ICC Model Sale Contract

The IC C M o del Intern ati o n al S ale C o ntract M a n u f a c t u r e d g o o d s in t e n d e d f o r r e s ale In clu d e s t h e t e x t o f t h e s p e cific a n d g e n e r al c o n ditio n s o n C D r o m Contrats Internationaux ICC The world business organization

International Chamber of Commerce The world business organization The ICC Model International Sale Contract Manufactured goods intended for resale

Published in December 1997 by ICC PUBLISHING S.A. (Paris) Reprinted November 1998, December 1999 and October 2000 Copyright © 1997 ICC (International Chamber of Commerce) All rights reserved. No part of this work may be reproduced or copied in any form or by any means without written permission of ICC Publishing SA, except by the purchaser of this ICC publication N°556, for his own personal use. This publication may not be reproduced in whole or in part for sale, hire or licensing or any other commercial purpose without written permission of ICC Publishing SA. The software being part of the publication is subject to this provision. ICC publication N°556 (E) ISBN 92-842-1210-3

ACKNOWLEDGEMENTS The ICC Model International Sale Contract is intended to provide a reliable and equitable standard legal platform for the global export-import sector. The International Chamber of Commerce (ICC), as the world business organization, has sought to respond to the need for a set of clear and concise standard contractual conditions which balance the interests of export sellers and import buyers. This model contract, the third in a successful series produced under the Chairmanship of Fabio Bortolotti (Italy), has benefited from the extensive drafting contributions of the Chairman of the ICC Commission on International Commercial Practice, Roy Goode (U.K.), as well as from the Commission Vice-Chairman, Jan Ramberg (Sweden) and Incoterms Panel Co-rapporteur, Charles Debattista (U.K.). Other ICC members who participated actively in drafting or commenting upon the contract were: Martin Vetter (Austria), Hans Van Houtte (Belgium), Didier Matray (Belgium), Ole Lando (Denmark), Sarno Lindberg (Finland), Lauri Railas (Finland), Didier Ferrier (France), and Klaus Meyer Swantee (Netherlands). As always, the ICC National Committees around the world were instrumental in circulating early drafts of this contract to their trading communities for comment. Administrative support was provided by ICC staff: Anne-Marie Harper, Guillermo Jiménez, Emmanuel Jolivet and Pascale Reins. The ICC would also like to thank Gerold Herrmann, Secretary General of Uncitral, for his kind permission to reprint in its entirety the Vienna Convention on the International Sale of Goods. Maria Livanos Cattaui Secretary General International Chamber of Commerce 3 THE IC C MODEL INTERNATIONAL SALE C ONTRACT

TABLE OF CONTENTS page Acknowledgements 3 Introduction 5 The ICC Model International Sale Contract A. Specific Conditions 15 B. General Conditions 19 Annexes Specimen form of Model Contract 24 Incoterms 2000 – Preambles 27 United Nations Convention on Contracts for the International Sale of Goods (CSIG) 34 ICC at a Glance 61 Selected ICC Publications 62 For more information on the ICC Model Contracts and other ICC publications, please contact ICC Publishing at: ICC Publishing 38 Cours Albert 1er 75008 Paris France tel.: (33 1) 49 53 29 23 fax: (33 1) 49 53 29 02 e-mail: [email protected] or consult the ICC Publishing web site at www.iccbooks.com INTERNATIONAL CHAMBER OF C OMMERCE 4

INTRODUCTION 1. General characteristics The ICC Model International Sale Contract is divided into two parts: A. Specific Conditions, setting out terms which are special to a particular contract of sale; and B. General Conditions, setting out standard terms common to all contracts incorporating the ICC General Conditions of sale. The model has been designed on the assumption that parties would normally use both Parts A and B, with each part being drafted with the other part in mind. On the other hand, it is open to the parties to incorporate into their contract only part B, the General Conditions. Where the parties wish to use only part B of this model contract, they should include terms such as the following in their special contract: “This contract shall be governed by the ICC General Conditions of Sale (Manufactured Goods Intended for Resale).” Of course, in this case part A would not be used and any reference in part B to the clauses in part A would be deemed to refer instead to any relevant specific term, if any, agreed by the parties in their special contract: see article 1.1 of part B. 2. Scope of application This model contract is primarily directed at contracts for the sale of manufactured goods intended for resale, where the purchaser is not a consumer and where the contract is an independent transaction rather than part of a long-term supply arrangement. Each of these features of the contracts for which this model is intended will now be dealt with. • “Manufactured goods”: the model contract does not cater for the special terms required in contracts for the sale of commodities, in particular raw material, agricultural produce or food and perishable goods. • “Intended for resale”: the model is primarily intended for goods sold and bought in general commerce and which can easily be substituted, rather than for custom-built goods or equipment purchased by the end user. For these specially produced goods and more generally for machinery and equipment, other standard terms may be more appropriate, e.g. the ECE 188 General Conditions or the Orgalime General Conditions for the supply of mechanical, electrical and associated electronic products. • The model contract does not cover sales to consumers, but only to purchasers who are in the business of re-selling goods, e.g. distributors, importers, wholesalers, etc. • The model is principally designed for one-off sales rather than continuing supply arrangements1 . This is the reason why the model does not contain terms more likely to appear within long-term supply agreements, such as price adjustment clauses. 5 THE IC C MODEL INTERNATIONAL SALE C ONTRACT 1 However, if the parties enter into an agreement setting up the framework for a number of individual sale contracts (like a distribution agreement) the sale contra cts made under such framework agre ement may be governed individually by these conditions.

It should be emphasized that the above guidance is intended only to advise potential users of the model contract of the intentions of the Working Party responsible for drafting the model contract; it is not intended to prevent the use of the model contract (and in particular of the General Conditions contained in part B) in transactions other than those particularly targeted by the Working Party. However, if the model contract is used in the context of goods which are substantially different from those primarily considered by the Working Party, the parties should take care to satisfy themselves that all the terms of the model contract are appropriate for their purpose. 3. Applicable law Failing contrary agreement between the parties, the model contract subjects the transaction to the United Nations Convention for the International Sale of Goods (hereafter referred to as CISG), also known as the Vienna Convention of 1980 and which, for ease of reference, is appended to the model contract as an annex. By means of this incorporation of the Vienna Convention into the model contract in article 1.2(A) of Part B, the Convention will apply, whether or not the countries of the seller and buyer have ratified the Vienna Convention. The working party chose to apply the Convention in default of contrary agreement because it was felt appropriate to adopt a uniform law, such as CISG, expressly made for international transactions. The model contract has been drafted on the assumption that the parties’ rights will be governed by the Vienna Convention and, as to questions not covered by the Convention, by the law of the country where the seller has his place of business (article 1.2). Accordingly parties are encouraged not to choose a domestic law of sale to govern the contract. Although CISG does not cover all aspects of the sale contract, it promotes uniformity and consistency. If, however, parties wish to choose a domestic law in place of CISG (by filling in box A-14(a) of part A), they should carefully check to ensure that the domestic law they have chosen to apply does not conflict with the terms of the model contract. If they wish to choose a law other than that of the seller to govern questions not covered by CISG, they should fill in box A-14(b). 4. Modifications to be evidenced in writing With a view to ensuring maximum certainty regarding the terms agreed between the parties, article 1.5 of Part B provides that modifications to the contract must be made in writing. However, this requirement is not absolute. In keeping with article 29(2) of CISG, article 1.5 of the model contract goes on to say that a party may be precluded from invoking the requirement of writing if he has agreed to a modification of written terms orally or by conduct and the other party has relied on such oral agreement or conduct. 5. Shipment and delivery conditions The parties are invited to choose the appropriate trade term2 under Incoterms3 . Although Part A of the model contract lists all current Incoterms in A-3, the Working Party recommends that the parties should seriously consider avoiding the use of terms requiring transferable transport documents, like bills of lading, such as the CFR and CIF Incoterms: manufactured goods are rarely sold or pledged in transit and consequently rarely require the use of a transferable transport document. Likewise, parties ought to think carefully before using, in conjunction with this model contract, Incoterms providing for delivery to, or discharge from, a vessel, such as FAS, FOB, DES and DEQ. Manufactured goods are normally handed over for carriage at terminals, whether within the port precincts or at an inland depot, and the use of such terms might consequently be inappropriate to the type of goods for which the model contract is intended. INTERNATIONAL CHAMBER OF C OMMERCE 6 2 In the absenc e of such choic e EXW shall apply: se e art. 8. 3 The current version is Incoterms 2000 (IC C Public ation no. 560).

Consequently, the Working Party recommends that the Incoterms most appropriate for use with the model contract would normally be EXW, FCA, CPT, CIP, DAF, DDU or DDP. It is for this reason that these terms are listed first rather than in the order set out in Incoterms. Contracting parties are also reminded that while Incoterms spell out the main duties of, and the allocation of, risk and costs as between sellers and buyers, they do not provide comprehensive answers to all the possible issues which may arise between the parties. Thus, for example, in some Incoterms, e.g. FOB, neither of the parties is under an obligation to insure, and consequently it is up to the parties to agree among themselves who is to effect any insurance cover. Again, the CIP, CPT and FCA terms do not allocate the incidence of terminal handling charges: the allocation of such charges between sellers and buyers is therefore a matter for special agreement between the parties. 6. Time of delivery It is important to bear in mind that the time of delivery, to be inserted by the parties at A-4 of Part A of the model contract, refers to the date on which, or period within which, the seller undertakes to perform his delivery obligations under the contract of sale, and in particular under the relevant Incoterm selected by the parties. This “time of delivery” is linked to the contractual place of delivery, which is not necessarily the place where the goods reach the buyer. Thus under CPT (Carriage Paid To) the seller fulfils his obligation to deliver the goods (according to clause A4 of this Incoterm) when he delivers the goods into the custody of the carrier and not when the goods arrive at the named place of destination. The Working Party therefore recommends that, before agreeing on the time of delivery by completing A-4 of Part A of the model contract, parties should check carefully the stage at which delivery occurs according to the Incoterm chosen in A-3 of the model contract: i.e. the operation described as delivery under the relevant Incoterm which the seller must perform at, or by the time agreed in A-4 of the model contract. The parties can agree a time of delivery by agreeing a precise date (e.g. “10 February 1998” or “by 10 February 1998”) or a period (e.g. “third week of February 1998”, “March 1998”). The parties can also agree a period of time running from a certain date (e.g. “60 days from signature of the sale contract”, “90 days after receipt of the agreed advance payment”). If a period of time is agreed, the seller may, according to article 33 CISG, deliver the goods at any time within that period, unless circumstances indicate that the buyer is to choose a date. 7. Payment conditions It is important to designate the mode and time of payment as set out in A-7. Where payment is to be made by transfer to the seller’s bank, the name and address of the bank and branch should be stated, together with details sufficient to identify the account, and, if desired, the mode of the payment message (e.g. wire transfer, electronic funds transfer). 8. Documents to be provided by the seller It is common practice in international sales that the seller provides the buyer with certain documents: invoice, transport document, certificates, etc. A-8 of Part A of the model contract provides the parties with an opportunity expressly to indicate their intentions as to documents. Two matters are well worth bearing in mind: (a) Parties should check which documents, if any, are to be provided under the particular Incoterm chosen under A-3 of Part A. Should the parties wish to add to or vary the documentary position under the Incoterm chosen, they should do so clearly in completing A-8 in Part A. (b) Where the parties agree on payment through a letter of credit, care should be taken to ensure that the parties are clear as to the documents to be required under the letter of credit. This 7 THE IC C MODEL INTERNATIONAL SALE C ONTRACT

For the guidance of users of this model contract, the following box contains a list of some transport documents in common use, with an indication of the type of transport for which they are appropriate. Some of the documents listed hereunder are documents of title, which give to their holder the right to dispose of the goods, while others are simply documents which evidence the delivery of the products to a carrier or warehouseman. Type of Document Bill of Lading Mode of Transport Se a. Also frequently used for multimodal transport. Comments Transferable Document of Title allowing buyer to sell or pledge goods while in transit by transferring the documents at any rate where made out “to order”. Type of Document Multimodal Transport Document Mode of Transport Transit involving c arriage by at le ast two different modes of transport. Comments Known by many names: Combined Transport Document, Container Bill of Lading, Fiata Multimodal Transport Bill of Lading and other variations. Type of Document Seawaybill Mode of Transport Se a. Comments Known by many names: Cargo Quay Re c eipt, Non-negotiable Bill of Lading, Liner Waybill. Non Transferable. Seller may alter delivery dire ctions until discharge, unless the SWB contains a NO DISP clause preventing such change. Type of Document Mate’s Receipt Mode of Transport Se a. Comments Document providing proof of delivery to a c arrier. Sometimes given to shipper when selling FOB or FCA, to be tendered to buyer inste ad of Bill of Lading. Type of Document Air Waybill Mode of Transport Air. Comments Sometimes also known as air consignment note. Type of Document Consignment Note Mode of Transport Land. Comments Also sometimes known as CIM (rail) or CMR (road) consignment note or waybill. Type of Document Warehouse Warrant Mode of Transport Land & Se a. Comments Transferable document used when the goods are warehoused for colle ction by buyer at seller’s end or at buyer’s end. Type of Document Freight-forwarder’s Documents Mode of Transport Se a, Air, Land or multimodal. Comments Important to identify whether the forwarder is undertaking responsibility for the c arriage of the goods as c arrier or as agent of the c arrier. Type of Document Packing List Mode of Transport Se a, Land or multimodal. Comments A document re cording what has be en pa cked into a lorry, pa ckage or container. May represent proof of delivery as betwe en seller and buyer, but important to identify who has issued the list and at what stage. INTERNATIONAL CHAMBER OF C OMMERCE 8

9. Retention of title The parties may agree, by completing A-6 of Part A of the model contract or otherwise, that the goods will remain the property of the seller until complete payment of the price, as indicated in article 7 of Part B of the model contract. It should however be remembered that under many national laws retention of title of goods intended for resale is not always effective. The seller should therefore carefully check under the relevant law (which normally will be the law of the country where the goods are situated) if and to what extent he may rely on article 7 of Part B4 . 10. Warranty to consumers Manufacturers of the type of goods for which this model contract is primarily intended typically grant a warranty (for repair and/or replacement as the case may be) to the ultimate purchaser (consumer). In such a case, the manufacturer’s warranty to the final user may overlap with the obligations of the seller under the sale contract. In fact, where the goods are defective, the final purchaser may, in principle, make a claim against his seller under the sale contract or directly against the manufacturer under the warranty given by him. In these cases, it may be appropriate for the parties to the international sale contract specifically to agree that the buyer will co-operate with the seller – who might himself be the manufacturer – in managing the warranty, for example by confirming the date of the on-sale to the ultimate consumer, normally the commencement date of the manufacturer’s warranty. The parties may also agree that the buyer will perform on the manufacturer’s behalf certain obligations under the warranty, for example the duties of repair or replacement of non-conforming goods. Elements of desirable co-operation between the parties are provided for in article 12 of Part B of the model contract. Parties may wish to stipulate for other aspects of co-operation by appropriate stipulation in A-16 of Part A of the model contract. 11. Limitations of liability In line with general practice in international trade, Part B of the model contract provides for a limitation of the amount of damages that may be claimed against a defaulting party, in order to reach a reasonable compromise between the buyer’s interest to claim the full loss caused by the seller’s breach and the seller’s interest to maintain his liability for damages within clearly foreseeable limits. Since it is impossible to strike such a balance in standard terms for all types of products, the Working Party chose to state basic formulae in Part B (at articles 10.1, 10.4, 11.3, 11.5 and 11.6) but expressly giving the parties an opportunity (at A-10, A-11 and A-12 of Part A) to agree on a modification of such formulae. (a) Delay in delivery or non-delivery The buyer may claim for delay in delivery: (i) the liquidated damages provided under article 10.1, i.e. 0.5% per week with a maximum amount of 5% of the price of the delayed goods5 , and (ii) where the contract is terminated by the buyer for late delivery under articles 10.2 or 10.3, the buyer may recover, in addition to the above liquidated damages, an amount for proven loss not exceeding 10% of the price of the non-delivered goods: see article 10.4. 9 THE IC C MODEL INTERNATIONAL SALE C ONTRACT 4 For more information on this topic see the Guide on Retention of Title, 2nd ed., (IC C Publication no. 501 out of print ) and Transfer of Ownership in International Trade (IC C Public ation no. 546). 5 This amount is re a ched after 10 we eks, which is also the time limit after which the buyer may terminate the contra ct. The buyer must notify the seller of the delay and if he does not do so within 15 days from the agre ed delivery date damages will run only from the date of notic e.

