Indo- Nippon Automobiles: International Sales Transaction Essay

First and foremost, it is necessary to consider the profile of the parties in this international sales transaction.

1. Name and location of the buyer: Indo- Nippon Automobiles, Taiwan.
2. Name and location of the seller: Dubai Plastics, L.L.C., Al Nasr, Dubai

Profile of the buyer

Indo-Nippon is part of the $20 Billion Nippon conglomerate, which is engaged in the manufacture and sale of internationally acclaimed automobiles and vehicles, including tractors and heavy duty vehicles. As part of its economy drive, it wishes to outsource plastics and other components used in automobiles through outsourcing from global markets at globally competitive prices. This company believes that the factor of outsourcing “seems to stay in the public focus as companies try to reduce costs and improve profits.” (Outsourcing: Pros And Cons 2008).

Profile of the seller

Dubai Plastics is a member of the Al- Darwish Group in United Arab Emirates, engaged in the manufacture of plastics since 1950. From a family owned business, it has grown and diversified into a large business house, and is a premier company in this region. It has specialised machinery and equipments to deal with manufacturing of automobile accessories and has supplied to world renowned car manufacturers and their “factory covers 2000 square meters, with 200 square meters of office and 1500 square meters of transportation.” (Companies about Specialized Vehicles 2008, p.8).

Consent

Dubai Plastics is well positioned to enter the Taiwanese market with their products and have expressed their willingness to outsource their products to Indo-Nippon, Taiwan, for mutual benefits and a long term business association.

The preliminary negotiations between the two parties are over, and the formal agreements are being drafted by the corporate lawyers of Dubai Plastics and Indo-Nippon Automobiles, Taiwan, in consultation with their mutual legal consultants and counsellors. It is believed that the second phase of negotiations would be completed by 15^th December, 2008.

Draft Sale Agreement

Agreement for International Sale of Goods from Dubai, United Arab Emirates,

• SALE AGREEMENT

This Agreement is made this First day of January, 2009, BETWEEN – Dubai Plastics, L.L.C., Al Nasr, Dubai Of Post Box 22761, Deira, Dubai, United Arab Emirates (full address) (‘Seller’) AND Indo- Nippon Automobiles Inc., (buyer’s full name) of Post Bag 23, Near Vietnamese Embassy, Mainland, Taiwan(full address) (‘Buyer’)

• WHEREAS

1. Seller, being resident of Dubai has offered to sell goods of the same type and quality as sample/s of goods previously provided by Seller to Buyer.
2. The buyer wants to enter into sale covenant with seller. However, there are matters of concern since the buyers and sellers are from different countries.
3. Both the parties wish to assuage perceived threats and challenges that could emanate, either between the business partners or with Third parties, due to nature of global contract and uncertainties in future business climates and commercial environment.

Both the parties are agreeable to sign the following contract

Standard agreement

Both the purchaser and vendor call this contract the Standard Agreement and this shall henceforth be referred to, as such:

International sale transaction

• Seller shall sell, convey and convey to buyer the property for the amount vide the several Rules and Regulations that are set forth in this agreement :

1. Delivery shall be CIF, Dubai (name of loading port). “This expression covers cases where the seller is required or authorized to ship the goods.” (Secretariat Commentary (Closest Counterpart to an Official Commentary 2006). Delivery of the Goods from Seller to Buyer shall occur as soon as the ship crosses the dock’s rails.
2. Delivery target date is: March 16, 2009
3. To enable the Delivery Target Date, Seller agrees and accepts to take necessary precautions to appropriately ship the Goods from its bonded warehouse to the loading port, on or before January 15, 2009 (‘Consignment Date’).

• In respect of deliverance and passing of risk:

1. All costs of deliverance are included in the agreed Price. All risks up to the time of loading at seller’s port would be the responsibility of seller.
2. Receipt by Buyer of true copy of the Bill of Lading shall be proof of Delivery;
3. After the goods have been handed over to the buyer’s representatives, the responsibility shall accrue to the Buyer.

