PART 1. MULTIPLE-CHOICE QUESTIONS
1. Free on Board (FOB) –The seller must load the goods near the ports nominated by
the buyer. Cost and risk are divided when the goods are actually on board
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True/False: False
Legal base: Incoterms
Brief explanation: Rules for Sea and Inland Waterway Transport
The four rules defined by Incoterms 2010 for international trade where
transportation is entirely conducted by water are:
The seller must load the goods on board the vessel nominated by the buyer.
Cost and risk are divided when the goods are actually on board of the vessel
(this rule is new!). The seller must clear the goods for export. The term is
applicable for maritime and inland waterway transport only but NOT for
multimodal sea transport in containers (see Incoterms 2010, ICC publication
715). The buyer must instruct the seller the details of the vessel and the port
where the goods are to be loaded, and there is no reference to, or provision
for, the use of a carrier or forwarder. This term has been greatly misused over
the last three decades ever since Incoterms 1980 explained that FCA should
be used for container shipments.
2. The contract can be terminated only when both of them agree to do it.
True/False: False
Legal base: Article 422, Vietnam Civil Code
Brief explanation: Accroding to Article 422, Vietnam Civil Code can the
contract is canceled or unilaterally terminated; and can termination in any
of the following cases:
1. The contract has been completed;
2. The parties agree;
3. Where a contract can only be performed by a natural or juridical person
who entered into the contract, and that particular natural person dies or the
juridical person ceases to exist.
4. The contract is canceled or unilaterally terminated;
5. The contract cannot be performed because the subject matter of the
contract no longer exists;
6. The contract is terminated according to the provisions of Article 420 of
this Article Code;
7. Other cases as prescribed by law.
3. Cost and Freight (CFR) –Seller must pay the costs and freight to bring the goods to
the arrival port. Although the risk is transferred to the buyer when the goods are loaded
on the ship
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True/False: True
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Legal base: Section A (seller’s obligations) & section B (buyer’s
obligation), Article Cost and Freight (CFR), page 88, Incoterms 2020 by
ICC.
Brief explanation: Cost and Freight (CFR) –Seller must pay the costs and
freight to bring the goods to the port of destination. Although the risk is
transferred to the buyer when the goods are loaded on the ship.
The seller must deliver the goods either by placing them on board the vessel or
by procuring the goods so delivered. In either case, the seller must deliver the
goods on the agreed date or within the agreed period and in the manner
customary at the port.
The seller must pay all costs and freight relating to the goods until they have
been delivered to the port of destination.
Risk transfers from seller to buyer when the goods are delivered to the buyer by
placing them on board the vessel at the shipment port or by procuring the goods
already so delivered.
4. The Incoterms rules are the international regulations that apply to the trade for the
sales of goods worldwide; these rules are in place to clarify the buyer's responsibilities
and the seller/shipper in the international shipments of global goods
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- True/False: True
Legal base: Incoterms 2020 by the International Chamber of Commerce (ICC)
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Brief explanation: The Incoterms rules are standard sets of trading terms and
condition
designed to assist traders when goods are sold and transported.
Each Incoterms rule specifies:
- The obligations of each party (e.g. who is responsible for services such as
transport; import and export clearance etc)
- The point in the journey where risk transfers from the seller to the buyer
So by agreeing on an Incoterms rule and incorporating it into the sales contract,
the buyer and seller can achieve a precise understanding of what each party is
obliged to do, and where responsibility lies in event of loss, damage or other
mishap.
5. The objectives of a civil transaction are legitimate interests that the parties wish to
achieve when they enter into such a transaction.
- True/False: True
- Legal base: Article 116 (Civil transactions) & Article 118 (Objectives of civil
transactions), Chapter VIII (civil transactions), Vietnamese Civil Code
(2015)
Brief explanation: Article 116: Civil transaction is a contract or a unilateral legal
act which gives rise to, changes or terminates civil rights and/or obligations.
Object of a contract is what parties have actually agreed to undertake. It is the
obligation of both parties to the contract. The obligation may be to do something
or to refrain from doing something or to give something to someone. So, object
of a contract is the agreement of the parties to act, not to act, or to give.
To be a contract the objective for which the agreement has been entered into
must not illegal or immortal or opposed to public policy. This legality of object
ensure individual to protect themselves from illegal activity which is treated as
a power which enable individuals.
6. A time limit may be calculated by reference to seconds, minutes, hours, days, weeks,
months, or years, or by reference to the happening of an event.
- True/False: False
- Legal base: Article 144 Time limits, Vietnamese Civil Code (2015)
- Brief explanation:
1. Time limit means a length of time calculated from one point of time to another
point of time
2. A time limit may be calculated by reference to minutes, hours, days, weeks,
months or years, or by reference to the happening of an event.
PART 2:
7. If you are authorized to make an international commercial contract to ship 20
containers of rice from Vietnam to China, what articles are the most important that you
will make in that contract? (2 points) (you have to indicate minimum of four articles,
explain the reason why you choose them)
First , I make subject to the terms agreed in this contract because :
- The object of a commercial contract is the goods that the parties will buy and sell with each
other or the work or service that one party will perform and provide to the other party. The
parties shall specify relevant information of goods, such as: type of goods, specification,
condition of goods, origin, quantity, volume, quality.
- In case the subject matter of a commercial contract is the performance of work or the provision
of services, the parties need to specify what this work/service is and what work/service is
considered out of scope. vi and will charge an additional fee, how it is provided, by whom,
when and where it is performed, how the completion of the work/service is determined.
Second, i make article for price :
When agreeing on the price, the parties should mention the following contents: Unit price, total
value, and payment currency. Regarding the unit price, it is possible to define a fixed price or
provide a way to determine the price (mobile price).
Third, I make article payment method :
- As for the payment method: The parties can choose one of the popular payment methods:
Direct payment; Payment via wire transfer, payment by collection, and L/C documentary
credit.
- For payment currency: The parties agree expressly that the payment currency is Vietnam dong
or USD or another currency at the parties' discretion. - As for the payment term: Although the
law stipulates that the parties do not agree on a payment term, there is still a method to
determine it. However, the parties should still agree on a specific payment term. The payment
term can be one-time or many times according to the progress of the contract.
Finally, I make the article of violation penalty:
The law stipulates fundamental rights and obligations for the parties. The parties may agree to
add several other rights and obligations following their transactions to ensure their legitimate
rights and interests.
PART 3:
8. Indicate the differences between force majeure and hardship (2 points)
FORCE MAJEURE
DEFINITION
REQUIREMENTS
Force majeure means
unavoidable events
such as natural disasters of all
kinds, especially
storms, earthquakes, flood,
volcanic eruption,
but also fire, traffic accidents,
kidnappings, wars,
riots, revolution, terrorism,
sabotage and strike. A force
majeure
event, could be generally
described as
an event that affects the
contractual relationship
unpredictably from the outside
and that, despite the parties
taking extreme care, was not
avoidable.
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Non-performance due to
an impediment beyond a
party’s control
Not reasonably
foreseeable at the time of
the conclusion
Impediment or
consequences were
unavoidable
Party must give notice
HARDSHIP
In case of hardship, the
performance of the contract is
not impossible, but hindered.
Hardship
is defined as any event of legal,
technical, political or financial
nature occurring after the
conclusion of the contract, which
was unforeseeable at the time the
contract had been formed,
despite using the utmost care. In
general, hardship does not cause
the impossibility of performance,
but allows for renegotiation of
the contract.
Occurrence of events
fundamentally altering the
equilibrium of the contract
Either because the costs of the
performance have increased
Or because the value of the
performance a party receives has
diminished
Events occur after conclusion
Not foreseeable
Events are beyond parties control
The risk of event was not
assumed by disadvantaged party
LEGAL
Relief from liability, no further
CONSEQUENCES rights for disappointed party
Disadvantaged party can demand
renegotiation
CASE
deals with cases where the
agreed performance is basically
still possible. However, some
underlying facts have
substantially changed, so that
proper fulfilling of the
contractual obligations is still
possible in principle, but does
not make any economic sense
applies to cases where
performance has become
(temporarily) impossible due to
an event beyond one party’s
control although all reasonable
precautionary measures had been
taken