The damages referred to in (i) relate to delay in delivery of goods which are ultimately delivered and accepted. In this case, the buyer is entitled to the liquidated damages on mere proof of delay, and without showing actual loss, up to a maximum of 5% of the price of the delayed goods. The damages referred to in (ii) deal with the case where the buyer exercises a right to terminate the contract for delay. In this case he is still entitled to liquidated damages as above but can claim further damages (not exceeding 10% of the price) only if, and to the extent that, he proves additional loss after taking account of the liquidated damages to which he is entitled. Finally, the parties may modify the formulae in article 10.1 and 10.4 by completing A-10 of Part A of the model contract. (b) Lack of conformity The structure of remedies for delivery of non-conforming goods follows that applicable to delay in delivery. The breach does not by itself give the buyer the right to terminate the contract and, if the seller cures the breach, the buyer’s damages are limited to liquidated damages for the delay involved up to an amount which, when aggregated with the damages for the first period of delay (if any) under article 10.1, does not exceed 5% of the price of the non-conforming goods. Only where the non-conformity is not cured (and the contract is terminated) is the buyer entitled to further damages for any additional loss he is able to prove over and above reimbursement of the price and liquidated damages for delay. If the buyer notifies the seller of the non-conformity of the goods, the seller has three options: to replace the goods, to repair them, or to reimburse the price. Should the seller delay in replacing the goods or repairing them, the buyer is entitled to liquidated damages for delay in the same formula set out above under heading (a)(i). On the other hand, should the buyer choose to accept non-conforming goods, he is entitled to recover from the seller the difference in value compared with conforming goods, subject to a limit of 15% of the price of such goods. Finally, if the contract is terminated, the buyer can claim, as well as reimbursement of the price and damages for delay, additional damages for any loss he can establish up to a maximum of 10% of the price of the non-conforming goods. The Working Party felt that these formulae represent a fair balance between the conflicting interests of the parties, who can nonetheless agree otherwise. By completing A-11 of Part A, the parties can modify the above balance by deciding: (a) to fix a maximum amount of liability which is higher (or lower) than the 10% limit of article 11.5, or (b) to provide otherwise. 12. Termination of contract by the buyer in case of breach The model contract envisages three circumstances in which the buyer is entitled to terminate the contract on account of the seller’s breach: (a) where the seller fails to deliver goods by the cancellation date agreed in Box A-9 in part A of the model contract: see article 10.2; or (b) in the absence of such an agreed date, where the seller, duly notified of delay in delivery according to article 10.1, fails to deliver goods when the maximum amount of liquidated damages for delay is due, i.e. after 10 weeks from the date on which the seller should have delivered the goods and after five days from receipt by the seller of a notice to terminate: see article 10.3; or (c) where the seller fails to repair or replace non-conforming goods when the maximum aggregate of 5 % of the price of the delayed and/or non-conforming goods has been reached (that is, in the case of non-conformity, after 10 weeks from the date of notification) and after five days from receipt by the seller of a notice to terminate: see INTERNATIONAL CHAMBER OF C OMMERCE 10

article 11.4. 13. Force majeure The force majeure clause, contained in article 13 of part B of the model contract, is based on the force majeure clause of the ICC, with some modifications intended more efficiently to allocate losses in the case of commonly recognized instances of force majeure. 14. Resolution of disputes Through the completion of Box A-15 in Part A of the model contract, the parties may choose between arbitration and litigation for the resolution of disputes arising under the contract. Whether they choose arbitration or litigation, the parties are also invited to specify the place of arbitration or litigation. Where the parties fail to choose between arbitration and litigation, the model contract assumes that ICC arbitration is the preferred method intended by the parties for the resolution of disputes. If the parties choose litigation, without indicating the forum, ordinary courts will have jurisdiction according to the applicable rules of law. 11 THE IC C MODEL INTERNATIONAL SALE C ONTRACT

The ICC Model International Sale Contract A. Specific Conditions B. General Conditions THE IC C MODEL INTERNATIONAL SALE C ONTRACT 13 Copyright © 1997 ICC (International Chamber of Commerce) All rights reserved. No part of this work may be reproduced or copied in any form or by any means without written permission of ICC Publishing SA, except by the purchaser of this ICC publication N°556, for his own personal use. This publication may not be reproduced in whole or in part for sale, hire or licensing or any other commercial purpose without written permission of ICC Publishing SA. The software being part of the publication is subject to this provision.

ICC International Sale Contract (Manufa ctured Goods Intended for Resale) A. SPECIFIC CONDITIONS These Spe cific Conditions have be en prepared in order to permit the parties to agre e the particular terms of their sale contra ct by completing the spa c es left open or choosing (as the c ase may be) betwe en the alternatives provided in this document. Obviously this does not prevent the parties from agre eing other terms or further details in box A-16 or in one or more annexes. SELLER C ONTACT PERSON BUYER C ONTACT PERSON NAME AND ADDRESS NAME AND ADDRESS NAME AND ADDRESS NAME AND ADDRESS ................................................................................................... ........................................................................................................ ........................................................................................................ .............................................................................................................. ................................................................................................... ........................................................................................................ ........................................................................................................ .............................................................................................................. ................................................................................................... ........................................................................................................ ........................................................................................................ .............................................................................................................. A-1 GOODS SOLD DESCRIPTION OF THE G O ODS IF THERE IS INSUF FICIENT SPACE PARTIES MAY USE AN ANNEX A-2 CONTRACT PRICE (ART. 4) CURRENCY: AMOUNT IN NUMBERS: AMOUNT IN LETTERS: A-3 DELIVERY TERMS Recommended terms (a c cording to Incoterms 2000): se e Introduction, §5 ■ EXW Ex Works named pla c e: ■ FCA Fre e Carrier named pla c e: ■ CPT Carriage Paid To named pla c e of destination: ■ CIP Carriage and Insuranc e Paid To named pla c e of destination: ■ DAF Delivered At Frontier named pla c e: ■ DDU Delivered Duty Unpaid named pla c e of destination: ■ DDP Delivered Duty Paid named pla c e of destination: Other terms (a c cording to Incoterms 2000: se e Introduction, § 5) ■ FAS Fre e Alongside Ship named port of shipment: ■ FOB Fre e On Board named port of shipment: ■ CFR Cost, and Freight named port of destination: ■ CIF Cost Insuranc e and Freight named port of destination: ■ DES Delivered Ex Ship named port of destination: ■ DEQ Delivered Ex Quay named port of destination: Other delivery terms ■ CARRIER (where applic able) NAME AND ADDRESS C ONTACT PERSON ................................................................................................................................................................................................................. ............................................................................................................................................................................................................................. ................................................................................................................................................................................................................. ............................................................................................................................................................................................................................. ................................................................................................................................................................................................................. ............................................................................................................................................................................................................................. A-4 TIME OF DELIVERY The present contract of sale will be governed by these Specific Conditions (to the extent that the relevant boxes have been completed) and by the ICC General Conditions of Sale (Manufactured Goods Intended for Resale) which constitute part B of this document. SELLER BUYER SIGNATURE SIGNATURE _________________________________________ ___________________________________________ PLACE ________________________________ DATE ____________________________________ PLACE___________________________________ DATE ____________________________________

A-4 TIME OF DELIVERY Indicate here the date or period (e.g. week or month) at which or within which the Seller must perform his delivery obligations according to clause A.4 of the respective Incoterm (see Introduction, § 6) A-5 INSPECTION OF THE GOODS BY BUYER (ART. 3) ■ Before shipment Pla c e of inspe ction: ■ Other: A-6 RETENTION OF TITLE (ART. 7) ■ YES ■ NO A-7 PAYMENT CONDITIONS (ART. 5) ■ Payment on open account (art. 5.1) Time for payment (if different from art. 5.1) days from date of invoic e. Other: ■ Open a c count ba cked by demand guarante e or standby letter of credit (art. 5.5) ■ Payment in advance (art. 5.2): Date (if different from art. 5.2): ■ Total pric e ■ % of the pric e ■ Documentary Collection (art. 5.5) ■ D/P Documents against payment ■ D/A Documents against a c c eptanc e ■ Irrevocable documentary credit (art. 5.3) ■ Confirmed ■ Unconfirmed Pla c e of issue (if applic able): Pla c e of confirmation (if applic able): Credit available: Partial shipments: Transhipment: ■ By payment at sight ■ Allowed ■ Allowed ■ By deferred payment at: days ■ Not allowed ■ Not allowed ■ By a c c eptanc e of drafts at: days ■ By negotiation Date on which the documentary credit must be notified to seller (if different from art. 5.3) ■ days before date of delivery ■ other: ■ Other (e.g. cheque, bank draft, ele ctronic funds transfer to designated bank a c count of seller) A-8 DOCUMENTS Indicate here documents to be provided by Seller. Parties are advised to check the Incoterm they have selected under A-3 of these Specific Conditions. (As concerns transport documents, see also Introduction, § 8) ■ Transport documents: indicate type of transport document required ■ Commercial Invoice ■ Certificate of origin ■ Packing list ■ Certificate of inspection ■ Insurance document ■ Other: A-9 CANCELLATION DATE TO BE COMPLETED ONLY IF THE PARTIES WISH TO MODIFY ARTICLE 10.3 If the goods are not delivered for any reason whatsoever (including force majeure) by (date) the Buyer will be entitled to CANCEL THE C ONTRACT IMMEDIATELY BY NOTIFICATION TO THE SELLER A-10 LIABILITY FOR DELAY (ART. 10.1, 10.4 AND 11.3) TO BE COMPLETED ONLY IF THE PARTIES WISH TO MODIFY ART. 10.1, 10.4 OR 11.3 Liquidated damages for delay in delivery shall be: ■ % (of pric e of delayed goods) per we ek, with a maximum of % (of pric e of delayed goods) or: ■ (spe cify amount) In case of termination for delay, Seller's liability for damages for delay is limited to % of the price of the non-delivered goods

A-11 LIMITATION OF LIABILITY FOR LACK OF C ONFORMITY (ART. 11.5) TO BE COMPLETED ONLY IF THE PARTIES WISH TO MODIFY ART. 11.5. Seller's liability for damages arising from lack of conformity of the goods shall be: ■ limited to proven loss (including consequential loss, loss of profit, etc.) not exc e eding % of the contra ct pric e; or: ■ as follows (spe cify): A-12 LIMITATION OF LIABILITY WHERE NON-C ONFORMING G O ODS ARE RETAINED BY THE BUYER (ART. 11.6) TO BE COMPLETED ONLY IF THE PARTIES WISH TO MODIFY ART. 11.6 The price abatement for retained non-conforming goods shall not exceed: ■ % of the pric e of such goods or: ■ (spe cify amount) A-13 TIME-BAR (Art.11.8) TO BE COMPLETED ONLY IF THE PARTIES WISH TO MODIFY ART. 11.8. Any a ction for non-conformity of the goods (as defined in article 11.8) must be taken by the Buyer not later than from the date of arrival of the goods at destination. A-14(a), A-14(b) APPLICABLE LAW (Art.1.2) TO BE COMPLETED ONLY IF THE PARTIES WISH TO SUBMIT THE SALE CONTRACT TO A NATIONAL LAW INSTEAD OF CISG, the solution hereunder is not recommended (see Introduction, § 3) This sales contra ct is governed by the domestic law of (country) To be completed if the parties wish to choose a law other than that of the seller for questions not covered by CISG Any questions not covered by CISG will be governed by the law of (country) A-15 RESOLUTION OF DISPUTES (Art.14) The two solutions hereunder (arbitration or litigation before ordinary courts) are alternatives: parties cannot choose both of them. If no choice is made, ICC arbitration will apply, according to art. 14 ■ ARBITRATION ■ LITIGATION (ordinary courts) ■ IC C (a c cording to art. 14.1) In c ase of dispute the courts of Pla c e of arbitration (pla c e) ■ Other (spe cify) shall have jurisdiction A-16 OTHER

