Exercise 1: Based on the below contract, present the payment process for this contract.
Analyse the risks that the party in Vietnam can suffer under the payment method in this
contract. Suggest solutions for the party in Vietnam to avoid the payment risks can be
occurred.
CONTRACT
No: 7/21
Date: May 25th 20xx
THE SELLER:
ABC Company
Address: No1, Street 2, District 7, Hochiminh City, Vietnam
Tel: 84 8 39330131 Fax: 848 39330132
Represented by Mr: Phan Truong An - Director
THE BUYER:
XYZ Company
Address: 3 Iguchido, Ikeda, Osaka, Japan
Tel: 81 72 762 8888 Fax: 81 72 762 8889
Represented by Mr: Takahashi - Director
In has been agreed that the Seller shall sell and the Buyer shall buy commodity under the
following terms and conditions:
1. COMMODITY: Vietnam groundnut kernels grade 1 crop in 20xx.
2. SPECIFICATION: Grade 290 seeds /100 [Link].
- Moisture: 8.5 % max.
- Foreign matter: 0.5 % max.
- Broken kernels: 3 % max.
- Other kernels: 3 % max.
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- Defective kernels: 5 % max.
- Aflatoxin: 0.3/billion max.
Well dry, not mouldy, not infested, not weevil and sour smell.
3. QUANTITY: 40 MTS +/- 5% ( at seller’s option)
4. PRICE:
- Unit price: USD 710/MT CFR Osaka port, Japan (Incoterms 2020)
- Total amount: USD 28,400 +/- 5 %
Say: Twenty eight thousand and four hundred United States Dollars only.
5. PACKING: In new single jute bags of 50kgs net each in 2 CTNS x 20’ FCL.
Shipping mark:
- Groundnut kernels
- Made in Vietnam
- Net weight: 50 kgs
- Gross weight: 50.700 kgs
- USE NO HOOKS
One side printed in green color.
6. SHIPMENT:
- Port of loading: Cat Lai port
- Port of discharging: Osaka port (Japan)
- Time of shipment: In August 20xx
- Partial shipment: not allowed.
- Transshipment: not allowed.
- Inspection: Shipped weight and quality at the load port by Vinacontrol to be final.
- Notice of Shipment:
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+ one day before the sailing date of carrying vessel to Japan, the Seller shall notify by
cable or fax to the Buyer the following information:
• Commodity and Quality of goods.
• B/L number.
• Name and Nationality of the vessel.
• ETD, ETA
+ Within 1 day after receipt of goods, the Buyer shall notify by cable or fax to the Seller
the following information:
• Name of the vessel.
• B/L number.
• Commodity, Quantity and Quality of goods.
7. PAYMENT: T/T at sight after received payment documents.
The Buyer must pay 100% invoice value to the seller’s account,
No: 97634568231 at Vietcombank Ho Chi Minh City Branch.
Three days after payment documents are presented, if the Buyer fails to do the
payment on due time, the Buyer has to bear interest rate of 0.02 % per day.
Payment documents:
+ Signed Commercial Invoice issued by the Seller in triplicate.
+ 3/3 (Full set) of originals clean B/L on board marked FREIGHT PREPAID.
+ One (1) original and two (2) copies Certificate of Quantity, Quality by
Vinacontrol.
+ One (1) original and two (2) copies Certificate of Origin by The Vietnam Chamber
of Commerce and Industry, Ho Chi Minh City Branch.
+ One (1) original and two (2) copies Phytosanitary Certificate by Plant Protection
Department – Vietnam.
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+ One (1) original and two (2) copies Certificate of Fumigation by Vietnam
Fumigation Company.
+ Packing list in triplicate by the Seller.
8. ARBITRATION:
In the execution course of this contract, all dispute not reaching at amicable
agreement shall be settle by The Vietnam International Arbitration Center at the Chamber
of Vietnam under the rules of The Commercial Law of The Socialist Republic of Vietnam
whose awards shall be final and binding both parties. Arbitration fees and other related
charges shall be borne by the losing party, unless otherwise agreed.
9. GENERAL CONDITION:
This contract is made in Ho Chi Minh City – Vietnam, in 06 English originals, 03 for
each party of equal value. This contract comes into effect from signing date, any amendment
and additional clause to these conditions shall be valid only if made in written form by telex
or fax and confirmed by both parties
FOR THE BUYER FOR THE SELLER
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Exercise 2: Based on the below contract, present the payment process for this contract.
