial activities must
comply with the Commercial Law and relevant laws”.
4. The applicable law for the contract signed between 2
Vietnamese companies could be the Chinese Law if the
parties so decide. (False)
- Article 5 of the Law on Commerce: “Parties to commercial
transactions involving foreign elements may agree to apply foreign
laws or international commercial practices if such foreign laws or
international commercial practices are not contrary to the
fundamental principles of the Vietnamese law”.

⮲ Whether the economic parties (usually companies not people who is on behalf
of them) involve in foreign elements (Art. 663 – Civil Code 2015)
2. Requirements for a Valid Contract:
2.1. Parties to the contract:
2.1.1. General Information:
a. In VN:
- Decree No. 69/2018/NĐ-CP. Nghị định 69/2018
 Điều 2 Nghị định 69/2018
Đối tượng áp dụng
1. Cơ quan quản lý nhà nước.
2. Thương nhân tham gia hoạt động ngoại thương.
3. Tổ chức, cá nhân trong nước và nước ngoài khác có liên quan.
- Art 142-143 Civil Code 2015.

- Resolution No. 04/2003 of the Judges Council of the Supreme

People’s court.
b. Competence to enter into a contract:
- Legal representative:
+ Director of the LLC.
+ Chairman of the Members' Council (Chủ tịch hội đồng thành
viên)
- Authorized representative (người đại diện theo ủy quyền) (power of
attorney – authorization letter – giấy ủy quyền)
 ⮲ When signing the contract, both parties need to mention the scope of
authorization and duration.
2.1.2. Requirement:
- The parties have (Civil) Legal Capacity (Năng Lực Pháp Lập Dân
Sự) and Capacity for Civil Acts (Năng Lực Hành Vi Dân Sự)
appropriate to the established civil transaction.
a. Legal Capacity (Năng Lực Pháp Lập Dân Sự): Individual
- Art. 16 – Civil Code 2015:
1. The civil legal capacity of an individual means the
capability of the individual to have civil rights and civil
obligations.
2. All individuals have equal civil legal capacity.
3. The civil legal capacity of an individual commences at
birth and terminates at death.
- Art. 18 – Civil Code 2015:
The civil legal capacity of an individual may not be
restricted, except where otherwise provided by this Code
or other relevant laws.
- Example:
+ Paying taxes
+ Obeying the laws.
+ Doing military service…
b. Legal Capacity: Legal Entity/Person (Pháp Nhân)
- Art. 74 – Civil Code 2015: An organization shall be recognized as a
legal entity if it satisfies all the following conditions:
a) It was established in accordance with provisions of this Code or other relevant
laws (Lawfully established).
b) It has an organizational structure pursuant to article 83 of this Code (Well–
structured).
c) It has property independent from other individuals and
organizations and it is self- responsible by recourse to its
property (Assets/Property separated/independent).
d) It participates independently in legal relations in its own name (Legal relation
independently).
- Art. 86 – Civil Code 2015:
1) The civil legal capacity of a legal entity means the
capability of that entity to have civil rights and obligations.
Civil legal capacity of legal entities is unrestricted, except
where otherwise prescribed by this Code or other
releveant laws.
 2) The civil legal capacity of a legal entity arises from the
time when it is established or permitted to be established
by a competent State authority; where registration of
operation of the legal entity is required, the civil legal
capacity of the legal entity arise from the time of entry into
the register.
3) The civil legal capacity of a legal entity terminates from
the time when the entity is terminated.
- Example:
Legal Entity Non – legal Entity
- Ministries (Ministry of Education and - A business household
training) - A sole proprietorship
- State bank of Vietnam - Representative office of a foreign
- Joint–stock/share–holding company company in Vietnam
- A partnership - A branch of an LLC
- Limited Liability Company (LLC) - FTU 2 HCMC Campus (a branch)
- FTU Hanoi City Campus

⮲ If you want to sue a business entity (the FTU), you should sue the legal entity
(FTU Hanoi City Campus), not the branch of that legal entity (FTU 2 HCMC
Campus).
c. Capacity for Civil Acts (Năng Lực Hành Vi Dân Sự):
- Art. 19 – Civil Code 2015:
The capacity for civil acts of an individual shall be the
capability of the individual to establish and exercise civil
rights and perform civil obligations through his or her acts.
- Art. 20 – Civil Code 2015: The Age of Majority
1) Adults are persons who are eighteen (18) or more years
of age.
2) An adult shall have full capacity for civil acts except in
the circumstances provided in articles 22, 23 and 24 of this
Code.

⮲ The USA (depending on the states – fluctuating from 18 – 21 years old)

