Chapter2 Chapter2 Subject Matter of an International Sales Contract

 1. Name of Goods  Be specific  Be true to fact  Try to use a name accepted internationally - Sometimes a commodity has different names in different areas and easily misunderstanding. - Sometimes a commodity has different names in different areas and easily misunderstanding. - Select a name to reduce tariff charges or fees. - Select a name to reduce tariff charges or fees.

 Ways to name commodity 1) according to the use tennis shoes ， electronic piano ， sunglasses. tennis shoes ， electronic piano ， sunglasses. 2) according to the material used cashmere sweater ， plastic flower, golden coin. cashmere sweater ， plastic flower, golden coin. 3) according to the main composition soy milk ， pure golden coin ， peanut chocolate. soy milk ， pure golden coin ， peanut chocolate. 4) according to outward looking T- shirt ， claw hammer ， computer mouse T- shirt ， claw hammer ， computer mouse

5) according to good meaning Coca Cola ， Pepsi ， Piaget / 伯爵表 Coca Cola ， Pepsi ， Piaget / 伯爵表 6) according to well-known name Louis XIII whisky ， Swarovsky Crystal ， Toyota wagon Louis XIII whisky ， Swarovsky Crystal ， Toyota wagon 7) according to technology or craft Fried chips ， Hand-made Lace ， Pressed Peanut Oil Fried chips ， Hand-made Lace ， Pressed Peanut Oil HS Code SITC Code

 2. Quality of Goods  1) Methods of Describing Quality of Goods  Sales by sample()  Sales by sample( 凭样品买卖 ) The sample refers to the article which can be used to represent the quality of the whole lot. Sale by sample includes two cases  Sales by seller’s sample Representative sample (original sample/ type sample) is usually sent by the seller to the buyer, and at the same time, duplicate samples are always kept by the seller for later reference. “Quality as per seller’s sample” “Quality as per seller’s sample”

 Sales by buyer’s sample When possible, the seller will do according to the buyer’s sample. “Quality as per buyer’s sample” “Quality as per buyer’s sample” If impossible, he may send to the buyer a sample of goods in similar quality, called return sample ( 回样 ) or counter sample （对等样品）, as a proposal for the buyer’s consideration. If impossible, he may send to the buyer a sample of goods in similar quality, called return sample ( 回样 ) or counter sample （对等样品）, as a proposal for the buyer’s consideration.

 Sales by specifications   The specification of the goods refers to certain main indicators which indicate the quality of the goods, such as composition, content, purity, size, length, etc.   Sale by Description and illustration   The quality of some commodities, such as technological instruments, electric machines, etc. can not be simply indicated by quality indexes, instead it is quite necessary to explain in detail the structure, material, performance as well as method of operation. If necessary, pictures, photos, etc. must also be provided.

  Sales by Grade ( 商品的等级 )   The grade of the goods refers to the classifications of the commodity of the goods which is indicated by words, numbers or symbols. The classifications are usually decided by different qualities, weights, compositions, appearances, properties, etc.   Sales by Standard （ 商品的标准）   The standard refers to the specifications or grades which are stipulated and announced by the government or the chambers of commerce, etc.

 FAQ (Fair Average Quality) F.A.Q indicates the quality of a product that is offered not on a particular quality specification but on the basis equal to the average quality of the current crop, recent shipment. F.A.Q indicates the quality of a product that is offered not on a particular quality specification but on the basis equal to the average quality of the current crop, recent shipment.  GMQ (Good Merchantable Quality) While G.M.Q. refers to the sound quality that is free from defects and is sufficiently good to satisfy the purpose for which the buyer intends to use the goods or for which the seller intends that they should be used. Both terms are rather too general and sweeping. When in use, therefore, they are usually supplemented by some concrete specifications. While G.M.Q. refers to the sound quality that is free from defects and is sufficiently good to satisfy the purpose for which the buyer intends to use the goods or for which the seller intends that they should be used. Both terms are rather too general and sweeping. When in use, therefore, they are usually supplemented by some concrete specifications.

