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Business Contracts Presented By: Bahman Motevali
DBA – London University
2011
Part II-1Part II 1
THE ICC MODELTHE ICC MODEL COMMERCIAL
AGENCY CONTRACTCONTRACT
Model Form of International Agency ContractICC C i l A C t t
ARTICLE SUMMARY
ICC Commercial Agency Contract
ARTICLE SUMMARY
Article 1- Territory and Productsy
Article 2- Good faith and fair dealing
A ti l 3 A t’ f tiArticle 3- Agent’s functions
Article 4- Acceptance of orders by the principal
Article 5- Undertaking not to compete
Article 6 Sales organization Advertising and FairsArticle 6- Sales organization, Advertising and Fairs
Article 7- Sales Targets – Guaranteed Minimum
targets
Article 8- Sub-AgentsArticle 8 Sub Agents
Article 9- Principal to be kept informed
Model Form of International Agency ContractICC C i l A C t tICC Commercial Agency Contract
ARTICLE SUMMARY
Article 10- Financial responsibilityArticle 10- Financial responsibility
rticle 11- Principal’s trademarks and symbols
Article 12- Complaints by customers
Article 13- Exclusivityy
Article 14- Agent to be kept informed
A ti l 15 A t’ C i iArticle 15- Agent’s Commission
Article 16- Method of calculating commission
and payment
Article 17 Unconcluded businessArticle 17- Unconcluded business
Article 18- Term of the Contract
Model Form of International Agency ContractICC Commercial Agency Contract
ARTICLE SUMMARY
g y
Article 20- Earlier termination
Article 21- Indemnity in case of terminationArticle 21 Indemnity in case of termination
Article 22- Return of documents and samples
Article 23- Arbitration – Applicable laws
Article 19- Unfinished business
Article 24- Automatic inclusion under the present
contractcontract
Article 25- previous agreements – Modifications –
Nullify
Article 26- Prohibition of AssignmentArticle 26 Prohibition of Assignment
Article 27- The Authentic Text
A ' F iAgent's Functions
Acceptance of orders by principal
U d t ki t t tUnder taking not to compete
Sales organization g
Sales target
Sub agent
Giving information to principalsGiving information to principals
Trade mark / symbol of principal
Del credere Agent ضمانت فروشنده حق العملکار نسبت بهمعتبر بودن خريدار،تضمين کننده طلب هاط
Is an agent, who , when he sells the goods on creditti th l f th h t higuaranties the solvency of the purchaser to his
principal. He is obliged to pay that principal if thec stomer defa ltscustomer defaults.
Dejure قانونی بطور و مشروع ، قانونی حق قانونی ، مشروع و بطور قانونی Dejureحق
Description of a condition in which there has been totalDescription of a condition in which there has been total compliance with all requirements of law.
AGENCY CONTRACT
In "AGENCY CONTRACTS" the agent does not have to
buy the goods, Agent acts on behalf a the principal, reports
hi b h bto him about the buyers.
The word "Importer" or "General Importer" is used toThe word Importer or General Importer is used to
define that the distributor is responsible for organizing
distribution in a given country.
The Supplier encounters a privileged position in theThe Supplier encounters a privileged position in the
territory on the distributor, generally the exclusive right to
purchase.
The Supplier has a good collaboration with
distributor on long period.
Th l ti hi t f i l l ti fThe relationship creates a fairly close ties of
loyalty between parties, that distributory y p ,
refrains from distributing the competing
products.
The distributor is virtually alwaysThe distributor is virtually always
distributing Brand-New product.
The applicable law is not governed by a
S ifi N i l L b i AGENCY hSpecific National Law, but in AGENCY, the
contract could be modified by National Law,contract could be modified by National Law,
but if parties insist, it could be by national law.
