2. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY Chapter Three: Terms of Commodity Clauses: Terms of Commodity International Cargo Transport International Cargo Transportation Insurance Terms of Price International Payments Claims, Force Majeure and Arbitration

3. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY Definition of contract A contract is an agreement which set forth binding obligations between the relative parties.

4. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY Types of contract 1 Agreement 2 Contract 3 Confirmation 4 Memorandum 5 Order

5. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY Contract clauses Name of commodity Quality Quantity Packing Shipment Insurance Price Payment Commodity inspection Claim Arbitration Force majeure

6. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY Conditions of contract Name of commodity Quality Quantity Packing Shipment Price Payment

7. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY General Terms of Contract Insurance Commodity inspection Arbitration Claim Force Majeure

8. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY Name of commodity Name of commodity is a main component of “ Description of goods ” It concerns the rights and obligations of the seller and the buyer. If the goods delivered by the seller are not in accordance with the contract, the buyer reserves the right to lodge a claim, reject the goods or even cancel the contract.

9. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY Name commodity Valid terms of name commodity: ｛ 1 ｝ Commodity should be owned by the Exporter; ｛ 2 ｝ Commodity should be agreeable by the relative parties; ｛ 3 ｝ Commodity should be legal.

10. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY Notes of Name commodity Clear Concrete Common Reasonable Sometimes it is descripted with the term of quality.

11. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY HS （ Harmonized System ） The HS is a core system of obligating contracting parties to use the international six-digit nomenclature as the basis of their national import and export tariff and statistical compilations. The Hs consists of 20 sections divided into 96 chapters listing 5019 articles descriptions. China began to adopt HS in 1992.

12. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY Quality of Goods ） 商品质量（ Quality of Goods ）： 商品内在素质（物理性能、机械性能、 化学成分、生物特征等）和 外观形态（外形、色泽、款式等） 的综合反映。

13. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY Role of quality clause A condition of contract clause. Basis of avoiding disputes. Obligations of the seller to provide the quality of the goods. Descriptions of the goods.

14. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY Methods of describing the quality Phisical goods Descriptio n

15. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY Methods of describing the quality Sale by actual quality 1 Actual goods （ 1 ） The buyer has no rights to put forward any discrepancy of quality after he inspected the goods. （ 2 ） The buyer and the seller are far apart in different countries.

16. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY Sample A sample is a small quantity of a product, often taken out from a whole lot or specially designed and processed that is given to encourage prospective customers to buy the product.

17. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY Sales by Sample Reference sample When sale is made by description, either the seller or the buyer may send a physical sample to the other party to let him know more clearly about the products. This sample is often marked “ for reference only ”. It is not the basis of delivery.

18. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY Standard sample Standard samples include seller's sample, buyer's sample and counter sample. Sample are either offered by the seller or the buyer. They are described as sale by the seller's sample, and the sale by the buyer's sample.

19. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY Counter sample When sale is made by the buyer's sample,the goods delivered by the seller, may sometimes not be in conformity with the buyer's sample and thus the buyer may refuse to accept the goods. In order to avoid disputes over the quality of goods in the days to come, a wise seller should first send a copied product for confirmation before putting in production.

20. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY Sealed sample Before sending samples or delivering the goods to the buyer, the seller may select some samples and seal them in the presence of the buyer or notary （公 证人）. This sealed sample is for checking the quality of the shipments in the future.

21. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY Sale by description Sales by Specification, Grade or Standard Sales by Brand or Trade Mark Sales by Description, Drawing or Diagram （ illustration ） Sale by name of origin

22. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY FAQ — Fair Average Quality ( 良好平均品质 ) 是指一定时期内某地出口货物的平均品质水 平，一般是指大路货（即中等货）。 具体指： 农产品的每个生产年度的中等货 某一季度或某一装船月份在装运地发运的同 一种商品的 “ 平均品质 ” 在我国是指大路货，与精选货相对

23. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY GMQ —— Good Merchantable Quality （上好可销品质）

24. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY Quality clause in contract Flexible quality range: “ The quality of the goods shipped to be about equal to the sample ”. Quality tolerance

25. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY Quantity of commodity Unit of Measurement Calculation of Weight More or less clause

26. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY The systems of weights and measures 1 Metric system （ kilogram, meter, square meter and liter ） 2 International system （ kilogram, meter and second ） 3 British system （ pound and yard ） 4 U.S. system （ pound and yard ）

27. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY Relations of S/T and L/T 1L/T=2240 pounds =1016kg 1S/T=2000pounds =907kg 1MT= 2204pounds=1000kg

28. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY Some methods for calculating weight Gross weight The over-all weight of the commodity including the package weight. Net weight The weight of the commodity itself. Gross for net

29. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY Ways to calculate tare Real tare Average tare Customs tare Computed tare.

30. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY Calculation of weight Gross weight Net weight Conditioned weight Theoretical weight 法定重量 (Legal Weight) 和实 物净重 (Net Net Weight)

31. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY Conditioned weight 公量 (Conditioned Weight) 指用科学方法除去其所含水分，然后再加上 国际公认的标准含水量，按此方法求出的重 量，称为公量。 公量＝商品干净重 × （ 1+ 公定回潮率） 公量＝商品净重 × （ 1+ 公定回潮率） / （ 1+ 实际回潮率）

32. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY More or less clause More or less clause is a clause which stipulates that the quantity delivered can be more or less within certain extent. Settlement for the more or less clause part is usually based on the contract price.

33. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY Packing of Commodity Any kind of fast-selling goods is not only be superior in quality but also attractive in appearance. Preference of people, their custom and tradition play important role in the packing of goods. Commodities can be categorized into bulk, nude packed and packed commodities.

34. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY Types of Packing Outer Packing Inner Packing Marking of Goods Shipping Mark Indicative/ Warning Mark Neutral Packing

35. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY Bulk commodity Bulk commodity means the commodity directly shipped and even sold without packages. Bulk shipment has the advantage of space saving, quick handling and lower freight.

36. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY Nude packed Nude packed commodity means the commodities to be shipped without any packages or in simple bundles. Some commodities such as steel, rubber and automobiles etc., can be packed in nude.

37. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY Packed commodities Packed commodities can be classified in to shipping package and sales packing. Shipping package also called outer package, is used for protecting the commodities against damages to or shortages during the storing and transportation.

38. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY Shipping marks Shipping mark Indicative mark Warning mark

39. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY Content of Standard Shipping Mark ： ① The abbreviation name of the importer or consignees ； ② Reference number ； ③ Port of destination ； ④ Serial number.

40. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY  运输标志 主要标志 …………………… 件号标志 …………………… 目的地标志 ………………… 体积标志 …………………… 重量标志 …………………… 原产地标志 ………………… ABC NOS.26/60 NEW YORK 45×60×65 G.125 kgs N.100 kgs T.25 kgs MADE IN CHINA

41. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY Indicative mark

42. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY

43. 警告性标志 Warning mark

44. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY

45. Sales packing Also called inner packing or small packing. It can protect the commodity, also helps to improve the image of commodities, it enables the consumers to easily identity, select, carry and use the commodities.

46. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY Neutral packing Neutral packing is the packing without the name and address of the manufacturer, the origin of country, the trade mark and brand. It is adopted to break the tariff and non-tariff barriers of some importing countries or regions, to meet the special demand of the transaction, and help the manufacturers in exporting countries to increase the competitiveness of their products and expand the exports.

47. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY Types of Neutral Packing （ 1 ） Neutral Packing （ 2 ） Brand Designated by the Buyer

48. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY Packing clause 1 Contents Packing: in wooden cases of 50kilos net each. 2 Packing marks 3 Packing charges

49. NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY Examples of packing clauses in Contract 1) In international standard tea boxes, 24 boxes on pallet, 10 pallets in FCL container. 2) To be packed in new gunny containing about 100kgs and each bag shall weigh 1.15kgs with allowance of 0.1 kgs.