SUGGESTED ANSWER TO PRACTICE ON CONTRACT AMENDMENT

Practice 1:

A Vietnamese exporter agrees to sell green bean to a Filipino importer, and receives a draft for contract containing the following information: 1. Commodity: Green Bean 2. Quantity: 500 tons 3. Price: 130USD/ton FOB 4. Delivery: in containers to main ports in the Philippines. 5. Payment: by L/C 6. Inspection: final at port of destination 7. Performance guarantee: 5% of the shipment value 8. Force majeure: parties involved in force majeure case shall be free from liability 9. Dispute settlement: by arbitration Give your comments on the above wordings and make any necessary corrections to the contract.

Suggested answer
Terms Comments 1. Commodity No information about products main usage, origin and crop 2. Quantity Which kinds of Tons? MT/ LT/ST Tolerance needed 3. Price Unit price and Total Value Define the exact currency, unit of calculation, version of incoterms, include/exclude packing. 4. Delivery Missing: - Time of delivery Corrections Green bean (for human consumption), Vietnam origin, crop 2012-2013 500MT(5%, as jthe sellers option) Unit price: 130 USD/MT FOB Hi Phng, Incoterms 2000, excluding packing. Total value: 65,000 USD (in words: Sixty five thousand United States Dollars only)

- Shipment in one lot not later than 10/12/2013 - Third-party B/L: not accepted - Delivery instruction (Number of - Stale B/L: not accepted shipment? Transshipment? Third party B/L accepted? Stale B/L accepted?) - Transshipment: not allowed - Mode of delivery - Port of departure: Vietnamese port - Port of departure -Port of destination: Main port of the Phillipines - Port of destination - Notice of delivery: - Notice of delivery + Within 7 days before the expected delivery date, the Seller shall notify by fax the availability of the goods for delivery, including: Commodity, Quantity, Specification, Packing, Marking, vessels name, vessel nationality, vessel flag, vessel tonnage, ETD, ETA. + After delivery, the Seller shall notify by fax the delivery, including: Commodity, quantity, specification, packing, markings, vessels name, nationality, vessels flag, invoiced value, B/L No., ETD, ETA.

5. Payment

No mention: Types of L/C.

Missing information about banks, amount of money, currency, beneficiary, time of opening, validity and documents needed for presentation.

6. Inspection

7. Performance guarantee

Seller should not agree with the inspection carried out at the port of destination as the quality of goods can change during transit. Seller should negotiate to have a third party for inspection. - Which methods? - How? - Amount of money in escrow account / standby L/C - Beneficiary

Payment to be made in US Dollars by Irrevocable confirmed Letter of Credit, to be opened at the beginning of Nov 2013 at CityBank Philippines branches to the Sellers account at VCB Vietnam, valid for 45 days, for the full value of the goods to be shipped. - Beneficiary - Advising bank - Issuing bank The L/C shall be available for payment upon presentation of the following documents: - Full set (3/3) of original clean on board Bill of Lading - Commercial invoice: 2 originals - Packing list: 3 originals - Certificate of Origin: 1 original, 2 copies - Certificate of Quality: 1 original, 2 copies Inspection shall be fulfiled at the Vietnamese port of departure, inspection cerfiticate / survey report issued by Vinacontrol, HCMC branches shall be final and binding. - The Buyer shall pay an amount of 10% of the contract value to the escrow account at a bank named by the Seller, who shall be entitled for the full repayment of this amount if the Buyer fails to open a letter of credit as agreed.

(The warranty period is _ months since the date of delivery and before the production of 1millions items, whichever is earlier. The guarantees that the equipment is completely new, trouble free and in conformity with the technical description stipulated in the contract. During the warranty period, the seller ensures the normal operation within the devices capacity) 8. Force - Which case is considered as - Force majeure cases shall be understood the majeure Force Majeure? occurrence of situations to be considered as - Parties cannot be COMPLETELY force majeure in ICC publication No 421. free from liability in Force - The force majeure cases shall be informed to Majeure the other party by the concerned party by phone within 7 days and confirmed by writing within 10 days from the date of such a phone call together with certification of force majeure issued by the Chamber of Commerce located in the region of the case. After this deadline,

claims for force majeure shall not be taken into account. - In the event of force majeure, the concerned party shall bear no responsibility of any penalty arising from delay of delivery. 9. Dispute - Mutual negotiation before In the even of any disputes and differences in settlement taking legal action? opinion arising during implementation of this - Which arbitration center? contract between the parties which can not be Applicable law? Language? Place? settled amicably, such dispute shall be settled Fee? by the Vietnam International Arbitration Center (VIAC), at the Chamber of Commerce and Industry of Vietnam. Arbitration fees shall be borned by losing party. The applicable law is Vietnamese Law. Language of Arbitration is English and the place for arbitration is at the defendants country.