⮲ The UK, Japan, Australia, Vietnam: 18 years old

- Art. 21 – Civil Code 2015: Minors
1) Minors are persons who are under eighteen (18) years of
age.
 2) Civil transactions of a person under six years of age are
established and performed by his or her legal
representative.
3) A person who is from six to under fifteen (15) years of
age must have the consent of his or her legal representative
to establish and perform civil transactions, except for civil
transactions which are performed for the purpose of
meeting the needs of daily life appropriate to the age
group.
4) A person who is from fifteen (15) to under eighteen
(18) years of age may himself or herself establish and
perform civil transactions, except for civil transactions
relating to real property or movable property which
require registration and other civil transactions which
require the consent of his or her legal representative in
accordance with law.
- Art. 22 – Civil Code 2015: Loss of capacity for civil acts
1) Where a person is incapable of being aware of or
controlling his or her own acts due to any mental or other
illness, a court shall, based on the conclusion of forensic
mental examination and at the request of a person with
related rights or interests, or a relevant agency or
organization, issue a decision declaring the former person
as a person who has lost capacity for civil acts.
Where the basis on which a person has been declared as
having lost the capacity for civil acts no longer exists, the
court shall, at the request of such person or any person
with related rights or interests, or a relevant agency or
organization, issue a decision revoking the decision
declaring the loss of capacity for civil acts.
2) Civil transactions of a person who has lost the capacity
for civil acts must be established and performed by his or
her legal representative.
- Art. 23 – Civil Code 2015: Person with difficulty in awareness or
control of his or her own acts
1) Where an adult is incapable of being sufficiently aware
of or controlling his or her own acts due to any mental or
physical condition but not to the extent of loss of capacity
for civil acts, a court shall, based on the conclusion of
forensic mental examination and at the request of such
person, a person with related rights or interests, or a
relevant agency or organization, issue a decision declaring
the former person as a person who has difficulty in
awareness or control of his or her own acts, appoint a
 guardian, and determine the rights and obligations of the
guardian.
2) Where the basis on which a person has been declared as
having difficulty in awareness or control of his or her own
acts no longer exists, the court shall, at the request of such
person or any person with related rights or interests, or a
relevant agency or organization, issue a decision revoking
the decision declaring such person as a person who has
difficulty in awareness or control of his or her own acts.
- Art. 24 – Civil Code 2015: Restricted capacity for civil acts
1) At the request of a person with related rights or interests
or of a relevant agency or organization, a court may issue a
decision declaring a person whose addiction to drugs or
other stimulants has ruined the property of his or her
family as having restricted capacity for civil acts. The
court determines the legal representative of a person with
restricted capacity for civil acts and the scope of such
representation.
2) The consent of the legal representative must be obtained
in respect of the establishment and performance of civil
transactions relating to the property of a person with
restricted capacity for civil acts, except for transactions to
meet the needs of daily life or where otherwise provided
by relevant laws.
3) Where the basis on which a person has been declared as
having restricted capacity for civil acts no longer exists,
the court shall, at the request of such person or any person
with related rights or interests or a relevant agency or
organization, issue a decision revoking the decision
declaring restricted capacity for civil acts.
1.1.2. Civil Code 2015:
a. Article 142: Consequences of civil transactions entered into and
performed by unauthorized persons.
1. A civil transaction entered into and performed by an
unauthorized person shall not give rise to rights and
obligations with respect to the principal, except in one of
the following cases:
(a) The principal has recognized the transaction;
(b) The principal knew but has not objected within a
reasonable period;
(c) The principal is at fault, resulting in the fact that the
transacting person did not know or could not have
known that the person who entered into or performed the
civil transaction with him or her was unauthorized.
2. Where a civil transaction established or performed by an
unauthorized person does not give rise to rights and
obligations with respect to the principal, the unauthorized
person must, nevertheless, fulfil obligations to the person
with whom he or she transacted, unless such person knew
or should have known that the representative was
unauthorized but still carried out the transaction.
3. A person having transacted with an unauthorized person
has the right to terminate unilaterally the performance of or
to rescind the civil transaction entered into and to demand
compensation for any loss and damage, except where such
person knew or should have known that the representative
was unauthorized but still carried out the transaction or in
the case prescribed in clause 1(a) of this article.
4. Where an unauthorized person and the transacting
person deliberately enter into or perform a civil transaction
and thereby cause loss and damage to the principal, they
must be jointly liable to compensate for same.
b. Article 143: Consequences of civil transactions entered into and
performed by representatives beyond scope of representation.
1. A civil transaction entered into and performed by a
representative beyond his or her scope of representation
shall not give rise to rights and obligations of the
principal with respect to that part of the transaction which
 exceeded the scope of representation, except in one of the
following cases:
(a) The principal has agreed;
(b) The principal knew but has not objected within a
reasonable period;
(c) The principal is at fault, resulting in the fact that the
transacting person did not know or could not have
known that the person entered into or performed the civil
transaction with him or her beyond the scope of
representation.
2. Where a civil transaction established or performed by a
representative beyond the scope of representation does not
give rise to rights and obligations with respect to that part
of the transaction established or performed which exceeded
the scope of representation, the representative must fulfil
obligations to the person with whom he or she transacted
with respect to that part of the transaction which exceeded
the scope of representation, unless such person knew or
should have known that the scope of representation was
exceeded but still carried out the transaction.
3. A person having entered into a transaction with such
representative has the right to terminate unilaterally or
rescind the civil transaction with respect to that part which
is beyond the scope of representation or with respect to the
entire transaction and demand compensation for any loss
and damage, except where such person knew or should
have known that the scope of representation was exceeded
but still carried out the transaction or in the case prescribed
in clause 1(a) of this article.
4. Where a person and a representative enter into and
perform a civil transaction deliberately beyond the scope
of representation of the representative and thereby cause
loss and damage to the principal, they must be jointly
liable to compensate for the loss and damage.
1.1.3. Exercise:
a. Mechel Metal Supply Ltd. v. Metal Construction Jsc:
Feb2003, Metal Construction JSC (A) (VN), represented
by Mr. Ngô Văn Kèn entered into a contract with Mechel
Metal Supply Ltd (Lichtenxtain) (B)
A failed to open the L/C within the time limit. The goods
were made available at destination port, but A failed to
take delivery. B then sold the goods to another company at
a lower price. B brought A to the ICC.
 - A’s arguments:
+ The contract is invalid as Mr Ken is not the legal representative.
He is merely the director of the dependent unit of company A.
+ Mr Ken failed to advise the Board of Management of the
existence of contract.
- B’s arguments:
+ In the past, Mr Ken, acting as an authorized legal representative,
used to conclude the contract with Company B.
+ Mr. Ken declares that he advised the Director of the contract by
phone.

⮲ A will win the case since Mr. Ken is not the legal representative since there
are no forms of contract mentioned so, even though there has been a case in
the past. Moreover, talking by phone is invalid since there is no proof of it.
1.2. Forms of the contract:
1.2.1. Law of Commerce:
a. Article 24:
1. Contracts for sale and purchase of goods may be
expressed in verbal or written form or established by
specific acts.
2. For types of contracts for purchase and sale of goods,
which, as provided for by law, must be made in writing,
such provisions must be complied with.
b. Article 74:
1. A service contract shall be expressed in verbal or
written form or established with specific acts.
2. For those types of service contract which are required by
law to be made in writing, such requirement must be
abided by.
1.2.2. Others:
a. Written form or equivalent: Viet Nam (Art 27.2, Law on Commerce),
China, Argentina, Chile, Belarus, Hungary, Ucraina…
b. The US: (Art 2.201, UCC): A contract for the sale of goods for the price
of $500 or more shall be made in writing.
c. CISG 1980: Art 11 & Art 96.
1.3. Content of the contract:
1.3.1. Mandatory Clauses in the Contract:
a. Civil Code 2015: Art 398 - Contents of contracts
 1. Parties to a contract have the right to agree on the
contents in the contract.
2. A contract may contain the following contents:
(a) Subject matter of the contract;
(b) Quantity and quality;
(c) Price and method of payment;
(d) Time-limit, place and method of performing the
contract;
(đ) Rights and obligations of the parties;
(e) Liability for breach of contract;
(g) Method of resolving disputes.
b. Commercial Law 1997: Article 50 - Principal Contents of Contracts
for Sale and Purchase of Goods
Contracts for sale and purchase of goods must contain the
following principal contents:
1. Name of goods;
2. Quantity;
3. Specifications, quality;
4. Price;
5. Method of payment;
6. Location and time for delivery and receipt of goods.
In addition to the principal contents stipulated in this
article, parties may agree on other contents of the contract.
c. CISG 1980: Art 19.3
Additional or different terms relating, among other things,
to the price, payment, quality and quantity of the goods,
place and time of delivery extent of one party’s liability to
the other or the settlement of disputes are considered to
alter the terms of the offer materially.
1.3.2. The content must not be contrary to the laws
1.4. Objects of the contract:
- Goods banned from export and import.
- Goods imported and exported under the conditions.
- Goods freely imported and exported.
2. Offer and Acceptance:
2.1. Forms:
 2.1.1. Offer + Acceptance = Contract
Contract Formation Under The CISG