Part II-2Part II 2THE ICC MODLE COMMERCIALTHE ICC MODLE COMMERCIAL
DISTRIBUTION CONTRACT( Sole Importer – Distributor )
Article 1 – Territory and Products
Article 2 – Good faith and fair dealing
Article 3 – Distributor's functionsArticle 3 Distributor s functions
Article 4 – Undertaking not to compete
Article 5 – Sales organization
Article 6 – Advertising and Fairsc e 6 dve s g d s
Article 7 – Conditions of supply Prices
Article 8 – Sales Targets – Guaranteed Minimum Target
Article 9 – Sub-distributors or agentsg
Article 10 – Supplier to be kept informed
A ti l 11 R l iArticle 11 – Resale prices
Article 12 – Sales outside the Territory
Article 13 – Supplier's trademarks and symbols
Article 14 – Stock of Products and spare parts – After-sales serviceArticle 14 Stock of Products and spare parts After sales serviceArticle 15 – Sole distributorshipA ti l 16 Di t lArticle 16 – Direct salesArticle 17 – Distributor to be kept informedArticle 18 – Term of the ContractArticle 19 – Earlier terminationArticle 19 Earlier terminationArticle 20 – Indemnity in case of terminationA ti l 21 R t f d t d d t i t kArticle 21 – Return of documents and products in stockArticle 22 – Arbitration – Applicable lawsArticle 23 – Automatic inclusion under the present contractArticle 24 – Previous agreements – Modifications – Nullity –g y
AssignmentA ti l 25 A th ti t tArticle 25 – Authentic text
Distributor / Sole importer
This model is intended in principal to apply
only to international agreements where
di t ib t t "b ll " ddistributor acts as "buyers – resellers" and as
"Importers" who organize distribution in thep g
country they are responsible. This model does
not apply to dealers selling at rebel level.
The distributor is not only distributor or brokerThe distributor is not only distributor or broker,
but rather than a dealer who buys goods to
resell in its own name and its own behalf, even
if distributor is called "agent".
Part IPart I
Business ContractsBusiness Contracts I d iIntroduction
B i C t tBusiness Contracts
There is mainly one word in Persian
language but in English language
different words are used to
express the same meaning, but
different connotations.
LETTER OF INTENT (L.O.I)
Letter of Intent is customarily employed to reduce towriting a preliminary understanding of parties whowriting a preliminary understanding of parties whointend to enter into contract.
MEMORANDUM OF UNDERESTANDING (M.O.U)
In the Law of Contract (M.O.U) is an agreement.It i i t l t lid t tIt is an internal agreement, or a valid contactengagement of a somewhat informal character.M O U shows that it constituted a meeting ofM.O.U. shows that it constituted a meeting ofthe minds of parties upon something respectingwhich they intended to be boundwhich they intended to be bound.
AGREEMENT
In simple definitions: Coming together of minds inopinion or determination and/or the act of two oropinion or determination and/or the act of two ormore persons, who unite in expressing a mutualand common purpose with the view of alteringp p gtheir rights and obligations, and mutual assent todo a thing. “Agreement” is a broader Term thang g“Contract”. Agreement is made for broader andmore general Cases. Each case then could be aContract.
CONTRACT
A contract is an agreement between two ormore parties, which intend to have legalp gconsequences
PROTOCOL
It is a brief summary of the text of a document.Also, is the minute of a meeting which makes theparties present to reflect their assent, to theaccuracy of the minutes of the meeting which is
ll i i i d P l ll d bgenerally initiated. Protocol usually used byGovernment and must be approved by Parliaments.
TREATY( ) d bA compact (agreement) made between two or
more independent nations with a view to the publiclfwelfare
PACTAn agreement between two or more nations,states usually less elaborated than treaty.states usually less elaborated than treaty.
Characters of a Good Contract:
A good contract must be:A good contract must be:
1. Comprehensive
2. Clear & simple
3 Concise3. Concise
4. Correct
5. Coordinated in content & Articles
A CONTRACT COULD BE DIVIDED INTO FOLLOWING CATEGORIES:FOLLOWING CATEGORIES:
1‐ SUBJECTS l t h EPC t tSales; procurement; purchase; EPC; contractService contractGranting Royalties patents contractGranting Royalties, patents … contract
2 TIME2‐ TIMETemporary/Tentative contractLong term and continuous contractLong term and continuous contractSpecific (Business, Service) contract
3‐ OTHERSGuarantee contract (Bid Bond, PBG, GPBG,Guarantee contract (Bid Bond, PBG, GPBG,
Retention …)Loan & credit contractTechnology transfer, know how, … contracts,
Etc
THE CONTENT OF AN INTERNATIONAL TRADE CONTRACT
Article 1 – PreambleArticle 1 Preamble
Article 2 – Definitions
Article 3 – Subject of the contract/scope of work
Article 4 Description and introd ction of bothArticle 4 – Description and introduction of both
parties, individual, or company; full address and
residence.
