Chapter 4 International Trade Contracts Instructor Binh Do

Chapter 4 International Trade Contracts Instructor: Binh Do

Contracts can be complicated

Concepts q Contract: A contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service. q Contracts for Sale of Goods: The sale contract for good is a specific or general contract for sellers to transfer the ownership of goods to specified buyer in return for a specified sum of money. q International Trade Contracts: are more complex in nature because they are subject to the laws of both contracting parties’ countries, asking the task of contract implementation more difficult and often calling for dispute settlements. 3

Characteristics of International Contracts The contract’s parties have head-offices in different countries. Goods – the objectives of the contract have to move away from national borders. Currency for payment can be one or both sides’ foreign currency 4

Conditions for effective contracts The subjects of the contract are buyer and seller – they must have legal status. Goods under the contract is the sale of goods permitted under the provisions of law International trade contract must contain the main provisions of laws. The form of the contract must be written 5

Form of International Trade Contract CONTRACT No … Place, Date … Between: Name: … Address: … Tel: … Fax: … Email: … Represented by … Hereinafter called as the SELLER And: Name: … Address: … Tel: … Fax: … Email: … Represented by … Hereinafter called as the BUYER The SELLER has agreed to sell and the BUYER has agreed to buy the commodity under the terms and conditions provided in this contract as follows: Art. 1: Commodity: Art. 2: Quality: Art. 3: Quantity: Art. 4: Price: Art. 5: Shipment: Art. 6: Payment: Art. 7: Packing and marking: Art. 8: Warranty: Art. 9: Inspection: Art. 10: Force majeure: Art. 11: Claim: Art. 12: Arbitration: Art. 13: Other terms and conditions: … (Loading terms/loading and discharging rate; Performance Bond, Insurance; Penalty) For the BUYER 6 For the SELLER

Part 1: Clauses in International Trade Contracts 7

1. COMMODITY §Commercial name, normal name and Scientific name §Commodity name together with local production §Commodity name together with name of manufacturer §Commodity name together with specifications of goods §Commodity name together with the use of goods § Commodity name together with the code of goods § Combine multiple ways 8

1. COMMODITY (cont) Commodity: Vietnamese white rice long grain, crop 2010, 10% broken Commodity: Frozen black Tiger shrimps (Pennnues Monodon) Commodity: UREA FERTILIZER Origin: Indonesia Specification: Nitrogen 46% min 9

2. QUALITY § Samples § Standards § Specification of goods § Trademarks § Technical Documentations § Cargo density § The status of goods § The description of goods § … 10

By sample § The quality of goods is determined based on the quality of a few commodities, known as samples § Cons § The accuracy is not high. § Applied to the standard item no or hardly standardized 11

By samples § Quality of goods must be as counter sample which is marked with signatures of both sides § Quality of goods must be correspond/ according to sample 12

By Standards are the regulations on quality assessment, methods of production, processing, packing, goods inspection by the competent authority regulations 13

Cà phê nhân Buôn Mê Thuột, vụ mùa 2004, hạng đặc biệt TCVN 4193: 2001 14

Dựa vào quy cách của hàng hóa (By Specification) Specifications are technical specifications related goods such as power , size , weight. . . These specifications reflect the quality of the goods Specification: Mainboard ECS 845 GV-M 3 – Socket 478 CPU Intel Pentium 4 Processor – Socket 478 DDRAM 128 MB – Bus 333 FDD 1. 44 MB HDD 40. 0 GB Monitor 15 inch Samsung Sync. Master Medium Tower Case ATX ROBO Keyboard PS/2 ROBO Multimedia Mouse PS/2 ROBO Optical Scroll CD Rom 52 X 15

By Trade marks are symbols, pictures, letters. . . to distinguish the goods of this producer to others 16

Dựa vào tài liệu kỹ thuật (By technical documents) • Technical documents show the specifications of the goods, including operating manuals, assembly. . . • Technical documentation must turn into a inseparable part of the contract 17