2.1.2. Offer signed by both the seller and buyer = Contract

2.2. Offer (Đề nghị kí kết hợp đồng/Chào hàng):
2.2.1. Laws Application:
- Civil Code 2015: Art.386 Art. 397
- CISG 1980: Art.14 Art.24

⮲ Not use Commercial Law because it does not govern these aspects.
2.2.2. Criteria for an offer:
a. Việt Nam: Art 386.1 (Civil
b. CISG 1980: Article 14.1
Code)
- Offer to enter a contract - A proposal for
means a clear concluding a contract
expression by the addressed to one or
offeror of its intention more specific persons
to enter a contract and constitutes an offer if it
to be bound by such is sufficiently definite
offer made to another and indicates the
determined party or to intention of the offeror
the public (hereinafter to be bound in case of
collectively referred to acceptance. A proposal
as the offeree). is sufficiently definite
if it indicates the goods
and expressly or
implicitly fixes or
makes provision for
determining the
quantity and the price.
c. Remark: In which circumstances, these are offers:
CISG 1980 Civil Code 2015 Note
Inquiries No No No intention to bound the
 contract
Mass distribution
of a catalogue of Yes Simply invitation to treat
merchandise (if it has validity concluded) (no intention to bound)
Brochures
Disclaimer should be
yes (only if it shows the
provided as: The following
supplier’s intention to enter the
Advertisement statement does not constitute
contract and the bound made to
an offer but an invitation to
a specific party or the public)
negotiate with the seller
2.2.3. Open Price Contract:
- Article 55 - the CISG 1980: “Where a contract has been validly
concluded but does not expressly or implicitly fix or make provision
for determining the price, the parties are considered (in the absence
of any indication to the contrary) to have impliedly made reference
to the price generally charged at the time of the conclusion of the
contract for such goods sold under comparable circumstances in the
trade concerned.”
- Case Law: “In the majority of cases, the courts and arbitral
tribunals came to the conclusion that a contract had been formed
while in rare cases a different result was reached.”
2.2.4. Withdrawal and Revocation:
a. Withdrawal:
Việt Nam:
Art 389 CISG 1980:
(Civil Code Article 15.2
2015)
- An offeror may modify - An offer, even if it is
or withdraw an offer to irrevocable, may be
enter a contract in the withdrawn if the
following cases: withdrawal reaches the
a) The offeree receives notice of offeree before or at the
modification or withdrawal of the offer same time as the offer.
prior to or at the same time as receipt
of the offer.
b) The offeror clearly specified the
circumstances in which the offer could
be modified or withdrawn, and such
circumstances have in fact arisen.
b. Revocation:
 Việt Nam:
Art 390 CISG 1980:
(Civil Code Article 16
2015)
- An offeror may revoke - An offeror may modify
the offer to enter a or withdraw an offer to
contract if such right enter a contract in the
was specified in the following cases:
offer and the offeree 1) Until a contract is concluded an
receives the notice of offer may be revoked if the revocation
revocation of the offer reaches the offeree before he has
prior to the offeree dispatched an acceptance.
providing a notice of
2) However, an offer can’t be revoked:
acceptance of the offer
to enter the contract. a) If it indicates whether by stating a
fixed time for acceptance or otherwise,
that it is irrevocable; or
b) If it was reasonable for the offeree
to rely on the offer as being irrevocable
and the offeree has acted in reliance on
the offer.
- Civil Code: Have time-limit and need to mention about this offer’s
ability to revoke.
- CISG: Unable to revoke an offer if the offer has validity.
2.3. Acceptance (Chấp nhận đề nghị kết hợp đồng/chào hàng):
2.3.1. Laws Application:
- Civil Code 2015: Art.386 Art.397
- CISG 1980: Art.14 Art.24
2.3.2. The offeree shall accept the entire content of the offer:
a. Laws Application:
- Civil Code 2015: Art.392, 393
- CISG 1980: Art.19
b. Content:
Việt Nam:
Art 393 CISG 1980:
(Civil Code Article 19
2015)
- Acceptance of an offer 1) A reply to an offer which purports to
to enter a contract be an acceptance but contains
means a reply by the additions, limitations or other
 offeree accepting the modifications is a rejection of the offer
entire contents of the and constitutes a counteroffer.
offer. 2) However, a reply to an offer which
⮲ “Mirror Image” Rule
purports to be an acceptance but
contains additional or different terms
which do not materially alter the terms
of the offer constitutes an acceptance,
unless the offeror, without undue delay,
objects orally to the discrepancy or
dispatches a notice to that effect. If he
does not so object, the terms of the
contract are the terms of the offer with
the modifications contained in the
acceptance.
3) Additional or different terms
relating, among other things, to the
price, payment, quality and quantity of
the goods, place and time of delivery,
extent of one party's liability to the
other or the settlement of disputes are
considered to alter the terms of the offer
materially.
- Vietnam Civil Code: if the offerees change anything in the offer,
those changes become a new offer.
- Art 19.3: …among other things… means there are more criteria can
be considered as material (significant) changes.
- Example:
+ If somebody sends you an offer and you want to make a change
about translation issue, that’s still the original offer (according to
CISG 1980) as that change is not matterial, but it’s a new offer
(according to Civil Code 2015).
2.3.3. The acceptance must be received within the time limitation set
forth in the offer:
a. Laws Application:
- Civil Code 2015: - CISG 1980: Art.18
Art.394
b. Content:
- Writte - Oral - Perfor
n form. ming
forms. an act.
SILENCE
 Việt Nam:
Art 393 CISG 1980:
(Civil Code Article 18.1
2015)
1) Acceptance of an offer to enter a - A statement made by or
contract means a reply by the offeree other conduct of the
accepting the entire contents of the offer. offeree indicating
2) The silence of the offeree shall not assent to an offer is an
be deemed to be an acceptance of the acceptance. Silence or
offer to enter the contract, unless inactivity does not in
otherwise agreed or unless it complies itself amount to
with the custom established by the acceptance.
parties.
2.3.4. The acceptance shall not be withdrawn:
a. Laws Application:
- Civil Code 2015: - CISG 1980: Art.22
Art.397
b. Content:
Việt Nam:
Art 397 CISG 1980:
(Civil Code Article 22
2015)
- The offeree may - An acceptance may be
withdraw notice of withdrawn if the
acceptance to enter a withdrawal reaches the
contract if the notice of offeror before or at the
such withdrawal same time as the
arrives prior to or at acceptance would have
the same time as the become effective.
offeror receives the
reply accepting the
offer to enter a
contract.