Article 5 – General obligations of the
supplier/sellersupplier/seller
Article 5 General obligations of the supplier/sellerArticle 5 – General obligations of the supplier/seller
Selling goods or servicesSelling goods, or servicesPrice (unit price, total of goods or services)PackingPackingShipment/partial shipmentDelivery terms (INCOTERMS 2000)Delivery terms (INCOTERMS 2000)Shipping documentNecessary documents & certificates/standards,…y / ,Shipment adviceInspections/surveillancepTechnical DocumentsDrawings & instructionsTransfer of property/Transfer of titleSpare parts (List of itemized price of spare parts, …
Article 6 General Obligations of the BuyerArticle 6 – General Obligations of the BuyerPrice of ContractRejection in whole or in partRejection in whole or in partReduction of the contract price (Pro rata)
Article 7 – Payment MethodLetter of Credit (L/C)Letter of Credit (L/C)Bill of Exchange (D/A, D/P)Cash on Delivery (C.O.D)y ( )Advance paymentOpen Account (consignment)p gPlace of payment
Article 8 – GuaranteesBid BondLetter of Guarantee / Performance Bank
Guarantee (P. B.G.)Good Performance Bank Guarantee (G.P.B.G)Advance Payment Bank Guarantee (A.P.B.G)Retention Bond / Money (R.M)
Article 9 Training and Technical AssistanceArticle 9 – Training and Technical Assistance
Article 10 – Terms of provision of schedule of pservices
A ti l 11 T h i l i t f iArticle 11 – Technical assistance of services
Article 12 – Breach of contractArticle 12 Breach of contractRemedies for breaching contract
Article 13 – PenaltiesLiquidated/un liquidated damagesq / q g
Article 14 – Force Majeure
Article 15 – Contract SuspensionArticle 15 Contract Suspension
Article 16 – Governing law of the contract
A ti l 17 Th t t t b C h iArticle 17 – The contract must be Comprehensive.
Article 18 – Effective date of the contract
Article 19 – who is responsible to pay for:Tax, Insurance, Banking fees, Customs clearance, …
Article 20 – Settlement of DisputesCommercial law, International Commercial law
International Chamber of Commerce Law, (I.C.C.)
Practice (usage, amicably)
Article 21 – Training Services and Supervision
Article 22 – Weights and MeasuresArticle 22 Weights and Measures
Article 23 – Addenda and Amendments
Article 24 – Term & time of the Contract
Article 25 Copies of the ContractArticle 25 – Copies of the Contract
Article 26 – Notice and official address
Article 27 – Concluding provisions
Article 28 – Place and date of signing
contract & signaturescontract & signatures
Article 29 – Language of the contract
Article 30 – List of Annexes
SALES CONTRACT NO. NB – 2008/09/121‐2
THIS SALES CONTRACT CONCLUDED BY/AND BETWEEN:
MANAGING DIRECTORE OF ……………………………………. COMPANY.MANAGING DIRECTORE OF ……………………………………. COMPANY.
………………………………………..
ADDRESS :……………………………………………………... TEHRAN – IRAN
TEL. NO. : 00‐98‐21 …………………..FAX NO. : 00‐98‐21………………..
HEREINAFTER REFERRED TO AS THE “ SELLER ”
/S OAND M/S:……………………………………COMPANY.
MANAGING DIRESTORE:
ADDRESS :ADDRESS : ……………………………………………………………..
TEL NO. …………………………..:FAX NO. :……………………………
HEREINAFTER REFERRED TO AS THE “ BUYER ”
WHEREAS THE SELLER WITH FULL AUTHORITY CERTIFIESWHEREAS THE SELLER WITH FULL AUTHORITY CERTIFIES ,
REPRESENTS AND WARRANTS THAT THEY CAN PROVIDE
THE PRODUCT REFERRED TO IN TIME AND UNDER THE
TERMS AS SET FORTH HEREINAFTER.
WHEREAS THE BUYER WILL BUY THE PRODUCT
PROVIDED BY THE SELLER TO THE WORLD MARKETPROVIDED BY THE SELLER TO THE WORLD MARKET
UNDER THE TERMS AS SET FORTH HEREINAFTER.
THE SELLER AND THE BUYER DO HEREBY AGREE TO
HONOUR THIS CONTRACT UNDER THE FOLLOWING
CONDITIONS AND TERMS:
ARTICLE 1: PRODUCTS:BUTIMEN / & /BUTIMEN: GRADE 60/70 & GRADE 80/100
THE DETAILED SPECIFICATIONS ARE ACCORDINGTHE DETAILED SPECIFICATIONS ARE ACCORDING
TO THE ATTACHED SHEETS, WHICH ARE PROVIDED,
BY THE BUYER. IT IS AGREED BY BOTH PARTIES
THAT THE QUANTITY OF GRADE 80‐100 SHAL NOT
EXCEED 10% OF THE TOTAL QUANTITY.
