Learning Objectives To understand the structure of a contract
To know language characteristics in the contract
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General View Sales and purchases contracts are agreements
reached between the seller and the buyer concerning the
establishing, modifying and terminating the rights and obligations
between the two parties during a business transaction. A contract
is a legal document enforceable by law and binding on the parties
involved, therefore, it must be observed and implemented once the
terms and conditions of the contract are reached and the document
is signed between the parties.
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Guidelines for Writing 1. Structure of a contract A contract is
made up of three parts: heading, body and ending. Heading of a
contract includes the title and number of the contract, time and
place for sign the contract, parties and preface, etc. Attention
should be paid to the place (city) where the contract is signed,
for in case discrepancy arises in the performance of the trade,
local laws are to be resorted to for arbitration.
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Body is the most important part of a contract, it includes all
the main clauses of the contract, reflecting duties and obligations
of both parties. Usually the main clauses are: title, quality and
specification of the commodity, quantity, price, packing, shipment,
and payment. Usually for confirmations or short form contracts,
only these main clauses are included. Detailed contracts also
include general clauses as documentation, insurance, inspection,
claim for loss, arbitration, force majeure, etc, which may vary in
content in different occasions. Ending includes the witness clause,
the language validity, copies of the contract, signatures,
etc.
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2. Language characteristics 1) Use of formal expressions The
use of modal verb shall instead of will or should, meaning should,
must can illustrate this point. Party A shall open an irrevocable
letter of credit for US$ 500,000 (five hundred thousand US dollars
only) in favor of Party B within 30 days from the date hereof. 2)
Use of synonym coupling The use of synonym coupling is one of the
frequently used devices that help build the style of legal
documents. For instance: amendments to or alterations of
obligations and responsibilities fulfill or perform of force and
effect
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3) Frequent use of Archaism Archaism always renders the legal
documents highly formal and dignified. (1) The Contract is made and
entered into between Chang- hong Group (hereafter referred to as
Party A) and Xwell, Inc. (hereafter referred to as Party B). (2) In
Witness Whereof, the parties hereto have caused the Agreement to be
executed on the day and year first before written in accordance
with their respective laws.
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4) Unique Positioning of Adverbials In sales or purchase
contracts, business writers are flexible in sentence order in order
to lay emphasis upon or remind readers of certain points.
Adverbials, often concerning time or place that dealers concern
about, should be prominently positioned to arouse readers
attention. The following sentence can illustrate the prevailing
sentence patterns commonly used in business writing. If, after 30
days from the commencement of such informal consultations, the
parties fail to resolve amicably a contract dispute, either party
hereto may require that the dispute by submitted to arbitration for
resolution. 30
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5)Accurate expression In writing a business contract, the
writer must give the exact and precise meaning, leaving no
loopholes and possibility of misunderstanding. For example: Instead
of writing: The Seller shall undertake to load the goods on board
the vessel on time. Write: The Seller shall undertake to load the
contracted goods on board the vessel nominated by the Buyer on any
date notified by the Buyer, within the time of shipment as
stipulated in Clause 8 of this Contract. The second sentence uses 5
modifiers, as is shown by the italicized parts, to restrict the
meaning of the to make it as clear as possible.
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Specimen-1 SALES CONFIRMATION S/C No. : STEL-FT07001 Date:
April 1, 2012 The Seller: Shanghai Heng Da International Trading
Co., Ltd The Buyer: Fields Inc. Address: Rm. 302B Phoenix Building.
No. 25 Nanjin Rd. Pudong, Shanghai 208314, P.R. China Address:
Suite 27, Cola St., Toronto., Canada Zip: M240023 Tel:
0106-21-78345688 Tel: +1116 9019888 Fax: 0106-21-78340000 Fax: +1
416 9016567
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Art. No. Name of Commodity & Specifications Quantity Unit
Price CIF TORONTO 1002 COFFEE POT 800ML 200 PcsUS$12.00, US$
2,400.00 1003 TEA KETTLE 500ML 200 Pcs US$15.00, US$ 3,000.00
1004CUP200ML 200 Pcs US$10.00, US$ 2,000.00 Total Amount: US$
7,400.00, CIF TORONTO Total Amount in words: SAY US DOLLARS SEVEN
THOUSAND FOUR HUNDRED ONLY
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TERMS OF PACKING: Art. No. 1002 to be packed in cartons of 20
pcs each only Art. No. 1003 to be packed in cartons of 10 pcs each
only Art. No. 1004 to be packed in cartons of 40 pcs each only
Total: 35 cartons TERMS OF SHIPMENT: From: Shanghai, China to
Toronto, Canada to be effected before October15, 2012 with partial
shipments not allowed and transhipment allowed. TERMS OF PAYMENT:
The buyer should open through a bank acceptable to the seller an
irrevocable L/C payable at 30 days after B/L date for 100% of total
contract value to reach the seller before Aug.15, 2012 and valid
for negotiation in China until the 15th day after the date of
shipment.