ICC International Sale Contract (Manufactured Goods Intended for Resale) B. GENERAL CONDITIONS IC C General Conditions of Sale (Manufa ctured Goods Intended for Resale) Art. 1 General 1.1 These General Conditions are intended to be applied together with the Spe cific Conditions (part A) of the IC C International Sale Contract (Manufactured Goods Int e n d e d for Re s a l e), b ut th e y ma y a lso b e incorporated on their own into any sale contract. Where t h e s e G e n e r a l C o n d iti o n s (P a rt B ) a r e u s e d independently of the said Specific Conditions (Part A), any referenc e in Part B to Part A will be interpreted as a referenc e to any relevant spe cific conditions agreed by the parties. In case of contradiction between these General Conditions and any specific conditions agre ed upon betwe en the parties, the spe cific conditions shall prevail. 1.2 Any questions relating to this Contra ct which are not e xpre ssly or implicitly s e ttle d by the provisions contained in the Contra ct itself (i.e. these General Conditions and any spe cific conditions agre ed upon by the parties) shall be governed: A. by the United Nations Convention on Contracts for the International Sale of Goods (Vienna Convention of 1980, here after referred to as CISG), and B. to th e e xt e nt th a t su c h q u e stions are not covered by CISG, by reference to the law of the country where the Seller ha s his pla c e of business. 1.3 Any referenc e made to trade terms (such as EXW, FCA, etc.) is de emed to be made to the relevant term of Incoterms published by the International Chamber of Commerc e. 1.4 A n y r e f e r e n c e m a d e t o a p u b l i c a ti o n o f t h e International Chamber of Commerce is deemed to be made to the version current at the date of conclusion of the Contra ct. 1.5 No modification of the Contract is valid unless agreed or evidenc ed in writing. However, a party may be precluded by his conduct from asserting this provision to the extent that the other party has relied on that conduct. Art. 2 Characteristics of the goods 2.1 It is agre ed that any information relating to the goods and their use, such as weights, dimensions, capacities, prices, colours and other data contained in catalogues, prospectuses, circulars, advertisements, illustrations, pric e-lists of the Seller, shall not take effe ct as terms of the Contra ct unless expressly referred to in the Contra ct. 2.2 Unless otherwise agreed, the Buyer does not acquire any property rights in software, drawings, etc. which may have be en made available to him. The Seller also remains the exclusive owner of any intelle ctual or industrial property rights relating to the goods. Art. 3 Inspection of the goods before shipment If the parties have agre ed that the Buyer is entitled to inspe ct the goods before shipment, the Seller must notify the Buyer within a re asonable time before the shipment that the goods are re ady for inspe ction at the agre ed pla c e. Art. 4 Price 4.1 If no pric e has be en agre ed, the Seller's current list price at the time of the conclusion of the Contract shall apply. In the absenc e of such a current list pric e, the pric e generally charged for such goods at the time of the conclusion of the Contra ct shall apply. 4.2 Unless otherwise agreed in writing, the price does not include VAT, and is not subje ct to pric e adjustment. 4.3 The price indicated under A-2 (contract price) includes any costs which are at the Seller's charge a c cording to this Contra ct. However, should the Seller be ar any costs which, a c cording to this Contra ct, are for the Buyer's a c count (e.g. for transportation or insuranc e u n d e r E XW or F C A), s u c h s ums s h a l l n o t b e consid ere d as having b e en includ e d in the pric e under A-2 and shall be reimbursed by the Buyer. Art. 5 Payment conditions 5.1 Unless otherwise agre ed in writing, or implied from a prior course of de aling betwe en the parties, payment of the pric e and of any other sums due by the Buyer to the Seller shall be on open a c count and time of payment shall be 30 days from the date of invoice. The amounts due shall be transferred, unless otherwise agre ed, by teletransmission to the Seller’s bank in the Seller’s country for the a c count of the Seller and the Buyer shall be de emed to have performed his payment obligations when the respe ctive sums due have been received by the Seller's bank in immediately available funds. 5.2 If the parties have agre ed on payment in advanc e, without further indication, it will be assumed that such advance payment, unless otherwise agreed, refers to the full pric e, and that the advanc e payment must be received by the Seller's bank in immediately available

funds at le ast 30 days before the agre ed date of delivery or the earliest date within the agreed delivery period. If advance payment has been agreed only for a part of the contra ct pric e, the payment conditions of the remaining amount will be determined according to the rules set forth in this article. 5.3 If the parties have agreed on payment by documentary credit, then, unless otherwise agreed, the Buyer must arrange for a documentary credit in favour of the Seller to be issued by a reputable bank, subject to the Uniform C ustoms and Pra ctic e for Documentary Credits published by the International Chamber of Commerc e, and to be notified at le ast 30 days before the agre ed date of delivery or at le ast 30 days before the e arliest date within the agre ed delivery period. Unless otherwise agre ed, the documentary credit shall be payable at sight and allow partial shipments and transhipments. 5.4 If the parties have agreed on payment by documentary collection, then, unless otherwise agreed, documents will be tendered against payment (D/P) and the tender will in any c ase be subje ct to the Uniform Rules for Colle ctions published by the International Chamber of Commerc e. 5.5 To the extent that the parties have agreed that payment is to be ba cked by a bank guarante e, the Buyer is to provide, at le ast 30 days before the agre ed date of delivery or at le ast 30 days before the e arliest date within the agreed delivery period, a first demand bank guarante e subje ct to the Uniform Rules for Demand Guarante es published by the International Chamber of Commerc e, or a standby letter of credit subje ct either to such Rules or to the Uniform Customs and Pra ctic e for Documentary Credits published by the International Chamber of Commerc e, in either c ase issued by a reputable bank. Art. 6 Interest in case of delayed payment 6.1 If a party does not pay a sum of money when it falls due the other party is entitled to interest upon that sum from the time when payment is due to the time of payment. 6.2 Unless otherwise agre ed, the rate of interest shall be 2% above the average bank short-term lending rate to prime borrowers prevailing for the currency of payment at the pla c e of payment, or where no such rate exists at that place, then the same rate in the State of the currency of payment. In the absenc e of such a rate at either pla c e the rate of interest shall be the appropriate rate fixed by the law of the State of the currency of payment. Art. 7 Retention of title If the parties have validly agre ed on retention of title, the goods shall remain the property of the Seller until the complete payment of the pric e, or as otherwise agre ed. Art. 8 Contractual term of delivery Unless otherwise agreed, delivery shall be “Ex Works” (EXW). Art. 9 Documents Unless otherwise agre ed, the Seller must provide the documents (if any) indicated in the applicable Incoterm or, if no Incoterm is applic able, a c cording to any previous course of de aling. Art. 10 Late-delivery, non-delivery and remedies therefor 10.1 When there is delay in delivery of any goods, the Buyer is entitled to claim liquidated damages equal to 0.5% or such other perc entage as may be agre ed of the pric e of those goods for e a ch complete we ek of delay, provided the Buyer notifies the Seller of the delay. Where the Buyer so notifies the Seller within 15 days from the agre ed date of delivery, damages will run from the agre ed date of delivery or from the last day within the agre ed period of delivery. Where the Buyer so notifies the Seller after 15 days of the agreed date of delivery, damages will run from the date of the notice. Liquidated damages for delay shall not exceed 5% of the pric e of the delayed goods or such other maximum amount as may be agre ed. 10.2 If the parties have agre ed upon a c anc ellation date in Box A-9, the Buyer may terminate the Contra ct by notification to the Seller as regards goods which have not be en delivered by such c anc ellation date for any reason whatsoever (including a force majeure event). 10.3 When article 10.2 does not apply and the Seller has not delivered the goods by the date on which the Buyer has become entitled to the maximum amount of liquidated damages under article 10.1, the Buyer may give notice in writing to terminate the Contract as regards such goods, if they have not been delivered to the Buyer within 5 days of receipt of such notice by the Seller. 10.4 In case of termination of the Contract under article 10.2 or 10.3 then in addition to any amount paid or payable und er article 10.1, the Buyer is entitle d to claim damages for any additional loss not exc e eding 10% of the pric e of the non-delivered goods. 10.5 The remedies under this article are exclusive of any other remedy for delay in delivery or non-delivery. Art. 11 Non-conformity of the goods 11.1 The Buy er shall e x amine the goods a s soon a s possible after their arrival at destination and shall notify the Seller in writing of any la ck of conformity of the goods within 15 days from the date when the Buyer discovers or ought to have discovered the lack of conformity. In any c ase the Buyer shall have no remedy for la ck of conformity if he fails to notify the Seller thereof within 12 months from the date of arrival of the goods at the agre ed destination.

11.2 Goods will be de emed to conform to the Contra ct despite minor discrepancies which are usual in the particular trade or through course of dealing between the p arties, but the Buyer will b e entitle d to any abatement of the pric e usual in the trade or through course of de aling for such discrepancies. 11.3 Where goods are non-conforming (and provided the Buyer, having given notic e of the la ck of conformity in complianc e with article 11.1, does not ele ct in the notic e to retain them), the Seller shall at his option: (a) re pla c e the goods with conforming goods, without any additional expense to the Buyer, or (b) r e p a ir th e g oo d s , without a ny a d d ition a l expense to the Buyer, or (c) reimburse to the Buyer the pric e paid for the non-conforming goods and thereby terminate the Contra ct as regards those goods. The Buyer will be entitled to liquidated damages as quantified under article 10.1 for e a ch complete we ek of delay betwe en the date of notific ation of the nonconformity a c cording to article 11.1 and the supply of substitute goods under article 11.3(a) or repair under article 11.3(b) above. Such damages may be a c cumulated with damages (if any) payable under arti c l e 10.1, b ut c a n in no c a s e e x c e e d in th e aggregate 5% of the pric e of those goods. 11.4 If the Seller has failed to perform his duties under article 11.3 by the date on which the Buyer be comes entitled to the maximum amount of liquidated damages a c cording to that article, the Buyer may give notic e in writing to terminate the Contract as regards the nonconforming goods unless the supply of repla c ement goods or the repair is effected within 5 days of receipt of such notic e by the Seller. 11.5 Where the Contract is terminated under article 11.3(c) or article 11.4, then in addition to any amount paid or payable under article 11.3 as reimbursement of the price and damages for any delay, the Buyer is entitled to damages for any additional loss not exc e eding 10% of the pric e of the non-conforming goods. 11.6 Where the Buyer ele cts to retain non-conforming goods, he shall be entitled to a sum equal to the differenc e betwe en the value of the goods at the agreed place of destination if they had conformed with the Contra ct and their value at the same pla c e as delivered, such sum not to exc e ed 15% of the pric e of those goods. 11.7 Unless otherwise a gre e d in writing, the reme dies under this article 11 are exclusive of any other remedy for non-conformity. 11.8 Unless otherwise agre ed in writing, no a ction for la ck of conformity c an be taken by the Buyer, whether before judicial or arbitral tribunals, after 2 ye ars from the date of arrival of the goods. It is expressly agre ed that after the expiry of such term, the Buyer will not plead non-conformity of the goods, or make a counterclaim thereon, in defenc e to any a ction taken by the Seller against the Buyer for non-performanc e of this Contra ct. Art. 12 Cooperation between the parties 12.1 The Buyer shall promptly inform the Seller of any claim made against the Buyer by his customers or third parties concerning the goods delivered or intellectual property rights related thereto. 12.2 The Seller will promptly inform the Buyer of any claim which may involve the product liability of the Buyer. Art. 13 Force majeure 13.1 A party is not liable for a failure to perform any of his obligations in so far as he proves: (a) that the failure wa s due to an imp e diment beyond his control, and (b) that he could not re asonably be expe cted to have taken into account the impediment and its effe cts upon his ability to perform at the time of the conclusion of the Contra ct, and (c) that he could not re asonably have avoided or overcome it or its effe cts. 13.2 A party seeking relief shall, as soon as practicable after the impediment and its effe cts upon his ability to perform be come known to him, give notic e to the other party of such impediment and its effe cts on his ability to perform. Notice shall also be given when the ground of relief c e ases. F ailure to give either notic e makes the party thus failing liable in damages for loss which otherwise could have be en avoided. 13.3 Without prejudic e to article 10.2, a ground of relief under this clause relieves the party failing to perform from liability in damages, from penalties and other contra ctual sanctions, exc ept from the duty to pay interest on money owing as long as and to the extent that the ground subsists. 13.4 If the grounds of relief subsist for more than six months, either party shall be entitled to terminate the Contra ct with notic e. Art. 14 Resolution of disputes 14.1 Unless otherwise agreed in writing, all disputes arising in connection with the present Contract shall be finally s e t tl e d u n d e r t h e Ru l e s o f A r b itr a ti o n o f t h e International Chamber of Commerc e by one or more arbitrators appointed in a c cordanc e with the said Rules. 14.2 An arbitration clause does not prevent any party from requesting interim or conservatory measures from the courts.

Annexes • Specimen form of Model Contract • Incoterms 2000 Preambles • United Nations Convention on Contracts for the International Sale of Goods (CSIG) 23 THE IC C MODEL INTERNATIONAL SALE C ONTRACT

INTERNATIONAL CHAMBER OF C OMMERCE 24 ICC International Sale Contract (Manufa ctured Goods Intended for Resale) A. SPECIFIC CONDITIONS These Spe cific Conditions have be en prepared in order to permit the parties to agre e the particular terms of their sale contra ct by completing the spa c es left open or choosing (as the c ase may be) betwe en the alternatives provided in this document. Obviously this does not prevent the parties from agre eing other terms or further details in box A-16 or in one or more annexes. SELLER C ONTACT PERSON BUYER C ONTACT PERSON NAME AND ADDRESS NAME AND ADDRESS NAME AND ADDRESS NAME AND ADDRESS ................................................................................................... ........................................................................................................ ........................................................................................................ .............................................................................................................. ................................................................................................... ........................................................................................................ ........................................................................................................ .............................................................................................................. ................................................................................................... ........................................................................................................ ........................................................................................................ .............................................................................................................. A-1 GOODS SOLD DESCRIPTION OF THE G O ODS IF THERE IS INSUF FICIENT SPACE PARTIES MAY USE AN ANNEX A-2 CONTRACT PRICE (ART. 4) CURRENCY: AMOUNT IN NUMBERS: AMOUNT IN LETTERS: A-3 DELIVERY TERMS Recommended terms (a c cording to Incoterms 2000): se e Introduction, §5 ■ EXW Ex Works named pla c e: ■ FCA Fre e Carrier named pla c e: ■ CPT Carriage Paid To named pla c e of destination: ■ CIP Carriage and Insuranc e Paid To named pla c e of destination: ■ DAF Delivered At Frontier named pla c e: ■ DDU Delivered Duty Unpaid named pla c e of destination: ■ DDP Delivered Duty Paid named pla c e of destination: Other terms (a c cording to Incoterms 2000: se e Introduction, § 5) ■ FAS Fre e Alongside Ship named port of shipment: ■ FOB Fre e On Board named port of shipment: ■ CFR Cost, and Freight named port of destination: ■ CIF Cost Insuranc e and Freight named port of destination: ■ DES Delivered Ex Ship named port of destination: ■ DEQ Delivered Ex Quay named port of destination: Other delivery terms ■ CARRIER (where applic able) NAME AND ADDRESS C ONTACT PERSON ................................................................................................................................................................................................................. ............................................................................................................................................................................................................................. ................................................................................................................................................................................................................. ............................................................................................................................................................................................................................. ................................................................................................................................................................................................................. ............................................................................................................................................................................................................................. A-4 TIME OF DELIVERY The present contract of sale will be governed by these Specific Conditions (to the extent that the relevant boxes have been completed) and by the ICC General Conditions of Sale (Manufactured Goods Intended for Resale) which constitute part B of this document. SELLER BUYER SIGNATURE SIGNATURE _________________________________________ ___________________________________________ PLACE ________________________________ DATE ____________________________________ PLACE___________________________________ DATE ____________________________________ Continental Export plc 7 Smithfield Terrace London EC34RP UK 1500 English widgets; Model: classic Size 13 Colour: dark blue Alan Bell 7 Smithfield Terrace London EC34RP UK VERONESE spa Via Borgia 15 Torino Italy Stefano Romani Via Borgia 15 Torino Italy London 23 October 1997 27 October 1997 Torino US Dollar 1,570,000 one million five hundred and seventy thousand DOVER TRANSWORLD plc 13 East Lane Dock Dover Tom Bungee X Specimen form of model contract

