Chapter 7: Inspection, Claim, Arbitration and Force Majeure

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Chapter 7 Inspection, Claim, Arbitration and
Force Majeure

• Abstract This chapter mainly introduces
  inspection, claim, arbitration, force majeure and
  related knowledge in international merchandise
  trade.
• Section 1 Inspection of the Goods
• Section 2 Claim
• Section 3 Force Majeure
• Section 4 Arbitration

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Section 1 Inspection of the Goods

• 1.The meaning of Inspection
• The buyers right to inspection if the buyer
  gives up his reasonable opportunity to examine
  the goods, it means he also gives up the right to
  reject the goods.
• Case analysis

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• 2.The time and place of inspection

• (1) To make inspection in the export country
• 1. To make inspection at the factory
• 2. To make inspection at the port of
  shipment
• Notice the above two methods denies the buyers
  reinspection right, so they are disadvantageous
  to buyer.
• (2) To make inspection in the import country
• 1. To make inspection at the port of
  destination
• 2. To make inspection at users residence
• Notice Those two methods are in favor of buyer
  because the seller should be responsible for the
  quality and quantity of the goods.

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• (3) To make inspection in the export country and
  make reinspection in the import country
• (4) To make inspection at the port of shipment to
  take shipped weight as final and make
  reinspection at the port of destination to make
  take landed quality as final.

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• 3. Commodity Inspection Institution
• Commodity Inspection Institution
• Commodity Inspection Institution in our country
• China Commodity Inspection Bureau
• The main duties of the inspection bureau
• Making Legal Inspection
• Supervision and Administration
• Authentic Attesting Business

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4. Inspection Certificate

• The inspection certificate is a written
  document issued by the commodity inspection
  institution, bearing witness to the result of
  inspection.
• Kinds of Inspection Certificate
• Functions of Inspection Certificate

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Section 2 Claim

• 1. The laws of different countries on Breach of
  Contract
• 1. Regulation of Britain law
• Breach of Condition and Breach of Warranty
• 2. Regulation of American law
• Material Breach of Contract and Minor Breach of
  Contract
• 3. Regulation of Convention (Article 25)
• Fundamental Breach of Contract and
  Non-Fundamental Breach of Contract
• 4. Regulations of China Contract Law (See
  chapter 6, 7)

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• Target of the claim
• Claim from buyer or seller
• Claim from carrier
• Claim from insurer
• Common claim and possible responsibility analysis
  in international trade business
• Case analysis1
• Case analysis 2

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Claim Clauses In the Contract

• (1)Discrepancy and Claim Clause
• 1. Claim Foundation
• 2. Period of Claim
• Appointed deadline for claim
• Legal deadline for claim
• 3. Methods of handling claim

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• (2) Penalty Clause or Liquidated Damage Clause
• Applied occasion of this clause
• The nature of penalty
• China Contract Law on penalty
• 4. Penalty clause of the deposit
• (1)The meaning of deposit
• Note Deposit is different from the advance
  payment
• (2)The function of deposit clause (Penalty clause
  of the deposit)
• (3)Precautions of using deposit clause
• If both penalty clause and deposit clause are
  stipulated, damaged side can only select one
  (article 116 of "contract law ").

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Section 3 Force Majeure

• 1. The meaning of Force Majeure
• (1) Preconditions of force majeure
• Notice Market risk, commodity price fluctuation,
  and exchange rate variation can't be regarded as
  force majeure incidents.
• Force majeure is free from liabilities.

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• 2. Force Majeure Clause
• (1) The nature and range of force majeure
• There are three ways to stipulate force majeure
  clause
• 1. In a summarizing way
• 2. In a specified way
• 3. In a comprehensive way

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• (2) Treatment of force majeure events
• There are two kinds of force majeure
  consequences First, the rescission of the
  contract Second, postpone fulfilling the
  contract.
• Case analysis
• (3) Force majeure incidents inform and
  certificate

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Section 4 Arbitration

• 1. Arbitration is an important way of settling
  disputes
• (1) Amicable Negotiation
• (2)Conciliation
• (3)Arbitration
• 1?The definition of Arbitration
• Two parties reach a written agreement that they
  will submit the disputes which cant be settled
  through amicable negotiations to the third party
  for arbitration whose decision is final and
  binding.
• 2?Characteristics of Arbitration
• (4)Litigation

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• 2. The forms and functions of arbitral agreement
• (1) The form of arbitral agreement
• Arbitration Clause or agreement in advance
• Submission or agreement afterwards
• If agreement in advance is not accordance with
  agreement afterwards, subject to agreement
  afterwards.
• Those two kinds of arbitral agreements have equal
  legal effect
• (2) The function of arbitral agreement

The arbitration agreement eliminates the
jurisdiction of the court over the relative case
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• 3. Arbitral Proceeding
• The plaintiffs application
• The formation of arbitral tribunal
• The hearings
• The award-making
• 4. Admit and execute arbitral award
• The most important international convention is
  the Convention of New York 958, our country
  joins in this convention in 1987.

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• 5. The stipulation of arbitration clauses
• (1) Place of arbitration
• (2) Arbitration authority
• (3) Arbitration rules
• (4) Effectiveness of award
• (5) Arbitration expense bearing
• The award is usually final and has the force of
  law binding upon both parties.

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• 6. Clause forms of arbitral
• 1. Clause form arbitrated in our country
• 2. Clause form arbitrated in the country of
  defendant
• 3. Clause form arbitrated in the third country

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Summary

• This chapter has introduced each clause about
  prevention and treatment of disputes in
  merchandise contract, including inspection,
  claim, force majeure and arbitration, etc.
• Key point of this chapter Inspection clause,
  claim clause, force majeure clause and arbitral
  clause
• Difficult point of this chapter Force majeure
  definition, similarities and differences between
  arbitration and lawsuit

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Questions of this chapter

• 1, when the accident of the claim happens, how to
  clear and definite claim target?
• 2, whats the penalty clause of deposit?
• 3, what are the conditions of force majeure?
• 4, what are the form and function of arbitral
  agreement?