• In respect of identification of the Goods

1. The Goods must match Samples sent earlier by seller to buyer:
2. The said matching shall be carried out by the specified inspectors of buyers and by matching items with the samples provided and shall be deemed to be assessment before loading.

• Buyer, at own cost, must conduct the assessment before loading during usual trade timings but shall not exceed Three working days after notice has been issued by Seller to Buyer that the Goods are amenable to Assessment before loading.
• Assessment before loading shall be necessary in order to assess and keep aside the goods for the Buyer for the presentation of this contract;
• Intentional omission by Buyer to perform the assessment before loading shall be construed as binding acceptance of the goods by the buyer.
• Except as otherwise intimated, the following person is authorised by the buyers to conduct the assessment before loading and forward his report to the buyers:

Mr. Gordon Brown, Technical Officer, Indo-Nippon Autos, International Division, Resident office: Abu Dhabi, UAE.

Payment terms

Buyer shall pay to Seller:

1. A security deposit in accord with the meaning of security deposit, a sum equal to 60% of the Purchase Price within four (4) business days of satisfactory Pre-shipment Inspection (‘Security Deposit’);
2. Upon issue of Bill of Lading the Seller shall appropriate the Security Deposit to part payment of the Purchase Price;
3. Buyer shall pay the remaining 40% of Purchase Price within two (2) business days of receipt by Buyer of true copy of the Bill of Lading;
4. Buyer shall release the said monies by wire transfer to Seller’s bank account (

Seller’s bank account

Detail of the Seller’s Bank Account into which the Buyer shall TT all monies payable under this Agreement is:

• British Bank of the Middle East, (BBME)
• Souk Branch, Deira,
• Dubai,
• United Arab Emirates.

Purchase price

Total of all payments payable to Seller by Buyer for or in relation to the Goods is US $15,00,000

Description and identification of goods

1. The Sample/s referred to Clause 2 (e) is/are described and identified as: Samples of plastic components and accessories used in dashboard of vehicles, sample sheet of plastic conforming to IS 2001 and ISO Standards 25001 are also enclosed. All future supplies shall carry IS 2001 certification and a logo, The buyer is requested to indicate acceptance of this standard sample by email or fax immediately.
2. The Goods shall comprise 5000 units of the same merchandisable type, quantum of the Samples and shall conform to Standards and all other warranties, representations and undertakings in Clause 6 (b). The contract provides for preliminary sample to be provided to buyer. Upon acceptance of the samples, the final order shall be placed and intimated to sellers within 15 days from date of receipt of samples. In case no intimation is received, it shall be taken that the samples have been accepted, and the sellers may go ahead with final dispatch subject to confirmation by Indo-Nippon Plastics,
3. The Goods also consist packaging of each unit comprising the Goods together with proper packaging, and providing corrugated thick boxes of the Goods necessary for shipment, being:

Individual items should be wrapped in cellophane plastic covers and tagged with Batch and Code numbers. Groups of similar products need to be packed together in one box. Finally, all boxes need to be carefully placed in robust cartons of specified diameters and mechanically sealed with iron seal tapes. All boxes should be packed to full capacity and their contents, Code and Batch Numbers and relevant BL details fully indicated for identification and retrieval. It is urged that Packaging follows norms in terms of non-deletable ink and be water proofed, acid and corrosion resistant and fire retardant.

Explain packing modes for both units and composite cartons

• Pursuant to the agreement, products shall be recognised and used for the fulfilment of this Agreement by buyer, only after they received a Clean and unqualified assessment before loading certificate issued by buyer’s Inspector.