  Sales by Brand Name or Trade Mark   As to the goods whose quality is stable, reputation is sound and with which the customers are quite familiar, we may sell it by brand name or trade mark.   Sales by Name of Origin   It is suitable for some agricultural products and by-products whose origins are well- known all over the world.   Sales as seen

 2)Quality clause  Tolerance clause  Flexible ranges  A given range  A limit  A more or less clause

Case  An export company in China concluded a deal on edible citric acid. While delivering the goods, they mistook inedible citric acid for the edible kind. Not until several days after the vessel’s departure did they discovered the mistake. By then, the relevant documents had already been sent by the negotiating bank.

 To avoid severe consequences, the export company tried to withhold the documents at the post office, while, on the other hand, it urgently informed the ocean shipping agency to ask the agent in HongKong to hold back the goods when the ship called at the port. Though an accident has been avoided, the company had suffered a great loss.

 3. Quantity of Goods  1) calculation of quantity  Metrology Metric System( 公制 ); British System ( 英制 ); U.S. System ( 美制） ; International System of Units( 国际单位制 ) Metric System( 公制 ); British System ( 英制 ); U.S. System ( 美制） ; International System of Units( 国际单位制 ) Unit of Measurement weight ： 千克、公斤（ kilogram, kg. ）， 克（ gram, g. ）， 千克、公斤（ kilogram, kg. ）， 克（ gram, g. ）， 公吨（ metric ton, m/t ）， 盎司（ ounce, oz. ）， 公吨（ metric ton, m/t ）， 盎司（ ounce, oz. ）， 磅（ pound, lb. ）， 长吨（ long ton, l/t ）， 磅（ pound, lb. ）， 长吨（ long ton, l/t ）， 短吨（ short ton, s/t ）， 公担（ quintal, q. ） 短吨（ short ton, s/t ）， 公担（ quintal, q. ）

capacity ： 升（ liter, l. ），加仑（ gallon, gal. ） ， 蒲式耳（ bushel, bu. ） 升（ liter, l. ），加仑（ gallon, gal. ） ， 蒲式耳（ bushel, bu. ） numbers ： 只（ piece, pc. ）， 双（ pair ）， 只（ piece, pc. ）， 双（ pair ）， 件（ package, pkg. ）， 头 （ head ） 件（ package, pkg. ）， 头 （ head ） 台、架、套（ set ）， 打（ dozen, doz. ）， 台、架、套（ set ）， 打（ dozen, doz. ）， 罗（ gross, gr. ）， 令（ ream, rm. ）， 罗（ gross, gr. ）， 令（ ream, rm. ）， 包、 捆（ bundle, bale ） ， 袋 （ bag ）， 包、 捆（ bundle, bale ） ， 袋 （ bag ）， 箱（ case, c/s ） ， 盒（ box,bx. ）， 箱（ case, c/s ） ， 盒（ box,bx. ）， 卷（ roll/coil ）， 辆（ unit ） 卷（ roll/coil ）， 辆（ unit ）

length ： 码（ yard, yd. ） 米（ meter, m. ） 码（ yard, yd. ） 米（ meter, m. ） 英寸（ inch, in. ） 英尺（ foot, ft. ） 英寸（ inch, in. ） 英尺（ foot, ft. ） 厘米（ centimeter, cm. ） 厘米（ centimeter, cm. ） area ： 平方码（ square yard, sq.yd. ） 平方码（ square yard, sq.yd. ） 平方米（ square meter, sq.m. ） 平方米（ square meter, sq.m. ） 平方英尺（ square foot, sq.ft. ） 平方英尺（ square foot, sq.ft. ） 平方英寸（ square inch, sq.in.) 平方英寸（ square inch, sq.in.)