By technical documents The quality is pursuant to the technical document herein as attached which has been approved by the buyer and is an integral part of this contract 18

By content of mainly material Specified percentage of a certain ingredients/material in goods. 2 types: § Content of useful material: specified minimum content (%) § Content of un-useful material: specified maximum content (%) 19

Example: Fertilizer import contract Specification Nitrogen 46% min Moiture 0. 5% max Biuret 1. 0% max Color white 20

Dựa vào dung trọng hàng hoá (By Natural weight) § Natural weight is the natural weight of cargo in unit that reflects the physical properties, impurities proportion of goods § Often used in combination with the described method 21

Dựa vào sự xem hàng trước (Inspected and approved) This method is also called “inspected and approved method” (“đã xem và đồng ý”) § The commodity was inspected and approved by the buyer. § The buyer has to receive goods and pay the money 22

Dựa vào hiện trạng hàng hóa (By commodity status) This method is also called “as is sale/ arrive sale method” - có thế nào, giao thế ấy”. The seller has to delivery the goods but is not responsible for the quality of the product Apply in some cases: § Market belong to the seller § Auction § Sales to the ship 23

By Description § Outlined the characteristics of shape, color, size, utility. . . of the product. § Applied to all products that we can describe and often used in combination with other methods 24

: Based on familiar standard When buying and selling agricultural products and raw materials that difficult standardized the quality, we often use some familiar standard such as: FAQ, GMQ • FAQ (Fair Average Quality)- Phẩm chất bình quân khá • GMQ (Good Merchantable Quality)- Phẩm chất tiêu thụ tốt 25

3. QUANTITY § Đơn vị tính số lượng § Phương pháp quy định trọng lượng § Địa điểm xác định số lượng 26

Đơn vị tính vĐơn vị tính: cái, chiếc, hòm, kiện… vĐơn vị theo hệ đo lường (metric system): KG, MT vĐơn vị theo hệ đo lường Anh, Mỹ: §Đơn vị đo chiều dài: inch, foot, yard, mile §Đơn vị đo diện tích: square inch, square yard §Đơn vị đo dung tích: gallon §Đơn vị đo khối lượng: long ton, short ton, pound vĐơn vị tính số lượng tập hợp: tá, gross, set 27

Phương pháp quy định số lượng Quy định dứt khoát Quy định phỏng chừng Ø About Ø Approximately Ø More or less Ø From. . . to… 28

Phương pháp quy định trọng lượng Trọng lượng cả bì (gross weight) Trọng lượng tịnh (net weight) Trọng lượng tịnh = Trọng lượng cả bì - Trọng lượng bì Trọng lượng lý thuyết Trọng lượng thương mại 100 + W TC GTM = GTT X 29 100 + W TT

Ví dụ Hợp đồng mua bán 120 MT bông, độ ẩm quy định trong hợp đồng là 10%. Khi nhận hàng 120 MT; độ ẩm 15%, vậy người mua thanh toán cho bao nhiêu MT hàng? GTM = 120 x (110 : 115) = 114. 78 MT 30

4. PRICE Đồng tiền tính giá Xác định mức giá Phương pháp quy định giá Giảm giá 32

Đồng tiền tính giá Nước xuất khẩu Nước nhập khẩu Nước thứ ba 33

Xác định mức giá Đơn giá Tổng giá Điều kiện cơ sở giao hàng tương ứng 34

PRICE Unit price: USD 120/ MT CIF Cat Lai port, HCMC, Vietnam, Incoterms 2000 Total amount: USD 18, 000 Say: United State Dollars eighteen thousand only 35

Phương pháp quy định giá Giá cố định (fixed price) Giá quy định sau Giá có thể xét lại (rivesable price) Giá di động (sliding scale price) 36