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TERMS OF INSURANCE: The buyer should open through a bank
acceptable to the seller an irrevocable L/C payable at 30 days
after B/L date for100% of total contract value to reach the seller
before Aug.15, 2012 and valid for negotiation in China until the
15th day after the date of shipment. The contract is made out in
two original copies, one copy to be held by each party. THE SELLER
THE BUYER Shanghai Heng Da International Trading Co., Ltd Fields
Inc. (Signature) (Signature)
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Remarks: 1. The buyer shall have the covering letter of credit
reach the Seller 30 days before shipment, failing which the Seller
reserves the right to rescind without further notice, or to regard
as still valid whole or any part of this contract not fulfilled by
the Buyer, or to lodge a claim for losses thus sustained, if any.
2. In case of any discrepancy in Quality, claims should be filed by
the Buyer within 30 days after the arrival of the goods at port of
destination; while for quantity discrepancy, claims should be filed
by the Buyer within 15 days after the arrival of the goods at port
of destination.
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3. For transactions concluded on C.I.F basis, it is understood
that insurance amount will be for 110% of the invoice value against
the risks specified in the Sales Confirmation. If additional
insurance amount or coverage required, the Buyer must have the
consent of the Seller before shipment, and the additional premium
is to be borne by the Buyer. 4. The Seller shall not hold liable
for non-delivery or delay in delivery of the entire lot or a
portion of the goods hereunder by reason of natural disasters, war
or other causes of Force Majeure. However, the Seller shall notify
the Buyer as soon as possible and furnish the Buyer within 15 days
by registered airmail with a certificate issued by the China
Council for the Promotion of International Trade attesting such
events.
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5. All disputes arising out of the performance of, or relating
to this contract, shall be settled through negotiation. In case no
settlement can be reached through negotiation, the case shall then
be submitted to the China International Economic and Trade
Arbitration Commission for arbitration in accordance with its
arbitral rules. The arbitration shall take place in Shanghai. The
arbitral award is final and binding upon both parties. 6. The Buyer
is requested to sign and return one copy of this contract
immediately after receipt of the same. Objection, if any, should be
raised by the Buyer with in 3 working days, otherwise it is
understood that the Buyer has accepted the terms and conditions of
this contract. 7. Special condition: (These shall prevail over all
printed terms in case of any conflict.)
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Specimen-2 (Purchase contract) PURCHASE CONTRACT No. 30043212
Date March 20 2012 Place of Signing: Shanghai, China The Buyer:
Hector Textiles Corporation 20 Madison Road, San Francisco,
California 94501 USA The Seller: Zhuang Yin Trading Corporation 152
Zhongshan Road, Pudong, Shanghai 208314 PRC The Contract is made by
and between the Buyer and the Seller, whereby the Buyer agrees to
buy and the Seller agrees to sell the under mentioned commodity
according to the terms and conditions stipulated below
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1 Commodity Description Blouses made of 100 percent cotton Size
120 in white, yellow, black, and green. Technical specifications
shall be the same as the samples sent to the Seller by the Buyer on
January 12, 2012. 2 Quantity White, 400; yellow, 300; black, 400
green, 200. 3 Unit Price US$15.00 FOB Shenzhen per suit. 4 Total
Amount US$ 19,500.00 Nineteen Thousand Five Hundred US Dollars Only
5 Country of Origin The Peoples Republic of China 6 Packing Each
blouse shall be packed in a waterproof polythene bag and then in a
cardboard box 40 boxes to a wooden case. The Seller shall be liable
for any damage and loss attributed to inadequate packing by the
Seller. 7 Shipping Mark On the surface of each package, the package
number, measurement, gross weight, net weight and HECTOR in a
triangle shall be stenciled with paint.