1. The Buyer shall inspect the Goods for agreement
2. Such examination and association shall exclude test of a technical nature in respect of which the buyer absolutely places trust on each assurance, illustration and declaration made by the Seller hereof.
3. Upon satisfactory examination the Buyer shall identify the goods with suitable symbol of its option and shall be allowed access to oversee shipment of the Goods from the seller’s warehouse in Dubai.
4. By making the said symbols, the Goods shall thereby be set aside for the presentation of this Agreement.

• To facilitate meeting the deadline, Seller shall immediately replace any sample units notified by Buyer as not reasonably in compliance with the Sample and shall right away set right any issues arising out of faulty packing.
• However, if more than 15% of the sample units comprising the Goods are found not to match with standards, the buyer, Indo- Nippon Plastics, may, at its discretion, end this Agreement or require that this contract be specifically performed.
• Buyer declares, represents and reassures the Seller that it would not unreasonably, or without prior intimation, refuse to set aside, any part of the Goods to the performance of this Agreement.

Warrantis, representations and undertakings

• Seller, Dubai Plastics, acknowledges that Buyer has full understanding of the technical nature of the units forming part of Goods and accordingly is in a position to assess whether the Goods are capable of causing detriment to users or consumers or meet product parameters required in Buyer’s country, Taiwan.
• Seller guarantees to Buyer that, at time of Delivery, each unit, or product, forming part of total Goods shall be devoid of obvious defects, which their quality control has undertaken, and is declared fit for their intended use and life expectancy, of saleable quality, fulfil all applicable laws, security and quality standards and adhere in all respects, to the quality, reliability and safety standards of IS 2001, UAE and ISO Standards 25001. It is also seen that the goods shall conform to Section 35 of the United Nations Convention On Contracts For The International Sale Of Goods, 1980 ( CISG ) “The seller must deliver goods which are of the quantity, quality and description required by the contract and which are contained or packaged in the manner required by the contract.” (United nations Convention on Contracts for the International Sale of Goods, 1980(CISG )).
• If any unit comprising the goods is later found not to reasonably comply with Clause 6 (b) and in particular with Standards, shall be herewith, deemed to be a faulty product (‘faulty Product’).
• Seller guarantees to buyer that the Goods shall comply with the standards set forth regularly by the relevant government departments or trade organizations in the Taiwan, and that Seller holds all licenses and all other permits needed to produce, vend and export the Goods necessary to meet the Consignment Date on March 16, 2009

Faulty goods replacement and/or repair

Ddespite any examination or endorsement by Buyer of the Goods through assessment before loading, or otherwise:

• Seller, at own cost, shall forthwith repair or replace any unit or product or part thereof which shall, within 4 years of Delivery prove to be inoperative.
• Seller shall incur all inward and outward freight costs of repairing/ replacing any defective product.

Reimbursements and accountability

Seller undertakes to Buyer to wholly indemnify, protect and hold Buyer free from and against any risks, cases, lawsuits, causes of action, assertion of rights by Third Parties, costs or expenses (including legal costs) arising from any contravention, or claimed infringements of Seller’s representations, warranties, obligations or terms under this Agreement including all ancillary, or far-reaching damages, predictable or proposed profits.

Force majeure or acts of God

• Seller shall be secure from any responsibility, loss or damage to Buyer or any other person or party for failure to manufacture, or deliver, or any delay in delivery, arising from calamitous events beyond Seller’s control such as Acts of God, war, riot, embargoes, fires, floods, earthquakes, tsunamis and like occurrences.
• Under such situations, seller is still under the commitment to take all necessary steps to accelerate delivery of the Goods. In case the emergency lasts for more than 2 months from the contracted delivery date, Buyer shall have the right to cancel this agreement, whereupon Seller shall forthwith reimburse Buyer for any monies paid by Buyer to Seller, with regard to non-Delivery of Goods. The seller shall also be liable to the buyers for any losses accruing to the buyer due to negligence of seller, or his agents, or servants.
• “Where an event of force majeure occurs after the party’s delay in performance, the defaulting party shall not be released from its liabilities.” (Sample Business Contracts 2008)

Payment clause

Each of the following events is a breach of fundamental conditions of this accord:

• If Buyer fails to provide the Security Deposit, or the Purchase Price or any part thereof, within the notified time.
• If 15%( fifteen percent) or more of the Goods are found by Buyer to be non compliant according to the Certificate of Inspector after assessment of loading.
• If Seller fails to replace any non-conforming part of the Goods within one week of request by Buyer after receiving Certificate of Inspector post assessment of loading.
• If Consignment Date or Delivery Target Date are exceeded by more than Thirty days, by mistake of the Seller.
• If either party fails to comply with full and proper call for actual execution of contractual obligations.
• Any other event as might be logically and circumstantially be construed to amount to a violation of any critical clause in this agreement.

Handling disputes – Arbitration

Any dispute arising from, or in connection with this Contract shall be submitted to the Dubai International Economic and Trade Arbitration Commission (DIETAC), for arbitration which shall be carried out, in harmony with the Commission’s adjudication rules in effect at the time of applying for such Alternate dispute resolution. (ADR).

Most companies operating on a global scale prefer. ”New methods of dispute resolution such as ADR facilitate parties to deal with the underlying issues in dispute in a more cost-effective manner and with increased efficacy.” (Alternative dispute resolution)

The decision of the DIETAC appointed arbitrators “shall be final and conclusive. “ (Contract Clauses).

• The place of arbitration and/or enquiry shall be at DIETAC office at Dubai
• The language of the arbitration shall be in English,
• The arbitration shall be done by solitary arbitrator, or a group of Four Members after discussions, as per the wishes of the parties
• The parties jointly appoint and/or entrust the Chairman of the DIETAC to appoint the sole arbitrator, or to moderate proceedings between group of arbitrators.
• The nationalities of the arbitrators shall be made by the Chairman of DIETAC,

However, minimum one panel member from the buyer country (Taiwan) and seller country (UAE) is envisaged.

• The applicable law of contract shall be United Nations Convention on Contracts for the International Sale of Goods, 1980 (CISG) and INCOTERMS, except all matters concerning Security Deposit
• The arbitration shall be conducted by Summary process.
• In respect of any Third Party claiming against the Buyer for loss and/or damage arising from defective Goods, the Seller permits the assigning any of its litigating rights to Third Party, at its will and option and this shall not prejudice the hearing in any manner.
• (The parties hereby consent, upon any request by the arbitrator to submit to mediation, to use their best efforts to resolve all disputes within a month of such request and shall actively co-operate with arbitrators in all relevant matters.

Acknowledgement of understanding

The Parties accept that they have read and understand each Clause set out in the earlier pages of this Agreement and that such, together with this Clause, constitutes the whole of the terms and conditions of this Agreement.

In witness whereof, the parties have executed this agreement at Dubai, United Arab Emirates, the day and year first above written.

_________________________ ___________________________

Seller’s Signature, Name and Capacity of Signatory

———————————————————————–

Witnessed by ————————————————-

Buyer’s Signature Name and Capacity of Signatory

Bibliography

1. Alternative Dispute Resolution: The concept & its Efficacy. [online]. Seth Associates: Advocates and Legal consultants.
2. Contract Clauses: CBO 01 Terms and Conditions Limited (2004). [online].
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4. Out sourcing: pros and Cons: Firstex: Your One Stop shop for Outsourcings. (2008). [online]. Firstex Industries.
5. Secretariat Commentary (Closest Counterpart To An Official Commentary: Where The Contract Involves Carriage Of The Goods, Paragraph 2. (2006). [online]. Guide to CISG Article 58.
6. Sample Business Contracts: Featured Sales And Marketing Agreements. (2008). [online]. Onecle Resources. Web.
7. United Nations Convention on Contracts for the International Sale of Goods, 1980(CISG): Article 35. [online]. Lex Mercatoria. Web.