volume ： 立方米（ cubic meter, cu.m. ）， 立方米（ cubic meter, cu.m. ）， 立方码（ cubic yard, cu.yd. ）， 立方码（ cubic yard, cu.yd. ）， 立方英尺（ cubic foot, cu.ft. ）， 立方英尺（ cubic foot, cu.ft. ）， 立方英寸（ cubic inch, cu.in. ） 立方英寸（ cubic inch, cu.in. ） Measurement of weight

gross weight: net weight plus tare (the weight of packing), “gross for net” indicates the goods of little values, eg. rice, some kinds of beans. net weight: gross weight minus tare, there are ways to subtract tare, namely, to subtract the real tare, actual tare, average tare, customary tare, or the computed tare. net weight: gross weight minus tare, there are ways to subtract tare, namely, to subtract the real tare, actual tare, average tare, customary tare, or the computed tare. conditioned weight: dry weight plus standard moisture content conditioned weight: dry weight plus standard moisture content theoretical weight: total number times the weight of each unit theoretical weight: total number times the weight of each unit legal weight: net weight + inner packing legal weight: net weight + inner packing net net weight: net weight – (moisture + dust) net net weight: net weight – (moisture + dust)

 2) quantity clause  Content  More or less clause  “5000m/t, with 5% more or less at seller’s option”, usually “at the seller’s option” is often used. But when shipment is organized by buyer, “buyer’s option” is preferred. “At carrier’s option” is sometimes used when charter transport is adopted, by this means, the capacity of the ship is fully utilized.  Approximately or About

 某公司定购钢板 400M ／ T ，计 6 英尺、 8 英 尺、 10 英尺、 12 英尺四种规格各 100M ／ T ， 并附每种数量可增减 5 ％的溢短装条款，由 卖方决定。今卖方交货为： 6 英尺， 70M ／ T ， 8 英尺， 80M ／ T ； 10 英尺， 60M ／ T ； 12 英尺， 210M ／ T ，总量未超过 420M ／ T 的溢短装上限的规定。对于出口商按实际 装运数量出具的跟单汇票，进口商是否有 权拒收拒付？

4. Packing and Marking 1) factors influencing types of cargo packing : Value of goods Transport Dimension and the weight limit customs or statutory requirements EconomicalInsurance Handling easily

 2) Types of packing  Without packing 散装货 (bulk cargo / cargo in bulk ) 散装货 (bulk cargo / cargo in bulk ) 裸装货 (nude cargo ) 裸装货 (nude cargo )  packing 运输包装 ( transportation packing 运输包装 ( transportation packing 运输包装 运输包装 / outer packing) / outer packing) 销售包装 ( selling packing 销售包装 ( selling packing 销售包装 销售包装 / small packing / small packing / inner packing / inner packing / immediate packing ) / immediate packing )

3) Outer packing 单件包装（ single-piece packing ）： 箱（ wooden case; crate; carton; corrugated carton ) 桶（ iron drum ; wooden cask ） 袋（ gunny bag ;cloth bag ; plastic bag ; paper bag ） 捆包 (bundle ; bale ） 罐（ can ） 篓（ basket ） 瓶（ bottle ; cylinder ） 坛 (demijohn ; carboy ） 集合包装（ muster packing ）： 集装箱（ container ） 托盘（ pallet ） 集装箱（ container ） 托盘（ pallet ） 集装袋（ Flexible container ） 集装袋（ Flexible container ）

 4) marking Also called shipping mark. It is a symbol or a sign on outer packing usually with The order number or contract number, name of exporter, name of exporter, Name of buyer, Name of buyer, Destination, Destination, number of cases, number of cases, special warning. special warning.

 identification mark  识别标志又称附属标志（ subsidiary mark)  94CL — H08 合同号  ART.NO. : 904A 货号  COLOUR : NAVY/GREY 色泽  SIZE : 尺寸搭配  N.W. : 11.3KG 净重  G.W. : 16.4KG 毛重  MEAS. :45.5×52×55.5cm 尺码  MADE IN CHINA 生产国别