Phương pháp quy định giá Giá cố định Giá cả được quy định lúc ký kết hợp đồng và không thay đổi trong suốt quá trình thực hiện hợp đồng. 37

Phương pháp quy định giá Giá quy định sau Là giá cả không được quy định lúc ký kết hợp đồng mà xác định trong quá trình thực hiện hợp đồng 38

Phương pháp quy định giá Giá có thể xét lại Giá đã được xác định trong lúc ký kết hợp đồng nhưng có thể được xem xét lại nếu lúc giao hàng giá thị trường có sự biến động nhất định 39

Giá di động Po P 1= M 1 (a + b 100 S 1 +c Mo ) So P 1: giá cuối cùng, dùng để thanh toán Po: giá cơ sở, được quy định khi ký kết hợp đồng a+ b+ c= 100% a, b, c là tỷ lệ % của các yếu tố cấu thành nên giá -a: tỷ lệ % của chi phí cố định -b: tỷ lệ % của các chi phí về nguyên vật liệu -c: tỷ lệ % của các chi phí về nhân công Mo và M 1: giá của nguyên vật liệu, ở thời điểm ký kết HĐ và thời điểm xác định giá thanh toán So và S 1: tiền lương/ chỉ số tiền lương ở thời kỳ ký kết HĐ và thời 40 điểm xác định giá thanh toán

Giảm giá - Nguyên nhân: do mua số lượng lớn, thời vụ, hoàn lại hàng trước đó đã mua - Cách tính toán: § Single discount § Double discount § Progressive discount § Discount by give award 41

5. SHIPMENT/DELIVERY Time of Delivery The place of delivery Delivery notification Other regulations 42

Time of Delivery Giao hàng có định kỳ Ø Vào một ngày cố định Ø Ngày cuối cùng của thời hạn giao hàng Ø Một khoảng thời gian nhất định theo sự lựa chọn của người mua Giao hàng không định kỳ Giao hàng ngay (prompt, immediately, ASAP) 43

Câu hỏi: Điều khoản giao hàng quy định thời hạn giao hàng 20/11/2014 Địa điểm giao hàng: + Cảng đi: Cát Lái, TPHCM + Cảng đến: Hồng Kông Ngày 20/11/2014 hàng hoá sẽ ở đâu theo điều kiện: v. FOB Cat Lai port, Incoterms 2010 v. CFR Hong Kong port, Incoterms 2010 v. DAT Hong Kong port, Incoterms 2010 v. DDP buyer’s warehouse, Incoterms 2010 44

Delivery Notifications Delivery notifications regulate how many time for delivery notifications and the content of notifications § Before delivery § After delivery 45

Other Regulations • Partial shipment, total shipment • Transhipment • Stale document • Third party document 46

6. PAYMENT Currency of payment Time of payment Methods of payment Payment documents 47

Currency of Payment § Currency of Export country § Currency of Import country § Currency of the third country 48

Time of Payment Trả trước Trả ngay Trả sau 49

Methods of Payment § Remittance § Collection § Documentary Credits 50

Payment Documents Hối phiếu (Bill of Exchange) Hoá đơn thương mại (Commercial Invoice) Vận đơn đường biển (Bill of Lading) Chứng thư bảo hiểm (Insurance Policy/Insurance Certificate) Giấy chứng nhận chất lượng (Certificate of quality) Giấy chứng nhận số lượng, trọng lượng Phiếu đóng gói hàng hoá (Packing List) . . . 51

Payment CAD at Vietcombank Vietnam HCMC branch. Payment documents: • Commercial invoice in triplicate. • 3/3 clean on board B/L original. • Certificate of weight, quality issued by S. G. S (1 original, 1 copy) • Certificate of origin issued by the Chamber of Commerce and industry of Vietnam. (1 Original, 1 copy). • Certificate of fumigation issued by the Fumigation Company (1 original, 1 copy) 52

