Representative contract

Between English car’s company “Rower” and “Ukrainian car’s company “ Vortex” the following agency agreement is concluded.

 

The representation of company “Vortex” is limited to visiting the customers and taking orders.

 

In addition to taking orders the work of representatives of “Vortex” should include advising our customers.

 

The activity of our agent must all times protect the interests of our company.

 

The activities of our representatives require regullar calls on our customers throughout their territory.

 

The representative’s territory is all of Ukraine and Russia.

 

The representative will be paid a fixed salary plus the usual commission.

 

Commissions due will be paid monthly to our representative.

 

The representative receives the usual expenses.

 

“Rower” reserve the right to check the expense statement.

 

Advertising costs are born equally by both parties to this contract.

 

“Rower” suggest the agency contract should be initialy made for a trial period of 6 months.

 

After a trial period we would be willing to sign a contract with a 4-month cancellation clause.

 

The contract is for no set period. It may be terminated through cancellation notice by registered mail with 4 months’ notice.

 

If there is evidence of a breach of contract by either party, the contract may be cancelled immediately.

 

Both partners reserve the right to alter the contract.

 

Teacher ________________I.S.Kokovihinа

Практичне заняття № 23

CONTRACTS

In foreign trade transactions a contract is drawn up to give legal expression to the intention of the partners and guarantee that the obligation contained in the contract will be fulfilled.

 

The contract forms the basis of transaction between the Buyers and the Sellers and great care is exercised when the contract is being prepared that all the legal obligations have been stated.

 

According to the purpose and contents, contracts can cover: goods, services, patients, technology, know-how, etc.

 

By law contracts are made in written and signed by the contracting parties.

 

As a rule the contract contains a number of clauses (articles) arranged in definite sequence.

 

1. Preamble — Names of the Parties

2. Subject of the Contract

3. Price and Total Cost of the Contract or

Price and Total Amount (Sum) of the Contract or Price

4. Dates of Delivery or

Dates and Terms of Delivery or

Time and Date of Delivery or

Basis of Delivery

5. Payment or

Terms of Payment or

Conditions of Payment

6. Packing and Marking

7. Guarantees or Warranty

8.  Sanctions and Claims or Penalty

9. Insurance

10. Force-Majeure Circumstances

11. Arbitration

12. Other Conditions or Miscellaneous

13. Concluding Wording

14. Legal Addresses and Signatures of the Parties.

Standard contracts are not a must. Some clauses may be altered and supplemented. They are used to represent specific demands to the subject of the Contract and to the order of the fulfilment of the obligations.

1. Taking-over of the Goods

Transfer and Acceptance of Goods (Products)

2. Schedule of Delivery

3. Quality of Equipment

4. Inspection and Tests

5. Advice of Shipment and Shipping Instruction or

Notification of Shipment.

6. Shipping Documents

7. Range of Design Documentation

8. Basis of Working Out the Detailed Project Report

9. Terms of Working Out the Detailed Project Report.

 

Drawing up the foreign trade contracts it is necessary to use the Bases of Delivery that are usually called incoterms¹. The incoterms simplify the drawing up of the contract and help the contracting parties to cope with some differences.

 

Incoterms define the Seller’s obligations to ensure the delivery of goods for settled price to certain place stipulated in the Contract. The Seller has to load the merchandise on the means of transport or to transfer it to a transport organisation.

 

In addition the incoterms define the other obligations and responsibilities both of the Seller and the Buyer.

 

There are fourteen incoterms:

 

1. Ex Works²

«Ex Works» means that the seller’s only responsibility is to make the goods available at his factory. In particular he is not responsible for loading the goods in the vehicle provided by the buyer, unless otherwise agreed. The buyer bears the full cost and risk involved in bringing the goods from there to the desired destination. This term represents the minimum obligation for the seller.

 

2. Free Carrier … (named point)³

This term has been designed to meet the requirement of modern transport such as container or «roll-on roll-off» traffic by trailers and ferries. It is based on the same main principle as FOB except that the seller fulfils his obligations when he delivers the goods into the custody of the carrier at the named point.

 

3. FOR/FOT⁴

FOR and FOT mean «Free on Rail» and «Free on Truck». These terms are synonymous since the word «Truck» relates to the railway wagon. They should only be used when the goods are to be carried by railway.

 

4. FOB⁵

FOB means «Free on Board». The goods are placed on board a ship by the seller at a port of shipment named in the sales contract. The risk of loss of or damage to the goods is transferred from the seller to the buyer when the goods pass ship’s rail.