⮲ The offeree is not allowed to withdraw the acceptance if he already sent the
acceptance to the offeror.
2.3.5. Exercise:
1. A requests B to set out the conditions for the renewal of a contract for the supply
of wine, due to expire on 31 December. In its offer B includes a provision stating that
“if we have not heard from you at the latest by the end of November, we will assume
that you have agreed to renew the contract on the conditions indicated above”. What
should A do if A does not want to renew the contract? The applicable law is the
Vietnam’s law.
A. A need to reply by the end of November to terminate
the offer
B. A do not need to reply the offer if A don’t want to
renew the contract
C. A or B is correct (Silience means A don’t agree with
the new offer)
D. None of them is correct
2. Under a long–term contract for the supply of wine, B regularly met A’s orders
without expressly confirming its acceptance. On 15 November A orders a large stock
for New Year. B does not reply, nor does it deliver at the requested time. Discuss
whether B is in breach.

⮲ Yes, B is in breach of contract because of the Article 393.2 of the Vietnam

Civil Code 2015 “The silence of the offeree shall not be deemed to be an
acceptance of the offer to enter the contract, unless otherwise agreed or unless
it complies with the custom established by the parties”. Until now, B have
made “the custom” which is regularly met A’s orders without expressly
confirming its acceptance. Thus, this time the silence from B means
acceptance.
3. The Polish seller (Y) sent an offer to the Vietnamese buyer (X). The offer is valid
until 30th May.
26/5: X accepted the offer on one condition – that Y might reduce the price.
29/5: X accepted the entire content of the initial offer.
27/5: Y concluded the contract with another buyer.
X claims for damages. Who wins the case?

⮲ This case involves foreign elements (between 2 international companies), thus

CISG law will be applicable. According to Article 19.1 of the CISG law, “A
reply to an offer which purports to be an acceptance but contains additions,
limitations or other modifications is a rejection of the offer and constitutes a
counteroffer.”

⮲ This means on 26th May, X rejected Y’s offer and put forward a counteroffer
when X offered a condition about Y’s reducing the price (change the initial
offer materially). That means Y’s offer was terminated (X can’t accept the
former offer) and Y can sign the contract with another buyer, therefore, Y will
win the cases if X claims for damages.
4. True/False Statement:
a. A U.S company sends a purchase order to an Italian shoe company. The Italian
shoe company sends a letter confirming the purchase order. According to the CISG,
the acceptance by the Italian company cannot be withdrawn under any circumstances.
 ⮲ False. According to Article 22 of the CISG 1980: “An acceptance may be
withdrawn if the withdrawal reaches the offeror before or at the same time as
the acceptance would have become effective.”

⮲ The Italian company can withdraw the acceptance if the withdrawal reaches
the U.S. before its acceptance.
b. An advertisement on social media could constitute an offer if the applicable law is
the Vietnam’s law.

⮲ True. According to Art 386.1 of the Vietnam Civil Code 2015, “Offer to enter a
contract means a clear expression by the offeror of its intention to enter a
contract and to be bound by such offer made to another determined party or to
the public”.
c. According to the CISG, revocation is always allowed if the revocation reaches the
offeree before he has dispatched an acceptance.

⮲ False. There are cases that revocation can’t be allowed according to Article
16.2.
d. A buyer in Florida, USA orders 1000 pounds of fresh lecture from a seller in
HCMC, Vietnam. The purchase order provides for a price of 78 cents per pounds,
delivery by December 15th, and payment within 30 days after delivery. The seller
sends an acknowledgement providing that payment is due within 10 days after
delivery. The buyer remains silent on the seller’s acknowledgement. According to the
CISG, the contract is formed between the US buyer and the Vietnamese buyer.

⮲ False. According to Article 18.1 of CISG 1980: “A statement made by or other

conduct of the offeree indicating assent to an offer is an acceptance. Silence or
inactivity does not in itself amount to acceptance”.
e. According to the Vietnam’s law, the withdrawal is always allowed if the
withdrawal reaches the offeree before he has dispatched an acceptance.

⮲ True. According to Art 390 of the Vietnam Civil Code 2015, “An offeror may
revoke the offer to enter a contract if such right was specified in the offer and
the offeree receives the notice of revocation of the offer prior to the offeree
providing a notice of acceptance of the offer to enter the contract.”
5. Jasmine Ha was offered a position as director of food service for the hotel
located in District 1. She received a written offer of employment on the first of the
month, with a stipulation that the offer would be in effect until the 15th of the month. If
Jasmine were to accept the employment offer, she would have to sign the employment
contract and return it to the hotel before the offer expired on the 15th. Upon reading
the details of the contract, Jasmine felt that the salary identified in the letter was too
low, and thus she adjusted it upward by $5,000, initialing her change on the contract
copy. She then returned the offer letter to the hotel with a cover letter, stating she was
pleased to accept the position as detailed in the contract. The contract arrived by mail
in the hotel office on the 14th of the month, at which time, the hotel called Jasmine to
express his regret that she had rejected the employment offer. During the telephone
call, Jasmine realized that the hotel would not accept her salary revision proposal, so
instead she verbally accepted the position at the original rate of pay. The hotel,
however, declined her acceptance, stating that the original employment offers no
longer existed.
Does the hotel have the legal right to withdraw its offer of employment? Why or
why not?

⮲ This offer is made between 2 Vietnamese entities and in Vietnam, thus Vietnam
Civil Code 2015 will be applicable. According to the Article 393 of Vietnam
Civil Code 2015, “Acceptance of an offer to enter a contract means a reply by
the offeree accepting the entire contents of the offer.”

