Unit 2 Description of Commodities.docx

Unit 2 Description of Commodities.docx

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Unit2DescriptionofCommodities

Unit2DescriptionofCommodities

AnAmericancompanyApurchased200dozenoftoycarsfromanexportcompanyBinDalian.Inreality,Bshipped198dozen.BthoughtthataccordingtothestipulationsinUCP600,5%moreorlessoftheshipmentwasallowed.ButArefusedtoaccepttheproductsbecauseofshortageofcommodities.DidAhavetherighttorefusethetoycars?

Why?

　　Toavoidpossibledisputes,everyeffortshouldbemadetodescribethegoodsinthesalescontractexactlyasthesellerandthebuyerintendthemtobe.Thedescriptionofcommodityconsistsofnameofcommodity,quantityofcommodity,qualityofcommodityandpacking.Ininternationaltrade,asdifferentcountriesmayhavedifferentinterpretationsaboutthesamename,quality,quantityorpacking,carefulstipulationinthesalescontractisveryimportant.

DescriptionofCommodities

NameofCommodity

Usually,thepartiestothecontractjustspecifythenameoftheproductunderthesubject“NameofCommodity”.Asthebasisofatransaction,nameofcommodityconcernstherightsandobligationsofboththesellerandthebuyer.Ifthegoodsdeliveredbythesellerarenotinaccordancewiththeagreednameofcommodity,thebuyerhastherighttolodgeaclaim,refusethegoodsorevencancelthecontract.Therefore,asamainconditionofsale,thenameofcommodityshouldbeclearlystipulated.

QualityofCommodity

Thequalityofcommodityreferstotheoutwardappearanceandtheessentialqualityofthegoods,suchasshape,structure,color,flavorsaswellaschemicalcomposition,physicalandmechanicalproperty,biologicalfeature,etc.Ininternationaltransactions,therearedifferentwaysofshowingquality.

Salebysample

　　Asampleisaproduct,oftentakenoutfromawholelotofconsignmentorspecially

designedandprocessed.Samplescouldbeofferedbytheseller,i.e.,salebyseller’ssample.Inthiscase,thesellershallsupplyarepresentativesampleandatthesametimekeepaduplicatesamplewhichshallbeinthesamequalityasoronthewholeasthestandardsample.Thesampledispatchedandtheduplicatesamplekeptshallhavethesamearticlenumbersoastomakeitconvenientfordeliveryandverificationwhenhandlingqualitydisputesorfuturetransactions.Samplescouldalsobeofferedbythebuyer,i.e.,salebybuyer’ssample.

Thereisanothersamplecalled“countersample”.Whenthesampleisofferedbythebuyer,thesellermaynotbeverysurewhetherhecouldsupplythegoodsinconformitywithitornot.Inordertotaketheinitiative,thesellermayreproducethebuyer’ssample,andsenditbacktothebuyerasatypesample.Afterthebuyerconfirmsthissample,salebybuyer’ssampleischangedintosalebytheseller’scountersample.

　　Itshouldbenotedthatsometimesthesellermaysendasampletothepotentialbuyerbeforethecontractisconcluded.Thiskindofsampleisthereferencesampleandoftenlabeled“forreferenceonly”.Suchasampleisnotthebasisofdeliverybytheseller.However,thepartiesmayagreetodeliverthegoodsinconformitywithitinthecontract,andthenitwillbethebasisofdelivery.

Salebyactualquality

　　Inthiscase,thebuyerorhisagentexaminesthegoodsatseller’splaceatfirst.Aftertheyconcludeadeal,thesellershalldeliverthegoodsaccordingtothegoodsexamined.

Salebydescription

　　Itmainlyincludesthefollowingtypes.

（1）Salebyspecifications

　　Thespecificationreferstocertainmainindicatorswhichindicatethequalityofthegoods,suchascomposition,content,purity,size,length,etc.Itisoftenexpressedbyindexes.Forexample,thespecificationofironoremaybeexpressedas“thecontentofiron>80%”.

（2）Salebygrade

　　Thegradereferstotheclassificationsofthegoodsandisindicatedbywords,numbersorsymbols.Forexample,thefresheggsweighed55-60gareclassifiedintoGradeA,50-55gGradeB,45-50gGradeC.However,thegradeofthesameproductmaybedifferentindifferentcountries.Itisnecessarytomakesurethatthegradeofthecommodityisunderstoodidenticallybythepartiesiftheywanttosellbygrade.

（3）Salebystandard

　　Thestandardreferstothespecificationsorgradeswhicharestipulatedandannouncedbygovernmentorthechambersofcommerce,etc.QualityofcommoditycanbedescribedinthecontractbytheinternationalstandardlikeISO,orthenationalstandardeitheroftheexporter’sortheimporter’scountrywhichisagreeduponbybothparties.

Inthetradeofagriculturalproducts,FAQ（FairAverageQuality）isoftenemployed.FAQmeansaquantityofaproductthatisofferednotonaparticularqualityspecificationbutonthebasisthatisequaltotheaveragequalityofthecurrentgrouporrecentshipment.Whenusingthiswaytoindicatethequality,specificationsarestillnecessaryunlessthetransactionisdonebetweenregulartradingpartners.