 Of course, it is not always possible to keep the marking simple. Sometimes, it is necessary to indicate the weight or measure of the packages, the name of the vessel or the origin of the goods.  When fragile goods are being transported, it is sound practice to indicate this by marking the cases “Fragile” or for bags of raw materials to bear the notice “Use No Hooks”, or where appropriate for other materials, “Keep Dry ”.(indicative mark)  On occasions, the warning signs for any dangerous, explosive or corrosive products should be given in the shipping marks.(warning mark)

 5) Packaging  Packaging functions  Kinds of packaging  Labeling  6) Product code 美国统一代码委员会（ UCC ） : UPC 码 （ Universal Product Code ） 美国统一代码委员会（ UCC ） : UPC 码 （ Universal Product Code ） 国际物品编码协会（ IAN ） : EAN 码（ European Article Number ） 国际物品编码协会（ IAN ） : EAN 码（ European Article Number ） others ：三九条码（ 3 of 9 Bar Code 或 Code 39 ）、九三条码 （ Code 93 Bar Code ）、库德巴条码（ Codabar Bar Code ）、二 五条码（ 2 of 5 Bar Code ） others ：三九条码（ 3 of 9 Bar Code 或 Code 39 ）、九三条码 （ Code 93 Bar Code ）、库德巴条码（ Codabar Bar Code ）、二 五条码（ 2 of 5 Bar Code ） China(IAN): “690” “691” “692” “693” “694” “489” “471” China(IAN): “690” “691” “692” “693” “694” “489” “471”

EAN 消费单元编码标准版 前缀码 制造厂商代码 商品项目代码 校验码

 7)Neutral packing & manufacturing brand-name goods  8) clause of packing In single, new, used and / or repaired gunny bags of 90kg each In single, new, used and / or repaired gunny bags of 90kg each In baskets of 50kg each, covered with hessian cloth and secured with ropes. In baskets of 50kg each, covered with hessian cloth and secured with ropes. In tin-lined cartons of 11 kilos net each. In tin-lined cartons of 11 kilos net each. In cartons of 48 tins ×312oz. Net each. In cartons of 48 tins ×312oz. Net each. In cartons,each containing 4 boxes about 9 lbs.,each fruit waxed and wrapped with paper In cartons,each containing 4 boxes about 9 lbs.,each fruit waxed and wrapped with paper

Marking: Marking: Each package shall be stenciled with gross and net weights, package number, measurement, port of destination, country of origin and the following Shipping Mark: Each package shall be stenciled with gross and net weights, package number, measurement, port of destination, country of origin and the following Shipping Mark: 89ZHPC ZHPC-075 GUANG ZHOU GUANG ZHOU

 Packing clause in the contract:  To be packed in new strong wooden cases / cartons suitable for long voyage and well protected against dampness, moisture, shock, rust and rough handling. The Seller shall be liable for any damage to the goods due to improper packing and for any damage attributable to inadequate or improper protective measures taken by the Seller. In such case all losses and/or expenses incurred shall be borne by the Seller.

Questions: 1. What is F.A.Q. ? 2. What is Gross for Net ? 3. What is Return Sample or Counter Sample? 4. What is Net Net Weight ? 5. What is Plus or Minus Clause ?

Case1  A Chinese company imported some flammable liquid chemical raw material from a French company. When the goods arrived at the destination, it was found that there was a slight leakage caused by the defect in a few packages. However, the Chinese company failed to take any measures to save the loss and prevent the damage from expanding. As a result, the leakage worsened after the warehousing of the goods and led to a self-ignited fire. Afterwards, the Chinese company claimed against the French company for full compensation of the total loss.

Case 2  An export company in China made an offer on an agricultural product to an American importer. Aside from all the essential conditions, it was also indicated in the offer that ”packing in sound bags”. Within the validity period, the American importer gave a reply: “refer to your telex first accepted, packing in new bags”. After receiving this, the export company started to prepare the goods.

 A few days later, when the price of the agricultural product plummeted in the international market, the American importer claimed in its telex ” the contract is invalid because you have not confirmed our alteration to the offer.” But the export company insisted that the contract was valid. A dispute was thus aroused.

 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 (material alteration)