25 THE IC C MODEL INTERNATIONAL SALE C ONTRACT A-4 TIME OF DELIVERY Indicate here the date or period (e.g. week or month) at which or within which the Seller must perform his delivery obligations according to clause A.4 of the respective Incoterm (see Introduction, § 6) A-5 INSPECTION OF THE GOODS BY BUYER (ART. 3) ■ Before shipment Pla c e of inspe ction: ■ Other: A-6 RETENTION OF TITLE (ART. 7) ■ YES ■ NO A-7 PAYMENT CONDITIONS (ART. 5) ■ Payment on open account (art. 5.1) Time for payment (if different from art. 5.1) days from date of invoic e. Other: ■ Open a c count ba cked by demand guarante e or standby letter of credit (art. 5.5) ■ Payment in advance (art. 5.2): Date (if different from art. 5.2): ■ Total pric e ■ % of the pric e ■ Documentary Collection (art. 5.5) ■ D/P Documents against payment ■ D/A Documents against a c c eptanc e ■ Irrevocable documentary credit (art. 5.3) ■ Confirmed ■ Unconfirmed Pla c e of issue (if applic able): Pla c e of confirmation (if applic able): Credit available: Partial shipments: Transhipment: ■ By payment at sight ■ Allowed ■ Allowed ■ By deferred payment at: days ■ Not allowed ■ Not allowed ■ By a c c eptanc e of drafts at: days ■ By negotiation Date on which the documentary credit must be notified to seller (if different from art. 5.3) ■ days before date of delivery ■ other: ■ Other (e.g. cheque, bank draft, ele ctronic funds transfer to designated bank a c count of seller) A-8 DOCUMENTS Indicate here documents to be provided by Seller. Parties are advised to check the Incoterm they have selected under A-3 of these Specific Conditions. (As concerns transport documents, see also Introduction, § 8) ■ Transport documents: indicate type of transport document required ■ Commercial Invoice ■ Certificate of origin ■ Packing list ■ Certificate of inspection ■ Insurance document ■ Other: A-9 CANCELLATION DATE TO BE COMPLETED ONLY IF THE PARTIES WISH TO MODIFY ARTICLE 10.3 If the goods are not delivered for any reason whatsoever (including force majeure) by (date) the Buyer will be entitled to CANCEL THE C ONTRACT IMMEDIATELY BY NOTIFICATION TO THE SELLER A-10 LIABILITY FOR DELAY (ART. 10.1, 10.4 AND 11.3) TO BE COMPLETED ONLY IF THE PARTIES WISH TO MODIFY ART. 10.1, 10.4 OR 11.3 Liquidated damages for delay in delivery shall be: ■ % (of pric e of delayed goods) per we ek, with a maximum of % (of pric e of delayed goods) or: ■ (spe cify amount) In case of termination for delay, Seller's liability for damages for delay is limited to % of the price of the non-delivered goods FOURTH WEEK OF MARCH 1998 X CARRIER’S TERMINAL - DOVER X X X 45 TORINO, ITALY LONDON, UK 30 X X X X X X X X Multimodal Transport Document X Specimen form of model contract

INTERNATIONAL CHAMBER OF C OMMERCE 26 A-11 LIMITATION OF LIABILITY FOR LACK OF C ONFORMITY (ART. 11.5) TO BE COMPLETED ONLY IF THE PARTIES WISH TO MODIFY ART. 11.5. Seller's liability for damages arising from lack of conformity of the goods shall be: ■ limited to proven loss (including consequential loss, loss of profit, etc.) not exc e eding % of the contra ct pric e; or: ■ as follows (spe cify): A-12 LIMITATION OF LIABILITY WHERE NON-C ONFORMING G O ODS ARE RETAINED BY THE BUYER (ART. 11.6) TO BE COMPLETED ONLY IF THE PARTIES WISH TO MODIFY ART. 11.6 The price abatement for retained non-conforming goods shall not exceed: ■ % of the pric e of such goods or: ■ (spe cify amount) A-13 TIME-BAR (Art.11.8) TO BE COMPLETED ONLY IF THE PARTIES WISH TO MODIFY ART. 11.8. Any a ction for non-conformity of the goods (as defined in article 11.8) must be taken by the Buyer not later than from the date of arrival of the goods at destination. A-14(a), A-14(b) APPLICABLE LAW (Art.1.2) TO BE COMPLETED ONLY IF THE PARTIES WISH TO SUBMIT THE SALE CONTRACT TO A NATIONAL LAW INSTEAD OF CISG, the solution hereunder is not recommended (see Introduction, § 3) This sales contra ct is governed by the domestic law of (country) To be completed if the parties wish to choose a law other than that of the seller for questions not covered by CISG Any questions not covered by CISG will be governed by the law of (country) A-15 RESOLUTION OF DISPUTES (Art.14) The two solutions hereunder (arbitration or litigation before ordinary courts) are alternatives: parties cannot choose both of them. If no choice is made, ICC arbitration will apply, according to art. 14 ■ ARBITRATION ■ LITIGATION (ordinary courts) ■ IC C (a c cording to art. 14.1) In c ase of dispute the courts of Pla c e of arbitration (pla c e) ■ Other (spe cify) shall have jurisdiction A-16 OTHER 1 month X X Paris Specimen form of model contract

EXW EX WORKS (... named place) "Ex works" means that the seller delivers when he places the goods at the disposal of the buyer at the seller’s premises or another named pla c e (i.e. works, fa ctory, warehouse, etc.) not cle ared for export and not loaded on any colle cting vehicle. This term thus represents the minimum obligation for the seller, and the buyer has to be ar all costs and risks involved in taking the goods from the seller’s premises. However, if the parties wish the seller to be responsible for the loading of the goods on departure and to be ar the risks and all the costs of such loading, this should be made cle ar by adding explicit wording to this effe ct in the contract of sale1 . This term should not be used when the buyer c annot c arry out the export formalities dire ctly or indirectly. In such circumstances, the FCA term should be used, provided the seller agre es that he will load at his cost and risk. FCA FREE CARRIER (... named place) "Fre e Carrier" me ans that the seller delivers the goods, cle ared for export, to the c arrier nominated by the buyer at the named pla c e. It should be noted that the chosen pla c e of delivery has an impa ct on the obligations of loading and unloading the goods at that place. If delivery oc curs at the seller’s premises, the seller is responsible for loading. If delivery occurs at any other place, the seller is not responsible for unloading. This term may b e use d irresp e ctive of the mod e of transport, including multimodal transport. "Carrier" means any person who, in a contract of carriage, undertakes to perform or to procure the performanc e of transport by rail, road, air, se a, inland waterway or by a combination of such modes. If the buyer nominates a person other than a c arrier to re c eive the goods, the seller is de emed to have fulfilled his obligation to deliver the goods when they are delivered to that person. FAS FREE ALONGSIDE SHIP (... named port of shipment) "Fre e Alongside Ship" me ans that the seller delivers when the goods are pla c ed alongside the vessel at the named port of shipment. This me ans that the buyer has to be ar all costs and risks of loss of or damage to the goods from that moment. The FAS term requires the seller to cle ar the goods for export. THIS IS A REVERSAL FROM PREVIOUS INC OTERMS V E RSI O N S W HI C H R E Q UIR E D T H E B U Y E R T O ARRANGE FOR EXPORT CLEARANCE. However, if the parties wish the buyer to clear the goods for export, this should be made cle ar by adding explicit wording to this effe ct in the contra ct of sale 2 . This term c an be used only for se a or inland waterway transport. FOB FREE ON BOARD (... named port of shipment) "Fre e on Board" me ans that the seller delivers when the goods pass the ship's rail at the named port of shipment. This me ans that the buyer has to be ar all costs and risks of loss of or damage to the goods from that point. The FOB term requires the seller to clear the goods for export. This term c an be used only for se a or inland waterway transport. If the parties do not intend to deliver the goods a cross the ship’s rail, the FCA term should be used. CFR COST AND FREIGHT (... named port of destination) "Cost and Freight" me ans that the seller delivers when the goods pass the ship’s rail in the port of shipment. The seller must pay the costs and freight ne c essary to bring the goods to the named port of destination BUT the risk of loss of or damage to the goods, as well as any additional costs due to events oc curring after the time of delivery, are transferred from the seller to the buyer. The CFR term requires the seller to cle ar the goods for export. This term c an be used only for se a and inland waterway transport. If the parties do not intend to deliver the goods a cross the ship’s rail, the CPT term should be used. 27 THE IC C MODEL INTERNATIONAL SALE C ONTRACT Incoterms 2000, preambles © ICC, publication No. 560, available from ICC Publishing SA, 38 Cours Albert 1er, 75008 Paris, France 1 Refer to Introduction paragraph 11. 2 Refer to Introduction paragraph 11.

CIF COST, INSURANCE AND FREIGHT (... named port of destination) "Cost, Insuranc e and Freight" me ans that the seller delivers when the goods pass the ship’s rail in the port of shipment. The seller must pay the costs and freight ne c essary to bring the goods to the named port of destination BUT the risk of loss of or damage to the goods, as well as any additional costs due to events oc curring after the time of delivery, are transferred from the seller to the buyer. However, in CIF the seller also has to procure marine insuranc e against the buyer’s risk of loss of or damage to the goods during the c arriage. Consequently, the seller contra cts for insuranc e and pays the insuranc e premium. The buyer should note that under the CIF term the seller is required to obtain insurance only on minimum cover 3 . Should the buyer wish to have the prote ction of gre ater cover, he would either ne ed to agre e as much expressly with the seller or to make his own extra insuranc e arrangements. The CIF term requires the seller to cle ar the goods for export. This term c an be used only for se a and inland waterway transport. If the parties do not intend to deliver the goods a cross the ship’s rail, the CIP term should be used. CPT CARRIAGE PAID TO (... named place of destination) "Carriage paid to..." me ans that the seller delivers the goods to the c arrier nominated by him but the seller must in addition pay the cost of c arriage ne c essary to bring the goods to the named destination. This me ans that the buy er b e ars all risks and any other costs oc curring after the goods have be en so delivered. "Carrier" means any person who, in a contract of carriage, undertakes to perform or to procure the performanc e of transport, by rail, road, air, se a, inland waterway or by a combination of such modes. If subsequent c arriers are used for the c arriage to the agre ed destination, the risk passes when the goods have be en delivered to the first c arrier. The CPT term requires the seller to cle ar the goods for export. This term may b e use d irresp e ctive of the mod e of transport including multimodal transport. CIP CARRIAGE AND INSURANCE PAID TO (... named place of destination) "Carriage and Insuranc e paid to..." me ans that the seller delivers the goods to the c arrier nominated by him but the seller must in a d dition p ay the cost of c arria g e ne c essary to bring the goods to the named destination. This me ans that the buy er b e ars all risks and any additional costs occurring after the goods have been so delivered. However, in CIP the seller also has to procure insuranc e against the buyer’s risk of loss of or damage to the goods during the c arriage. Consequently, the seller contra cts for insuranc e and pays the insuranc e premium. The buyer should note that under the CIP term the seller is required to obtain insuranc e only on minimum cover 4 . Should the buyer wish to have the prote ction of gre ater cover, he would either need to agree as much expressly with the s eller or to ma k e his own e xtra insuranc e arrangements. "Carrier" means any person who, in a contract of carriage, undertakes to perform or to procure the performanc e of transport, by rail, road, air, se a, inland waterway or by a combination of such modes. If subsequent carriers are used for the carriage to the agreed destination, the risk passes when the goods have been delivered to the first carrier. The CIP term requires the seller to clear the goods for export. This term may b e use d irresp e ctive of the mod e of transport including multimodal transport. DAF DELIVERED AT FRONTIER (... named place) "Delivered at Frontier" me ans that the seller delivers when the goods are pla c ed at the disposal of the buyer on the arriving means of transport not unloaded, cleared for export, but not cle ared for import at the named point and pla c e at the frontier, but before the customs border of the adjoining country. The term "frontier" may be used for any frontier including that of the country of export. Therefore, it is of vital importanc e that the frontier in question be defined pre cisely by always naming the point and pla c e in the term. However, if the parties wish the seller to be responsible for the unloading of the goods from the arriving me ans of transport and to bear the risks and costs of unloading, this should be made cle ar by adding explicit wording to this effe ct in the contra ct of sale 5 . This term may b e use d irresp e ctive of the mod e of transport when goods are to be delivered at a land frontier. When delivery is to take pla c e in the port of destination, on board a vessel or on the quay (wharf), the DES or DEQ terms should be used. DES DELIVERED EX SHIP (... named port of destination) "Delivered Ex Ship" me ans that the seller delivers when the goods are pla c ed at the disposal of the buyer on INTERNATIONAL CHAMBER OF C OMMERCE 28 3 Refer to Introduction paragraph 9.3. 4 Refer to Introduction paragraph 9.3. 5 Refer to Introduction paragraph 11.

board the ship not cle ared for import at the named port of destination. The seller has to be ar all the costs and risks involved in bringing the goods to the named port of destination before discharging. If the parties wish the seller to be ar the costs and risks of discharging the goods, then the DEQ term should be used. This term c an be used only when the goods are to be d elivere d by se a or inland waterway or multimod al transport on a vessel in the port of destination. DEQ DELIVERED EX QUAY (... named port of destination) "Delivered Ex Quay" means that the seller delivers when the goods are placed at the disposal of the buyer not cleared for import on the quay (wharf) at the named port of destination. The seller has to be ar costs and risks involved in bringing the goods to the named port of d estination and discharging the goods on the quay (wharf).The DEQ term requires the buyer to clear the goods for import and to pay for all formalities, duties, taxes and other charges upon import. THIS IS A REVERSAL FROM PREVIOUS INC OTERMS V E RSI O N S W HI C H R E Q UIR E D T H E S E L L E R T O ARRANGE FOR IMPORT CLEARANCE. If the parties wish to include in the seller’s obligations all or part of the costs payable upon import of the goods, this should be made clear by adding explicit wording to this effect in the contract of sale6 . This term can be used only when the goods are to be delivered by sea or inland waterway or multimodal transport on discharging from a vessel onto the quay (wharf) in the port of destination. However if the parties wish to include in the seller’s obligations the risks and costs of the handling of the goods from the quay to another place (warehouse, terminal, transport station, etc.) in or outside the port, the DDU or DDP terms should be used. DDU DELIVERED DUTY UNPAID (... named place of destination) "Delivered duty unpaid" means that the seller delivers the goods to the buyer, not cle are d for import, and not unloaded from any arriving me ans of transport at the named pla c e of destination. The seller has to be ar the costs and risks involved in bringing the goods thereto, other than, where applic able 7 , any "duty" (which term includes the responsibility for and the risks of the carrying out of customs formalities, and the payment of formalities, customs duties, taxes and other charges) for import in the country of destination. Such "duty" has to be borne by the buyer as well as any costs and risks c aused by his failure to cle ar the goods for import in time. However, if the parties wish the seller to carry out customs forma liti e s a n d b e ar th e c osts a n d risks re sultin g therefrom as well as some of the costs payable upon import of the goods, this should be made clear by adding explicit wording to this effe ct in the contra ct of sale 8 . This term may b e use d irresp e ctive of the mod e of transport but when delivery is to take pla c e in the port of destination on board the vessel or on the quay (wharf), the DES or DEQ terms should be used. DDP DELIVERED DUTY PAID (... named place of destination) "Delivered duty paid" me ans that the seller delivers the goods to the buyer, cleared for import, and not unloaded from any arriving means of transport at the named place of destination. The seller has to be ar all the costs and risks involved in bringing the goods thereto including, where applic able 9 , any "duty" (which term includes the responsibility for and the risks of the c arrying out of customs formalities and the p ayment of formalities, customs duties, taxes and other charges) for import in the country of destination. Whilst the EXW term represents the minimum obligation for the seller, DDP represents the maximum obligation. This term should not b e use d if the seller is una ble dire ctly or indire ctly to obtain the import lic enc e. However, if the parties wish to exclude from the seller’s obligations some of the costs payable upon import of the goods (such as value-added tax : VAT), this should be made cle ar by adding explicit wording to this effe ct in the contra ct of sale 10 . If the parties wish the buyer to be ar all risks and costs of the import, the DDU term should be used. This term may b e use d irresp e ctive of the mod e of transport but when delivery is to take pla c e in the port of destination on board the vessel or on the quay (wharf), the DES or DEQ terms should be used. 29 THE IC C MODEL INTERNATIONAL SALE C ONTRACT 6 Refer to Introduction paragraph 11. 7 Refer to Introduction paragraph 14. 8 Refer to Introduction paragraph 11. 9 Refer to Introduction paragraph 14. 10 Refer to Introduction paragraph 11.