Forthetradingofwoodandaquaticproducts,GMQ（GoodMerchantableQuality）isemployedtoindicatethequality.GMQreferstothesoundqualitythatisfreefromdefectsandisgoodenoughtosatisfythepurposeforwhichthebuyerintendstousethegoodsorforwhichthesellerintendsthattheyshouldbeused.GMQisusuallynotsupplementedwithspecificationsandwhendisputesonqualityarise,thesellerswillhavetobeinvitedtomakethearbitration.

（4）Salebybrandortrademark

　Brandisthename,term,symbol,designoracombinationofthesetoidentifyaproduct,

whiletrademarkincludesallthosewords,symbols,ormarksthatarelegallyregisteredforusebyasinglecompany.Someproductsmayhavebeensoldintheglobalmarketformanyyearsandenjoyhighreputation,andtheirqualitycouldberepresentedbytheirbrandnamesortrademarks,forexample,Coca-Cola.

（5）Salebynameoforigin

　　Somecountriesandplacesarefamousforcertainproductsandthequalityoftheseproductsmaybedescribedbytheirorigincountriesorplaces,forexample,Chineseporcelain,Jinhuabam,etc.However,inordertoavoidpossibledisputes,itisadvisableforthepartiestousethespecificationstogetherwithbrandnameandotherwaysinthecontract.

　　（6）Salebydescriptionandillustration

Thequalityofsomecommoditiessuchastechnologicalinstruments,electricmachines,etc.cannotbesimplyindicatedbyqualityindexes,insteaditisquitenecessarytoexplainindetailthestructure,material,performanceaswellasmethodofoperation.Ifnecessary,pictures,photos,etc.mustalsobeprovided.

Sometimes,itisimportanttoadda“QualityTolerance”or“QualityLatitude”clauseinthecontract.Tolerancemeansthepermissiblerangewithinwhichthequalitysuppliedbythesellermaybeeithersuperiororinferiortothequalitystipulatedinthecontract.Qualitytolerancemaybethatagreeduponbetweenthesellerandthebuyerbeforehand,orthatgenerallyrecognizedbytradeassociations.Itisusuallyusedinthetradeofagriculturalproducts,industrialrawmaterialsorsomelightindustrialproducts.

　　Qualitylatitudemeansthatthequalityindexesofthegoodsdeliveredbythesellermaybecontrolledflexiblywithincertainlatitude.Therearethreewaystostipulatequalitylatitude.

（1）Tostipulateacertainscope,forexample,thewidthofthecottonclothis47/48inches.

（2）Tostipulatemoreorlessclause,forexample,astogreyduck’sdown,wemay

stipulateduck’sdowncontent18%（1%moreorless）.

　　（3）Tostipulate“max”or“min”,forexample,moisture（max.）15%.

QuantityofCommodity

Asdifferentproductshavedifferentcharacteristics,differentwaysofmeasurementmaybeused.Waysofmeasurementincludeweight,length,area,volumeandcapacity.

Unitsofmeasurement

WeightUnits:

kilogram,ton,metricton,gram,pound,ounce,longton,shortton,etc.

LengthUnits:

meter,kilometer,centimeter,yard,foot,mile,etc.

AreaUnits:

squaremeter,squareyard,squarefoot,squareinch,etc.

VolumeUnits:

cubicmeter,cubicyards,cubicfoot,cubicinch,etc.

CapacityUnits:

liter,gallon,bushel,etc.

NumberUnits:

piece,package,pair,set,dozen,gross,ream,roll,head,case,bale,barrel,bag,etc.

Moreorlessclause

　　Itisverydifficulttomeasureaccuratelysomeagriculturalandmineralproductslikecorn,wheat,coal,etc.,thena“moreorlessclause”,alsocalled“plusorminusclause”,maybeusedtoallowsometoleranceinthequantity.Thewordingofsuchaclausemightbe“500M/T,5%moreorlessatseller’soption”whichmeansthatthesellermaychoosetodeliverbetween475to525M/T.

　　AccordingtoUniformCustomsandPracticeforDocumentaryCredit,ifthereisanywordlike“about”,“approximately”inthequantityclauseintheletterofcredit,itshouldbeinterpretedthat10%moreorlessinquantityisallowed;andunlessthereisastipulationthatthequantityofthegoodsmustnotbeexceededorreduced,orthegoodsaretobecalculatedbynumberofpackage,5%moreorlessofthegoodsinquantityshouldbeaccepted.

Packing

Factorsinfluencingpacking

　　Packingshouldbedesignedaccordingtotheneedofthecargo.Bulkcargoesrequirelittlepacking.Generalmerchandisesrequireadequatepackingofvarioustypes.Factorsinrelationtotransportsuchasthenatureoftransit,loadingandunloadingfacilitiesandtransportunitshouldbeconsidered.Thedimensionandtheweightlimitmayalsoinfluencetheshape,sizeandweightofthecargopacking.Packingshouldcomplywithcustomsorstatutoryrequirements.Forexample,insomecountries,strawisanunacceptableformofpackingduetotheriskofinsects.Packingmustmeetinsuranceacceptanceconditions,andmakethehandlingaseasyaspossible.Itshouldalso