⮲ This means the hotel’s offer was terminated since Jasmine put forward a
change in salaries. Therefore, the hotel has the legal right to withdraw its offer
of employment.
3. Drafting an International Sale of Goods Contract:
3.1. Opening:
3.1.1. Type/name of Contract:
- Export – Import contract.
- Sale/Purchase contract.
- International sale of goods contract.
3.1.2. Contract Number:
- Contract No. 105/2021.
- Contract No. PETECH/2021-15.
3.1.3. Time and Place:
- HCMC, 15th May, 20…
- 15th March 20.. in Indonesia

⮲ Purpose: The time here usually indicates the date the contract becomes valid
and effective, affecting payment, delivery terms...
3.1.4. Contract Parties (Seller and Buyer):
- Name of company and its legal form
- Country of incorporation and (if appropriate) Trade register number
- Address
- Tel, Fax, Email
- Represented by (surname and first name, address, position, legal title
of representation). Ex: Represented by Mr. Nguyen Van A – Vice
 Director.

⮲ The one who is in the trade register license is the legal representative.
3.1.5. Definitions (If applicable):
- “Foreign Currency” means a currency of a country other than that in
which the Plant is to be installed.
- “Plant” means machinery, apparatus, materials and all things to be
provided under the Contract for incorporation in the works.
3.1.6. Preamble:
- Whereas: The seller and buyer, each with full corporate authority,
certifies, represents and warrants that each can fulfill the
requirements of this agreement and respectively provide the products
and the funds referred to herein, in time and under the terms agreed
to hereafter; or
- Whereas: The seller and the buyer both agree to finalize this contract
under the terms and conditions; and the product offered for sale is
subject only to the terms and conditions contained in this contract and
strictly confidential between the buyer and the seller and it is
therefore agreed as follows:
3.2. Terms and conditions:
3.2.1. Example:
- Object-related terms
- Finance-related terms
- Transport-related terms
- Legal-related terms
- Additional terms
- Confidential terms
- Termination and breach
3.2.2. Commodity/Scope of Supply:
a. Industrial Products:
- Commodity + Origin:
+ Japanese motorbike
+ Swiss watch
- Commodity + Main Specifications: 12-inch colored TV
- Commodity + Brand Name:
- Sony Trinitron TV
- HP ProBook 2430s
b. Agricultural Products:
 - Commodity + Scientific Name:
+ Pangasius hypophthalmus (Tra, Swai, Sutchi catfish, Striped
Catfish, Silver striped catfish)
+ Pangasius pangasius (Basa, basa catfish, bocourti, Bocourti fish,
Bocourti catfish)
- Commodity + Origin: Vietnamese rice
- Commodity + Use/Usage:
+ Wheat powder for human consumption
+ Rice paste (base element for preparation of spring roll)
- Commodity + Main Specifications: Skinless whole dried squid
c. Combination:
- Combination of some options to clearly identify the contract object.

⮲ For facilitation of contract performance and avoid misunderstanding/disputes.

+ Origin + Main Specifications: Vietnamese long grain white rice
of 10% broken, crop 2005.
+ Origin + Brand Name + Main Specifications: Two-litre multi rice
cooker, Natio brand, model FX12, made in Japan, 2003.
d. Discussion:
1. A dispute arose between a Vietnamese seller and the
British buyer.
- Pre-contractual documents: Raw, Unoxidised Tapioca Starch,
Industrial Grade.
- Contract: Raw, Unoxidised Tapioca Powder, Industrial Grade.
2. Plaintiff, a Swiss corporation, entered contracts to
purchase chicken from B.N.S. International Sales
Corporation. Defendant was a New York corporation. The
English language contracts called for the delivery of
“chicken” of various weights as follows:
- “US Fresh Frozen Chicken, Grade A, Government Inspected,
Eviscerated
+ 2½-3 lbs. and 1½-2 lbs. each
+ 75,000 lbs. 2½-3 lbs........@$33.00
+ 25,000 lbs. 1½-2 lbs........@$36.50 per 100 lbs. FAS New York”
When the birds were shipped to Switzerland, the 2-lb. sizes
were not young broiling chickens as the plaintiff had
expected, but mature stewing chickens or fowl. The
plaintiff protested, claiming that in German the term
chicken referred to young broiling chickens.
 Defendant notes that the contract called not simply for
chicken but for "US Fresh Frozen Chicken, Grade A,
Government Inspected." It says the contract thereby
incorporated by reference the Department of Agriculture's
regulations, which favor its interpretation The regulation of
the Department of Agriculture, 7 C.F.R. § 70.300-70.370,
entitled, "Grading and Inspection of Poultry and Edible
Products Thereof." and in particular § 70.301 which
recited:
"Chickens. The following are the various classes of
chickens:
(a) Broiler or fryer . . . (b) Roaster . . . (c) Capon . . . (d)
Stag . . . (e) Hen or stewing chicken or fowl . . . (f) Cock or
old rooster . . .”
The question was: What kind of chicken did the plaintiff
order? Was it “broiling chicken,” as the plaintiff argued, or
any chickens weighing 2 lbs., as the defendant argued?

3.2.3. Quantity:
a. Measurement Unit:
- Countable:
+ Single: 100 bales; 200 parcels; 1000 barrels, …
+ Collective: 5 dozens of eggs; 7 tens of oranges, …
- Uncountable:
+ Metric system (international system):

● Length (mm, cm, dm, m);

● Weight (g, kg, MT).

+ Imperial system (UK) and Customary measure (US):

● Length (yard, feet, inches, mile);

● Weight (pound, ounces, LT, SL).

- Note:
+ 1MT = 1000 kg;
+ 1 LT = 2240 pounds (1016 kg);
+ 1 ST = 2000 pounds (907 kg).
b. Ways of Stipulation:
- By Exact Figure: Valuable and countable goods
 + 100 motorbikes
+ 15.000 Barrels only
+ 525.000 UK Gallons only
- By approximate figure: With tolerance
+ Tolerance: Any quantity delivered between the tolerance shall
not be deemed a breach of contract.

● If market price increases, the seller provides less.

● If market price decreases, the seller provides more/at exact

amount.
+ Expression: “ ± ”, “about”, “approximately”, “more or less”…
+ Associated Stipulation:

● Party to choose tolerance: Seller/Buyer/Vessel Charterer’s

option

⮲ Ex: 10.000 MT ± 5% at seller's/buyer's/Vessel charterer's option.

● Price of the tolerated quantity: Contract price/Market price

⮲ Need to state in the contract clearly whether to use contract price or market
price.