Payment By irrevocable letter of credit with 120 days usance from B/L the full amount of the contract value. L/C beneficiary: N. company. L/C advising bank: Shinhan bank, Seoul, Korea. Bank of opening L/C Vietcombank. Time of opening L/C: not latter than Oct. 15, 2005. PAYMENT DOCUMENTS: 3/3 clean on board B/L marked “freight prepaid”, original. Commercial invoice Packing list Certificate of original Issued by Indonesia Chamber of commerce. Sucofindo’ s certificate of quantity and quality. 53

7. PACKING The method of provide packing Packaging price Quality packaging requirements 54

PACKING The method of provide packing • The seller provides packing • The buyer provides packing Packaging price • Is calculated as the price of another goods • Is included in the price of goods • Buyer pays packaging in particular 55

PACKING Quality packaging requirements General requirements Detailed requirements - Vật liệu làm bao bì - Hình thức của bao bì - Kích thước của bao bì - Số lớp, cách thức cấu tạo - Đai nẹp bao bì 56

PACKING 50 kgs net in new white double polypropylene woven bag with good quality. Export standard method of packing is applied. Tare weight of empty bag is about 240 grams each. 2% of total bag as empty bags to be supplies free of charge 57

8. WARRANTY Warranty: Seller 's deadline to ensure the quality of goods, is considered as the deadline for buyers to detect the goods’ defects Time of warranty Warranty’s content The rights and obligations of related parties 58

Time of warranty Warranty’s period When is the start day of warranty? 59

Warranty’s Content § Warranty coverage § Seller’s Responsibilities § The cases that seller does not warrant 60

Warranty period is 12 months from the date of delivery or until the machine produces 1 million products subject to either comes first The Seller warrants that the equipment supplied: + be brand-new + be free from defects. + be as per the attached technical description Within the warranty period, the Seller warrants the normal operation Under the guarantee period, the Buyer shall inform the Seller of all the defects in writing. Upon the receipt of the notice, the Seller shall work out the time to repair or make good all defects, the Seller shall inform the Buyer the time needed to make good the defects, the duration for repairing or replacing the Goods is to be less than 2 months from the receipt of the notice. All the arising costs for repairing the Goods are for the Seller’s account. 61

9. CLAIM §Time of claim §Claim documents §How to deal with complaints 62

Claim: In case upon taking the delivery, the Goods are not in strict conformity with conditions stipulated in the contract in terms of quality, quantity and packing, the Buyer shall submit his claim together with sufficient evidence of copy of the contract, Survey Report, Certificate of Quality, Certificate of Quantity, Packing List with certification of the authorized inspection company agreed by the two parties within 30 days upon the ship’s arrival Upon receiving the claim, the Seller shall in a timely maner solve it and reply in writing within 30 days, after such receipt. Incase of the Seller’s fault, the Seller shall deliver the replacements not later than 30 days after the official conclusion. 63

10. ĐIỀU KHOẢN MIỄN TRÁCH/ BẤT KHẢ KHÁNG (FORCE MAJEURE) Các sự kiện tạo nên bất khả kháng Thủ tục ghi nhận sự kiện Hệ quả của bất khả kháng 64

Force majeure cases shall be understood the occurrence of situations to be considered as force majeure in ICC pubication No 421. The force majeure cases shall be informed to the other party by the concerned party by phone within 7 days and confirmed by writing within 10 days from the date of such a phone call together with certification of force majeure issued by the Chamber of Commerce located in the region of the case. After this deadline, claims force majeure shall not be taken into account. In the event of force majeure, the concerned party shall bear no responsibility of any penalty arising from delay of delivery. 65

11. ĐIỀU KHOẢN TRỌNG TÀI (ARBITRATION) Địa điểm trọng tài Trình tự tiến hành trọng tài Luật dùng để xét xử Chấp hành tài quyết 66