Analyse the risks that the party in Vietnam can suffer under the payment method in this
contract. Suggest solutions for the party in Vietnam to avoid the payment risks can be
occurred.
CONTRACT
No: 01-20xx/ PTS- ABC
Date: May 31, 20xx
Between: ABC Co., Ltd
Address: No.1 Street 2, District 7, Hochiminh City, Vietnam
Tel: 84 8 7300 888
Fax: 84 8 7300 889
Represented by Mr Nguyen Van A - Director
Hereinafter called The Buyer
And: PT SIKAM SELAMBAN
Address: [Link] Indah S-19 Jl. Mayjen Sungkono Surabaya East Java 60224,
Indonesia
Tel: 62 - 31 - 5673162
Fax: 62 - 31 - 5664904
Represented by Mr Sukarno - Director
Hereinafter called The Seller
It is mutually agreed between both sides to sign this contract with terms and specifications
specified hereunder:
ARTICLE 1: COMMODITY & SPECIFICATION
1.1 Commodity: UREA FERTILIZER
1.2 Origin: INDONESIA
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1.3 Specification:
- Nitrogen: 46% min.
- Moisture: 0.5% max.
- Biuret: 1.0% max.
- Color: White
- Free flowing: treated with Anti- Caking
1.4 Packing: - 50 kg net in Polypropylen Woven bag with polythylene inner liner - 2% of
total bag as empty spare bags to be supplied free of charge
ARTICLE 2: UNIT PRICE - QUANTITY & TOTAL AMOUNT
2.1 Unit price: USD 600/ MT CIF Cat Lai Port (Incoterms 2020)
2.2 Quantity: 10,000 MT (plus or minus 10% at seller's option)
2.3 Total amount: USD 6,000,000 (+/- 10% at seller's option)
Say: US Dollars six million only.
ARTICLE 3: SHIPMENT
3.1 Time of shipment: in July 20xx
3.2 Port of loading: Indonesia main ports
3.3 Destination port: Cat Lai Port
3.4 Notice of shipment:
Within 2 days after the sailing date of carrying vessel to S.R Vietnam, the Seller shall
notify by cable to the Buyer the following information:
+ Amount
+ Name and nationality of the vessel
+ Bill of Lading number/ date
+ Port of loading
+ Date of shipment
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+ Expected date of arrival at discharging port
3.5 Shipping mark:
UREA
46% NITROGEN MINIMUM
1% BIURET MAXIMUM
0.5% MOISTURE MAXIMUM
50 KGS NET
USE NO HOOKS
MADE IN INDONESIA
One side printed in green color
3.6 Discharging terms:
- When Notice of Readiness tendered before noon, laytime shall be commenced from
13:00 on the same date
- When Notice of Readiness tendered afternoon, laytime shall be commenced from 8:00 on
next date
900MT/ day WWDSHEX EIU
Dem/ Des: USD 4,000/ half
ARTICLE 4: PAYMENT
D/A at 60 days after date of B/L
After receiving the documents & 60 days after date of B/L, the Buyer must pay
100% value invoice to Seller’s account No 2156427888 at Tbk PT Bank Negara Indonesia
Payment documents:
Payment shall be made upon receipt of the following documents:
- 3/3 of clean on board Bill of Lading marked FREIGHT PREPAID
- Commercial invoice in triplicate
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- Packing list in triplicate
- Certificate of origin issued by manufaturer
- One copy of shipping advice
ARTICLE 5: FORCE MAJEURE
Strike, sabotage, which may be occurs in Origin Country shall be considered as
Force Majeure
ARTICLE 6: ARBITRATION
6.1 In the execution course of this contract, all disputes not reaching at amicable
agreement shall be settled by the Economic Arbitration board of Hochiminh City under the
rules of the International Chamber of Commerce whose awards shall be final and binding
both parties
6.2 Arbitration fee and other related charges shall be borne by the losing party,
unless otherwise agreed.
ARTICLE 7: GENERAL CONDITION
7.1 By signing this contract, previous correspondence and negotiations connected
herewith shall be null and void
7.2 This contract comes into effect from signing date, any amendment and
additional clause to these conditions shall be valid only if made in written form and duty
confirmed by both sides.
7.3 This contract is made in Hochiminh City in 6 English originals, each side keeps
3.
FOR THE BUYER FOR THE SELLER