⮲ The reason for using by approximate figure instead of by exact figure is

because there may be losses of goods during delivery, which may lead to
incapacity of fulfilling the payment in the sales contract.
+ Example:

● 500 MT ± 5% at the buyer’s option;

● 1000MT approximately 5% at the buyer’s option;

● 10000 MT more or less 5% at the seller’s option;

● From 950 MT to 1000 MT at the seller’s option;

● Tolerance 5% more or less at seller’s option at contract price.

- Article 30 –UCP 600:
a. “ The word “about” or “approximately” used in
connection with the amount of the credit or the quantity or
the unit price stated in the credit are to be construed as
 allowing a tolerance not to exceed 10% more or 10% less
than the amount, the quantity or the unit price to which
they refer.
b. A tolerance not to exceed 5% more or 5% less than the
quantity of the goods is allowed, provided the credit does
not state the quantity in terms or a stipulated number of
packing units or individual items and the total amount of
the drawings does not exceed the amount or the credit.
- Example:
+ Standard Contract – Coffee:
The quantity shipped or loaded shall be that stated in the
contract. A tolerance of 3% in weight, more or less, shall
be permitted only if the difference is due to circumstances
beyond the control of the sellers.
+ Standard Contract – Cocoa Beans FCC:
The contract quantity is net of any tare and is subject to a
tolerance of plus or minus 1.5 per cent of the weight at
time of shipment, with the exception of shipped weight
contracts where the tolerance is plus or minus 0.5 per cent.
For in store/on truck/on railcar/on barge contracts the
tolerance is based on the weight at the time of delivery.
+ Weight Tolerance:
Where the net landed weight exceeds the contract quantity
by 1.5 per cent or more, the Buyer shall have the option to
refuse the total excess over the contract quantity or accept
it at the market value at the close of business on the last
day of weighing. Where the net landed weight is less than
the contract quantity by 1.5 per cent or more the total
shortfall shall be the subject of a settlement based on the
difference between the contract price and the market value
on the last day of weighing provided that the market price
at the close of business is higher than the contract price.
+ Standard Contract – GAFTA 100:
Sellers shall have the option of shipping a further 3% more
or less than the contract quantity. The excess above 2% or
the deficiency below 2% shall be settled on the quantity
thereof at shipment at market value on the last day of
discharge of the vessel at the port of destination; the value
to be fixed by arbitration, unless mutually agreed. Should
Sellers exercise the option to ship up to 5% more, the
excess over 2% shall be paid for provisionally at contract
price. The difference between the contract price and the
market price calculated in accordance with the provisions
of this clause shall be adjusted in a final invoice. In the
 event of more than one shipment being made, each
shipment shall be considered a separate contract, but the
margin on the mean quantity sold shall not be affected
thereby.
- Franchise (Exemption rate) vs Tolerance: Article 8.3.3 – Contract
Rules for Cocoa beans issued by Federation of Cocoa Commerce –
FCC:
+ Franchise for Shipping Weight Terms for cocoa beans in bags
only.
+ Parties must agree a franchise representing the weight loss which
could be expected due to natural shrinkage during the voyage. In
the event that Parties do not agree, a franchise of 1.5% shall
apply.
c. Methods to Determine Quantity:
- Gross Weight: Gross Weight = Net Weight + Tare
- Net Weight:
+ Net net weight: without any package;
+ Semi net weight: with direct package;
+ Gross weight for net: negligible package cost;
+ Legal net weight: Gross weight – tare determined by Customs
officers.
- Theoretical Weight: M (mass) = D (density) x V (volume)
- Commercial Weight: Goods whose mass is sensitive to moisture
change.

+ Example: Quantity of cotton in contract: 120 MT, standard

moisture stipulated in the contract is 10%. Actual moisture at the
loading time is 15%.

⮲ Commercial Weight = 120 x (100 + 10)/(100+15) = 114.78

d. Drafting A Quantity Clause:
- Specify Content: Exact/approximate (if it is approximate weight,
there must be stipulation on tolerance).
 - Select the method to determine quantity (gross/net/
theoretical/commercial weight)
- Inspection of goods:
+ Place of Inspection: Shipped weight/landed weight.
+ Inspector: Parties’ representatives or intermediary + Inspection
cost distribution.
+ Certificate of Quantity: Preliminary or final.
e. Example: Quantity of Vietnam export coffee:
- 5000 MT +/- 5% at the seller option;
- Tolerance’s price is determined at time of delivery;
- The mentioned above quantity is understood as gross weight for net;
- Quantity is to be determined at the unloading port by Continent
Inspection Service.
- Inspection cost shall be in the Buyer’s account.
- C/Q issued at the unloading port shall be final and binding for both
parties.
3.2.4. Quality:
a. By Technical Documents:
“Motorbikes with qualifications as stipulated in the
technical document No 345, published in 20.., provided by
the manufacturer, including design, manual/instructions
with signatures and stamps of the two parties.
Those technical documents are in English and Vietnamese
and are an integral part of the contract.”
b. By Specification:
“Brand-new motorbikes of 110cm3, maximum speed of
150km/h, fuel consumption of 1,6l/100km, automatic start,
available in 3 colors of blue, red and yellow as illustrated
in the enclosed pictures.”
c. By Trademark/Trade Name:
“Honda Spacy 125cm3.”
d. By Sample:
- Provided by seller or buyer;
- In case of sample given by the buyer, the seller will have to produce
counter samples for delivery.
“The rice shall be of quality as per sample No…, provided
by the seller on April 24th 20 with two parties’ signatures.
The sample shall be made into three pieces, each party
 keeps one and the remaining shall be kept by a third party
appointed by the two parties.”
e. By Description:
- Case: Not standardized products with quality rather stable.
“White rice of long grain with natural flavor
+ Broken: 15% max + Moisture:
+ Different color 15%max
grain: 4%max + Mixture: 5
grains/kg max”
f. By the Main Ingredient/Content:
- Case: mines, chemicals, processed foods…
“Malaysian white urea:
+ Nitrogen: 45% + Moisture: 15%
min; max;
+ Kali: 15% min; + Mixture: 1%
max.”
g. By Prior Inspection/Examination:
- Case: Commodity with small quantity, not standardized like
liquidated goods, auctioned ones.
+ Inspected – approved. + As it is and where it
is.
+ As it is.
- Choice of ways to stipulate quality depends on:
+ Nature of goods; + Trade practices;
+ Relevant power between the parties.
h. Drafting a Quality Clause:
- Define quality of goods (use one of / a combination of the above
methods)
- Inspection of quality:
+ Place of Inspection:

● Place of ● Place of
manufacture; destination;

● Place of delivery; ● Place of use.

