Contracts and Their Performance

A contract is a business agreement on work to be done, rates to be paid, goods to be sold or bought. It is also a document embodying such an agreement.

Contracts are concluded either between companies in one and the same country, or internationally, i.e. between organizations of different countries. In this book, naturally, the latter type of contracts is considered.

Every international contract has several standard parts which are obligatory. Most frequently these necessary parts of the contract include the following:

— legal addresses of the contracting parties,

— the subject matter of the contract, i.e., what this business agreement is about; usually this also includes the total amount of money involved and the denomination of goods bought or sold under the provision of this contract (or

the type of service agreed upon),

— a more detailed description of goods: their price, quality and quantity, packing and marking, etc.,

— the terms of delivery (the most usual ones being F.O.B., F.O.R.,C.I.F.,C.&F.,F.I.O.S., F.O.

— the length of duration of the contract, i.e. over what span of time the obligations arising out if it are valid,

— the terms and procedure of payment, banking details,

— arbitration,

— claims and their settlement,

— guarantee period (if any),

— other conditions.

All contracts consist of clauses, which are numbered, and sometimes of subclauses, and even of sub-subclauses as well.In the negotiations or correspondence one can refer to the specific clause and subclause, e.g. "according to the clause 7.5. of the contract number... ", or "as specified by clause 5.4.3. of the present contract... ".

It quite often occurs that the performance of the contracts is not altogether smooth, and that, one of' the parties to the contract believes that the other party

is not fulfilling its terms. In this case a letter of complaint will probably be sent, containing a claim for damages, etc. This claim can eithеr be settled amicably, or else the dispute may be taken to the court of law, or, which is more common, decided by arbitration.

A special clause in contracts is usually devoted to the matters of arbitration. It is often stipulated that in case of arbitration each party should appoint its

arbitrator, and, if the two arbitrators cannot agree, they have to appoint an umpire, whose decision (award) is final and binding upon both parties. Some contracts stipulate that all disputes and.differences should be settled by arbitration in a third country, while some other contracts provide for an

arbitration in the country of the respondent party.

Disputes between Russian and foreign companies are usually settled by the

Foreign Trade Arbitration Commission at the Russian Chamber of Commerce and Industry. This Commission consists of fifteen members appointed by the

Presidium of the Russian Chamber of Commerce and Industry.

Notes:

The terms of delivery most commonly employed in international trade are the following.

F. O. B., FOB (Free on Board). In many respects this type of delivery is opposite to C. I. F. and C. A. F. In the case of a F. O. B. delivery the Shipper is usually responsible only for the delivery of the goods on board the vessel. When

the goods are loaded, the Shipper’s responsibility is over. So, to look at it the Charterer’s way, the loading for him is free. Under this type of delivery terms freight is usually not prepaid, but collect.

F. O. R. (Free on Rail). The Sellers pay all charges up to and including the placing of the goods on a railway train.

C. I. F., CIF (Cost, Insurance, Freight). When this type of delivery is

employed, the Buyer pays not only for the goods themselves, but for their transportation (freight), and also insures the goods. Freight is usually prepaid.

C. & F., C. A. F., CAF (Cost and Freight). This is analogous to the previous, with the exception of insurance.

F. I. O. S., FIOS (Free in and out Stowed). Stowing the vessel in the port of loading, and unstowing it in the port of discharge is not included in freight (is

free).

F. O., FO (Free out). Everything until the ship is out of the port is the responsibility of one party (usually the Shipper), while afterwards it is the responsibility of another party (usually, the Charterer).

2. Translate the passage beginning with “legal addresses” up to “…present contract” in writing.