Arbitration In the even of any disputes and differences in opinion arising during implementation of this contract between the parties which can not be settled amicably, such dispute shall be settled by the Vietnam International Arbitration Center (VIAC), at the Chamber of Commerce and Industry of Vietnam. Arbitration fees shall be borned by losing party. 67

12. INSURANCE Người mua bảo hiểm Điều kiện bảo hiểm Loại chứng thư bảo hiểm 68

13. Other terms and conditions: Any amendments or modifications to the contract shall be made by fax or in writing with the confirmation of the two parties The contract is made in English in 4 equal copies, 2 copies for each party The contract comes into force upon the date of signature and shall be valid until 10 th April, 2005 69

Part 2

Discrepancies Uniform Commercial Code (UCC) of the United State = United Nations Convention on Contracts for the International Sale of Goods (CISG) Công ước Liên Hợp Quốc về mua bán hàng hóa quốc tế Công ước viên cho người VN: http: //cisgvn. wordpress. c om/

International Trade Contracts Lex Mercatoria International Sales Contracts and the CISG Agency versus Distributorship Legal Issues Elements of an Agency or Distributor Contract Termination What is Lex Mercatoria? Arbitration and Mediation Wasn’t he an enemy of Batman?

Lex Mercatoria Definition Refers to all international trade laws and conventions Is made up of a multitude of international agreements and international trade customs Complements domestic laws Is used when the contract is between two parties in different countries

International Trade Contracts Lex Mercatoria International Sales Contracts and the CISG Agency versus Distributorship Legal Issues Elements of an Agency or Distributor Contract Termination Arbitration and Mediation

How do we define an “international contract? ” Two basic requirements: Economic: Goods go from one country to another and money is sent back from one country to another. The transaction or sale is linked to the laws of different countries.

Uniform Commercial Code of the United States

Uniform Commercial Code of the United States Several organizations wrote a code of laws for dealing with personal property. They were not law in any state until the state adopted them. All fifty states, the District of Columbia, Guam, Puerto Rico, and the U. S. Virgin Islands have adopted them. They provide a uniform legal system for doing business in the United States.

Convention for the International Sale of Goods – CISG Created in 1980 Has become the Law of International Contracts Adopted by most countries as part of their Commercial Law The United States has not adopted all of the CISG.

Discrepancies Uniform = Commercial Code (UCC) of the United State United Nations Convention on Contracts for the International Sale of Goods (CISG)

Discrepancies Uniform United Nations = Commercial Convention on Code (UCC) of Contracts for Making the United the You can withdraw your an offer State International offer at any time before the expiration date Sale of Goods You cannot withdraw (CISG) your offer before the expiration date

Discrepancies Uniform United Nations = Commercial Convention on Code (UCC) of Contracts for Making the$195, 000 United the I offer $200, 000 an offer State International Seller pays freight Five Sale of Goods Six day delivery (CISG)

Discrepancies Uniform = Commercial Code (UCC) of Making the United I offer $195, 000 an offer State Seller pays freight Six day delivery United Nations Convention on Contracts for the International Sale of Goods (CISG)

Discrepancies Uniform United Nations = Commercial Convention on Code (UCC) of Contracts for Making the United the I offer $195, 000 an offer State International Seller pays freight I offer $200, 000 Six day delivery Sale of Goods Seller pays freight Five day delivery (CISG)

Discrepancies Uniform Nations = Commercial Convention on Code (UCC) of Contracts for Making the$195, 000 United the I offer $200, 000 an offer State International Seller pays freight Five Sale of Goods Six day delivery (CISG) Modification of original offer United

Discrepancies Uniform United Nations = Commercial Convention on Code (UCC) of Contracts for Making the$195, 000 United the I offer $200, 000 an offer State International Seller pays freight I offer $200, 000 Five day delivery Sale of Goods Six day delivery Seller pays freight Six day delivery (CISG)