9.3 The "C"-terms require the seller to contra ct for c arriage on usual terms at his own expense. Therefore, a point up to which he would have to pay transport costs must necessarily be indicated after the respective "C"-term. Under the CIF and CIP terms the seller also has to take out insuranc e and be ar the insuranc e cost. Sinc e the point for the division of costs is fixed at a point in the country of destination, the "C"-terms are frequently mistakenly believed to be arrival contra cts, in which the seller would be ar all risks and costs until the goods have a ctually arrived at the agre ed point. However, it must be stressed that the "C"-terms are of the same nature as the "F"-terms in that the seller fulfils the contra ct in the country of shipment or dispatch. Thus, the contra cts of sale under the "C"-terms, like the contra cts under the "F"-terms, fall within the c ategory of shipment contra cts. It is in the nature of shipment contracts that, while the seller is bound to pay the normal transport cost for the carriage of the goods by a usual route and in a customary manner to the agre ed pla c e, the risk of loss of or damage to the goods, as well as additional costs resulting from events occurring after the goods having been appropriately delivered for c arriage, fall upon the buyer. Henc e, the "C"-terms are distinguishable from all other terms in that they contain two "critic al" points, one indic ating the point to which the seller is bound to arrange and be ar the costs of a contra ct of c arriage and another one for the alloc ation of risk. For this re ason, the gre atest c aution must be observed when adding obligations of the seller to the "C"-terms which se ek to extend the seller’s responsibility beyond the aforementioned "critic al" point for the alloc ation of risk. It is of the very essenc e of the "C"-terms that the seller is relieved of any further risk and cost after he has duly fulfilled his contra ct by contra cting for c arriage and handing over the goods to the c arrier and by providing for insuranc e under the CIF- and CIP-terms. The essential nature of the “C”-terms as shipment contra cts is also illustrated by the common use of documentary credits as the preferred mode of payment used in such terms. Where it is agre ed by the parties to the sale contra ct that the seller will be paid by presenting the agre ed shipping documents to a bank under a documentary credit, it would be quite contrary to the c entral purpose of the documentary credit for the seller to be ar further risks and costs after the moment when payment had be en made under documentary credits or otherwise upon shipment and dispatch of the goods. Of course, the seller would have to be ar the cost of the contra ct of c arriage irrespe ctive of whether freight is pre-paid upon shipment or is payable at destination (freight colle ct); however, additional costs which may result from events oc curring subsequent to shipment and dispatch are ne c essarily for the a c count of the buyer. If the seller has to provide a contra ct of c arriage which involves payment of duties, taxes and other charges, such costs will, of course, fall upon the seller to the extent that they are for his a c count under that contra ct. This is now explicitly set forth in the A6 clause of all “C”-terms. If it is customary to procure several contracts of carriage involving transhipment of the goods at intermediate places in order to re a ch the agre ed destination, the seller would have to pay all these costs, including any costs incurred when the goods are transhipped from one me ans of conveyanc e to the other. If, however, the c arrier exercised his rights under a transhipment – or similar clause – in order to avoid unexpe cted hindranc es (such as ic e, congestion, labour disturbanc es, government orders, war or warlike operations) then any additional cost resulting therefrom would be for the account of the buyer, since the seller's obligation is limited to procuring the usual contract of carriage. It happens quite often that the parties to the contra ct of sale wish to clarify the extent to which the seller should procure a contract of carriage including the costs of discharge. Since such costs are normally covered by the freight when the goods are c arried by regular shipping lines, the contra ct of sale will frequently stipulate that the goods are to be so c arried or at le ast that they are to be c arried under "liner terms". In other c ases, the word "landed" is added after CFR or CIF. However, it is advisable not to use abbreviations added to the "C"-terms unless, in the relevant trade, the me aning of the abbreviations is cle arly understood and a c c epted by the contra cting parties or under any applic able law or custom of the trade. INTERNATIONAL CHAMBER OF C OMMERCE 30 Incoterms 2000, extracts from the introduction © ICC, publication No. 560, available from ICC Publishing SA, 38 Cours Albert 1er, 75008 Paris, France

In particular, the seller should not – and indeed could not, without changing the very nature of the "C"-terms - undertake any obligation with respe ct to the arrival of the goods at destination, sinc e the risk of any delay during the c arriage is borne by the buyer. Thus, any obligation with respe ct to time must ne c essarily refer to the pla c e of shipment or dispatch, for example, "shipment (dispatch) not later than...". An agre ement for example, "C FR Hamburg not later than..." is re ally a misnomer and thus open to different possible interpretations. The parties could be taken to have me ant either that the goods must a ctually arrive at Hamburg at the spe cified date, in which c ase the contra ct is not a shipment contra ct but an arrival contra ct or, alternatively, that the seller must ship the goods at such a time that they would normally arrive at Hamburg before the spe cified date unless the c arriage would have be en delayed be c ause of unforese en events. It happens in commodity trades that goods are bought while they are at sea and that, in such cases, the word "afloat" is added after the trade term. Sinc e the risk of loss of or damage to the goods would then, under the CFR- and CIFterms, have passed from the seller to the buyer, difficulties of interpretation might arise. One possibility would be to maintain the ordinary me aning of the CFR- and CIF-terms with respe ct to the alloc ation of risk betwe en seller and buyer, namely that risk passes on shipment: this would me an that the buyer might have to assume the consequenc es of events having alre ady oc curred at the time when the contra ct of sale enters into forc e. The other possibility would be to let the passing of the risk coincide with the time when the contra ct of sale is concluded. The former possibility might well be pra ctic al, sinc e it is usually impossible to asc ertain the condition of the goods while they are being c arried. For this re ason the 1980 United Nations Convention on Contra cts for the International Sale of Goods article 68 stipulates that "if the circumstanc es so indic ate, the risk is assumed by the buyer from the time the goods were handed over to the c arrier who issued the documents embodying the contra ct of c arriage". There is, however, an exc eption to this rule when "the seller knew or ought to have known that the goods had be en lost or damaged and did not disclose this to the buyer". Thus, the interpretation of a CFR- or CIF-term with the addition of the word "afloat" will depend upon the law applic able to the contra ct of sale. The parties are advised to asc ertain the applic able law and any solution which might follow therefrom. In c ase of doubt, the parties are advised to clarify the matter in their contra ct. In pra ctic e, the parties frequently continue to use the traditional expression C&F (or C and F, C + F). Nevertheless, in most c ases it would appe ar that they regard these expressions as equivalent to CFR. In order to avoid difficulties of interpreting their contract the parties should use the correct Incoterm which is CFR, the only world-wide-accepted standard abbreviation for the term "Cost and Freight (... named port of destination)". CFR and CIF in A8 of Incoterms 1990 obliged the seller to provide a copy of the charterparty whenever his transport document (usually the bill of lading) contained a referenc e to the charterparty, for example, by the frequent notation "all other terms and conditions as per charterparty". Although, of course, a contra cting party should always be able to asc ertain all terms of his contra ct – preferably at the time of the conclusion of the contra ct – it appe ars that the practice to provide the charterparty as aforesaid has created problems particularly in connection with documentary credit transa ctions. The obligation of the seller under CFR and CIF to provide a copy of the charterparty together with other transport documents has be en deleted in Incoterms 2000. Although the A8 clauses of Incoterms se ek to ensure that the seller provides the buyer with "proof of delivery", it should be stressed that the seller fulfils that requirement when he provides the "usual" proof. Under CPT and CIP it would be the "usual transport document" and under CFR and CIF a bill of lading or a se a waybill. The transport documents must be "clean", meaning that they must not contain clauses or notations expressly declaring a defective condition of the goods and/or the pa ckaging. If such clauses or notations appe ar in the document, it is regarded as "uncle an" and would then not be a c c epted by banks in documentary credit transa ctions. However, it should be noted that a transport document even without such clauses or notations would usually not provide the buyer with incontrovertible proof as against the c arrier that the goods were shipped in conformity with the stipulations of the contra ct of sale. Usually, the c arrier would, in standardiz ed text on the front page of the transport document, refuse to a c c ept responsibility for information with respe ct to the goods by indic ating that the particulars inserted in the transport document constitute the shipper's de clarations and therefore that the information is only "said to be" as inserted in the document. Under most applicable laws and principles, the carrier must at least use reasonable means of checking the correctness of the information and his failure to do so may make him liable to the consignee. However, in container trade, the c arrier's me ans of che cking the contents in the container would not exist unless he himself was responsible for stowing the container. 31 THE IC C MODEL INTERNATIONAL SALE C ONTRACT

There are only two terms which de al with insuranc e, namely CIF and CIP. Under these terms the seller is obliged to procure insuranc e for the benefit of the buyer. In other c ases it is for the parties themselves to de cide whether and to what extent they want to cover themselves by insuranc e. Sinc e the seller takes out insuranc e for the benefit of the buyer, he would not know the buyer's pre cise requirements. Under the Institute Cargo Clauses drafted by the Institute of London Underwriters, insuranc e is available in "minimum cover" under Clause C, "medium cover" under Clause B and "most extended cover" under Clause A. Sinc e in the sale of commodities under the CIF term the buyer may wish to sell the goods in transit to a subsequent buyer who in turn may wish to resell the goods again, it is impossible to know the insuranc e cover suitable to such subsequent buyers and, therefore, the minimum cover under CIF has traditionally be en chosen with the possibility for the buyer to require the seller to take out additional insuranc e. Minimum cover is however unsuitable for sale of manufa ctured goods where the risk of theft, pilferage or improper handling or custody of the goods would require more than the cover available under Clause C. Sinc e CIP, as distinguished from CIF, would normally not be used for the sale of commodities, it would have be en fe asible to adopt the most extended cover under CIP rather than the minimum cover under CIF. But to vary the seller's insurance obligation under CIF and CIP would lead to confusion and both terms therefore limit the seller's insurance obligation to the minimum cover. It is particularly important for the CIP-buyer to observe this: should additional cover be required, he should agree with the seller that the latter could take out additional insurance or, alternatively, arrange for extended insuranc e cover himself. There are also particular instanc es where the buyer may wish to obtain even more protection than is available under Institute Clause A, for example insurance against war, riots, civil commotion, strikes or other labour disturbanc es. If he wishes the seller to arrange such insuranc e he must instruct him a c cordingly in which c ase the seller would have to provide such insuranc e if procurable. 11. VARIANTS OF INCOTERMS In pra ctic e, it frequently happens that the parties themselves by adding words to an Incoterm se ek further pre cision than the term could offer. It should be underlined that Incoterms give no guidanc e whatsoever for such additions. Thus, if the parties c annot rely on a well-established custom of the trade for the interpretation of such additions they may encounter serious problems when no consistent understanding of the additions could be proven. If for instanc e the common expressions "FOB stowed" or "EXW loaded" are used, it is impossible to establish a world wide understanding to the effect that the seller's obligations are extended not only with respect to the cost of actually loading the goods in the ship or on the vehicle respe ctively but also include the risk of fortuitous loss of or damage to the goods in the proc ess of stowage and loading. For these re asons, the parties are strongly advised to clarify whether they only me an that the function or the cost of the stowage and loading operations should fall upon the seller or whether he should also be ar the risk until the stowage and loading has a ctually be en completed. These are questions to which Incoterms do not provide an answer: consequently, if the contract too fails expressly to describe the parties’ intentions, the parties may be put to much unne c essary trouble and cost. Although Incoterms 2000 do not provide for many of these commonly used variants, the pre ambles to c ertain trade terms do alert the parties to the ne ed for spe cial contra ctual terms if the parties wish to go beyond the stipulations of Incoterms. EXW the added obligation for the seller to load the goods on the buyer's colle cting vehicle; CIF/CIP the buyer's ne ed for additional insuranc e; DEQ the added obligation for the seller to pay for costs after discharge. In some cases sellers and buyers refer to commercial practice in liner and charter party trade. In these circumstances, it is ne c essary to cle arly distinguish betwe en the obligations of the parties under the contra ct of c arriage and their obligations to each other under the contract of sale. Unfortunately, there are no authoritative definitions of expressions such as "liner terms" and "terminal handling charges" (THC). Distribution of costs under such terms may differ in different pla c es and change from time to time. The parties are re commended to clarify in the contra ct of sale how such costs should be distributed betwe en themselves. Expressions frequently used in charterparties, such as "FOB stowed", "FOB stowed and trimmed", are sometimes used in contra cts of sale in order to clarify to what extent the seller under FOB has to perform stowage and trimming INTERNATIONAL CHAMBER OF C OMMERCE 32

of the goods onboard the ship. Where such words are added, it is necessary to clarify in the contract of sale whether the added obligations only relate to costs or to both costs and risks. As has been said, every effort has been made to ensure that Incoterms reflect the most common commercial practice. However in some c ases – particularly where Incoterms 2000 differ from Incoterms 1990 – the parties may wish the trade terms to operate differently. They are reminded of such options in the pre amble of the terms signalled by the word "However". 14. CUSTOMS CLEARANCE The term "customs cle aranc e" has given rise to misunderstandings. Thus, whenever referenc e is made to an obligation of the seller or the buyer to undertake obligations in conne ction with passing the goods through customs of the country of export or import it is now made cle ar that this obligation does not only include the payment of duty and other charges but also the performanc e and payment of whatever administrative matters are conne cted with the passing of the goods through customs and the information to the authorities in this conne ction. Further, it has – although quite wrongfully - be en considered in some quarters inappropriate to use terms de aling with the obligation to cle ar the goods through customs when, as in intra-Europe an Union trade or other fre e trade are as, there is no longer any obligation to pay duty and no restrictions relating to import or export. In order to clarify the situation, the words "where applicable" have be en added in the A2 and B2, A6 and B6 clauses of the relevant Incoterms in order for them to be used without any ambiguity where no customs procedures are required. It is normally desirable that customs clearance is arranged by the party domiciled in the country where such clearance should take pla c e or at le ast by somebody a cting there on his behalf. Thus, the exporter should normally cle ar the goods for export, while the importer should cle ar the goods for import. Incoterms 1990 departed from this under the trade terms EXW and FAS (export cle aranc e duty on the buyer) and DEQ (import cle aranc e duty on the seller) but in Incoterms 2000 FAS and DEQ pla c e the duty of cle aring the goods for export on the seller and to cle ar them for import on the buyer respe ctively, while EXW – representing the seller's minimum obligation – has be en left unamended (export cle aranc e duty on the buyer). Under DDP the seller spe cific ally agre es to do what follows from the very name of the term – Delivered Duty Paid – namely to cle ar the goods for import and pay any duty as a consequenc e thereof. 33 THE IC C MODEL INTERNATIONAL SALE C ONTRACT