ARTICLE 2: ORIGIN
I.R. IRANIAN ORIGIN AND SHIPMENT FROMSOUTH IRANIAN PORTS.
ARTICLE 3: DELIVERY TERMSARTICLE 3: DELIVERY TERMSF.O.B (FREE ON BOARD THE SHIP LOADED ANDSTOWED) IN PARTIAL SHIPMENTSSTOWED) IN PARTIAL SHIPMENTS.
ARTICLE 4: TIME OF DELIVERY:WITHIN 30 DAYS AFTER RECEIPT OF WORKABLEL/C. THE FIRST L/C WILL BE INITIATED AND WILL BEREVOLVING .THE WHOLE BUTIMEN UP TO 800,000M.T TO BE SHIPPED WITHIN 12 MONTHS.
ARTICLE 5: CONTRACT QUANTITY
80,000 MT (EIGHTHY THOUSAND M.TONS)
ARTICLE 6: PACKINGPACKED BY NEW FULLY PAINTED IRON DRUMPACKED BY NEW FULLY PAINTED IRON DRUM.
NET WEIGHT OF EACH DRUM: 160 KG +/‐5 KG.
GROSS WEIGHT OF EACH DRUM : 172 KG+/‐5
KG.
WITH OR WITHOUT PALLET DEPENDING ON
END BUYER’S REQUIREMENT IF WITH PALLETEND BUYER S REQUIREMENT IF WITH PALLET.
THE COST OF PALLET WILL BE CHARGED AT USD
5 00/MT5.00/MT.
ARTICLE 7: PAYMENT
PAYMENT WILL BE MADE BY IRREVOCABLE AT
SIGHT L/C DIRECTLY IN FAVOR OF THE SELLER
FROM THE END BUYER, OR TRANSFERABLE L/C
TRANSFERRED IN THE FAVOUR OF THE SELLER
AT BUYER’S OPTION BUYER MAY ALSO ISSUEAT BUYER’S OPTION. BUYER MAY ALSO ISSUE
THE L/C ON HIS OWN ACCOUNT DIRECTLY TOTHE L/C ON HIS OWN ACCOUNT DIRECTLY TO
THE SELLER.
ARTICLE 8: PRICE
BOTH GRADES 70‐80 AND 80‐100 AT USD…… //
MT FOB BANDAR ABBAS. OR BANDAR IMAM IF
PALLETS REQUIRES, A SURCHARGE OF USD 5.00
/MT IS TO BE ADDED TO THE BASIC PRICE.
ARTICLE 9: INSPECTION
THE BUYER OR THE END BUYER HAS THE RIGHT TO
APPOINT SGS OR LLOYDS OR ANY INTERNATIONAL
INDEPENDENT SURVERYOR TO INSPECT THEINDEPENDENT SURVERYOR TO INSPECT THE
QUALITY, QUENTITY, PACKING AT PORT OFQ , Q ,
LOADING. THE INSPECTION CHARGE IS ON BUYER’S
ACCOUNT. THE INSPECTION CERTIFICATE IS TO BE
ATTACHED TO THE SHIPPING DOCUMENT AND
SUMITTED TO THE BANKSUMITTED TO THE BANK.
ARTICLE 10: SHIPMENT & SHIPPING DOCUMENTSDOCUMENTS
SHIPMENT : 10,000 MT PER MONTH IN ONE LOT.BASICALLY THE SELLER SHOULD PROVIDEBASICALLY, THE SELLER SHOULD PROVIDE:
1. SIGNED COMMERCIAL INVOICE
2. BILL OF LADING
3. PACKING LIST AND WEIGHT CERTIFICATE
4. CERTIFICATE OF ORIGIN
5. CERTIFICATE OF QUALITY
6. QUALIFIED CERTIFICATE OF INSPECTION ISSUED BY
THE SURVEYOR
IF OTHER DOCUMENTS WERE NEEDED BY THE
IMPORTING COUNTRY, THE SELLER HAS TO PROVIDE
, BUT THE FEE IF ANY, WILL BE ON BUYER’S
ACCOUNT.