 

5. FOB Airport⁶

FOB Airport is based on the same main principle as the FOB term. The seller fulfils his obligations by delivering the goods to the air carrier at the airport of departure. This risk of loss of or damage to the goods is transferred from the seller to the buyer when the goods have been delivered.

 

6. FAS⁷

FAS means «Free Alongside Ship». Under this term the seller’s obligation are fulfilled when the goods have been placed alongside the ship on the quay or in lighters. This means that the buyer has to bear all costs and risks of loss of or damage to the goods from that moment.

 

7. C&F (CER)⁸

C&F means «Cost and Freight». The seller must pay costs and freight necessary to bring the goods to the named destination, but the risk of loss of or damage to the goods is transferred from the seller to the buyer when the goods pass the ship’s rail in the port of shipment.

8. CIF⁹

CIF means «Cost, Insurance and Freight». This term is basically the same as «C&F», but with the addition that during the carriage the seller has to procure marine insurance against the risk of loss of or damage to the goods. The seller contracts with the insurer and pays the insurance premium.

 

9. Freight or Carriage Paid to¹⁰

Like C&F «Freight or Carriage paid to» means that the seller pays the freight for the carriage of the goods to the named destination.

The risk of loss of or damage to the goods is transferred to the buyer when the goods have been delivered into the custody of the first carrier and not at the ship’s rail.

When the Seller has to furnish a bill of lading, waybill or carrier’s receipt, he duly fulfils this obligation by presenting such a document issued by the person with whom he has contracted for carriage to the named destination.

 

10. Freight or Carriage and Insurance Paid to¹¹

This term is the same as «Freight or Carriage Paid to», but with the addition that the seller has to procure transport insurance against the risk of loss of or damage to the goods during the carriage. The seller contracts with the insurer and pays the insurance premium.

 

11. Ex Ship¹²

«Ex Ship» means that the seller makes the goods available to the buyer on board the ship at the destination named in the sales control.

 

12. Ex Quay¹³

«Ex Quay» means that the seller makes the goods available to the buyer on the quay (wharf) at the destination named in the contract.

 

13. Delivered at Frontier¹⁴

«Delivered at Frontier» means that the seller’s obligations are fulfilled when the goods have arrived at the frontier, but before «the customs border» of the country named in the contract.

 

14. Delivered Duty Paid¹⁵

«Delivered Duty Paid» denotes the seller’s minimum obligation. The term «Delivered Duty Paid» may be used irrespective of the mode of transport.

¹ Incoterms — International Commercial Terms — міжнародні правила тлумачен­ня комерційних термінів

² Ex Works — EXW — франко-завод, з заводу

³ Free Сarrier … named point — FRC — вільно у перевізника (у названому пункті)

⁴ Free on Rail/Truck — FOR/FOT — франко-вагон, вільно у вагоні або на плат­формі

⁵ Free on Board — FOB — вільно на борту судна

⁶ FOB Airport — FOA — вільно в аеропорту

⁷ Free Alongside Ship — FAS — вільно вздовж борту судна

⁸ Coast and Freight — C&F or CFR — КАФ — вартість і фрахт

⁹ Cost, Insurance, Freight — CIF — СІФ — вартість, страхування, фрахт

¹⁰ Freight/Carriage Paid to — провізна плата/фрахт сплачені до…

¹¹ Freight/Carriage and Insurance Paid to — фрахт/провізна плата і страхування сплачені до …

¹² Ex Ship — з судна

¹³ Ex Quay — з пристані

¹⁴ Delivered at Frontier — DAF — поставлено на кордон

¹⁵ Delivered Duty Paid — DDP — поставлено з оплатою мита.

1. The article «NAMES OF THE PARTIES» includes the legal title of the contracting parties and their addresses.

 

2. The article «SUBJECT OF THE CONTRACT» names the product for sale or purchase. It is also indicates the unit of measure generally employed in foreign trade for specific commodities.

 

3. «PRICE AND TOTAL COST OF THE CONTRACT». The price stated in a contract may be fixed, firm and sliding.

Fixed price is the price governing in the market on the day of delivery or for a given period.

Firm prices are not subject to change in the course of the fulfillment of the contract.

Sliding prices are quoted for machinery and equipment which require a long period of delivery.

 

4. The exact dates and terms of «DELIVERY» are defined in this clause of the Contract.

 

5. The clause «PAYMENT» includes terms of the payment, defines the currency of payment and the order of the payment between contractors.

