Contracts for the sale of goods often appear in many commercial transactions. Along with the development of the market economy, transactions are also increasingly diversified and complex, potentially posing a lot of risks for the parties involved. Therefore, it is very important to limit risks right from the drafting of the Contract, especially in business activities. In this article, Apolo Lawyers - Solicitors & Litigators (Hotline: (+84) 903 419 479) will point out four notes when negotiating a contract for the sale of goods.
The contracting parties should understand what a contract for the sale of goods and how they should negotiate a contract for the sale of goods.
A contract for the sale of goods is a specific form of a contract for the sale of property. According to the provisions of Article 430 of the Civil Code 2015, a property sale and purchase contract is an agreement between parties whereby the seller transfers ownership of the property to the buyer and the buyer pays the seller.
Accordingly, a contract for the sale of goods can be understood as an agreement between the parties whereby the seller transfers the ownership of the goods to the buyer and the buyer pays the seller.
According to the provisions of Article 24 of the Commercial Law 2005 on the form of a contract for the sale of goods, a contract for the sale of goods shall be expressed orally, in writing or established by specific acts. For all types of insurance contracts that are required by law to be made in writing, such provisions must be complied with.
The contract for the sale of goods is usually signed by two parties, but can also be signed between many different parties, depending on the type of goods, the nature of the transaction, etc.
Negotiation can be understood as an exchange and agreement between two or more parties on one or more issues of mutual interest, through which the parties will achieve the desired outcome. So, the process of negotiating contracts for the international sale of goods is an exchange and agreement between two or more parties who want to conclude a contract with each other, on contract-related issues, through which each party will benefit.
During the negotiation process in an international sale of goods contract, the parties often focus on discussing and agreeing on the most important contents of the contract such as:
Identification of goods (name, type, characteristics, etc.) requirements for preservation, suitability of goods).
Determine the quantity of goods.
Determine price.
Shipping: delivery terms, carrier, port of departure – port of destination.
Applicable law.
Cases of liability exemption, force majeure terms.
Dispute Settlement Authority.
The subject matter of a contract of sale of goods is goods. Therefore, it is necessary to have a detailed, clear and complete description of the goods. The information to be described includes at least information such as: Quantity, type, specifications, preservation requirements, standards or regulations
Not all types of goods are allowed to be bought and sold in commerce, but only goods that are not prohibited from trading are allowed to be traded. In addition, for goods subject to restrictions on business and goods subject to conditional trading, the sale and purchase can only be made when the goods and the goods buying and selling parties fully satisfy the conditions as prescribed by law. . Goods that do not conform to the contract are specified in Clause 1, Article 39 of the Commercial Law 2005.
Transfer of ownership is the most important content in the sale of goods contract but often neglected.
The parties have the right to agree on the time of transfer of ownership of the goods, if there is no agreement, the ownership will be transferred from the seller to the buyer from the time the goods are transferred.
Article 238 of the 2015 Civil Code stipulates that: when the owner transfers his/her ownership rights to another person through a contract of sale, exchange, gift, loan, or other ownership transfer contract according to regulations prescribed by law or through the inheritance, the ownership rights to the property of such person shall terminate from the time when the ownership rights of the transferee arise.
Article 161 of the 2015 Civil Code stipulates: “The time for establishing ownership rights and other property-related rights shall comply with the provisions of this Code and other relevant laws; if there are no provisions of the law, the agreement of the parties shall apply; Unless otherwise provided for by law and without agreement by the parties, the time to establish ownership and other rights to the property is the time when the property is transferred. The time when the property is transferred is the time when the obligee or their legal representative takes possession of the property.
Thus, if in the goods sale and purchase contract, there is a provision on the time of transfer of ownership, the time of transfer of ownership of the goods shall comply with the agreement of the parties.
If there is no provision in the contract of sale of goods, the time of transfer of ownership over the goods will be the time when the property is transferred, ie the time when the buyer or the legal representative of the Buyer receives the property from the seller.
The time of risk transfer will also be agreed by the parties. If there is no agreement, the provisions of Articles 57 to 60 of the Commercial Law 2005.
In a contract for the sale of goods, the price of the goods is one of the main contents of the contract. Prices of goods are freely agreed upon by the parties and recorded in the contract. The parties when agreeing on the price should mention the following contents: unit price, total value and payment currency. The price must usually be clearly defined in the contract to avoid conflicts arising when the parties perform the contract.
However, in the case of international sales of goods, the price is usually required to be determined based on the market price at the time of delivery (Based on Article 56 of CISG 1980)
For the method of payment: The party can choose one of the current popular payment methods such as: direct payment; payment through wire transfer; collection payment and L/C documentary credit (usually used for international commercial contracts). The parties should specify the method of payment (transfer or cash) and the specific payment time with the payment amount in installments. To ensure safety, the parties can open L/C or use guarantee measures at the Bank for the payment.
In the case of negotiating contracts for the international sale of goods, the parties also need to pay attention to the law applicable to the contract. According to the rules of international law, the parties to a contract can agree to choose the applicable law and the chosen law must be the substantive law of a country. However, the 1980 Vienna Convention has the potential to be applied implicitly to contracts for the international sale of goods between merchants from member states or when International rules refer to the application of the law of a member state, also play an important role in the source of law governing contracts. If the parties do not wish to apply this Convention, it is necessary to agree on a provision that excludes its application.
In practice, there are also cases where the parties agree to choose a legal system of a third country to adjust, each party also needs to consider its own legal capacity, to avoid the case that one party has high negotiating power. would be detrimental to the other party.
Moreover, the parties need to negotiate and agree to choose a Court or Arbitration to resolve the dispute, as well as clearly determine which country of Court or arbitration center, avoiding the case of unclear regulations, which will cause loss. effect of this provision.
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Apolo Lawyers is confident in supporting Clients who have problems with commercial contract, including the following:
Consulting on how to draft the contract that satisfies the provisions of Vietnamese Law about contracts to reduce the risks;
Consulting to determine the basis for dispute settlement and legal basis for dispute settlement;
Consulting, and preparing to contact and negotiate with related parties in the settlement of international contract sale of goods disputes;
Guiding clients to collect documents and evidence, and provide information;
Authorized representative lawyers meet and discuss with Arbitration, Courts, and judgment enforcement agencies to protect the legitimate rights and obligations of clients
For further information, please contact us Apolo Lawyers - Solicitors & Litigators via email at contact@apolo.com.vn or Hotline (+84) 903 419 479 for the best advice and support.
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