Lesson 4
The Business Contract

A contract is an agreement which sets forth binding obligations of the relevant parties. It is enforceable by law, and any party that fails to fulfill his contractual obligations may be sued and forced to make compensation, though most contracts do not give rise to disputes'.

The contract is based on agreement2, which is the result of business negotiations. There are two types of business negotiations : oral and written. The former3 refers to direct discussions conducted at trade fairs or by sending trade groups abroad or by inviting foreign customers. Business discussions through international trunk calls are also included in this category.

Written negotiations often begin with enquiries4 made by the buyers to get information about the goods to be ordered such as quantity, specifications, prices, time of shipment and other terms. An enquiry is made without engagement on the part of the enquirer. In case of a first enquiry, that is, an enquiry sent to an exporter whom the importer has never dealt with5, information should be given in the enquiry as to how the name and address of the exporter have been obtained, the business line6 and usual practice of the importer, etc. so as to facilitate the exporter's work.

In response to an enquiry, a quotation may be sent by the exporter which should include all the necessary information required by the enquiry. Sometimes, the exporter may make an offer to an time of shipment and the mode of payment desired in addition to an exact description of the goods including the quantity, quality, specifications, packing, etc. The validity period is indispensable to a firm offer. An offer is considered open until after a stipulated time or until it is accepted or rejected.

The offeree may find part of the offer unacceptable and may raise for further discussions his own proposals which constitute a counter-offer. A counter-offer may be made in relation to the price, terms of payment, time of shipment or other terms and conditions of the offer. It is a refusal of the offer which will be invalid and unbinding once a counter-offer is made. The counter-offer thus becomes a new offer made by the original offeree to the original offerer.

Transaction is considered concluded once an offer or a counter-offer is accepted. 1Q A written contract is generally prepared and signed as the proof of the agreement and as the basis for its execution. When the contract is made by the seller, it is called a sales contract, and when made by the buyer, a purchase contract. A sales or purchase confirmation is less detailed than a contract, covering only the essential terms of the transaction. It is usually used for smaller deals or between familiar trade partners.
The setting up of a contract is similar to that of a trade agreement or any other type of forma! agreements. It generally contains the following items:

1. The trie. The type of the contract is indicated in the title such as Sales Contract, Purchase Contract, Consignment Contract" , etc. The number of the contract and the date are given bellow the title to the right side.

2. The contract proper'''. This part includes A. the full name and address of the buyer and the seller. B. The commodities involved including quantity, quality, specifications, packing , etc. C. All the terms and conditions agreed upon such as the price, total amount, terms of payment, transportation, insurance etc. D. Indication of the number of original copies of the contract, the languages used, the term of validity and possible extension of the contract14.

3. The signatures of the contracting parties indicating their status as the seller or the buyer.

4. The stipulations on the back of the contract are constituent parts of the contract and are equally binding upon the contracting parties15. These may include the shipping documents required, force majeure16, arbitration, claims etc.

Here are two examples of a sales contract:
(1)
《中国纺织品进出口公司上海分公司售货确认书》
中国纺织品进出口公司上海市分公司
CHINA NATIONAL TEXTILES IMPORT AND EXPORT CORPORATION
电报挂号 CABLE ADDRESS： SHANGHAI BRANCH
“TEXTILE”
电 码 ACME
BENTLEY'S 2ND 上海中山一路27号码 号数
CODES USED：ABC 6TH 27 ZHONGSHAN ROAD E.1, SHANGHAI ,CHINA No.SC811001
销售确认书
SALES CONFIRMATION
（ 棉 布。棉 纱）
To Messrs ,
Overseas TRADING corp.(COTTON PIECE GOODS AND COTTON YARNS)
31X X X X Road 日期
SINGAPORE Date Dec. 14, 19xx
新加坡 你方函电 19xx 年12 月10、13 日电
Your Reference : Your Cable : Dec.10, 13,19xx
XX 路31号码 我方函电子 19xx年12月8、12日电
Our Reference : Our Cable :Dec. 8.12,19xx
海外贸易公司

