General sale and purchase of goods contracts in Vietnam

When performing a sales and purchase agreement, the parties should pay attention to the implementation and inspection of the agreed contents of the contract. Typically, checking the legality of goods, whether the delivered goods are in accordance with the agreement between the parties; delivery-related issues such as location, time, and inspection of goods; the contents related to payment as well as ownership rights to the goods as agreed by the parties. A well-drafted sales and purchase agreement protects both parties’ interests.

This article will provide insights into key aspects of a sales and purchase agreement, including essential clauses. By understanding these elements is crucial for a successful transaction.

1. The conditions for goods

• Firstly, the parties must determine the legality of the goods involved in the transaction. Not all goods are permissible for business or trade. Based on the law, some goods are prohibited, restricted from, or subject to conditional trading.

• For goods subject to conditional trading, they must fully satisfy the legally established conditions. This is the fundamental step, necessary to make the purchase and sale of goods.
• Conditions on quantity, quality, method of preservation, packaging, etc. of goods shall be agreed upon by the parties when establishing the goods sale and purchase contract.
• Most goods put on sale in the market must have a label.
  • Mandatory labeling requirements for goods include:
    • the name of the goods,
    • the name and address of the person responsible for the goods and the origin of the goods.
  • In addition, depending on each type of goods, there are specific contents such as:
    • expiry date,
    • quantitative ingredients,
    • technical parameters, safety factor information, etc.
  • Monitor and ensure that the information written on the goods labels is accurate.

2. Goods do not conform to the contract

• When the buyer thinks that the goods do not conform to the contract, they have the right to refuse. The Law clearly stipulates cases where goods are not in accordance with the contract.
  Goods that are unsuitable for standard use or the buyer’s specific purpose are examples of non-conforming goods. Similarly, goods not preserved or packaged as usual for their type also fall into this category.
• In this case, the seller shall be liable for any defect in the goods prior to the time when the goods have been delivered to the buyer, even if such defect is discovered after the buyer has received the goods; except that during the signing of the contract, the buyer knows about the defects of the goods but still accepts to sign, the seller is not responsible for any defects of the goods.
  Furthermore, if, after the buyer receives the goods, the defects of the new goods arise during use due to the seller’s fault, the buyer has the right to hold the seller responsible.

3. Goods inspection

• Goods inspection is an important step in their buying and selling process. This step needs to conduct before delivery to ensure contract compliance and minimize disputes.
• The seller must create conditions and assure the buyer to inspect the goods.
  • If the contract stipulates the carriage of goods, their inspection shall be carried out when delivered to the place of destination. After the inspection, the buyer must notify the condition of the goods, including the defects of the goods that the buyer is aware of. If the buyer fails to notify, the seller is not responsible for these defects. However, the purchaser cannot detect some defects during normal inspection. In this case, the seller is still responsible.
  • If the buyer fails to inspect the goods before the agreed delivery date, the seller can still deliver the goods as planned. The buyer must receive the goods according to the contract.

4. Shipping

If the seller fails to deliver the goods compared to the contract, but there is still a deadline for delivery, the seller can still deliver the missing part within the remaining time limit. In case the seller delivers overtime goods, the buyer has the right to refuse such excess goods and must pay either the contracted or mutually agreed price.

For some goods with accompanying documents, the seller is obliged to deliver all documents related to the goods to the buyer. The parties can agree to attach documents to the goods or send them separately.

5. Place of delivery

Regarding the place of delivery, the seller must deliver the goods to the agreed place. However, some contracts do not have an agreement on this issue. Parties legally agree on the delivery place as follows:

• If the process of transporting goods from the seller to the buyer through many shipping intermediaries, the seller must deliver the goods to the first shipping intermediary in accordance with the agreement. The seller fulfills their delivery obligations by delivering the goods to the first carrier. Any damage to the goods after this point becomes the intermediary’s responsibility. This responsibility applies even if the buyer has not yet received the goods.
• If at the time of signing the contract, the seller knows the location of the goods warehouse, the place of loading or the place of production and manufacturing of the goods of the buyer, the seller must deliver the goods to that location. In fact, sellers often violate this content, saying that the contract does not specify the delivery location, to continue storing the goods at his warehouse and asks the buyer to come to collect these.
• If neither of the above two cases, the buyer must go to the seller’s business location and if there is no business location, to the seller’s place of residence when signing the contract to pick up the goods. In this case, the buyer bears a higher risk due to having to preserve the goods during transportation from the seller’s place of delivery to the buyer’s warehouse or business location.

6. Delivery term

The seller must deliver the goods at the time of delivery agreed in the contract. The buyer must receive the goods as agreed and do all reasonable work to help the seller deliver them. Some contracts lack a specific delivery time. Other contracts use vague delivery terms. Both situations hinder the delivery and receipt of goods for both the seller and buyer.

For example, in the contract, the delivery date is November 2012. In this case, the seller has the right to deliver the goods at any time in November and notify the buyer in advance.

If the seller delivers the goods before the agreement, the buyer has the right to accept or refuse to receive the goods. Therefore, the delivery of goods needs to have an agreement between the parties and a settlement plan when the delivery is not on time.

7. Risk transference

Transferring risk is a fundamental issue in goods purchase and sale contracts that parties must understand. Who will be responsible for goods damaged during transit: the seller, the buyer, or the carrier?

Therefore, the parties need to agree on the time of risk transfer to avoid disputes:

• There is no agreement in the contract on the time when the risk is transferred, if the seller is obliged to deliver the goods to the buyer at a certain place, the risk of loss of or damage to the goods passes to the buyer when the goods have been delivered. Delivered to the buyer.
• If the contract does not stipulate the carriage of the goods as well as the definite place of delivery, the risk of loss of or damage to the goods passes to the buyer when the goods have been delivered to the first carrier. In specific cases, the time of risk transfer is regulated in greater detail.

8. Guarantee of the ownership to the goods

According to the law on goods sale and purchase contracts, ownership passes from the seller to the buyer upon the transfer of goods. The seller must guarantee that no third party will dispute the buyer’s ownership of the goods. The goods must be lawful. The seller must ensure the delivery of the goods is legal. Regulations on legal goods mentioned above. The legal transfer of goods often requires import and export goods, tax requirements, means of transportation, etc.

If the buyer mandates compliance with its models, formulas, and data, the buyer assumes responsibility. Any intellectual property rights complaints arising from this compliance become the buyer’s responsibility.

If the goods are subject to pledge, mortgage, deposit, guarantee, etc., the seller must notify the buyer of the condition of the goods and this purchase and sale must be the agreed intention of the secured party.

9. Payment