Chapter Thirteen Business Contracts （商业合同）

Lesson 59 Lesson 60 Lesson 61

605961IntroductionsIntroductions A contract is a formal written agreement, which sets forth rights and obligations of the parties concerned. Once entered into, a contract is binding and enforceable by law. Any party who fails to fulfill his obligations must make compensation for the other parties’ losses. In an import and export business, if the seller makes an offer and the buyer accepts that offer, it means a deal. A written contract is usually made. But what is the contract? The second article of China’s Contract Laws (1999) defines the contract as: A contact refers to an agreement establishing, modifying and terminating the civil rights and obligations between subjects of equal footing, that is, between natural persons, legal persons or other organizations”. Steven H. Gifts’ “Law Dictionary” defines the contract to be “contract is a promise, or a set of promises, for breach of which the law gives remedy, or the performance of which the law in some way recognize as a duty.” A contract has a few main elements, including the agreement, the purpose, the intention to establish legal relationship and the ability to perform.

Structure of a Contract 1. The Preamble Preamble is the head of the contract, and all of the contracts start with preambles. The preamble clarifies the name of the contract, the contract number, the signing date and place, the concerned parties’ full names, the registered places and contract method, the preface which includes the basic situation of each party, the purposes and the principles of the contract and definition of the addressed terms of the parties involved in the contract.

销售合同 SALES CONTRACT 卖方 编号 NO.: SELLER ： 日期 DATE: 地点 SIGNED IN: 买方： BUYER: 买卖双方同意以下条款达成交易： This contract is made by and agreed between the BUYER and SELLER, in accordance with the terms and conditions stipulated below.

Body of Contract (1) Name of Commodity E.g.: GROUNDNUT 2009 CROP (2) Quantity E.g.: 10,000 metric tons, 5% more or less at sellers’ option. (3) Price Clause E.g.: Unit Price: CNY 3500 CIFC3% Rotterdam Amount: CNY Total Value: Say CNY One Hundred Seventy Five Thousand Only. (4) Packing Clause It is usually contains the following factors in the packing clause: The kind of the packages; The materials; The charges E.g.: in cartons of 20 dozen each

(5) Shipping Marks Shipping Marks is the marks which facilitates the buyers to receive the goods. It is usually at the seller’s option. The standard shipping marks is definited by ISO, which is made up of four lines. For example: CODANCO-- 收货人 Copenhagen-- 目的港 ( 地 ) 95BF01DK03-- 合同号 ( 或订单号, 发票号等 ) NO.1/ 批件号 ( 分母表示整批的数量 ) If the goods is naked or the packing is Neutral Packing, you can fill it with “N/M”.

(6) Delivery Clause E.g.: Time of Shipment & Means of Transportation: Shipment by Sea in/during November, Port of Loading & Destination: from Dalian, China to Rotterdam, Netherlands. (7) Insurance Clause E.g.: Insurance ( 保险 ): 由 按发票金额 110% 投保 险，另加保 险至 为止。 to be covered by the FOR 110% of the invoice value covering additional from to. （ 8 ） Payment Clause E.g.: The Buyer shall open with a bank acceptable an irrevocable, sight Letter of Credit to reach the Seller 30 days before the month of shipment, valid for negotiation in China until 15th day after the month/date of shipment. （ 9 ） Claim Clause （ 10 ） Arbitration Clause

The End The end of the contract contains the expiry date, the law complied with, the parties’ signatures and the remarks. There are still other items of the terms and conditions. The situation is complicated in international trade. Therefore, all the terms and conditions should be fully discussed in business talks and then clearly stated in the contract.

Structure of a Contract International sales are normally conducted through contracts which are agreements reached between the seller and the buyer concerning the establishing, modifying, and terminating the rights and obligations between two parties during a business transaction. A Sales Contract is usually made by the seller who sells the goods, and it is needed countersigned by the buyer. Thus a Sales Contract is reached. Should any conflict between the two sides arise later, reference is generally made to the Sales Contract in the effort to resolve the misunderstanding.

Purchase Contract Purchase Contract is another important form of contract. The difference between Sales Contract and Purchase Contract is easy to tell. Generally, a Sales Contract is made by the seller while a Purchase Contract is made by the buyer. The importance of a Purchase Contract can never be overstated due to the binding nature. And all the clauses of a Purchase Contract must be created and reviewed carefully.

Useful Sentences 1.This contract is signed by and between the Buyer and the Seller, according to the terms and conditions stipulated below. 经买卖双方同意成交下列商品，订立条款如下： 2. Insurance ： To be effected by buyers for 110% of full invoice value covering _____ up to _____ only. 保险：由卖方按发票全额 110% 投保至 _____ 为止的 _____ 险。 3. By confirmed, irrevocable, transferable and divisible L/C to be available by sight draft to reach the sellers before ___/___/_____ and to remain 买方须于 _____ 年 _____ 月 _____ 日将保兑的，不可撤销的，可转让 可分割的即期信用证开到卖方。 信用证议付有效期延至上列装运期 后 15 天在中国到期，该信用证中必须注明允许分运及转运。

The sellers shall not hold any responsibility for partial or total non- performance of this contract due to Force Majeure. But the sellers advise the buyers on time of such occurrence. 如因人力不可抗拒的原因造成本合同全部或部分不能履约，卖方概不 负责但卖方应将上述发生的情况及时通知买方。 5.All disputes arising from the execution of this agreement shall be settled through friendly consultations. In case no settlement can be reached, the case in dispute shall then be submitted to the Foreign Trade Arbitration Commission of the China Council for the Promotion of International Trade for Arbitration in accordance wit h its Provisional Rules of Procedure. The decision made by this commission shall be regarded as final and binding upon both parties. Arbitration fees shall be borne by the losing party, unless otherwise awarded. 在履行协议过程中，如产生争议，双方应友好协商解决。若通过友好 协商未能达成协议，则提交中国国际贸易促进委员会对外贸易仲裁委 员会，根据该会仲裁程序暂行规定进行仲裁。该委员会决定是终局的， 对双方均有约束力。仲裁费用，除另有规定外，由败诉一方负担。

This contract will be effective after being signed by both parties. Any party has no right to terminate this contract without another party‘s agreement. Anything not covered in this contract will be discussed separately by both parties. 本合同一经双方签字后立即生效；未经双方同意，不得任意终止，如 有未尽事宜，甲、乙双方可另行协商。 7 ． It will be governed by the law of the People's Republic of China under the circumstances that the contract is signed or the goods while the disputes arising are in the People's Republic of China or the defendant is Chinese legal person, otherwise it is governed by Untied Nations Convention on Contract for the International Sale of Goods. 本合同之签订地，或发生争议时货物所在地在中华人民共和国境内或 被诉人为中国法人的，适用中华人民共和国法律，除此规定外，适用 《联合国国际货物销售公约》。

The terms in the contract based on INCOTERMS 1990 of the International Chamber of Commerce. 本合同使用的价格术语系根据国际商会《 INCOTERMS 1990 》。 8.This contract is made out in both Chinese and English of which version is equally effective. Conflicts between these two languages arising therefrom, if any, shall be subject to Chinese version. 本合同中、英两种文字具有同等法律效力，在文字解释上，若有异议，以 中文解释为准。 9.Any annex is the integral part of this contract. The annex and this contract are equally valid. 本合同附件是本合同的有效组成部分，与本合同具有同等法律效力。 10.This contract is in copies, effective since being singed/sealed by both parties. 本合同共 份，自双方代表签字（盖章）之日起生效。 11. There are 2 originals of this contract. Each party will hold 1 original(s). 本合同一式二份，甲、乙双方各执一份。

Thank You!