+ Inspector:

● Manufacturer;
 ● Representatives of ● Intermediary
parties; organization.
+ Inspection Cost.
+ Certificate of Quality: Preliminary/Final.
i. Example: Quality of Vietnam export rice
- Broken: 35% max; - Foreign matter: 0,4%
- Moisture: 14,5% max; max;
- Crop: Summer Autumn
crop 2011
- The quality of goods is to be determined at the loading port by
Vinacontrol Haiphong. Inspection charges shall be borne by the
Seller.
- C/Q issued by Vinacontrol shall be final and binding for both parties.
j. Cases:
1. Quality inspection is conducted at the seller’s country.
2. Quality inspection is conducted by Company X at the
seller’s country.
3. Quality inspection conducted by Company X at the
seller’s country is binding.
4. Quality inspection is conducted at the buyer’s country.
5. Quality inspection is conducted by Company X at the
buyer’s country.
6. Quality inspection conducted by Company X at the
buyer’s country is binding.
7. Quality inspection is conducted by both Company X at
the seller’s country and Company Y at the buyer’s country.
Survey report issued by Y is binding.

⮲ “Binding means mandatory, enforceable and be adhered to by both parties

involved.”
3.2.5. Delivery/Shipment:
a. Time of Delivery:
- Specific Time of Delivery:
+ On a specific date: On May 5th, 20…
+ No later than/Before a specific date: Before May 5th;
+ In a specific period of time: Within 2 months since the contract
date/ From 1st to 20th of August;
- Unspecific Time of Delivery:
 + Conditional delivery: Subject to the opening of L/C; Subject to
export License.
+ Prompt/Quick/ASAP/Immediately: UCP 600 – Art 3.
b. Place of Delivery:
- Basis to Determine Place of Delivery:
+ International + Means of transport;
commercial terms
+ Intentions of parties in the contract
- Content of Place of Delivery:
+ Place/port of loading + Place/port of
discharge
- Methods to Denote:
+ Single port/Multiple + Specified
ports port(s)/Optional
port(s).
c. Notice of Delivery:
- Frequency, time and content of notice;
- Parties’ liability subject to failure of notice;
- Customary: single notice (F, D); triple notices (C);
d. Delivery Instructions/ Other Delivery Terms:
- Transshipment (not) allowed;
- Partial shipment (not) allowed;
- Stale B/L (not) accepted;

⮲ Stale B/L: Presented to its consignee, or at a bank, after the last date specified
in the relevant letter of credit and which, therefore, is not acceptable as a valid
document.
- Loading/Unloading advice (if necessary).
e. Others:
- Art 104 – ISBP 681: Transshipment is the unloading from one vessel
and reloading to another vessel during the carriage from the port of
loading to the port of discharge. If it doesn’t occur between these two
ports, unloading and reloading is not considered to be transshipment.
- Art 81 – ISBP 681: Partial shipment is the shipment on more than
one means of conveyance within the same mode of transportation,
even if the means of conveyance leave on the same day for the same
destination.
f. Drafting A Delivery Term: Necessary information
 - Applicable Incoterms (by reference to most recent version of the
Incoterms at date of conclusion of the contract).
- Time of delivery. - Advice/Notice of
- Place of delivery. delivery.
- Delivery instructions.
g. Example: Delivery as per FOB, Incoterms 2010
- Time of Delivery: No later than June 30th 2012;
- Port of Delivery: Haiphong, Vietnam
- Port of Discharge: Main ports in Europe
- Seller should without delay inform Buyer by fax when the goods are
ready for delivery. Within 48 hours prior to vessel’s arrival, Buyer
should inform Seller of details of ship number, ETA and loading
conditions. Within 24 hours after the loading of goods on board,
Seller should inform Buyer of B/L date and number.
- Partial shipment and stale B/L are not accepted.
3.2.6. Price:
a. General Information:
- Price Currency:
+ Parties’ agreement: Export/Import countries’ currency/a third
country’s currency;
+ Customary: USD (Crude oil); GBP (Metals)
+ Often determined by the stronger party;
+ Often of stable value; + May differ from
payment currency.
- Four methods to stipulate prices:
+ Fixed price; + Flexible price;
+ Deferred fixing price; + Sliding scale price.
b. Fixed Price:
1. “Unit price: 250 USD/MT.
Total price: 250 USD/MT x 200MT = 50.000 USD (In
words: fifty thousand US dollar only).
This price shall be understood to be FOB Haiphong Port,
Incoterms 2020, including packaging.”
2. “Unit price: 250 USD/MT, FOB Haiphong Port,
Incoterms 2020, including packaging.”
c. Deferred Price:
- Included Information: Time, place and how to identify prices.
- Case: Price fluctuates, market power belongs to the buyer.
 “Coffee price shall be identified as the trading price at
London Commodity Exchange at the time of delivery.”
d. Flexible Price:
- Adding: Time, place, identification of price difference and allowed
tolerance.
“Unit price: 600 USD/MT.
Total price: 600 USD/MT x 500MT= 300.000 USD.
At the time of delivery, if coffee price on the London
market is of 5% different from this price then market price
shall be applied.”
e. Sliding Scale Price:
- Case: Goods need a long time to produce and of high value.
“The initial price of the ship is GBP 5 million, of which
50% is for materials, 40% for manpower and 10% for
fixed cost. This price shall be recalculated upon delivery
by the formula given by European Economic Committee as
follows:
P1= Po (a + b.M1/Mo + c.S1/So)
Reference materials for parties are magazine of ABC,
published by XYZ Association within 20 days upon
delivery of the ship.”
f. Drafting A Fixed Price Clause: Necessary information
- Price currency;
- Unit price: Include the Incoterms rule applied and charges (not)
included;
- Total price: in number and in words;
- Discount (if any).
g. Example: Vietnam export rice price
- Price currency: USD
- Unit price: USD 410/MT as per FOB Haiphong Port, SRV,
Incoterms 2010, packing charges included.
- Loading, unloading costs and any other surcharges arising from the
contract, whether at the loading or unloading charges shall be at
Buyer’s account.
- Total price: Approximately USD 410,000. (In words : About four
hundred and ten thousand United States Dollars only).
3.2.7. Payment:
a. General Information:
 - Payment Currency:
+ Payment currency is price currency.
+ Payment currency is not price currency.
- Time of Payment:
+ Advanc + Prompt + Deferre
e paymen d
paymen t. paymen
t. t.
- Mode of Payment:
+ Transfe + Collecti + Docum
r. on. entary
credit.
b. Time of Payment:
- Advance Payment:
+ Definition: Payment made after the contract signing but before
delivery date.
+ Purpose: As Performance Bond, guaranteeing the contract
performance.
+ Note:

● Payment before the delivery from 10 to 15 days.

