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Several legal issues in the contract of international sale of goods

1、 Case introduction

Korean trading company, has signed an international sales contract for tableware with company B in China. It has been several years since the cooperation between the two sides. The early cooperation between the two sides has been relatively smooth, and the contract signed is also very simple. The specifications of the goods are simply agreed, and there is no agreement on the quality inspection of the goods, the limitation of claims, the settlement of contract disputes and other issues. Since September, 2007, the goods delivered by company B began to have quality problems, and there have been accidents of stabbing customers in the United States. The American customer of Korean buyer claims against Korean buyer, and Korean buyer will recover from company B after compensating the American customer. Because the agreement on the quality standard of the goods in the contract signed by Korean buyer and company B is unclear, although the two parties have negotiated the delivery of goods by samples, the delivery method is not agreed in the contract, and the samples are not sealed, so the two parties have a lot of disputes about the quality standard of the goods. Korean buyer did not inspect the quality of the goods before and after the delivery of the goods, and did not collect and keep the relevant compensation basis in the process of making compensation to American customers. Only some emails proved that Korean buyer had made compensation to American customers for the quality of the goods. Therefore, it is very difficult for Korean buyer to successfully claim against company B.


2、 Several legal issues related to this case

The case described above is not complicated, but the problems reflected in it are quite representative. Some enterprises always take things for granted in the process of engaging in international trade activities, due to the lack of legal awareness and the lack of attention to seeking the help of professionals, especially in the process of communicating with customers who have long-term business contacts, they do not pay attention to the prevention of legal risks. In the long run, there will be great hidden dangers. In this case, I summarized the following legal issues that should be paid attention to in the process of concluding contracts for the international sale of goods.

(1) The form of contract cannot be ignored

With the continuous development of modern communication technology, many companies use e-mail to conduct business exchanges with customers. Due to technical reasons, the evidentiary effect of this form of evidence is still controversial, so companies should use it carefully when sending official documents. Because the written contract has strong certainty and high evidentiary effect, it is recommended that the parties pay special attention to using the written contract to determine the rights and obligations of both parties in the process of concluding the contract for the international sale of goods, and it is best to keep the original of the written contract until a certain time after the completion of the contract. The modification of the contract should also be carried out in writing, rather than through telephone communication.

(2) The name of the signatory shall be accurate, and the date and place of signing shall be indicated

In the process of signing the contract, the names of the first two parties to the contract should be written in full when they appear for the first time, and should be consistent with the enterprise name on the business registration document and the content of the company seal stamped on the contract, so as to avoid disputes. If the contract takes effect by signing on behalf of the person, it is more important to accurately indicate the name of the signatory. It is best to take the copy of the business registration document of the signatory as an annex to the contract after being sealed and confirmed. In addition, the date and place of signing must be specified in the contract. These contents have a great impact on the legal application and litigation jurisdiction of the contract for the international sale of goods, especially when the applicable law and jurisdiction are not clearly agreed in the contract.

(3) The agreement of quality terms should be cautious

Quality clause is an important clause in the contract for the sale of goods. It is the basis for the parties to lodge a claim. If the quality of the goods delivered by the seller is inconsistent with the contract, the buyer has the right to reject and lodge a claim. If the quality clause in the contract is not clear, or there is no agreed quality clause, the buyer may lose the basis of claim. In practice, it is common for the parties to the contract to have disputes about the quality and specification of the goods, so it is very important to make clear, specific and operable agreements on the specification, model, color, material, etc. of the goods in the quality terms. An important problem in the claim process of Korean buyer against company B in the above case is that the quality agreement of the goods is not clear enough.

The formulation of quality terms should be scientific, rigorous and accurate, and should be easy to implement. All empty words should be avoided, such as “superior materials”, “first-class technology”, “high-quality products”, etc., because it is impossible to determine whether the goods delivered by the seller violate the provisions of the contract. For some complex products (such as complete sets of equipment), in view of the complex technical specifications and various contents, which are difficult to comment in the contract, they can be listed in the annex and indicated as an integral part of the contract. Here, we would like to point out in particular that for the contract of delivery by samples, we must pay attention to the selection of samples. We should not blindly provide samples of high or low quality in order to reach the contract, and we should do a good job in the sealing of samples, not simply take a product out as the quality standard of goods.

(4) The arbitration institution shall be selected

Arbitration is a relatively economic and fast way to solve disputes over international contracts for the sale of goods. An arbitration agreement is an agreement that the parties to a contract voluntarily submit their disputes to an arbitration institution for arbitration. It is a prerequisite for the parties to submit their disputes to an arbitration institution for arbitration. The arbitration agreement needs to be clear. If it is not enough to only agree that disputes arising from the performance of the contract should be submitted to arbitration, it must specify which arbitration institution should be arbitrated, and it is best to effectively agree on the arbitration rules and laws applicable to arbitration.

Therefore, the choice of arbitration institutions and applicable laws must be combined with the actual transaction situation of both parties to the contract to choose the most favorable way for dispute resolution and the execution of arbitration awards. In China, the foreign-related commercial arbitration institution is the China International Economic and Trade Arbitration Commission, which recommends the following model clauses:

“Any dispute arising from or in connection with this contract shall be submitted to the China International Economic and Trade Arbitration Commission for arbitration in accordance with its arbitration rules in force at the time of applying for arbitration. The arbitration award is final and binding on both parties.”



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