Company A was going to export some goods to Iraq by
installments deliveries of goods in March and April
respectively (one lot per month) on sight L/C. Force majeure Clause was stipulated in the contract. The buyer
Main Characteristics
1. It’s agreed by both parties (A written agreement has been achieved). 2. The arbitrator shall be agreed upon and/or authorized by both parties. 3. The arbitration award shall be final. 4. Easier and more effective to obtain a solution; simplified procedures; qualified arbitrators; lower cost and time-consuming; more flexible and more confidential compared with a legal suit.
Definition
Arbitration is a measurement employed to settle
international trade dispute whereby both parties have
achieved a written agreement that the dispute shall be
Penalty Clause
A fine A certain percentage of total contract value
Example
In case of quality discrepancy, claim should be filed by the buyers within 30 days after the arrival of the goods at port of destination, while for quantity discrepancy, claim should be filed by the buyers within 15 days after the arrival of the goods at port of destination. In all cases, claims must be accompanied by survey reports of recognized public surveyors agreed to by the sellers. Should the responsibility of the subject under claim be found to rest on the part of the sellers, the sellers shall, within 20 days after receipt of the claim, send his reply to the buyers together with suggestion for settlement.
Case Study
An American company ordered a lot of furniture from a Chinese export company and Force majeure Clause was stipulated in the contract. There were two subordinated factories manufacturing furniture for this export company. Unfortunately, one of them caught a fire accidently. Considering the dead line in around the corner, the export company telexed the American company indicated that they would like to quote Force Majeure Clause to excuse themselves from the responsibilities of delivery goods on time. The American insisted that this issue was out of the
submitted to a third party who is agreed upon and/or authorized by both parties for award voluntarily. The arbitration award shall be binding to both parties.
…days after the goods arrive at the port of destination …days after unloading the goods at the port of destination …days after the goods arrive at the buyer’s location …days after the reinspection
11.1
Claims
Clauses in the contract
Discrepancy and claim clause
Penalty clause
Discrepancy and claim clause
Legal regulations Basis of claim Inspection certificate Validity of Claim
scope and consequences of force majeure and required the
export company to fulfill its responsibility according to the contract. So what is the crux?
Case Study
Natural disasters
Flood、fire、storm, earthquake, heavy snow, etc.
Social Disturbances
War, strikes, sanctions, etc.
Definition of Force Majeure
An event occurring after signing the contract Not caused by the fault or negligence of any contract parties
11.2 Force Majeure
Coverage of Force Majeure Definition of Force Majeure Consequences of Force Majeure
Force Majeure Clause
Scope of Force Majeure Events
opened the L/C on time, however, a war broke out in Iraq
when Company A was about to make a shipment. Then Company A believed that they could excuse themselves from the responsibilities of deferred delivery according to the Force majeure Clause in the contract. So they delivered two lots of goods in April. In this case, is Company A’s decision reasonable?
Consequences of Force Majeure
Delay the shipment Terminate or partly terminate the contract
Force Majeure பைடு நூலகம்lause
Scope
Consequences
Time limit of notice Certificates and the agent who issue them.
Way of settlement of the claim
Settlements
Making refund and compensating for direct losses or expenses Selling the goods at lower prices Replacing the faulty goods with perfect ones
quality quantity weight Damages or lost in transit
2 main kinds of complaints or claims
Genuine complaints it arises from the situations as follow:
The wrong goods may have been delivered; The quality may have been found unsatisfactory; The shipment may have been found damaged, short, missing or late The prices changed may be excessive or not as agreed