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8 TIME OF SHIPMENT: July 2012 9 PORT OF SHIPMENT: Shanghai, PRC
10 PORT OF DESTINATION San Francisco, USA 11 INSURANCE: To be
covered by the Buyer. 12 PAYMENT The Buyer shall, upon receipt from
the Seller of the notice of readiness for shipment, open an
irrevocable letter of credit with Citibank, 15-20 days prior to the
date of delivery, in favor of the Seller, for an amount equivalent
to the total value of the shipment. The L/C shall be payable
against the presentation of the draft and the documents stipulated
in Clause 13 hereof in the opening bank. The L/C shall be valid
until the 15th day after the shipment. 13 DOCUMENTS: The Seller
shall present the following documents to the paying bank for
negotiation (1) One full set of Clean On Board ocean bills of
lading marked Freight to Collect and made out to order,blank
endorsed
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(2) Invoice in quintuplicate indicating contract number and
shipping mark; (3) Packing list in quintuplicate; (4) Certificate
of quality and quantity in duplicate issued by the manufacturers as
specified in Clause 16; (5) One copy of notification to the Buyer,
advising the shipment ready. 14 TERMS OF SHIPMENT (1) The Seller
shall, at least 40 days before the date of shipment stipulated in
the Contract, advise the Buyer of the contract number, commodity,
quantity, value, number of packages, gross weight, measurement, and
date of readiness at the port of shipment for the Buyer to book
shipping space. (2) Booking of shipping space shall be attended to
by the Buyer.
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(3) The Buyer shall, 10 days before the expected date of
arrival of the vessel at the loading port, notify the Seller of the
name of vessel, expected date of loading, contract number, for the
Seller to arrange shipment. When it becomes necessary to change the
carrying vessel or in the event of the vessels arrival having to be
advanced or delayed, the Buyer or its shipping agent shall advise
the Seller in time. Should the vessel fail to arrive at the port of
loading within 30 days of the arrival date advised by the Buyer,
the Buyer shall bear the storage and insurance expenses incurred
from the 31st day. (4) The Seller shall be liable for any dead
freight or demurrage, should it happen that they have failed to
have the commodity ready for loading after the carrying vessel has
arrived at the port of shipment on time.
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(5) The Seller shall bear all expenses, risks of commodity
before it passes over the vessels rail and is released from the
tackle. After it has passed over the vessels rail and been released
from the tackle, all expenses, risks of commodity shall be for the
Buyers account. 15. SHIPPING ADVICE The Seller shall, immediately
upon the completion of loading of the commodity, notify the Buyer
the contract number, name of commodity, quantity, gross weight,
invoice value, name of carrying vessel and date of sailing. In case
the Buyer fails to arrange insurance on time due to the information
not being given in time by the Seller, or to the notification
incomplete, all losses shall be borne by the Seller. 16.GUARANTEE
OF QUALITY The Seller shall guarantee that the commodity is
entirely in conformity with what has been stipulated in the
Contract with regard to its quality specifications. The guarantee
period shall be 3 months counted from the date on which the
commodity arrives at the port of destination.
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17. INSPECTION AND CLAIM (1) The Seller shall, before delivery,
make a precise and comprehensive inspection of the goods with
regard to its quality, specifications, and quantity and have the
China Commodity Inspection Bureau issue inspection certificates
certifying the technical data and the conclusion of the inspection.
(2) After arrival of the goods at the port of destination the Buyer
shall have the right to invite an authoritative surveyor to make a
further inspection as to the specifications and quantity of the
goods. If damages of the goods are found, or the specification and
/ or quantity are not in conformity with the stipulations in the
Contract, except when the responsibilities lie with the insurer or
the carrier, the Buyer shall, within 90 days after arrival of the
goods at the port of destination, claim against the Seller or
reject the goods.
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(3) The claims mentioned above shall be regarded as being
accepted if the Seller fails to reply within 30 days after the
Seller receives the Buyers claim. 18. FORCE MAJEURE The Seller
shall not be responsible for the delay of shipment or non-delivery
of the goods due to force majeure, which might occur during the
process of manufacturing or in the course of loading or transit.