● The delivery date: of the first shipment

● No interest on the advanced payment amount

● Seller only makes delivery when getting the notice of credit

available.
- Deferred Payment:
+ Definition: Payment shall be made x days after:

● The delivery date;

● The date of document presentation;

● The date of taking delivery;

● The date of guarantee completion.

- Combined/Mixed Time of Payment:
+ X1 days after the contract becomes effective, the Seller shall pay
3% of the contract value.
 + X2 days before the first shipment, the Seller shall pay 5% of the
contract value.
+ Right after the first shipment, the Seller shall pay 5% of the
contract value.
+ Right after the last shipment, the Seller shall pay 10% of the
contract value.
+ The Buyer will keep 10% of the contract value and pay that upon
the completion of guarantee obligation. The remaining shall be
paid in 4 years, each year an equal amount.
c. Mode of Payment:

- Open account:
+ Seller ships the goods and all the necessary shipping and
commercial documents directly to a buyer who agrees to pay a
seller’s invoice at a future date.
+ Open account is typically used between established and trusted
traders.
- Remittance: 2 types
+ Mail Transfer (MT): Remittance order is in a form of a letter sent
by post.

● Rarely used ● Low speed.

nowadays.
● Risky.
● Low cost.
+ Telegraphic Transfer (T/T or TTR): Remittance order is in a form
of a telegraphic message sent by wire/Telex/SWIFT.

● Popular. ● Speedy.

● Costly. ● Safe.
+ Procedure of Transfer Remittance:

● Remittance before shipping goods:

● Remittance after shipping goods:

● Mixed Remittance: Before and after shipping goods:

+ Term of Payment:

● Make payment by T/T

● Within 01 week after signing contract, buyer should remit in

advance 20% contract value.

● 80% remaining value will be transferred to seller upon

receiving docs.

● Pay to account:
 ● A/C name:

● A/C No. (USD):

● Swift code:

● Bank name:

● Bank address:
+ Wording:

● “Within 7 days upon receipt of the copy of the shipmaster’s

confirmation from Seller that the goods have been dispatched,
the Buyer shall instruct BOC to remit the full contract value
by T/T to Seller’s account at VCB Hà Nội.”

● “Within 01 week after receiving the seller’s notice of shipmen,

buyer should remit 100% contract value by TT to seller’s
account at Bank X.”

● “Payment by T/T within 7 days after receiving shipping

documents (original) to Kolon company, account No… at
Vietcombank, branch HCM. Payment should be made upon
buyer’s receiving following shipping docs:
> 3/3 clean Bill of Lading, shipped on board, marked
Freight prepaid.
> Commercial invoice: 3 copies
> Packing list: 3 copies
> Certificate of origin issued by Korean Commercial
Chamber.”
- Collection: The URC 522 are the Uniform Rules for Collections
+ Sub – Article 2(b): “Documents” means financial documents
and/or commercial documents:

● "Financial Documents" means bills of exchange, promissory

notes, cheques, or other similar instruments used for obtaining
the payment of money;

● "Commercial Documents" means invoices, transport

documents, documents of title or other similar documents, or
any other documents whatsoever, not being financial
documents.
+ Sub – Article 2(a): “Collection” means the handling by banks of
documents as defined in Sub – Article 2(b) in accordance with
instructions received, in order to:

● Obtain payment and/or acceptance

● (or) Deliver documents against payment and/or against

acceptance

● (or) Deliver documents on other terms and conditions.

+ Sub – Article 2(c): “Clean Collection” means collection of
financial documents not accompanied by commercial documents.

+ Sub – Article 2(d): “Documentary Collection” means collection

of:

● Financial documents accompanied by commercial documents;

● Commercial documents not accompanied by financial

documents.
 + Wording:

● “Payment shall be made by D/P through BOC Hongkong

Bank upon Seller’s presentation of the following documents:
> At sight B/E drawn on Buyer;
> Commercial invoice: 3 copies;
> Certificate of quality : 3 copies;
> Certificate of quantity : 3 copies;
> Full set (3/3) of clean shipped onboard B/L.”
- Documentary Credit / Letter of Credit (L/C):
+ Definition:

● L/C: An arrangement under which the bank, at the request of

the buyer or on its own, undertakes to make payment to the
seller provided specific documents are submitted.

⮲ Assurance of payment by the bank.

+ Procedure of Documentary Credit:
 ● Role of Issuing/Opening Bank:
> Receive applications from the buyers.
> Put a certain amount of money into their account.
> Check if the buyer are able to pay the money.
> Check the documents with the contract.

● Role of Advising Bank:

> Forward documents.
+ Types of L/C:

● Revocable L/C can be cancelled, revoked or amended without

the consent of the beneficiary or the applicant up to moment of
payment.

● Irrevocable L/C cannot be amended or cancelled without the

consent of the issuing bank, the confirming bank, if any, and
the beneficiary.

● L/C At Sight is payable once it is presented along with the

necessary documents.

● L/C with Deferred Payment shall be payable for a number of

days as of the date of document presentation.

● Without Recourse L/C: The advising bank will not be able to

recover the money paid to the beneficiary in case the issuing
bank does not pay the advising bank.

● Confirmed L/C: Issuing bank’s authenticity has been

confirmed by the advising bank.
 ● Revolving L/C: The amount becomes available again without
issuing another L/C and usually under the same terms and
conditions.

● Transferable L/C: The rights and obligations of the

beneficiary are transferred to another party.

● Back to back L/C:

● Stand by L/C: It is a guarantee issued in format of LC by

issuing bank, not at all documentary credit.
+ Wording:

● “Payment: in GBP by irrevocable at sight L/C opened at

Natwest, 120 Hight street, Harborn, Birmingham, UK,
advised by Vietcombank, 198 Tran Quang Khai, Hanoi,
Vietnam to the favour of the seller. L/C must reach the seller
no later than 15 days before expected shipment and valid 30
days since opened. TTR is accepted. The L/C shall be
available for payment upon presentation of the following
documents:
> Bill of exchange at sight, drawn under the buyer;
> Full set of B/L marked clean, on board, freight prepaid;
> Insurance policy for 110% contract value covering “all
risks”
> Invoice in triplicate; (1 orgin + 2 copies)
> Packing list in duplicate; (1 orgin + 1 copies)
> Phytosanitary certificate in duplicate.” (1 orgin + 1
copies)
- Advanced Payment/Pre-pay: