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Agreement for the International Sale of Goods from China mainland 6 replies,9798 views

#1
Dear Lawyer He and our other good house Lawyers,

If possible, I would greatly appreciate your quick eye over the following form of contract for purchase of goods by a foreigner from China mainland. Layout is of course corrupted by pasting here.

The idea is to publish it our Due Diligence forum as a rough guide qualified with caution to seek own legal advice.

It is my own drafting evolved over time, with a few snippets pinched from elsewhere, which I use in my own business.

This form is geared to placing purchase orders based on sample product. Main protection is payment of 70% deposit under Article 115 after satisfactory Pre-shipment Inspection with balance against Bill of Lading + penalty for late delivery.

In particular, the "Continuing Agreement" under Clause 15 is a bit hairy.

Many thanks, Tony

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Agreement for the International Sale of Goods from China mainland

This Agreement is made this _________________ day of ____________________ 2007


BETWEEN _____________________________________________ (seller��s full name)

of __________________________________________________ (full address) (��Seller��)

AND ___________________________________________________ (buyer��s full name)

of _____________________________________________________________ (��Buyer��)

WHEREAS:

A. Seller, being resident of China mainland, has offered to sell goods of the same type and quality as sample/s of goods previously provided by Seller to Buyer.

B. Buyer wishes to purchase said goods from Seller. However, Buyer is in a special position of disadvantage by, among other, residency in a foreign country.

C. The parties seek to mitigate Buyer��s said position of disadvantage by certain terms and conditions in this Agreement.

IT IS HEREBY AGREED AS FOLLOWS:-

1. STANDARD AGREEMENT

Seller and Buyer call this Agreement the ��Standard Agreement��. Any reference to the Standard Agreement in any communication between Buyer and Seller is a reference to this Agreement.

2. HEADS

Seller shall sell, transfer and deliver to Buyer the property described in Clause 5 (��Goods��) for the price set out in Clause 4 (��Purchase Price��), on the terms and conditions hereof, including:

(a) Delivery shall be Incoterm FOB _____________ (name of loading port). Delivery of the Goods from Seller to Buyer shall occur at the moment the Goods swing over the ship��s rail in the loading port (��Delivery��).

(b) Delivery target date is _____________________ 2007 ��Delivery Target Date��).

(c) To enable the Delivery Target Date, Seller warrants, represents and undertakes to properly dispatch the Goods from its premises to the loading port on or before ___________________ 2007 (��Consignment Date��).

(d) In respect of Delivery and risk:

(i) All costs of Delivery are included in the Purchase Price. all risk up to the point of Delivery is Seller��s own risk;

(ii) Receipt by Buyer of true copy of the Bill of Lading shall be prima facie evidence of Delivery;

(iii) All risk and cost after Delivery is Buyer��s own cost and risk.

(e) In respect of identification of the Goods and subject to Clause 5:

(i) The Goods must conform with the Sample/s previously provided by Seller to Buyer identified in Clause 5 (a);

(ii) The said conformity shall be determined by the Buyer inspecting and comparing the Goods with the Sample/s prior to Consignment Date (��Pre-shipment Inspection��);

(iii) Buyer, at own cost, must conduct the Pre-shipment Inspection during normal business hours no later than three (3) working days after notification by Seller to Buyer that the Goods are ready for such inspection;

(iv) Upon Pre-shipment Inspection the Goods shall be identified and appropriated by Buyer to the performance of this Agreement;

(v) Deliberate failure by Buyer to conduct the Pre-shipment Inspection shall constitute irrevocable identification and acceptance of the Goods by Buyer;

(vi) Unless or until otherwise advised, Buyer��s representative to conduct the Pre-shipment Inspection is:
____________________________________________________________________________________________________________ (Insert full name and contact detail of Inspector)

(f) Buyer shall pay to Seller:

(i) A security deposit in accord with the meaning of security deposit in Article 115 of People��s Republic of China Contract Law in a sum equal to 70% of the Purchase Price within two (2) business days of satisfactory Pre-shipment Inspection (��Security Deposit��);

(ii) Upon issue of Bill of Lading the Seller shall appropriate the Security Deposit to part payment of the Purchase Price;

(iii) Buyer shall pay the remaining 30% of Purchase Price within two (2) business days of receipt by Buyer of true copy of the Bill of Lading;

(iv) Buyer shall pay the said monies by wire transfer to Seller��s **** (��TT��).

3. SELLER��S ****

Detail of the Seller��s **** into which the Buyer shall TT all monies payable under this Agreement is:
____________________________________________________________________________________________________________________________________

4. PURCHASE PRICE

Total of all monies payable by Seller to Buyer for or in relation to the Goods is US$_____________ calculated by:
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ (��Purchase Price��)

5. DESCRIPTION AND IDENTIFICATION OF GOODS

(a) The Sample/s referred to Clause 2 (e) is/are described and identified as: ______________________________________________________________________________________________________________________________________________________________________ (��Sample/s��)

(Insert sufficient to remove any doubt about exact identity of sample/s)

(b) The Goods shall comprise ___________ units of the same merchandisable type, quality and volume as the Sample/s and shall comply with the Standards and all other warranties, representations and undertakings in Clause 6 (b). Additional or extra items, if any, consist:
_____________________________________________________________________________________________________________ (��GOODS��).

(c) The Goods also consist packaging of each unit comprising the Goods together with proper boxing of the Goods necessary for shipment, being:
_______________________________________________________________________________________________________________________________________________________________________ (��Packaging��)

(Describe packaging for both individual units and shipping boxes)

(d) Further to Clause 2 (e), the Goods shall be identified and appropriated to the performance of this Agreement by Buyer only during or forthwith after the Pre-shipment Inspection, where:

(i) The Buyer shall inspect the Goods for compliance under Clause 5 (b);

(ii) Such inspection and comparison shall exclude examination and tests of a technical nature in which respect Buyer absolutely relies on each warranty, representation and undertaking made by the Seller hereof.

(iii) Upon satisfactory inspection the Buyer shall mark the Goods and/or packaging with a mark of its choice and shall be entitled to watch over dispatch of the Goods from the seller��s premises;

(iv) By making the said markings the Goods shall thereby be appropriated to the performance of this Agreement.

(e) To enable meeting the Consignment Date, Seller shall immediately replace any units notified by Buyer as not reasonably conforming with the Sample/s and/or immediately rectify any unreasonably faulty packaging.

(f) However, if more than 25% of the units comprising the Goods are found by Buyer to be non-conforming on Pre-shipment Inspection, Buyer may at its discretion terminate this Agreement or request specific performance.

(g) Buyer warrants, represents and undertakes to Seller to not unreasonably refuse to appropriate any part of the Goods to the performance of this Agreement.

6. WARRANTIES, REPRESENTATIONS AND UNDERTAKINGS

(a) Seller acknowledges that Buyer has no understanding, or very limited understanding, of the technical nature of the units comprising the Goods and accordingly is not in a position to assess whether the Goods are capable of causing loss or damage to end consumers and/or users or meet the standards required in the Buyer��s country.

(b) Seller warrants, represents and undertakes to Buyer that at time of Delivery each unit or product comprising the total Goods shall be free from defects, fit for their intended use and life expectancy, of merchantable quality, comply with all applicable laws and safety and quality standards and conform in all respects to the quality, reliability and safety standards of:
____________________________________________________________________________________________________________(��Standards��)(Insert Standard of the country applicable to the Goods)

(c) Any unit comprising the Goods later found to not reasonably comply with Clause 6 (b) and in particular with the Standards is hereby deemed a defective product (��Defective Product��).

(d) Seller warrants, represents and undertakes to Buyer that the Goods shall comply with the standards imposed from time to time by the relevant government departments or trade organizations in the People��s Republic of China and that Seller holds all licenses and all other authorisations necessary to manufacture, sell and export the Goods necessary to meet the Consignment Date.

(e) Seller warrants, represents and undertakes to Buyer that neither the Goods nor the manufacturing process of the Goods infringe or will infringe the intellectual **** or any other rights of any third party.

(f) Seller warrants that at the time of entering this Agreement, Seller neither knows nor has reason to know of the existence of any outstanding title or claim of title hostile to the rights of seller in the Goods

7. Seller acknowledges that Buyer relies on each of Seller��s warranties, representations and undertakings hereof to enter into this Agreement. In particular Seller acknowledges that Buyer would not have entered into this Agreement but for the Seller making each warranty, representation and undertaking hereof.

8. DEFECTIVE GOODS REPLACEMENT AND/OR REPAIR

Notwithstanding any inspection or approval by Buyer of the Goods by Pre-shipment Inspection or otherwise:

(a) Seller, at own cost, shall forthwith repair or replace any unit or product or part thereof which shall within ________years of Delivery prove to be a Defective Product. Seller shall bear all inward and outward freight costs of repairing and/or replacing any Defective Product.

(b) Seller��s liability under Clause 8 (a) excludes:
________________________________________________________________________________________________________________________

9. INDEMNIFICATION AND LIABILITY

Seller warrants, represents and undertakes to Buyer to fully indemnify, defend and hold Buyer harmless from and against any liabilities, suits, causes of action, claims, costs or expenses (including legal costs) arising from any breach or claimed breach of Seller��s representations, warranties, obligations or terms under this Agreement including all incidental or consequential damages and anticipated or projected profits.

10. LATE DELIVERY

(a) Seller acknowledges that Buyer will suffer commercial loss and damage for late delivery of the Goods caused by the Seller.

(b) Seller agrees to compensate Buyer for late delivery of the Goods in these events:

(i) Dispatch of the Goods from the Seller��s premises later than the Consignment Date, and/or

(ii) Delay in FOB Delivery Target Date through Seller��s fault.

(c) The sum of compensation shall equal one percent (1%) of Purchase Price for each one day of delay caused by Seller for a maximum of thirty (30) days / 30%.

(d) The Purchase Price shall be credited with the sum of any compensation payable by way of either reducing the Purchase Price by a sum equal to the sum of compensation or by deducting the sum from any Invoice issued by Seller.

11. FORCE MAJEURE / ACTS OF GOD

(a) Seller shall be excused from any liability, loss or damage to Buyer or any other person or party for failure to manufacture or deliver, or any delay in delivery, arising from catastrophic events beyond Seller��s control such as acts of God, war, riot, embargoes, fires, floods, earthquakes and the like.

(b) Under such circumstances Seller is still under the obligation to take all necessary measures to hasten Delivery of the Goods. In case the emergency lasts for more than 8 weeks, Buyer shall have the right to terminate this Agreement whereupon Seller shall forthwith reimburse Buyer for any money paid by Buyer to Seller in relation to non-Delivery of Goods.

12. EVENTS OF FUNDAMENTAL BREACH

Each of the following events is a breach of fundamental conditions of this Agreement:

(c) If Buyer fails to TT the Security Deposit or the Purchase Price or any part thereof within the any time specified in Clause 2 (f).

(d) If 25% or more of the Goods are found by Buyer to be non-conforming during the Pre-shipment Inspection.

(e) If Seller fails to replace any non-conforming part of the Goods within seven (7) days of request by Buyer after the Pre-shipment Inspection.

(f) If Consignment Date or Delivery Target Date are exceeded by more than 30 days by fault of the Seller.

(g) If either party fails to comply with full and proper request for specific performance.

(h) Any other event as might be reasonably constructed to constitute a breach of any fundamental condition of this Agreement.

13. RIGHTS UPON FUNDAMENTAL BREACH

(a) The injured party shall be entitled to terminate this Agreement at any time following any event in Clause 12.

(b) If Buyer fails to make the 30% balance of Purchase Price referred to in Clause 2 (f), title in the Goods shall revert to the Seller in which event Seller shall be entitled to collect the Goods at the port of destination and dispose of the Goods at its discretion without prejudice to Seller��s other rights under this Agreement,

(c) If, by fault of the Seller, Consignment Date or Delivery Target Date is exceeded by more than 30 days, Seller shall return the Security Deposit to Buyer within seven (7) days of termination of this Agreement together with the additional sum payable in respect of double payment of Security Deposit provisions under Article 115 of PRC Contract Law without prejudice to Buyer��s other rights under this Agreement.

14. ARBITRATION

Any dispute arising from or in connection with this Contract shall be submitted to the China International Economic and Trade Arbitration Commission (��CIETAC��) for arbitration which shall be conducted in accordance with the Commission��s arbitration rules in effect at the time of applying for arbitration. The arbitral award is final and binding upon both parties. And,

(a) The place of arbitration and/or hearing shall be the domicile of CIETAC South China Sub-Commission, and

(b) The language of the arbitration shall be English, and

(c) The arbitration shall be conducted by a sole arbitrator, and

(d) The parties jointly appoint and/or entrust the Chairman of the CIETAC to appoint the sole arbitrator, and

(e) The nationality of the arbitrator shall be determined by the Chairman of CIETAC, and

(f) The applicable law of contract shall be United Nations Convention On Contracts For The International Sale Of Goods, 1980 (��CISG��) save that all matters concerning the Security Deposit shall be determined by reference to Article 115 of PRC Contract Law and related law, and

(g) The arbitration shall be conducted by Summary Procedure, and

(h) In respect of any Third Party claiming against the Buyer for loss and/or damage arising from faulty Goods, the Seller consents to Buyer joining the Third Party into the arbitration proceedings and/or for the Buyer to assign any of its litigation rights arising from this Contract to Third Parties, and

(i) The parties hereby consent, upon any request by the arbitrator to submit to mediation, to use their best endeavors to resolve all disputes within 28 days of such request.

15. CONTINUING AGREEMENT AND TERM

Without prejudice to any term or condition concerning purchase of the Goods under this Agreement, the parties presently intend that the Seller shall sell, transfer and deliver to Buyer more of the same, or similar, sorts of property described in Clause 3 (��Further Transactions��), in which event/s:

(a) The terms and conditions of this Agreement shall apply to all Further Transactions save for only necessary amendments to Purchase Price and Consignment and Delivery Dates and like detail.

(b) Such necessary amendments may be made by email or other electronic communication without need to sign further agreement.

(c) The execution of this Agreement constitutes execution of the agreement for the Further Transactions save for only the said necessary amendments.

(d) This Agreement shall be effective from the date first above written and shall remain in force until the earlier of valid termination or on the first anniversary after no Further Transactions occur.

16. EXECUTION, ATTEMPTED PERFORMANCE, DATE OF AGREEMENT

(b) This Agreement may be executed in one or parts by the parties on separate counterpart or facsimile copies each of which when so executed by any party shall be an original but all executed or counterpart or facsimile copies shall together when delivered constitute one and the same agreement.

(c) In particular, execution and exchange by facsimile of only the signatory page last appearing in this Agreement constitutes acceptance of and agreement to each preceding page in this Agreement.

(d) Notwithstanding any lack of execution or other perceived irregularity in form of this Agreement, any attempted performance of this Agreement shall establish the existence of this Agreement in respect of both the Goods and any Further Transactions.

(e) Any Pro Forma Invoice, Invoice or other document concerning the Goods or concerning Future Transactions are issued pursuant to only this Agreement.

(f) Notwithstanding any different dates in counterparts in the date first written above, the date of this Agreement is the earliest date by which both parties had agreed to enter this Agreement in which respect any relevant correspondence shall establish the date.

17. SEVERABLE TERMS

The illegality, invalidity or unenforceability of any part of this Agreement shall not affect the legality, validity or enforceability of any other part of this Agreement.

18. Buyer may assign the benefit of any provision in this Agreement without the prior written consent of Seller.

19. ACKNOWLEDGEMENT OF UNDERSTANDING

The Parties acknowledge to each other that they have read and understand each Clause set out in the preceding pages of this Agreement and that such, together with this Clause, constitutes the whole of the terms and conditions of this Agreement.

In witness whereof, the parties have executed this agreement at ____________________ (insert city and country of execution by the different parties) the day and year first above written.

_________________________ ___________________________

Buyer��s Signature Name and Capacity of Signatory (please print)

_________________________ ___________________________

Seller��s Signature Name and Capacity of Signatory (please print)

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#2
Re: Agreement for the International Sale of Goods from China mainland
Replying to [Aussie]:
wow!
I want a copy of this one Aus! Can we see what an agreement between a buyer and an agent (in China) would look like also?

For example the agreement between a small buyer and someone like Peter C..... An agreement that wiould cover both parties?
#3
Re: Re: Agreement for the International Sale of Goods from China mainland
Replying to [Foow]:

Hi Foow,

Aussie's agreement is a good example of what we called "distribution agreement." However, just want to remind you a few points:

1. You can find thousands of this kinds of agreements by goolging on the net.
2. Be careful of how you are going to enforce it, ie governing law and dispute resolution clause, if dispute is likely to foresee in the near future.
3. Realizing that most agreements are product of "cut-and-paste", ask for professional advise if you are heading to execute the agreement, especially with huge amount.
4. (Assuming you are dealing with Chinese) Most Chinese don't "play by the book". If you both sign the contract, do not count on the fact that the other party will honor it without any hassle. Most of the time you need to use your leverage to make the other party to honor the contract.

Hope those helps.


#4
Re: Re: Re: Agreement for the International Sale of Goods from China mainland
Replying to [sophocles]:

My Agreement is for purchase of goods from China not related to distribution.

1. No you can't, and I have never seen even one version for buying from China. Save for a couple of standard clauses, my Agreement is about 95% my own drafting to fit my company's own needs in buying from China.

2. A proper arbitration clause is the key. I choose CIETAC, for reasons a lawyer would recognise, complete with arbitration process to suit me. Emphasis is on CISG contract law while preserving rights under Article 115 of PRC contract law in respect of security deposit. However, you can't re-write PRC law with other.

3. Seek professional advice for both large and small sum contracts, not just large.

4. In my experience, you face thousands of years of Chinese tradition of settling disputes by mediation rather than Court or Arbitration process. And CIETIC's arbitrators will usually request the parties to enter mediation before arbitration. However, even for mediation, you need a well thought out contract as a starting point.

So far, in my several decades of doing business with China, I have been been able to settle every dispute over drinks with help of my family there. This also reflects my personal caution in selecting Chinese suppliers.

For a new chum Westerner, pretend you are a child. Forget everything you know and start all over again in trying to understand China mainland way of doing things. [em1]
#5
Re: Re: Re: Re: Agreement for the International Sale of Goods from China mainland
Replying to [Aussie]:

Hello, Aussie,

Good job.... But I think you may have some misunderstandings with the "Security Deposit" under frame of China Contract Law and Guaranty Law. This word's legal extension and connotation meaning is confined very strictly by Chinese laws and related official judicial explainantions, a contract can not change it at all, for example, percentage must lower than 20% and which stage of time's payment is a Security Deposit. Not sure whether you have any existing arbitration cases that can support you related contract clause, but I think the 70% sum of money in your contract is PAYMENT, but not SECURITY DEPOSIT or EARNEST MONEY. So it will affect the structure of the contract in whole.

Think you will need a Chinese lawyer to give your some detailed explainations and amendments, so as to make it sure these clauses are no problems over Chinese laws.
[em1]

For you references only.

Regards,
#6
Re: Agreement for the International Sale of Goods from China mainland
Replying to [Aussie]:[em1]thanks for your details information !very worthy for me !!! [em19]
#7
Reply #

Dear all,

For a free support service on B2B e-contract signing for international sale/supply of goods transactions, please visit LexEcon Consulting Group's website http://www.lexecongroup.com/etransworld.php. Also visit http://www.scoop.it/t/electronic-contract-models-and-templates-for-international-b2b-trade for more info.

Email: support@lexecongroup.com
Regards,

LexEcon

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