装运期限 19××年2月 目的地 新加坡
SHIPMENT During Fob.19×× DESTINATION: SINGAPORE
付款方式： 凭不可撤销信用证见票后30天付款
PAYMENT: By Irrevocable Credit at 30 days after sight
特约条款
SPECIAL CLAUSE:
备注 保险
REMARKS: INSURANCE:
由卖方投保一切险和战争险
To be covered by the Sellers against All Risks and War Risk
一般条款 (见本合同反面)
GENERAL TERMS & CONDITIONS: (PLEASE SEE OVERLEAF)
注意 开立信用证时，请在证内注明本售货确认书号码 中国纺织进出口公司上海分公司
IMPORTANT: When establishing L/C, please China National Textiles Import
indicate the number of this Sales and Export Corporation Shanghai
Conformation in the L/C. Branch

Overseas Trading Corp. 韩志清
L.L.Lin
卖方（The sellers）Manager

请在本确认书上签字后退回一份给卖方
Please sign and return one copy to the Sellers.

(2)
Simplified Form of Sales Confirmation
销售确认书 字第 号
SALES CONFIRMATION NO. 89FSO125
卖方 中国土产畜产进出口总公司广东土产分公司 日期
sellers: China National Produce & Animal By-Products Date: November 1,19—
Import & Export Corporation, Guangdong 签约地点Signed at :
Native Produce Branch Guangzhou
地址：中国广州市六二三路486号 电报、电传挂号
Address :No. 486, “623” Road , Guangzhou ,China Cable Address :
PROCATION
Telex:44072 KTNB
CN
买方
Buyers: Smith & Co.,Ltd 电报挂号
地址 Cable Address SMITHCO
Address: 50 Green Road, Singapore

兹经买卖双方同意成交下列商品订立条款如下：
The Undersigned Sellers and Buyers have agreed to close the following transaction according to the terms and conditions stipulated below:
1、 商品
Name of Commodity :Chinese Sweet Potato Slices, F.A.Q. 甘薯片，大路货
2、 规格
Specifications: Moisture: 16% max. 水份最高16％
3、 数量
Quantity:18000 metric tons
数量及总值均得有5％的增减，有买方决定。
With 5% more or less both in amount and quantity allowed at the Sellers’ option.
4.单价
Unit Price: USD 143. 00 per metric ton CIF Singapore
5.总值
Total Value:USD 2574 000. 00(SAY U.S. DOLLARS TWOI MILLION FIVE
HUNDRED AND SEVENTY-FOUR THOUSAND ONLY )
6.包装
Packing: All in bulk
7.装运期
Time of Shipment: During December, 19 ... and January. 19..
8.装运口岸和目的地
Loading Port & Destination: From China Ports to Singapore ,transhipment
&partial shipments allowed.
9.保险
Insurance: To be covered by the Sellers for 110% of the invoice value against
ALL RISKS and WAR RISK.
10.付款条件
买方须于19____年11月30日前将保兑的、不可撤销的、可转让可分割的即期信用开到卖方。
信用证议付有效期至上列装运期后二十天在中国到期
Terms of Payment: By Confirmed ,Irrevocable,Transferable ,and Divisible Letter
of Credit to be available by sight draft to reach the Sellers before November
30,19____and to remain valid for negotiation in China until the 20th day after
the aforesaid Time of Shipment
11.装船标记
Shipping Mark :At the Seller's option
12.品质、数量、重量，以中国商品检验局检验证或卖方所出之证明书为最后依据。
Quality, quantity and weight certified by the China Commodity Inspection
Bureau or the Sellers, as per the former's Inspection Certificate or the
latter's certificate ,are to be taken as final.
13.其他条款
Other Terms:
卖方 买方
THE SELLERS THE BUYERS
C. N. N. P. A. B. P. I. E. C..
Guangdong Native Produce Branch.

Words and Expressions
set forth 陈述,阐明
binding a. 有约束力的
enforceable a. 可实施的
sue vt. 起诉
trade fairs 商品交易会
trunk call 长途电话
enquiry n. 询盘, 询价
quotation n. 报价
voluntarily ad. 主动地, 自愿地
indispensable a. 必不可少的
validity period 有效期
offeree n. 收盘人
counter offer 还盘
unbinding a. 无约束力的
invalid a. 无效的
sales contract 销售合同
sales (purchase) confirmation 销售(购货)确认书
setting up 构成,结构,格式
consignment n. 寄售
contracting parties 缔约方
force majeure 不可抗力
arbitration 仲裁
Cotton piece goods 棉布
Cotton yarns 棉纱
Hereby ad. 于此
Hereunder ad. 于下
Article number 货号
Yard n. 码
Overleaf ad. 反面
Bleached a. 漂白