United Nations Convention on Contracts for the International Sale of Goods* PREAMBLE The States Parties to this Convention Be aring in mind the broad obje ctives in the resolutions adopted by the sixth spe cial session of the General Assembly of the United Nations on the establishment of a New International Economic Order, Considering that the development of international trade on the basis of equality and mutual benefit is an important element in promoting friendly relations among States, Being of the opinion that the adoption of uniform rules which govern contra cts for the international sale of goods and take into a c count the different social, e conomic and legal systems would contribute to the removal of legal barriers in international trade and promote the development of international trade, Have agre ed as follows: Part I Sphere of application and general provisions CHAPTER II SPHERE OF APPLICATION Article 1 (1) This Convention applies to contra cts of sale of goods betwe en parties whose pla c es of business are in different States: (a) when the States are Contra cting States; or (b) when the rules of private international law le ad to the applic ation of the law of a Contra cting State. (2) The fa ct that the parties have their pla c es of business in different States is to be disregarded whenever this fa ct does not appe ar either from the contra ct or from any de alings betwe en, or from information disclosed by, the parties at any time before or at the conclusion of the contra ct. (3) Neither the nationality of the parties nor the civil or commercial chara cter of the parties or of the contra ct is to be taken into consideration in determining the applic ation of this Convention. Article 2 This Convention does not apply to sales: (a) of goods bought for personal, family or household use, unless the seller, at any time INTERNATIONAL CHAMBER OF C OMMERCE 34 * Reproduc ed with the permission of the United Nations Commission on International Trade Law (UNCITRAL)

before or at the conclusion of the contra ct, neither knew nor ought to have known that the goods were bought for any such use; (b) by auction; (c) on exe cution or otherwise by authority of law; (d) of stocks, shares, investment se curities, negotiable instruments or money; (e) of ships, vessels, hovercraft or aircraft; (f) of ele ctricity. Article 3 (1) Contracts for the supply of goods to be manufactured or produced are to be considered sales unless the party who orders the goods undertakes to supply a substantial part of the materials ne c essary for such manufa cture or production. (2) This Convention does not apply to contra cts in which the preponderant part of the obligations of the party who furnishes the goods consists in the supply of labour or other servic es. Article 4 This Convention governs only the formation of the contra ct of sale and the rights and obligations of the seller and the buyer arising from such a contract. In particular, except as otherwise expressly provided in this Convention, it is not conc erned with: (a) the validity of the contra ct or of any of its provisions or of any usage; (b) the effe ct which the contra ct may have on the property in the goods sold. Article 5 This Convention does not apply to the liability of the seller for de ath or personal injury c aused by the goods to any person. Article 6 The parties may exclude the applic ation of this Convention or, subje ct to article 12, derogate from or vary the effe ct of any of its provisions. CHAPTER II GENERAL PROVISIONS Article 7 (1) In the interpretation of this Convention, regard is to be had to its international chara cter and to the ne ed to promote uniformity in its applic ation and the observanc e of good faith in international trade. (2) Questions conc erning matters governed by this Convention which are not expressly settled in it are to be settled in conformity with the general principles on which it is based or, in the absenc e of such principles, in conformity with the law applic able by virtue of the rules of private international law. Article 8 (1) For the purposes of this Convention statements made by and other conduct of a party are to be interpreted a c cording to his intent where the other party knew or could not have be en unaware what that intent was. (2) If the pre c eding paragraph is not applic able, statements made by and other conduct of a party are to be interpreted according to the understanding that a reasonable person 35 THE IC C MODEL INTERNATIONAL SALE C ONTRACT

of the same kind as the other party would have had in the same circumstanc es. (3) In determining the intent of a party or the understanding a re asonable person would have had, due consideration is to be given to all relevant circumstanc es of the c ase including the negotiations, any pra ctic es which the parties have established betwe en themselves, usages and any subsequent conduct of the parties. Article 9 (1) The parties are bound by any usage to which they have agre ed and by any pra ctic es which they have established betwe en themselves. (2) The parties are considered, unless otherwise agreed, to have impliedly made applicable to their contra ct or its formation a usage of which the parties knew or ought to have known and which in international trade is widely known to, and regularly observed by, parties to contra cts of the type involved in the particular trade conc erned. Article 10 For the purposes of this Convention: (a) if a party has more than one pla c e of business, the pla c e of business is that which has the closest relationship to the contra ct and its performanc e, having regard to the circumstanc es known to or contemplated by the parties at any time before or at the conclusion of the contra ct; (b) if a party does not have a pla c e of business, referenc e is to be made to his habitual residenc e. Article 11 A contra ct of sale ne ed not be concluded in or evidenc ed by writing and is not subje ct to any other requirement as to form. It may be proved by any me ans, including witnesses. Article 12 Any provision of article 11, article 29 or Part II of this Convention that allows a contra ct of sale or its modification or termination by agreement or any offer, acceptance or other indication of intention to be made in any form other than in writing does not apply where any party has his place of business in a Contracting State which has made a declaration under article 96 of this Convention. The parties may not derogate from or vary the effect of this article. Article 13 For the purposes of this Convention “writing” includes telegram and telex. Part II Formation of the contract Article 14 (1) A proposal for concluding a contra ct addressed to one or more spe cific persons constitutes an offer if it is sufficiently definite and indic ates the intention of the offeror to be bound in c ase of a c c eptanc e. A proposal is sufficiently definite if it indic ates the goods and expressly or implicitly fixes or makes provision for determining the quantity and the pric e. (2) A proposal other than one addressed to one or more specific persons is to be considered merely as an invitation to make offers, unless the contrary is cle arly indic ated by the person making the proposal. INTERNATIONAL CHAMBER OF C OMMERCE 36

Article 15 (1) An offer be comes effe ctive when it re a ches the offere e. (2) An offer, even if it is irrevoc able, may be withdrawn if the withdrawal re a ches the offere e before or at the same time as the offer. Article 16 (1) Until a contra ct is concluded an offer may be revoked if the revoc ation re a ches the offere e before he has dispatched an a c c eptanc e. (2) However, an offer c annot be revoked: (a) if it indic ates, whether by stating a fixed time for a c c eptanc e or otherwise, that it is irrevoc able; or (b) if it was re asonable for the offere e to rely on the offer as being irrevoc able and the offere e has a cted in relianc e on the offer. Article 17 An offer, even if it is irrevoc able, is terminated when a reje ction re a ches the offeror. Article 18 (1) A statement made by or other conduct of the offere e indic ating assent to an offer is an a c c eptanc e. Silenc e or ina ctivity does not in itself amount to a c c eptanc e. (2) An a c c eptanc e of an offer be comes effe ctive at the moment the indic ation of assent re a ches the offeror. An a c c eptanc e is not effe ctive if the indic ation of assent does not re a ch the offeror within the time he has fixed or, if no time is fixed, within a re asonable time, due a c count being taken of the circumstanc es of the transa ction, including the rapidity of the me ans of communic ation employed by the offeror. An oral offer must be a c c epted immediately unless the circumstanc es indic ate otherwise. (3) However, if, by virtue of the offer or as a result of pra ctic es which the parties have established betwe en themselves or of usage, the offere e may indic ate assent by performing an a ct, such as one relating to the dispatch of the goods or payment of the pric e, without notic e to the offeror, the a c c eptanc e is effe ctive at the moment the a ct is performed, provided that the a ct is performed within the period of time laid down in the pre c eding paragraph. Article 19 (1) A reply to an offer which purports to be an acceptance but contains additions, limitations or other modific ations is a reje ction of the offer and constitutes a counteroffer. (2) However, a reply to an offer which purports to be an acceptance but contains additional or different terms which do not materially alter the terms of the offer constitutes an a c c eptanc e, unless the offeror, without undue delay, obje cts orally to the discrepancy or dispatches a notic e to that effe ct. If he does not so obje ct, the terms of the contra ct are the terms of the offer with the modific ations contained in the a c c eptanc e. (3) Additional or different terms relating, among other things, to the price, payment, quality and quantity of the goods, pla c e and time of delivery, extent of one party’s liability to the other or the settlement of disputes are considered to alter the terms of the offer materially. Article 20 (1) A period of time of a c c eptanc e fixed by the offeror in a telegram or a letter begins to run from the moment the telegram is handed in for dispatch or from the date shown on the letter or, if no such date is shown, from the date shown on the envelope. A period 37 THE IC C MODEL INTERNATIONAL SALE C ONTRACT

of time for a c c eptanc e fixed by the offeror by telephone, telex or other me ans of instantaneous communic ation, begins to run from the moment that the offer re a ches the offere e. (2) Official holidays or non-business days oc curring during the period for a c c eptanc e are included in c alculating the period. However, if a notic e of a c c eptanc e c annot be delivered at the address of the offeror on the last day of the period be c ause that day falls on an official holiday or a non-business day at the pla c e of business of the offeror, the period is extended until the first business day which follows. Article 21 (1) A late a c c eptanc e is nevertheless effe ctive as an a c c eptanc e if without delay the offeror orally so informs the offere e or dispatches a notic e to that effe ct. (2) If a letter or other writing containing a late a c c eptanc e shows that it has be en sent in such circumstanc es that if its transmission had be en normal it would have re a ched the offeror in due time, the late a c c eptanc e is effe ctive as an a c c eptanc e unless, without delay, the offeror orally informs the offere e that he considers his offer as having lapsed or dispatches a notic e to that effe ct. Article 22 An a c c eptanc e may be withdrawn if the withdrawal re a ches the offeror before or at the same time as the a c c eptanc e would have be come effe ctive. Article 23 A contract is concluded at the moment when an acceptance of an offer becomes effective in a c cordanc e with the provisions of this Convention. Article 24 For the purposes of this Part of the Convention, an offer, de claration of a c c eptanc e or any other indic ation of intention “re a ches” the addresse e when it is made orally to him or delivered by any other me ans to him personally, to his pla c e of business or mailing address or, if he does not have a pla c e of business or mailing address, to his habitual residenc e. INTERNATIONAL CHAMBER OF C OMMERCE 38

Part III Sale of goods CHAPTER I GENERAL PROVISIONS Article 25 A bre a ch of contra ct committed by one of the parties is fundamental if it results in such detriment to the other party as substantially to deprive him of what he is entitled to expect under the contract, unless the party in breach did not foresee and a reasonable person of the same kind in the same circumstanc es would not have forese en such a result. Article 26 A declaration of avoidance of the contract is effective only if made by notice to the other party. Article 27 Unless otherwise expressly provided in this Part of the Convention, if any notic e, request or other communic ation is given or made by a party in a c cordanc e with this Part and by means appropriate in the circumstances, a delay or error in the transmission of the communic ation or its failure to arrive does not deprive that party of the right to rely on the communic ation. Article 28 If, in a c cordanc e with the provisions of this Convention, one party is entitled to require performanc e of any obligation by the other party, a court is not bound to enter a judgement for spe cific performanc e unless the court would do so under its own law in respe ct of similar contra cts of sale not governed by this Convention. Article 29 (1) A contra ct may be modified or terminated by the mere agre ement of the parties. (2) A contract in writing which contains a provision requiring any modification or termination by agreement to be in writing may not be otherwise modified or terminated by agreement. However, a party may be pre cluded by his conduct from asserting such a provision to the extent that the other party has relied on that conduct. CHAPTER II OBLIGATIONS OF THE SELLER Article 30 The seller must deliver the goods, hand over any documents relating to them and transfer the property in the goods, as required by the contra ct and this Convention. Se ction I Delivery of the goods and handing over of documents Article 31 If the seller is not bound to deliver the goods at any other particular place, his obligation to deliver consists: (a) if the contra ct of sale involves c arriage of the goods—in handing the goods over to the first c arrier for transmission to the buyer; (b) if, in c ases not within the pre c eding subparagraph, the contra ct relates to spe cific 39 THE IC C MODEL INTERNATIONAL SALE C ONTRACT

goods, or unidentified goods to be drawn from a specific stock or to be manufactured or produc ed, and at the time of the conclusion of the contra ct the parties knew that the goods were at, or were to be manufactured or produced at, a particular place— in pla cing the goods at the buyer’s disposal at that pla c e; (c) in other c ases—in pla cing the goods at the buyer’s disposal at the pla c e where the seller had his pla c e of business at the time of the conclusion of the contra ct. Article 32 (1) If the seller, in a c cordanc e with the contra ct or this Convention, hands the goods over to a c arrier and if the goods are not de arly identified to the contra ct by markings on the goods, by shipping documents or otherwise, the seller must give the buyer notic e of the consignment spe cifying the goods. (2) If the seller is bound to arrange for carriage of the goods, he must make such contracts as are necessary for carriage to the place fixed by means of transportation appropriate in the circumstanc es and a c cording to the usual terms for such transportation. (3) If the seller is not bound to effe ct insuranc e in respe ct of the c arriage of the goods, he must, at the buyer’s request, provide him with all available information ne c essary to enable him to effe ct such insuranc e. Article 33 The seller must deliver the goods: (a) if a date is fixed by or determinable from the contra ct, on that date; (b) if a period of time is fixed by or determinable from the contra ct, at any time within that period unless circumstanc es indic ate that the buyer is to choose a date; or (c) in any other c ase, within a re asonable time after the conclusion of the contra ct. Article 34 If the seller is bound to hand over documents relating to the goods, he must hand them over at the time and pla c e and in the form required by the contra ct. If the seller has handed over documents before that time, he may, up to that time, cure any la ck of conformity in the documents, if the exercise of this right does not c ause the buyer unre asonable inconvenienc e or unre asonable expense. However, the buyer retains any right to claim damages as provided for in this Convention. Se ction II Conformity of the goods and third party claims Article 35 (1) 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 mannerrequired by the contract. (2) Exc ept where the parties have agre ed otherwise, the goods do not conform with the contra ct unless they: (a) are fit for the purposes for which goods of the same description would ordinarily be used; (b) are fit for any particular purpose expressly or impliedly made known to the seller at the time of the conclusion of the contract, except where the circumstances show that the buyer did not rely, or that it was unre asonable for him to rely, on the seller’s skill and judgement; (c) possess the qualities of goods which the seller has held out to the buyer as a sample or model; INTERNATIONAL CHAMBER OF C OMMERCE 40