The forms of the payment may be different:

a) cash payment

b) payment by cheque

c) bank money order

d) payment by a letter of credit

e) encashment

 

6. «PACKING AND MARKING»

The packing must protect the goods against any damage during the carriage. The marking should be clearly made with indelible paint on the top of the box and on its two opposite sides (ex. Handle with care; Do not drop; Keep dry, etc.).

 

7. The article «GUARANTEES» says, that the Seller guarantees the quality of the delivered merchandise in conformity with the latest technical achievements and the period of guarantee will meet the requirement mentioned in the Contract.

 

8. The clause «SANCTIONS AND CLAIMS» includes the cases of breach of the Contract. In this case the sufferer makes a claim on the party which fails to meet its obligation. Most often the Buyer makes quality and quantity claims on the Seller. The Party which fails to meet its contract obligation is penalized.

 

9. The article «INSURANCE» includes four main terms of insurance:

1) what is insured

2) what risks the goods are insured from

3) who insures

4) in whose favour the insurance is made.

 

10. The article «FORCE MAJEURE» includes the obligations of the contracting parties in case of coming the Force Majeure circumstances. The parties have the right to extend the time stipulated for the fulfilment of the contract by a period equal to that during which force majeure circumstances last.

The formulation of this article is rather universal.

 

11. The article «ARBITRATION» says that the contracting parties will take every measures to reach friendly settlement of any differences and disputes connected with the contract. If the parties fail to reach an agreement the dispute will be at the written request of one of the parties submitted for the consideration of the Arbitration Court.

12. The article «OTHER CONDITIONS» includes the order of the entry of any alterations and amendments, and the order of the transfer of the parties rights and obligations to a third party.

 

13. As a rule the article «CONCLUDING WORDING» shows the language in which the contract is drawn up and the number of copies that have the same legal force.

 

14. The part of the Contract «LEGAL ADDRESSES AND SIGNATURES OF THE PARTIES» includes the legal addresses of the contracting parties, the numbers of their phones, FAXes and the signatures of the parties.

1. To acknowledge	підтверджувати (факт отримання)
2. Alteration	зміна, змінення
3. To amount to…	складати суму…
4. Appendix	додаток
5. As follows	про нижченаведене
6. At one’s own cost	за чийсь рахунок (кошт)
7. At the rate of…	у розмірі…
8. To be entitled	мати право, бути в праві
9. To be evidenced	підтверджуватись
10. To be fit for…	відповідати, бути придатним
11. To be in force	бути в силі, діяти, набирати чинності
12. To be responsible for…	бути відповідальним за…
13. To be valid	бути дійсним, мати силу
14. Carrier	перевізник
15. Carriage	перевезення, транспортування
16. To consider null and void	вважати таким, що не має законної сили
17. Contracting parties	сторони, що домовляються
18. Custody	зберігання
19. Delay	відстрочка
20. Delivery	постачання
21. Destination	місце призначення
22. Difference	розбіжність (у поглядах)
23. Dispute	суперечка
24. Duly signed by…	підписаний належним чином
25. To effect payment	сплачувати
26. Firm and fixed	сталий та незмінний
27. To fulfil obligations	виконувати зобов’язання
28. Goods under supply	товари, що підлягають постачанню
29. To grant	надавати
30. To hand over	передавати
31. Hereinafter	нижче, надалі
32. Hereinafter referred to as…	що надалі іменується
33. In accordance with… in conformity with…	відповідно до… згідно з…
34. In connection with…	у зв’язку з…
35. In favour of smb.	на користь кого-небудь
36. In respect of…	відносно до…
37. Instalment	внесок, частина
38. Insurance premium	страховий внесок / страхова премія
39. Insured	застрахований
40. Insurer	страховик (особа, яка приймає майно)
41. Integral part	невід’ємна частина
42. Lighter	ліхтер (вантажне морське судно)
43. Loss (loss of)	втрата, збиток
44. Marine insurance	морське страхування
45. To meet the requirements	задовольняти вимоги, забезпечувати потреби
46. Mode of transport	(вид) засіб транспорту
47. Neither party	жодна сторона
48. On board a ship	на борту судна
49. Penalty	штраф
50. To penalize	штрафувати
51. To pertain to	належати до, стосуватись
52. Port of shipment	порт відвантаження
53. Port of discharge	порт розвантаження
54. To postpone	відстрочити
55. Postponement	відстрочка
56. To prolong	продовжити, відстрочити
57. Quality certificate	сертифікат якості
58. Quay (wharf)	причал
59. To reserve	залишити за собою право
60. Receipt	одержання, розписка про одержання
61. Risk of loss of or damage	ризик втрати або пошкодження товару
62. Roll-on roll-off (RO/RO)	метод транспортування вантажу з горизонтальним навантаженням та розвантаженням
63. Sliding price	змінна ціна
64. Ship’s rail	рейлінг судна
65. To the effect that	(у цьому тексті) з цією метою, для цього змісту
66. Vehicle	транспортний засіб

Exercise 1. Fill in the blanks with the necessary words given below:

1. The Seller sells and the Buyer buys the goods indicated in the specification which is an i… p… of the Contract.

2. The price for the merchandise supplied in a… w… present contract amounts to $10 million.

3. Quality of the merchandise shall be in f… c… w… the standards in force in Ukraine.

4. Payment under the present Contract shall be offered in 5 i… in the following manner.

5. The last installment shall be paid after c… of s… of the g….

6. For each week of d… in p… the Customer shall pay to the Supplier a p… at the rate of 0.1 per cent of a… of the previous payments.

7. The Seller shall d… the m… to the Buyer in dates indicated in a… to the present Contract.

8. With the equipment the Supplier shall send to the Customer the f… s… d….

9. After the Contract has been signed all the p… n… and c…pertaining to it become n… and v….

10.Any a… and a… to the present contract shall be made in writing and d… s… by both parties.

11.Neither party is entitled to transfer their rights and obligations to a third party without a written consent of the other c… p….

contracting party

correspondence

integral part

neither party

in accordance with

in force

penalty

amount

in full conformity with

null and void

instalments

completion of supply of the goods

deliver the merchandise

appendix

delay in payment

following shipping documents

duly signed

alterations and additions

previous negotiations.

Exercise 2. Complete the following sentences:

1. The Customer shall be fully responsible ….

2. The packing shall protect the goods against ….

3. Neither party is responsible for the nonfulfilment of ….

4. Marking shall be inscribed on three sides of the box: ….

5. The Seller shall be responsible to the payment of Liquidated Damages and for ….

6. All differences and disputes connected with the present Contract should be settled through ….

7. The Supplier shall insure the equipment to the delivered on CIF terms against ….

8. Firm «X», hereinafter referred to as «Seller» on the one part and firm «Y» hereinafter referred to as «Buyer» on other hand ….

9. 20 per cent of the total value of the present Contract shall be paid within ….

10.Neither party is entitled to transfer their rights and obligations to ….

Exercise 3. Translate into English:

1. Фірма «Х», що надалі іменується «Продавець», з одного боку, і фірма «Y», що надалі іменується «Покупець», з другого боку, уклали цей контракт такого змісту.

2. Специфікації товару, що додаються до цього контракту, є його невід’ємною частиною.

3. Продавець гарантує якість товару, що постачається.

4. Товари повинні постачатися в строки, вказані у контракті.

5. Упаковка повинна забезпечувати зберігання вантажу від пошкоджень.

6. Платіж проводитиметься за допомогою кредиту, що надається Банком постачальника Банку Замовника.

7. Продавець сплачує Покупцю штраф у розмірі 0,1 % вартості товару за кожний тиждень прострочення постачання.

8. Усі суперечки, що можуть виникнути із цього контракту або в зв’язку з ним, повинні розглядатися у зовнішньоторговельній арбітражній комісії.

9. Жодна сторона не може передавати свої права та обов’язки третій стороні.

10. Постачальник страхує обладнання, що постачається, на умовах СІФ від звичайних морських ризиків.

11. Платежі за постачання провадяться в американських доларах готівкою.

12. Загальна вартість контракту становить 1 млн. американських доларів.

13. Якість товару, що постачається, повинна відповідати світовим стандартам.

14. Постачання товарів відповідно до цього контракту буде провадитись за відвантажувальними документами, вказаними у Додатку 1 до цього Контракту.

15. Продавець зобов’язаний негайно повідомити Покупця про початок і усунення обставин, що перешкоджують виконанню зобов’язань.

16. Контракт складено двома мовами і в двох примірниках, обидва мають однакову юридичну силу.

Exercise 4. Translate into Ukrainian:

CONTRACT OF SUPPLY # 7

Kyiv                                                   ________________ 1997

 

The company _____________ represented by _______ hereinafter

referred to as the «Seller» and _________ represented by _________ hereinafter referred to as the «Buyer» have agreed as follows.

1. SUBJECT OF CONTRACT

The Seller sells and the Buyer buys, under the conditions of CIF Kyiv, the goods indicated in the specifications (Appendix 1), which is an integral part of this Contract.

2. PRICES AND TOTAL SUM OF CONTRACT

The prices for the goods are in US $ as indicated in the Specifications. The prices for the goods as indicated in this Contract under CIF Kyiv conditions include the packaging for international transportation and shipment, marking, forwarding and loading services.

The prices as per this Contract have fixed firmly and are not subject to alteration.

The total sum of the Contract is: US $ ______________________

(______________________________________________________).

(total sum worded)

3. CONDITIONS OF PAYMENT

The Buyer is obliged to make payment in USA $:

— 100 % value of Contract is to be paid in advance by telegraph to Seller’s Bank in 30 days from the moment of Contract’s signing as indicated in Specifications.

4. DATES OF DELIVERY

The goods under this Contract are delivered according to terms mentioned in Specifications (Appendix 1) no later than 3 months from the date of receiving the Letter of Credit by Seller at his Bank in Vienna.

The Seller enjoys the right of early delivery against the dates indicated in the Specifications of this Contract.

Partial deliveries are authorized.

5. WARRANTY

The Seller guarantees:

5.1. That the quality of the goods supplied should correspond to the technical specifications appended to this Contract. The effective warranty period is 12 months from the date of delivery to Kyiv.

5.2. The warranty obligations may be canceled in the following cases:

- if the equipment is damaged by receiver or the third party;

- incorrect installation of the equipment.

6. PACKING AND MARKING

The package in which the equipment is shipped shall correspond to the standards and specifications existing in Ukraine and shall ensure protection in transit, if it is handled properly.

Each package shall bear the following marking in the Ukrainian and the English languages:

Name of the consignee: Olexander Zarko

Address: 24 Peremohy Ave., Kyiv 252054, Ukraine

Handle with care;

Do not drop;

Keep dry;

Contract #

Naryad #

Waybill #

Gross weight;

Box #.

The Seller is responsible for damage to the goods as a result of incorrect marking if the latter does not meet the packing requirements, on the way to Kyiv.

7. NOTIFICATION OF SHIPMENT

Shipment is performed on the CIF Kyiv conditions. The Seller notifies the Buyer about shipment by telegraph (teletype), telex, telefax or telephone specifying the date of shipment, Contract #, name of product, number of pack, gross weight, waybill.

8. ARBITRATION

All disputes and disagreements which may arise due to this Contract or in connection with it shall be settled through friendly negotiations between the parties. Disputes and disagreements that can not be settled through negotiation are subject to settlement in the State Arbitration of Ukraine in accordance with the law in force.

9. TRANSFER AND ACCEPTANCE OF PRODUCTS

The goods are considered to be transferred by the Seller and accepted by the Buyer, the quality being in accordance with the technical specifications and the quantity in accordance with the number of packages indicated in the transfer waybill.

10. FORCE MAJEURE CIRCUMSTANCES

10.1. The parties are released from the responsibility for partial or complete failure to meet the obligations under this Contract if this is consequence of Force Majeure circumstances, namely: fire, floods, earthquakes and wars, and if these circumstances affect directly the fulfillment of this Contract.

In this case, the dates fixed in this Contract are postponed in accordance with the time for which such circumstances lasted.

10.2. The party which encounters the impossibility of meeting the obligations must notify the other party in written about the onset and cessation of the above-mentioned circumstances immediately, however, no later than 10 days from the date of their onset.

Late notification about Force Majeure circumstances deprives the corresponding party of the right to refer to them subsequently.

10.3. The prove of occurrence of the above mentioned Force Majeure circumstances and their duration will be the confirmation of corresponding higher level organizations.

11. OTHER CONDITIONS

In everything that is not provided for this Contract, the parties may be guided by additional protocol to the Contract.

All amendments and alterations in this Contract are valid only in written form, and should be signed by both parties.

Upon signing this Contract, all preceding talks and correspondence on it lose their force.

This Contract has been drawn up in the Ukrainian and the English languages, both copies having equal rights.

Appendix: 1. Specifications on ___ pages.

12. BANK ACCOUNTS AND LEGAL
ADDRESSES OF THE PARTIES

SELLER:                                                          BUYER: