IMPORTANT MATTERS OF CONTRACT
EDUCATION: SUPPLIER END BUYERS WORLDWIDE
From: 1 September 2021
FTNX (FTN EXPORTING) has seen many (strange) contract models in the last 35 years of trading. In many instances we have seen the required elements in forming a contract was missing. A good contract is a contract which is expressed in the simplest manner where all the required elements are apparent. Simple does not mean ‘easy’ as a written contract can become a very complex and elaborate document. Using Latin laguage and maxims in law and contracts is common practice, as it’s done so because Latin has the ability to clarify complex matters into a simple objective veiw. Six elements form the basis of a good contract model and no contract is in effect unless it is supported by a legally binding and signed formal offer. Entering an illegal contract is an invalid contract. While many of the laws and rules of commerce used by democratic societies today have roots based in ancient Rome and renaissance Italy and France , the rule of law as we know it to be today, emanated directly from the apparent laws of England of which itself were developed on the back of Mosaic law. No matter from which country the international trade contract is drawn from, the said six elements must be apparent for it to be a valid trade contract. The English language is the universal language of international trade used by interalia , Customs, Airlines and Ships. When language and application of contract are conjoined, a formidable worldwide uniform understanding becomes apparent, regardless if the contract is produced in USA, Russia or Kyrgyzstan. Understanding such elements is the premise that produces a good well defined contract and business applied therein. While all laws are rules, not all rules are laws. Accordingly by understanding the basic elements that are required in a contract serves the premises of a good business relationship being developed between parties to the contract. In this business Quasi and implied contracts are avoided. The classification used as defined in this business accordingly, to matters of ‘contract formation’ is defined as an ‘expressed written contract’ that is; a contract that is expressed by written words. In trade, we apply an Executory (as opposed to ‘Executed’) ‘Contract of Performance’
The Six elements required to form contract are defined as follows
1. The intention of the parties to create a legally binding relationship
2. An offer is produced by one party to the other to accept, must be apparent
3. Valuable considerations is a term best describing that a ‘ price' must be apparent
4. Legal capacity to sign a contract by a person of age or sound mind is apparent.
5. A genuine consent to enter into such a contract must be present
6. Legality (objects) of the contract must also be evident.
FTNX added operational aspect which must apply so as not to contravene any of the above elements
1. All contract must bear hard copy version carrying hard copy seal and signature
2. Contract being served by email via the application of the internet is released to ensure no delays eventuate on condition that the hard copy ‘is yet to arrive’
3. All contracts released by email are deemed an original document after meta tags have been added at the time of transmission.
4. A third party to a transaction cannot sign a contract unless the position of the seller or buyer as opposed to end buyer and supplier is apparent.
Below is a simple ‘Performance’ contract that has all Six elements apparent
The basis below even though simple in style can be further styled which could lead to an elaborate contract simply by adding paragraphs and more details.
Date: This agreement was made on January 10, 2022
Parties to the contract: FTN Exporting, a commodity trader acting for an undisclosed principal.FTN Exporting is situated in Melbourne Australia (hereby called the Seller)
And Tom Smith (hereby called the end buyer) situated in the state of Ohio, USA.
It has been agreed upon and witnessed that;
1. The seller has agreed to sell and the end buyer agrees to buy five full container loads (20 ft FCL) of Aluminium ingots each bearing no less than 20 Metric Tons of ingots
2. This contract offers to sell Aluminium ingots to the end buyer as per the offer signed January 1, 2022.
3. The Aluminium ingots is available for collection from the factory producing such ingots as located in Geelong City, Victoria Australia
4. Independent analytic inspectors report shall also be served declaring Aluminium ingots have an Aluminium content purity not less than 98.0%
5. The end buyer has agreed to arrive in Melbourne City to sign the contract and pay for ordered goods on January 15th 2022
6. The seller shall then take the end buyer to the factory to 'sight' product. The end buyer shall remain in Melbourne City until delivery is finalised.
7. And that; the total quality of no less than 100 Metric Tons shall be delivered at the same time in accordance with ICC EXW incoterms delivery rules
8. The total value for said goods is US$ 200, 000.00 including all delivery expenses as advised on the invoice on completion of sale
9. Upon signing of this contract within 3 days of such, the end buyer shall lodge the financial instrument for the full value of purchase indicated.
10. The financial instrument is defined as an irrevocable UCP 600 bank issued a documentary letter of credit.
11. The end buyer or shipping agent acting for such shall arrive at the production factory on the morning of February 10, 2022
12. The driver or drivers will be directed to enter the factory and load each FCL, sign the packing slip, accept all document served, and leave the factory
13. The end buyer owns the goods as ordered. Once leaving the boundary of the factory.
14. The seller shall collect on the financial instrument thereafter, as per the terms expressed on the credit.
Attestation Clause and Witnessed
This contract has been signed by FTN Exporting in the presence of : (a) Witness : Commissioner for taking Affidavits
This contract has been signed by Tom Smith in the presence of : (a) Witness : Notary Public
The contract could be a simple affair or a complex affair as directed by the delivery mode used. Any disputes forming at the time of delivery. The seller shall address such matters as found on the offer to settle any misunderstandings; in this light the offer plays a crucial role. The most importing aspect of the whole contracting basis is the application of the first element as to the ‘intention’ of the parties. This is why many suppliers ask for upfront for financial details and other matters before considering to release an offer. An experienced commodity trader like FTNX must express its position clearly in being able to secure an offer from a supplier, for this reason asking for a good quote may be a better option for some, as no expectations as to ‘intentions’ is apparent. A good informed PCT is able to work with a good quote, rather than ‘just a standard quote’ which will have enough information in allowing the PCT acting as a seller to declare ostensibly his or her authority to make an offer for end buyers to consider.In all cases the PCT MUST secure supply or have supplied assured before offering such goods in the open market place to at least ensure that none of the six elements of a contract are contravened.