Discrepancies Uniform United Nations = Commercial Convention on Code (UCC) of Contracts for Making the$195, 000 United the I offer $200, 000 an offer State International Seller pays freight I offer $200, 000 Five day delivery Sale of Goods Six day delivery Seller pays freight Six day delivery (CISG) Rejection of original offer

Discrepancies Uniform United Nations = Commercial Convention on Code (UCC) of Contracts for Making the$195, 000 United the I offer $200, 000 an offer State International Seller pays freight I offer $200, 000 Five day delivery Sale of Goods Six day delivery Seller pays freight Six day delivery (CISG) Changes are a counteroffer

International Sales Contracts Differences Between CISG and UCC Making an offer Acceptance The second step in the formation of a contract Under the CISG, the second party must completely agree with all the terms presented in the offer; otherwise, it is a rejection of the offer.

Discrepancies Nations = Convention on Commercial Code Contracts for the (UCC) of the United Making International Sale State of Goods (CISG) an offer Uniform United I offer $200, 000 ed Seller paysptfreight edelivery Five day c c A

International Sales Contracts Differences Between CISG and UCC Making an offer Acceptance The second step in the formation of a contract Under the CISG, the second party must completely agree with all the terms presented in the offer; otherwise, it is a rejection of the offer. Under the UCC, the second party is considered to have accepted the offer if it generally agrees with its terms, even if it wants amendments to the quantity of the goods purchased, the delivery dates, and other details.

Discrepancies Uniform = Nations Commercial Code Convention on (UCC) of the United Contracts for the Making State International Sale of I offer $200, 000 ed t an offer Goods (CISG) p Seller pays freight e c c Five day A delivery United I offer $200, 000 ed Seller paysptfreight edelivery Five day c c A

Discrepancies Uniform Nations Commercial Code Convention on = (UCC) of the United Contracts for the State International Sale of Making Goods (CISG) I offer $200, 000 ed t Buyer Seller pays ep freight c c delivery Five day A Six day delivery United an offer I offer $200, 000 ed Seller paysptfreight edelivery Five day c c A

Discrepancies Uniform Commercial Code (UCC) of the United State I offer $200, 000 ed t Buyer Seller pays ep freight c c delivery Five day A Six day delivery Nations = United Convention on Contracts for the International Sale of Making Goods (CISG) an offer I offer $200, 000 ed Seller paysptfreight edelivery Five day c c A

International Sales Contracts Differences Between CISG and UCC Written Agreements The CISG does not dictate that contracts of sale have to be written. The UCC dictates that contracts have to be in writing (for transactions above $ 500).

International Sales Contracts Differences Between CISG and UCC Breach of Contract In the event that one of the parties to a contract does not meet its obligation, that party can be found in breach of the contract.

Discrepancies Uniform Commercial Code (UCC) of the United State I offer $200, 000 Buyer Seller pays freight Five Six day delivery = United Nations Convention on Contracts for the Making International Sale of an offer Goods (CISG) I offer $200, 000 Seller pays freight Five day delivery

Discrepancies Uniform Commercial Code (UCC) of the United State I offer $200, 000 Buyer pays freight Six day delivery = United Nations Convention on Contracts for the International Sale Breachofof. Goods (CISG) contract I offer $200, 000 Seller pays freight Five day delivery

Discrepancies Uniform = Nations Commercial Code Convention on (UCC) of the United Contracts for the Breach. International of State Sale of I offer $200, 000 contract Goods (CISG) Buyer pays freight Six day delivery United I offer $200, 000 Seller pays freight Five day delivery

Discrepancies Uniform = United Nations Commercial Code Convention on (UCC) of the United Contracts for the Breach. International of State Sale of I offer $200, 000 contract Goods (CISG) Buyer pays freight Six day delivery I offer $200, 000 Seller pays freight Five day delivery Actually takes fifteen days

Discrepancies Uniform United Nations = Commercial Convention on Code (UCC) of Contracts for Breachthe of the United I offer $200, 000 contract State International Buyer pays freight Seller $187, 000 Six day delivery Sale of Goods I offer pays $200, 000 Seller pays freight (CISG) Five day delivery Actually takes fifteen days

Agency vs. Distributorship Legal Issues What’s the difference between an agency and a distributor?

Agency http: //www. worldofmaps. net/europe/maps_europe. htm

Agency http: //www. weltkarte. com/europa/deutschland/Deutschland_Staedte. gif

Distributor http: //www. weltkarte. com/europa/deutschland/Deutschland_Staedte. gif

Agency vs. Distributorship Legal Issues There is no international agreement regarding relationships between exporters and their agents or distributors. Applicable law generally is that of the country where the agent or distributorship is located. Basically, agreements between an exporter and an agent/distributor are called distribution contracts.

Distributor Agent http: //www. weltkarte. com/europa/deutschland/Deutschland_Staedte. gif

Agency vs. Distributorship Legal Issues –Home Government Restrictions Home governments sometimes regulate agents/distributors to protect them from more powerful exporters. Home governments also may want to regulate the activities of agents and distributors within their borders. They may have to register with the government. They may have to be nationals of the country. Government may inspect contracts. Commissions may be regulated. Agents/distributors may be limited to geographic area.

Important Elements of Agency or Distributor Contracts Language in which contract is written. One language is considered primary contract language. Other languages are considered “translations. ” Good faith – participants agree to act in good faith, not attempting to take advantage of one another. Force majeure (“overwhelming power”) – contract not binding in event of catastrophe (ship sinking, hurricane, strike).

Agency or Distributor Contracts Scope of appointment Is contract with an agent or distributor? What products are involved? What is the territory involved? Is the agent/distributor an exclusive representative? What is the status of corporate accounts?

Agency or Distributor Contracts Term of appointment: Must always be a definite time period. Termination May of contract is usually a bad solution. be problem to find a new representative. Fired representative may cause problems. Customers may think exporter is not committed to market. Better to not renew contract, but identify terms that were not met. Failure to say this may mean a court may consider the contract an evergreen, meaning it is of unlimited duration and nonperformance cannot be used to terminate it.

Agency or Distributor Contracts Choice of legal jurisdiction: International contracts always say which country’s laws will govern disputes over the contract. Exporter usually makes this choice. International Chamber of Commerce (ICC) “Model Contracts for Agency and for Distributorship” provide two choices: Traditional Generally choice of specific country’s laws. recognized international trade laws.

Agency or Distributor Contracts Choice of forum and arbitration Both parties agree on court to rule and laws to apply in dispute. Increasing number of contracts call for an arbitration panel to settle disputes. Profitability or commission Determines price/margin of products distributor sells. Determines commission of agents.

Agency or Distributor Contracts Miscellaneous clauses Facilities and activities: size of retail site and inventory, extent of employee training, complaint handling. Advertising Competing Use responsibilities of both parties. lines agent/distributor can carry, if any. of trademarks, patents, and copyrights. Confidentiality of trade secrets, strategic information. Press “Page Down” to continue.

More on Termination Just cause termination. Exporter not fulfilling contract (rare). Agent/distributor not fulfilling contract. Even if there is failure to perform, the “guilty party” may be legally entitled to a minimum notice and compensation even though it is not so stated in the contract. Convenience termination. Exporter may think agent/distributor is earning too much. Exporter may be changing strategy. Best to include lengthy notice period and generous goodwill compensation package. Press “Page Down” to continue.

Arbitration Increasingly preferred way of resolving disputes between international partners instead of going to court. Venues for arbitration: International Chamber of Commerce Rules of Conciliation and Arbitration. United Nations Conference on International Trade Law Rules of Conciliation and Arbitration. London Court of International Arbitration. Stockholm Chamber of Commerce. World Intellectual Property Organization. American Arbitration Association. Individual law firms (many in Switzerland).