International trade contract and the commercial offer International

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International trade contract and the commercial offer International Business Transactions SSL MSG IB 2019/2020

International trade contract and the commercial offer International Business Transactions SSL MSG IB 2019/2020

Agenda 1. Trade offer: – definition – elements – types 2. Vienna Convention: –

Agenda 1. Trade offer: – definition – elements – types 2. Vienna Convention: – general provisions – formations of the contract – details concerning the matter of trade offers 3. Trade contract: – definition – types of contract clauses

Process of international trade transaction Phase I – preparing nad distributing the offer/request for

Process of international trade transaction Phase I – preparing nad distributing the offer/request for quotation Phase II – negotiation of contractual provisions and entering the contract Phase III – performing the contract Phase IV – settlement and conclusion

Trade offer • a binding proposal for the sale of goods or services •

Trade offer • a binding proposal for the sale of goods or services • includes the main, essential elements of the future contract

Elements of the trade offer • • name and contact details of the offerer

Elements of the trade offer • • name and contact details of the offerer name of the offeree number and date of the offer description of the good: – name, class, quality of the goods – specification of the good, its amount, unit price • • terms of delivery – INCOTERMS transport costs calculation time of the order method and date of the payment

Types of the trade offer solicited offer conditional offer open offer general offer binding

Types of the trade offer solicited offer conditional offer open offer general offer binding offer counteroffer request for quotation – unsolicited offer – unconditional offer – closed offer – detailed offer – unbinding offer

Vienna Convention United Nations Convention on Contracts for the International Sale of Goods CISG

Vienna Convention United Nations Convention on Contracts for the International Sale of Goods CISG • • signed in Vienna on 11 April 1980 introduced in 1989 ratified by 85 states „applies to contracts of sale of goods between parties whose places of business are in different States” – art. 1

Provisions of the Vienna Convention cannot be applied: • if the goods are auctioned

Provisions of the Vienna Convention cannot be applied: • if the goods are auctioned or sold in the course of enforcement procedures • in case of stock, shares • in case of ships • in case of electricity

CISG regulates: • the rules of entering into sales contracts • rights and obligations

CISG regulates: • the rules of entering into sales contracts • rights and obligations of the purchasers and sellers, specified in the contract • form of the contract • method the contract is entered into – by accepting the offer • conditions of avoidance of the contract • remedies for breach of the contract by the seller and buyer

CISG regulates: • transfer of risk related to the delivered goods from the seller

CISG regulates: • transfer of risk related to the delivered goods from the seller to the buyer • damages for the non-performance of the contract • penalties for the delay in the contract performance • exemptions of the parties’ liability due to the nonperformance of the contract • results of the avoidance of the contract

Details concerning the matter of trade offer: • it’s a proposal for concluding a

Details concerning the matter of trade offer: • it’s a proposal for concluding a contract addressed to one or more persons • the proposal needs to be sufficiently definite and bind the offer in the case of its acceptance • it’s possible to make unbinding offer: „not obliging”, „the offer is of informational character” • it becames effective when reaches the offeree • it may be withdrawen, if the withdrawal reaches the offeree before or at the same time as the offer

Details concerning the matter of trade offer: • silence or inactivity of the offeree

Details concerning the matter of trade offer: • silence or inactivity of the offeree does not in itself amount to acceptance of the proposed sales conditions • an acceptance of an offer becomes effective at the momnet the indication of assent reaches the offerer

Details concerning the matter of trade offer: • counteroffer – a reply to an

Details concerning the matter of trade offer: • counteroffer – a reply to an offer which purports to be an acceptance but contains additions or other modifications • if the counteroffer do not materially alter the terms of the offer – are treated as the elements of the offer, unless the offerer objects immediately

Details concerning the matter of trade offer: • terms that do materially alter the

Details concerning the matter of trade offer: • terms that do materially alter the terms of the offer: – price of the goods – payment conditions – quality and quantity of the goods – place and time of delivery – extent of one party’s liability to the other – settlement of disputes between the seller and the purchaser

Details concerning the matter of trade offer: • the offer can be rejected, if

Details concerning the matter of trade offer: • the offer can be rejected, if the rejection will reach the offerer at the same time or earlier than the acceptance of the offer becomes valid • price of the goods – the essential element of the offer – calculated in accordance with the terms of deivery

International trade contract • an agreement entered into between exporter and importer • constitutes

International trade contract • an agreement entered into between exporter and importer • constitutes the core elements of an international trade transactions • specifies obligations and rights of it’s parties – included in the contract in form of contractual clauses • usually agreed upon in the course of negotiations

Types of contractual clauses 1. Formal clauses 2. Principal clauses 3. Auxiliary clauses

Types of contractual clauses 1. Formal clauses 2. Principal clauses 3. Auxiliary clauses

Formal clauses • • date and place of signing the contract parties to the

Formal clauses • • date and place of signing the contract parties to the contract number of the contract parties signatures

Principal clauses • • • subject of the contract packaging and labeling of the

Principal clauses • • • subject of the contract packaging and labeling of the goods terms of the delivery date price of the goods payment conditions

Subject of the contract • defined in as many details as possible • contract

Subject of the contract • defined in as many details as possible • contract does not only specify the name of the goods, but also: – their types, class and quality – information about the brand – sample or detailed description with technical parameters, photos, • the amount of goods – in the units of weight/volume/lenght/numer of pieces

The package and labelling • determined both for unit packages (e. g. in cardboard

The package and labelling • determined both for unit packages (e. g. in cardboard with 3 pcs) and cumulative (e. g goods on EUR-pallets, strached and secured by tape) • prepared for transport and storage • exporter is obligated to pack the goods and ensure safe delivery to the importer

Delivery date • it is indicated directly by determining a specific: – date (e.

Delivery date • it is indicated directly by determining a specific: – date (e. g. 11 April 2018) – week (e. g. 8 th week of 2019) – month (e. g. May 2018) • it may depend on a specific event – e. g. „the goods shall be delivered within a month after the importer obtains its import license”

Price of the goods • fundamental clauses • essential for the contract to be

Price of the goods • fundamental clauses • essential for the contract to be valid • directly stated or implied, given in relations to the weight or list prices • contract can specify the unit price or the value of the whole contract • can be denominated in the curency of the country of the parties or in the curency of a third country (USD, EUR)

Price of the goods • value of the contract may depend on discounts proposed

Price of the goods • value of the contract may depend on discounts proposed by the exporter: – rebate – for the fulfillment of the specified conditions (e. g. for a single purchase of the specified amount of goods/ loyalty status of buyer) – cash discounts – in return for cash payments or payment made before specifed date – recompense – due to qualitative discrepancies

Conditions of payment • payment date • payment form – cash, check, bank transfer,

Conditions of payment • payment date • payment form – cash, check, bank transfer, prepayment, documentary letter of credit • name of the bank and exporter’s account number • value of prepayment

Auxiliary clauses • • • Jurisdication clause (prorogatio fori) Applicable law clause Adjustment clause

Auxiliary clauses • • • Jurisdication clause (prorogatio fori) Applicable law clause Adjustment clause Price revision clause Contractual penalty clause Force majeure clause Extraordinary change of circumstances Contract validity clause Complaint clause Arbitration and mediation clause

How the contract can be concluded? • • • through the full acceptance of

How the contract can be concluded? • • • through the full acceptance of the offer by the delivery terms negotiating on the stock exchange on the commodity auction through the tender proceedings

Obligatory sources and materials: 1. United Nations Convention on Contracts for the International Sale

Obligatory sources and materials: 1. United Nations Convention on Contracts for the International Sale of Goods: https: //www. uncitral. org/pdf/english/texts/sales/cisg/ V 1056997 -CISG-e-book. pdf 2. Introduction to International trade, ed. A. Fornalska -Skurczyńska, M. Skurczyński, Wyd. UG, Sopot 2016, Chapter 7 (7. 4), pp. 158 -166.