ARTICLE 11: FORCE MAJEURE
NEITHER PARTY OF THIS CONTRACT IS
RESPONSIBLE FOR BREACH OF CONTRACT IF
CAUSED BY AN ACT OF GOD, INSURRECTION, CIVILCAUSED BY AN ACT OF GOD, INSURRECTION, CIVIL
WAR, MILITARY OPERATION OR LOCAL
EMERGENCY. THE PARTIES HEREBY ACCEPT THE
INTERNATIONAL CHAMBER OF COMMERCE OFINTERNATIONAL CHAMBER OF COMMERCE OF
GENEVA, SWITZERLAND TO MEDIATE THIS CLAUSE
IF DISCREPANCIES OR DISPUTES ARISE.
ARTICLE 12: TRANSPORTATION CONDITIONS
1. ON COMPLETION OF LOADING, SELLER’S SHIPPING
AGENT SHALL FAX OR E MAIL THE BUYER OF VESSEL’SAGENT SHALL FAX OR E‐MAIL THE BUYER OF VESSEL S
NAME, SAILING DATE, QUANTITY LOADED, B/L NO AND
SHIPPING AGENT NAME IN IRAN, NOT LATER THAN
SEVENTY‐TWO (72) HOURS AFTER LOADING WAS
COMPLETED.
2. ANY TAXES OR LEVIES AT THE PORT OF LOADING ARE
FOR THE SELLER’S ACCOUNT.
3. BUYER WILL ADVISE THE SELLER OF THE NAME OF THE3. BUYER WILL ADVISE THE SELLER OF THE NAME OF THE
CHARTERED VESSEL, HER PLACE AND POSITION (15)
DAYS BEFORE THE VESSELS ARRIVAL TO THE PORT OFDAYS BEFORE THE VESSELS ARRIVAL TO THE PORT OF
LOADING.
ARTICLE 13: VESSEL LOADING TERMS
AS PER CHARTER‐PARTY, HOWEVER THE LOADING,
RATE IS SET AT APROX. 1,500 MT PWWD ( PER
) /WEEKLY WORKING DAYS ), AND THE DEMURRAGE /
DESPATCH SHOULD BE ACCORDING TO
INTERNATIONAL CHARTER‐PARTY. IT IS AGREED THAT
DEMURRAGE AND/ OR DESPATCH AT LOADING PORTDEMURRAGE AND/ OR DESPATCH AT LOADING PORT
BE SETTLED BY THE BUYER AND THE SELLER WITHIN
FIVE BANKING DAYS FROM RECEIPT OF VESSEL’S
MASTER’S INVOICE.MASTER S INVOICE.
ARTICLE 14: ARBITRATIONARTICLE 14: ARBITRATION
THE PARTIES AGREE THAT ALL DISPUTES
ARRISING IN CONNECTION WITH THE PRESENTARRISING IN CONNECTION WITH THE PRESENT
CONTRACT SHALL BE FINALLY UNDER THE
RULES AND ARBITRATION OF THE
INTERNATIONAL CHAMBER OF COMMERCE ININTERNATIONAL CHAMBER OF COMMERCE IN
GENEVA, SWITZERLAND BY ONE OR MORE
ARBITRATORS APPOINTED WITH SAID RULES.
ARTICLE 15: NON‐ CIRCUMENTION
THE PARTIES ACCEPT AND AGREE TO THE PROVISIONSOF THE INTERNATIONAL CHAMBER OF COMMERCE,GENEVA, SWITZERLAND AND FOR NONCIRCUMENTION AND NON DISCLOSURE WITHREGARDS TO ALL AND EVERYONE OF THE PARTIESINVOLVED IN THIS TRANSACTION AND CONTRACT.
ARTICLE 16: PERFORMANCE BOND
10% PROFORMA BOND OF L/C VALUE WILL BEPROVIDE BY SELLER AFTER RECEIVING THE L/C THISPROVIDE BY SELLER AFTER RECEIVING THE L/C. THISWILL BE KEPT REVOLVING TILL CONTRACTCOMPLETIONCOMPLETION.
ARTICLE 17:
BY ACCEPTANCE ON THE TERMS OF THIS CONTRACT, SELLER AND BUYER HAD SIGNED BELOW:
DATE: JANUARY 3RD 2008.
SELLER: BUYER:
SIGNATURES SIGNATURES
WITNESS WITNESSWITNESS WITNESS
SIGNATURES SIGNATURES