(d) are contained or pa ckaged in the manner usual for such goods or, where there is no such manner, in a manner adequate to preserve and prote ct the goods. (3) The seller is not liable under subparagraphs (a) to (d) of the pre c eding paragraph for any la ck of conformity of the goods if at the time of the conclusion of the contra ct the buyer knew or could not have be en unaware of such la ck of conformity. Article 36 (1) The seller is liable in a c cordanc e with the contra ct and this Convention for any la ck of conformity which exists at the time when the risk passes to the buyer, even though the la ck of conformity be comes apparent only after that time. (2) The seller is also liable for any la ck of conformity which oc curs after the time indic ated in the pre c eding paragraph and which is due to a bre a ch of any of his obligations, including a bre a ch of any guarante e that for a period of time the goods will remain fit for their ordinary purpose or for some particular purpose or will retain specified qualities or chara cteristics. Article 37 If the seller has delivered goods before the date for delivery, he may, up to that date, deliver any missing part or make up any deficiency in the quantity of the goods delivered, or deliver goods in repla c ement of any non-conforming goods delivered or remedy any la ck of conformity in the goods delivered, provided that the exercise of this right does not c ause the buyer unre asonable inconvenienc e or unre asonable expense. However, the buyer retains any right to claim damages as provided for in this Convention. Article 38 (1) The buyer must examine the goods, or c ause them to be examined, within as short a period as is pra ctic able in the circumstanc es. (2) If the contra ct involves c arriage of the goods, examination may be deferred until after the goods have arrived at their destination. (3) If the goods are redirected in transit or redispatched by the buyer without a reasonable opportunity for examination by him and at the time of the conclusion of the contra ct the seller knew or ought to have known of the possibility of such redirection or redispatch, examination may be deferred until after the goods have arrived at the new destination. Article 39 (1) The buyer loses the right to rely on a la ck of conformity of the goods if he does not give notic e to the seller spe cifying the nature of the la ck of conformity within a re asonable time after he has discovered it or ought to have discovered it. (2) In any event, the buyer loses the right to rely on a la ck of conformity of the goods if he does not give the seller notic e thereof at the latest within a period of two ye ars from the date on which the goods were a ctually handed over to the buyer, unless this timelimit is inconsistent with a contra ctual period of guarante e. Article 40 The seller is not entitled to rely on the provisions of articles 38 and 39 if the la ck of conformity relates to facts of which he knew or could not have been unaware and which he did not disclose to the buyer. Article 41 The seller must deliver goods which are fre e from any right or claim of a third party, unless the buyer agre ed to take the goods subje ct to that right or claim. However, if 41 THE IC C MODEL INTERNATIONAL SALE C ONTRACT

such right or claim is based on industrial property or other intelle ctual property, the seller’s obligation is governed by article 42. Article 42 (1) The seller must deliver goods which are fre e from any right or claim of a third party based on industrial property or other intelle ctual property, of which at the time of the conclusion of the contra ct the seller knew or could not have be en unaware, provided that the right or claim is based on industrial property or other intelle ctual property: (a) under the law of the State where the goods will be resold or otherwise used, if it was contemplated by the parties at the time of the conclusion of the contra ct that the goods would be resold or otherwise used in that State; or (b) in any other c ase, under the law of the State where the buyer has his pla c e of business. (2) The obligation of the seller under the pre c eding paragraph does not extend to c ases where: (a) at the time of the conclusion of the contra ct the buyer knew or could not have be en unaware of the right or claim; or (b) the right or claim results from the seller’s complianc e with te chnic al drawings, designs, formula e or other such spe cific ations furnished by the buyer. Article 43 (1) The buyer loses the right to rely on the provisions of article 41 or article 42 if he does not give notic e to the seller spe cifying the nature of the right or claim of the third party within a re asonable time after he has be come aware or ought to have be come aware of the right or claim. (2) The seller is not entitled to rely on the provisions of the pre c eding paragraph if he knew of the right or claim of the third party and the nature of it. Article 44 Notwithstanding the provisions of paragraph (1) of article 39 and paragraph (1) of article 43, the buyer may reduc e the pric e in a c cordanc e with article 50 or claim damages, except for loss of profit, if he has a reasonable excuse for his failure to give the required notic e. Se ction III Remedies for bre a ch of contra ct by the seller Article 45 (1) If the seller fails to perform any of his obligations under the contra ct or this Convention, the buyer may: (a) exercise the rights provided in articles 46 to 52; (b) claim damages as provided in articles 74 to 77. (2) The buyer is not deprived of any right he may have to claim damages by exercising his right to other remedies. (3) No period of gra c e may be granted to the seller by a court or arbitral tribunal when the buyer resorts to a remedy for bre a ch of contra ct. Article 46 (1) The buyer may require performanc e by the seller of his obligations unless the buyer has resorted to a remedy which is inconsistent with this requirement. INTERNATIONAL CHAMBER OF C OMMERCE 42

(2) If the goods do not conform with the contra ct, the buyer may require delivery of substitute goods only if the la ck of conformity constitutes a fundamental bre a ch of contra ct and a request for substitute goods is made either in conjunction with notic e given under article 39 or within a re asonable time there after. (3) If the goods do not conform with the contract, the buyer may require the seller to remedy the la ck of conformity by repair, unless this is unre asonable having regard to all the circumstanc es. A request for repair must be made either in conjunction with notic e given under article 39 or within a re asonable time there after. Article 47 (1) The buyer may fix an additional period of time of re asonable length for performanc e by the seller of his obligations. (2) Unless the buyer has re c eived notic e from the seller that he will not perform within the period so fixed, the buyer may not, during that period, resort to any remedy for bre a ch of contra ct. However, the buyer is not deprived thereby of any right he may have to claim damages for delay in performanc e. Article 48 (1) Subje ct to article 49, the seller may, even after the date for delivery, remedy at his own expense any failure to perform his obligations, if he c an do so without unre asonable delay and without c ausing the buyer unre asonable inconvenienc e or unc ertainty of reimbursement by the seller of expenses advanc ed by the buyer. However, the buyer retains any right to claim damages as provided for in this Convention. (2) If the seller requests the buyer to make known whether he will accept performance and the buyer does not comply with the request within a re asonable time, the seller may perform within the time indic ated in his request. The buyer may not, during that period of time, resort to any remedy which is inconsistent with performanc e by the seller. (3) A notic e by the seller that he will perform within a spe cified period of time is assumed to include a request, under the pre c eding paragraph, that the buyer make known his de cision. (4) A request or notic e by the seller under paragraph (2) or (3) of this article is not effe ctive unless re c eived by the buyer. Article 49 (1) The buyer may de clare the contra ct avoided: (a) if the failure by the seller to perform any of his obligations under the contra ct or this Convention amounts to a fundamental bre a ch of contra ct; or (b) in c ase of non-delivery, if the seller does not deliver the goods within the additional period of time fixed by the buyer in a c cordanc e with paragraph (1) of article 47 or de clares that he will not deliver within the period so fixed. (2) However, in c ases where the seller has delivered the goods, the buyer loses the right to de clare the contra ct avoided unless he does so: (a) in respe ct of late delivery, within a re asonable time after he has be come aware that delivery has be en made; (b) in respe ct of any bre a ch other than late delivery, within a re asonable time: (i) after he knew or ought to have known of the bre a ch; (ii) after the expiration of any a d ditional p eriod of time fixe d by the buyer in a c cordanc e with paragraph (1) of article 47, or after the seller has de clared that he will not perform his obligations within such an additional period; or 43 THE IC C MODEL INTERNATIONAL SALE C ONTRACT

(iii) after the expiration of any additional period of time indic ated by the seller in a c cordanc e with paragraph (2) of article 48, or after the buyer has de clared that he will not a c c ept performanc es. Article 50 If the goods do not conform with the contra ct and whether or not the pric e has alre ady be en paid, the buyer may reduc e the pric e in the same proportion as the value that the goods a ctually delivered had at the time of the delivery be ars to the value that conforming goods would have had at that time. However, if the seller remedies any failure to perform his obligations in accordance with article 37 or article 48 or if the buyer refuses to accept performance by the seller in accordance with those articles, the buyer may not reduc e the pric e. Article 51 (1) If the seller delivers only a part of the goods or if only a part of the goods delivered is in conformity with the contra ct, articles 46 to 50 apply in respe ct of the part which is missing or which does not conform. (2) The buyer may de clare the contra ct avoided in its entirety only if the failure to make delivery completely or in conformity with the contract amounts to a fundamental breach of the contra ct. Article 52 (1) If the seller delivers the goods before the date fixed, the buyer may take delivery or refuse to take delivery. (2) If the seller delivers a quantity of goods gre ater than that provided for in the contra ct, the buyer may take delivery or refuse to take delivery of the exc ess quantity. If the buyer takes delivery of all or part of the excess quantity, he must pay for it at the contract rate. CHAPTER III OBLIGATIONS OF THE BUYER Article 53 The buyer must pay the pric e for the goods and take delivery of them as required by the contra ct and this Convention. Se ction I Payment of the pric e Article 54 The buyer’s obligation to pay the pric e includes taking such steps and complying with such formalities as may be required under the contra ct or any laws and regulations to enable payment to be made. Article 55 Where a contra ct has be en validly concluded but does not expressly or implicitly fix or make provision for determining the pric e, the parties are considered, in the absenc e of any indication to the contrary, to have impliedly made reference to the price generally charged at the time of the conclusion of the contra ct for such goods sold under comparable circumstanc es in the trade conc erned. INTERNATIONAL CHAMBER OF C OMMERCE 44

Article 56 If the pric e is fixed a c cording to the weight of the goods, in c ase of doubt it is to be determined by the net weight. Article 57 (1) If the buyer is not bound to pay the pric e at any other particular pla c e, he must pay it to the seller: (a) at the seller’s pla c e of business; or (b) if the payment is to be made against the handing over of the goods or of documents, at the pla c e where the handing over takes pla c e. (2) The seller must bear any increase in the expenses incidental to payment which is caused by a change in his pla c e of business subsequent to the conclusion of the contra ct. Article 58 (1) If the buyer is not bound to pay the pric e at any other spe cific time he must pay it when the seller places either the goods or documents controlling their disposition at the buyer’s disposal in a c cordanc e with the contra ct and this Convention. The seller may make such payment a condition for handing over the goods or documents. (2) If the contra ct involves c arriage of the goods, the seller may dispatch the goods on terms whereby the goods, or documents controlling their disposition, will not be handed over to the buyer exc ept against payment of the pric e. (3) The buyer is not bound to pay the pric e until he has had an opportunity to examine the goods, unless the proc edures for delivery or payment agre ed upon by the parties are inconsistent with his having such an opportunity. Article 59 The buyer must pay the pric e on the date fixed by or determinable from the contra ct and this Convention without the ne ed for any request or complianc e with any formality on the part of the seller. Se ction II Taking delivery Article 60 The buyer’s obligation to take delivery consists: (a) in doing all the a cts which could re asonably be expe cted of him in order to enable the seller to make delivery; and (b) in taking over the goods. Se ction III Remedies for bre a ch of contra ct by the buyer Article 61 (1) If the buyer fails to perform any of his obligations under the contra ct or this Convention, the seller may: (a) exercise the rights provided in articles 62 to 65; (b) claim damages as provided in articles 74 to 77. (2) The seller is not deprived of any right he may have to claim damages by exercising his right to other remedies. (3) No period of gra c e may be granted to the buyer by a court or arbitral tribunal when the seller resorts to a remedy for bre a ch of contra ct. 45 THE IC C MODEL INTERNATIONAL SALE C ONTRACT

Article 62 The seller may require the buyer to pay the pric e, take delivery or perform his other obligations, unless the seller has resorted to a remedy which is inconsistent with this requirement. Article 63 (1) The seller may fix an additional period of time of re asonable length for performanc e by the buyer of his obligations. (2) Unless the seller has re c eived notic e from the buyer that he will not perform within the period so fixed, the seller may not, during that period, resort to any remedy for bre a ch of contra ct. However, the seller is not deprived thereby of any right he may have to claim damages for delay in performanc e. Article 64 (1) The seller may de clare the contra ct avoided: (a) if the failure by the buyer to perform any of his obligations under the contra ct or this Convention amounts to a fundamental bre a ch of contra ct; or (b) if the buyer does not, within the additional period of time fixed by the seller in a c cordanc e with paragraph (1) of article 63, perform his obligation to pay the pric e or take delivery of the goods, or if he declares that he will not do so within the period so fixed; (2) However, in cases where the buyer has paid the price, the seller loses the right to declare the contra ct avoided unless he does so: (a) in respe ct of late performanc e by the buyer, before the seller has be come aware that performanc e has be en rendered; or (b) in resp e ct of any bre a ch other than late p erformanc e by the buyer, within a re asonable time: (i) after the seller knew or ought to have known of the bre a ch; or (ii) after the expiration of any a d ditional p eriod of time fixe d by the seller in accordance with paragraph (1) of article 63, or after the buyer has declared that he will not perform his obligations within such an additional period. Article 65 (1) If under the contra ct the buyer is to spe cify the form, me asurement or other fe atures of the goods and he fails to make such spe cific ation either on the date agre ed upon or within a re asonable time after re c eipt of a request from the seller, the seller may, without prejudic e to any other rights he may have, make the spe cific ation himself in a c cordanc e with the requirements of the buyer that may be known to him. (2) If the seller makes the spe cific ation himself, he must inform the buyer of the details thereof and must fix a re asonable time within which the buyer may make a different spe cific ation. If, after re c eipt of such a communic ation, the buyer fails to do so within the time so fixed, the spe cific ation made by the seller is binding. CHAPTER IV PASSING OF RISK Article 66 Loss of or damage to the goods after the risk has passed to the buyer does not discharge him from his obligation to pay the pric e, unless the loss or damage is due to an a ct or omission of the seller. INTERNATIONAL CHAMBER OF C OMMERCE 46

Article 67 (1) If the contra ct of sale involves c arriage of the goods and the seller is not bound to hand them over at a particular place, the risk passes to the buyer when the goods are handed over to the first c arrier for transmission to the buyer in a c cordanc e with the contra ct of sale. If the seller is bound to hand the goods over to a c arrier at a particular pla c e, the risk does not pass to the buyer until the goods are handed over to the c arrier at that pla c e. The fa ct that the seller is authoriz ed to retain documents controlling the disposition of the goods does not affe ct the passage of the risk. (2) Nevertheless, the risk does not pass to the buyer until the goods are cle arly identified to the contra ct, whether by markings on the goods, by shipping documents, by notic e given to the buyer or otherwise. Article 68 The risk in respe ct of goods sold in transit passes to the buyer from the time of the conclusion of the contra ct. However, if the circumstanc es so indic ate, the risk is assumed by the buyer from the time the goods were handed over to the c arrier who issued the documents embodying the contra ct of c arriage. Nevertheless, if at the time of the conclusion of the contra ct of sale the seller knew or ought to have known that the goods had be en lost or damaged and did not disclose this to the buyer, the loss or damage is at the risk of the seller. Article 69 (1) In c ases not within articles 67 and 68, the risk passes to the buyer when he takes over the goods or, if he does not do so in due time, from the time when the goods are placed at his disposal and he commits a bre a ch of contra ct by failing to take delivery. (2) However, if the buyer is bound to take over the goods at a pla c e other than a pla c e of business of the seller, the risk passes when delivery is due and the buyer is aware of the fa ct that the goods are pla c ed at his disposal at that pla c e. (3) If the contra ct relates to goods not then identified, the goods are considered not to be pla c ed at the disposal of the buyer until they are cle arly identified to the contra ct. Article 70 If the seller has committed a fundamental bre a ch of contra ct, articles 67, 68 and 69 do not impair the remedies available to the buyer on a c count of the bre a ch. CHAPTER V PROVISIONS COMMON TO THE OBLIGATIONS OF THE SELLER AND OF THE BUYER Se ction I Anticipatory bre a ch and instalment contra cts Article 71 (1) A party may suspend the performanc e of his obligations if, after the conclusion of the contra ct, it be comes apparent that the other party will not perform a substantial part of his obligations as a result of: (a) a serious deficiency in his ability of perform or in his creditworthiness; or (b) his conduct in preparing to perform or in performing the contra ct. (2) If the seller has alre ady dispatched the goods before the grounds described in the pre c eding paragraph be come evident, he may prevent the handing over of the goods to the buyer even though the buyer holds a document which entitles him to obtain them. The present paragraph relates only to the rights in the goods as betwe en the buyer and the seller. 47 THE IC C MODEL INTERNATIONAL SALE C ONTRACT