The Seller shall advise the Buyer immediately of the occurrence
mentioned above and within 15 days thereafter the Seller shall send
a notice by airmail to the Buyer for their acceptance of a
certificate of the accident issued by the competent government
authorities under whose jurisdiction the accident occurs as
evidence thereof. Under such circumstances the Seller, however, is
still under the obligation to take all necessary measures to hasten
the delivery of the goods. In case the accident lasts for more than
10 weeks, the Buyer shall have the right to cancel the
Contract.
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19. LATE DELIVERY AND PENALTY Should the Seller fail to make
delivery on time as stipulated in the Contract, with the exception
of force majeure causes specified in Clause 18 of the Contract, the
Buyer shall agree to postpone the delivery on the condition that
the Seller agrees to pay penalty which shall be deducted by the
paying bank from the payment under negotiation. The rate of
negotiation is charged at 0.5% for every seven days, odd days less
than seven days should be counted as seven days. But the penalty,
however, shall not exceed 5% of the total value of the goods
involved in the delayed delivery. In case the Seller fails to make
delivery ten weeks later than the time of shipment stipulated in
the Contract, the Buyer shall have the right to cancel the
Contract, and the Seller, in spite of the cancellation, shall
nevertheless pay the aforesaid penalty to the Buyer without
delay.
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20. ARBITRATION All disputes arising from the execution of or
in connection with the Contract shall be settled amicably through
friendly negotiation. In case no settlement can be reached through
negotiation, the case shall then be submitted to the Foreign
Economic and Trade Arbitration Commission of the China Council for
the Promotion of International Trade for arbitration in accordance
with its rules of procedure. The arbitral award is final and
binding upon both parties. Arbitration fee shall be borne by the
losing party. 21. CONDITIONS OF SALE (1) It is strictly understood
that the Seller cannot be held responsible for non-delivery or
delayed delivery of the goods ordered if the situation is caused by
force majeure, war, rebellion, fire, strike, new levies imposed by
government, inability of, or refusal by the manufacturers to
fulfill the Contract or any other causes beyond the Sellers
control.
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(2) The Seller reserves the right to cancel the Contract at any
time if the Buyer makes default in payment (or in delivery) or
commit a breach of any clause hereof. (3) The Seller reserves the
right to cancel the Contract at any time if the Seller cannot make
the delivery as called for under the terms hereof by reason of
circumstances beyond their control. (4) Any additional expenses
incurred as the result of war, civil commotion, interruption of
normal transport, boycott, government action, etc., and/or any
other circumstances as are beyond the Sellers control and/or
foresight, shall be for the Buyers account.
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22. SUPPLEMENTARY PROVISION The Contract is made out in both
Chinese and English, two originals for each language. Each language
is legally of equal effect, each party keeps one Chinese version
and one English version after signing the Contract. The Buyer:
Hector Textiles Corporation Marlin Randall, President The Seller:
Zhuang Yin Trading Corporation Li Wei, President
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KEY TO UNIT SEVEN
Slide 30
KEY TO UNIT SEVEN I. Correct the mistake in each of the
following questions. 1. the under mentioned commodity 2. in
connection with 3. discrepancies 4. margin 5. authentic
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II. Translate the following sentences into English. 1. This
contract is made between the buyer and the seller, whereby the
buyer agrees to buy and the seller agrees to sell the following
commodities according to the terms and conditions stipulated as
follows: 2. All payment shall be made by an irrevocable letter of
credit. 3. We attach hereto our Purchase Contract No. 3674 with our
signature, please check and counter-sign. Then return one copy to
us for our records as soon as possible. 4. The guarantee period
shall be 12 months starting from the date on which the commodity
arrives at the port of destination. 5. The Seller shall not be
responsible for any damages due to normal wear and tear as well as
improper usage. 6. Claims concerning quality shall be made within 2
months after the arrival of the goods at their destination. 7.
Please send us a confirmation of the order including detailed
information regarding graduation of prices and the shipping date.
8. All disputes which are not settled through negotiation shall be
submitted to arbitration.
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III. Practice: Study the letters and fill in the sales contract
with the particulars from the following correspondence exchanged.
Omitted.