(3) A party suspending performanc e, whether before or after dispatch of the goods, must immediately give notic e of the suspension to the other party and must continue with performanc e if the other party provides adequate assuranc e of his performanc e. Article 72 (1) If prior to the date for performanc e of the contra ct it is cle ar that one of the parties will commit a fundamental bre a ch of contra ct, the other party may de clare the contra ct avoided. (2) If time allows, the party intending to declare the contract avoided must give reasonable notic e to the other party in order to permit him to provide adequate assuranc e of his performanc e. (3) The requirements of the pre c eding paragraph do not apply if the other party has de clared that he will not perform his obligations. Article 73 (1) In the c ase of a contra ct for delivery of goods by instalments, if the failure of one party to perform any of his obligations in respe ct of any instalment constitutes a fundamental breach of contract with respect to that instalment, the other party may declare the contract avoided with respe ct to that instalment. (2) If one party’s failure to perform any of his obligations in respe ct of any instalment gives the other party good grounds to conclude that a fundamental bre a ch of contra ct will oc cur with respe ct to future installments, he may de clare the contra ct avoided for the future, provided that he does so within a re asonable time. (3) A buyer who de clares the contra ct avoided in respe ct of any delivery may, at the same time, de clare it avoided in respe ct of deliveries alre ady made or of future deliveries if, by reason of their interdependence, those deliveries could not be used for the purpose contemplated by the parties at the time of the conclusion of the contra ct. Se ction II Damages Article 74 Damages for bre a ch of contra ct by one party consist of a sum equal to the loss, including loss of profit, suffered by the other party as a consequenc e of the bre a ch. Such damages may not exc e ed the loss which the party in bre a ch foresaw or ought to have forese en at the time of the conclusion of the contra ct, in the light of the fa cts and matters of which he then knew or ought to have known, as a possible consequence of the bre a ch of contra ct. Article 75 If the contra ct is avoided and if, in a re asonable manner and within a re asonable time after avoidanc e, the buyer has bought goods in repla c ement or the seller has resold the goods, the party claiming damages may re cover the differenc e betwe en the contract price and the price in the substitute transaction as well as any further damages re coverable under article 74. Article 76 (1) If the contra ct is avoided and there is a current pric e for the goods, the party claiming damages may, if he has not made a purchase or resale under article 75, re cover the differenc e betwe en the pric e fixed by the contra ct and the current pric e at the time of avoidanc e as well as any further damages re coverable under article 74. If, however, the party claiming damages has avoided the contra ct after taking over the goods, the current price at the time of such taking over shall be applied instead of the current price at the time of avoidanc e. INTERNATIONAL CHAMBER OF C OMMERCE 48

(2) For the purposes of the pre c eding paragraph, the current pric e is the pric e prevailing at the place where delivery of the goods should have been made or, if there is no current pric e at that pla c e, the pric e at such other pla c e as serves as a re asonable substitute, making due allowanc e for differenc es in the cost of transporting the goods. Article 77 A party who relies on a bre a ch of contra ct must take such me asures as are re asonable in the circumstances to mitigate the loss, including loss of profit, resulting from the breach. If he fails to take such me asures, the party in bre a ch may claim a reduction in the damages in the amount by which the loss should have be en mitigated. Se ction III Interest Article 78 If a party fails to pay the pric e or any other sum that is in arre ars, the other party is entitled to interest on it, without prejudic e to any claim for damages re coverable under article 74. Se ction IV. Exemption Article 79 (1) A party is not liable for a failure to perform any of his obligations if he proves that the failure was due to an impediment beyond his control and that he could not re asonably be expe cted to have taken the impediment into a c count at the time of the conclusion of the contra ct or to have avoided or overcome it or its consequenc es. (2) If the party’s failure is due to the failure by a third person whom he has engaged to perform the whole or a part of the contra ct, that party is exempt from liability only if: (a) he is exempt under the pre c eding paragraph; and (b) the person whom he has so engaged would be so exempt if the provisions of that paragraph were applied to him. (3) The exemption provided by this article has effe ct for the period during which the impediment exists. (4) The party who fails to perform must give notic e to the other party of the impediment and its effe ct on his ability to perform. If the notic e is not re c eived by the other party within a reasonable time after the party who fails to perform knew or ought to have known of the impediment, he is liable for damages resulting from such nonre c eipt. (5) Nothing in this article prevents either party from exercising any right other than to claim damages under this Convention. Article 80 A party may not rely on a failure of the other party to perform, to the extent that such failure was c aused by the first party’s a ct or omission. Se ction V Effe cts of avoidanc e Article 81 (1) Avoidanc e of the contra ct rele ases both parties from their obligations under it, subje ct to any damages which may be due. Avoidanc e does not affe ct any provision of the contra ct for the settlement of disputes or any other provision of the contra ct governing the rights and obligations of the parties consequent upon the avoidance of the contract. (2) A party who has performed the contra ct either wholly or in part may claim restitution 49 THE IC C MODEL INTERNATIONAL SALE C ONTRACT

from the other party of whatever the first party has supplied or paid under the contra ct. If both parties are bound to make restitution, they must do so concurrently. Article 82 (1) The buyer loses the right to declare the contract avoided or to require the seller to deliver substitute goods if it is impossible for him to make restitution of the goods substantially in the condition in which he re c eived them. (2) The pre c eding paragraph does not apply: (a) if the impossibility of making restitution of the goods or of making restitution of the goods substantially in the condition in which the buyer re c eived them is not due to his a ct or omission; (b) the goods or part of the goods have perished or deteriorated as a result of the examination provided for in article 38; or (c) if the goods or part of the goods have be en sold in the normal course of business or have be en consumed or transformed by the buyer in the course of normal use before he discovered or ought to have discovered the la ck of conformity. Article 83 A buyer who has lost the right to de clare the contra ct avoided or to require the seller to deliver substitute goods in accordance with article 82 retains all other remedies under the contra ct and this Convention. Article 84 (1) If the seller is bound to refund the pric e, he must also pay interest on it, from the date on which the pric e was paid. (2) The buyer must account to the seller for all benefits which he has derived from the goods or part of them: (a) if he must make restitution of the goods or part of them; or (b) if it is impossible for him to make restitution of all or part of the goods or to make restitution of all or part of the goods substantially in the condition in which he re c eived them, but he has nevertheless de clared the contra ct avoided or required the seller to deliver substitute goods. Se ction VI Preservation of the goods Article 85 If the buyer is in delay in taking delivery of the goods or, where payment of the pric e and delivery of the goods are to be made concurrently, if he fails to pay the pric e, and the seller is either in possession of the goods or otherwise able to control their disposition, the seller must take such steps as are re asonable in the circumstanc es to preserve them. He is entitled to retain them until he has be en reimbursed his re asonable expenses by the buyer. Article 86 (1) If the buyer has received the goods and intends to exercise any right under the contract or this Convention to reje ct them, he must take such steps to preserve them as are re asonable in the circumstanc es. He is entitled to retain them until he has be en reimbursed his re asonable expenses by the seller. (2) If goods dispatched to the buyer have be en pla c ed at his disposal at their destination and he exercises the right to reje ct them, he must take possession of them on behalf INTERNATIONAL CHAMBER OF C OMMERCE 50

of the seller, provided that this c an be done without payment of the pric e and without unre asonable inconvenienc e or unre asonable expense. This provision does not apply if the seller or a person authoriz ed to take charge of the goods on his behalf is present at the destination. If the buyer takes possession of the goods under this paragraph, his rights and obligations are governed by the pre c eding paragraph. Article 87 A party who is bound to take steps to preserve the goods may deposit them in a warehouse of a third person at the expense of the other party provided that the expense incurred is not unre asonable. Article 88 (1) A party who is bound to preserve the goods in a c cordanc e with article 85 or 86 may sell them by any appropriate me ans if there has be en an unre asonable delay by the other party in taking possession of the goods or in taking them ba ck or in paying the pric e or the cost of preservation, provided that re asonable notic e of the intention to sell has be en given to the other party. (2) If the goods are subje ct to rapid deterioration or their preservation would involve unre asonable expense, a party who is bound to preserve the goods in a c cordanc e with article 85 or 86 must take reasonable measures to sell them. To the extent possible he must give notic e to the other party of his intention to sell. (3) A party selling the goods has the right to retain out of the proc e eds of sale an amount equal to the re asonable expenses of preserving the goods and of selling them. He must a c count to the other party for the balanc e. Part IV Final provisions Article 89 The Se cretary-General of the United Nations is hereby designated as the depositary for this Convention. Article 90 This Convention does not prevail over any international agre ement which has alre ady be en or may be entered into and which contains provisions conc erning the matters governed by this Convention, provided that the parties have their pla c es of business in States parties, to such agre ement. Article 91 (1) This Convention is open for signature at the concluding me eting of the United Nations Conferenc e on Contra cts for the International Sale of Goods and will remain open for signature by all States at the He adquarters of the United Nations, New York until 30 September 1981. (2) This Convention is subject to ratification, acceptance or approval by the signatory States. (3) This Convention is open for a c c ession by all States which are not signatory States as from the date it is open for signature. (4) Instruments of ratific ation, a c c eptanc e, approval and a c c ession are to be deposited with the Se cretary-General of the United Nations. Article 92 (1) A Contra cting State may de clare at the time of signature, ratific ation, a c c eptanc e, 51 THE IC C MODEL INTERNATIONAL SALE C ONTRACT

approval or a c c ession that it will not be bound by Part II of this Convention or that it will not be bound by Part III of this Convention. (2) A Contra cting State which makes a de claration in a c cordanc e with the pre c eding paragraph in respe ct of Part II or Part III of this Convention is not to be considered a Contracting State within paragraph (1) of article 1 of this Convention in respect of matters governed by the Part to which the de claration applies. Article 93 (1) If a Contra cting State has two or more territorial units in which, a c cording to its constitution, different systems of law are applic able in relation to the matters de alt with in this Convention, it may, at the time of signature, ratific ation, a c c eptanc e, approval or a c c ession, de clare that this Convention is to extend to all its territorial units or only to one or more of them, and may amend its declaration by submitting another declaration at any time. (2) These de clarations are to be notified to the depositary and are to state expressly the territorial units to which the Convention extends. (3) If, by virtue of a de claration under this article, this Convention extends to one or more but not all of the territorial units of a Contra cting State, and if the pla c e of business of a party is located in that State, this place of business, for the purposes of this Convention, is considered not to be in a Contra cting State, unless it is in a territorial unit to which the Convention extends. (4) If a Contra cting State makes no de claration under paragraph (1) of this article, the Convention is to extend to all territorial units of that State. Article 94 (1) Two or more Contra cting States which have the same or closely related legal rules on matters governed by this Convention may at any time de clare that the Convention is not to apply to contracts of sale or to their formation where the parties have their places of business in those States. Such de clarations may be made jointly or by re ciproc al unilateral de clarations. (2) A Contra cting State which has the same or closely related legal rules on matters governed by this Convention as one or more non-Contra cting States may at any time declare that the Convention is not to apply to contracts of sale or to their formation where the parties have their pla c es of business in those States. (3) If a State which is the obje ct of a d e claration und er the pre c e ding p ara gra ph subsequently becomes a Contracting State, the declaration made will, as from the date on which the Convention enters into force in respect of the new Contracting State, have the effect of a declaration made under paragraph (1), provided that the new Contracting State joins in such de claration or makes a re ciproc al unilateral de claration. Article 95 Any State may de clare at the time of the deposit of its instrument of ratific ation, a c c eptanc e, approval or a c c ession that it will not be bound by subparagraph (1) (b) of article 1 of this Convention. Article 96 A Contra cting State whose legislation requires contra cts of sale to be concluded in or evidenc ed by writing may at any time make a de claration in a c cordanc e with article 12 that any provision of article 11, article 29, or Part II of this Convention, that allows a contract of sale or its modification or termination by agreement or any offer, acceptance, or other indic ation of intention to be made in any form other than in writing, does not apply where any party has his pla c e of business in that State. INTERNATIONAL CHAMBER OF C OMMERCE 52

Article 97 (1) De clarations made under this Convention at the time of signature are subje ct to confirmation upon ratific ation, a c c eptanc e or approval. (2) Declarations and confirmations of declarations are to be in writing and be formally notified to the depositary. (3) A de claration takes effe ct simultaneously with the entry into forc e of this Convention in respe ct of the State conc erned. However, a de claration of which the depositary re c eives formal notific ation after such entry into forc e takes effe ct on the first day of the month following the expiration of six months after the date of its re c eipt by the depositary. Re ciproc al unilateral de clarations under article 94 take effe ct on the first day of the month following the expiration of six months after the re c eipt of the latest de claration by the depositary. (4) Any State which makes a declaration under this Convention may withdraw it at any time by a formal notific ation in writing addressed to the depositary. Such withdrawal is to take effe ct on the first day of the month following the expiration of six months after the date of the re c eipt of the notific ation by the depositary. (5) A withdrawal of a de claration made under article 94 renders inoperative, as from the date on which the withdrawal takes effe ct, any re ciproc al de claration made by another State under that article. Article 98 No reservations are permitted exc ept those expressly authoriz ed in this Convention. Article 99 (1) This Convention enters into force, subject to the provisions of paragraph (6) of this article, on the first day of the month following the expiration of twelve months after the date of deposit of the tenth instrument of ratific ation, a c c eptanc e, approval or a c c ession, including an instrument which contains a de claration made under article 92. (2) When a State ratifies, a c c epts, approves or a c c edes to this Convention after the deposit of the tenth instrument of ratific ation, a c c eptanc e, approval or a c c ession, this Convention, with the exc eption of the Part excluded, enters into forc e in respe ct of that State, subje ct to the provisions of paragraph (6) of this article, on the first day of the month following the expiration of twelve months after the date of the deposit of its instrument of ratific ation, a c c eptanc e, approval or a c c ession. (3) A State which ratifies, a c c epts, approves or a c c edes to this Convention and is a party to either or both the Convention relating to a Uniform Law on the Formation of Contracts for the International Sale of Goods done at The Hague on 1 July 1964 (1964 Hague Formation Convention) and the Convention relating to a Uniform Law on the International Sale of Goods done at The Hague on 1 July 1964 (1964 Hague Sales Convention) shall at the same time denounc e, as the c ase may be, either or both the 1964 Hague Sales Convention and the 1964 Hague Formation Convention by notifying the Government of the Netherlands to that effe ct. (4) A State party to the 1964 Hague Sales Convention which ratifies, a c c epts, approves or a c c edes to the present Convention and de clares or has de clared under article 92 that it will not be bound by Part II of this Convention shall at the time of ratific ation, a c c eptanc e, approval or a c c ession denounc e the 1964 Hague Sales Convention by notifying the Government of the Netherlands to that effe ct. (5) A State party to the 1964 Hague Formation Convention which ratifies, accepts, approves or a c c edes to the present Convention and de clares or has de clared under article 92 that it will not be bound by Part III of this Convention shall at the time of ratific ation, a c c eptanc e, approval or a c c ession denounc e the 1964 Hague Formation Convention by notifying the Government of the Netherlands to that effe ct. 53 THE IC C MODEL INTERNATIONAL SALE C ONTRACT