Drafting international freight contracts

Nowadays, goods transportation activities between countries are increasingly happening. However, Vietnamese businesses are still facing many difficulties when drafting international freight contracts. To solve this problem, Viet An Law Firm has compiled some important advice related to drafting international freight contracts in Vietnam as follows.

Legal basis

• Civil Code 2015;
• Law on Commercial 2005.

What is international freight?

International freight transport is a form of transporting goods from one country or territory to another country or territory worldwide, beyond the country’s territorial borders. This includes the use of a variety of means and modes, including road, sea, air, and rail, to move goods from the place of production to the place of consumption or from the place of export to the place of consumption. import. There are two common forms of international freight transportation as follows:

• Direct international transport: This is a form of transportation conducted between two countries that share a national border.
• Transit international transportation is a form of transportation conducted through the territory of at least a third country (called the transit country).

In commercial practice in general and international trade in particular, there are many criteria for classifying goods transportation:

• Based on environmental criteria and production conditions, international freight transport is divided into road transport, sea transport, air transport, and rail transport.
• Based on the way of organizing the transportation of goods, international transportation is divided into unimodal transport and multimodal transport. Unimodal transport is a mode of transport in which goods are transferred from origin to destination by a single type of transport. Multimodal transport is the transportation of goods from origin to destination by at least two or more types of means of transport but only using a single type of transport document for which one carrier is responsible throughout the transportation process.

What is an international freight contract?

International transportation of goods is carried out through contracts. This is a type of transportation contract with foreign elements. International freight contracts have an organic relationship with international goods sale contracts. In the simplest terms, an international freight contract is an agreement between the parties. In which the carrier has the obligation to transport goods from this country or territory to the agreed upon location in another country or territory to deliver those goods to the person entitled to receive them, the lessee. The carrier is obligated to pay shipping charges.

Characteristics of international freight contracts

International elements of the contract

An international freight contract is a type of service contract of an international nature. Vietnamese law currently does not have specific regulations on contracts of an international nature, however, the international nature of contracts involves signs of subject, object, and legal events. Therefore, the international nature of the contract of carriage of goods is shown in the following signs:

• First, the parties entering into the contract do not have the same nationality, place of residence, or headquarters;
• Second, the contract is signed or performed abroad;
• Third, the object of the contract is goods that exist abroad;
• Fourth, goods are transported beyond national or territorial borders.

Subject of the contract

An international freight contract is signed between the carrier of the goods and the freight hirer or consignor.

• Carrier is the person who himself or authorizes another person to enter a contract for the transportation of goods with the consignor. Thus, the carrier can carry out all or part of the transport of goods, but can also entrust another person to carry out all or part of the transport. This authorized carrier is called an actual carrier.
• The freight hirer is a person who himself or authorizes another person to enter a contract for transportation of goods with the carrier. In the case of a contract of carriage according to a transport document, the freight hirer is called the consignor.

Content of the contract

An international freight contract is a bilateral contract with compensation. The two parties in an international freight contract, the carrier and the charterer, have corresponding rights and obligations to each other. The carrier has the obligation to preserve and transport the goods to the right location and at the agreed time. The charterer pays shipping costs to the carrier as agreed.

Notes when drafting international freight contracts

When drafting an international freight contract, there are a number of important considerations that parties need to consider to ensure that the contract is tightly constructed and protects the interests of all parties involved. Here are some important points to note:

Identify relevant parties

The contract needs to clearly identify the parties involved, including the shipper (exporter), the consignee (importer), and the carrier. This helps clearly define the responsibilities and rights of each party.

Description of goods

The contract should provide detailed information about the goods, including the name of the goods, description, quantity, value, weight, dimensions, and any other information relevant to the carriage of the goods.

Shipping conditions

The contract should clearly define the conditions and rules of transportation, including the type of transportation used (ship, boat, car, train, etc.) and mode of transportation (sea, air, road, rail), estimated delivery time, pick-up point, and delivery point. Also note any special terms (e.g., shipping fragile items).

Rates and payments

The contract needs to specify the fare, payment method, and payment term. This may include shipping costs, insurance, customs fees, and any other fees related to shipping. In addition, because this is an international contract, the parties need to record the payment currency to avoid possible disputes.

Insurance

The contract should specify which party will be responsible and liable for the cost of insuring the goods in the event of fire, loss, or damage during transit.

Delivery time

Clearly define the estimated time for delivery, including date and time. If the parties cannot enter into a contract on a specific date and time, the parties can enter into a contract over a period of time, for example: The last week of December.

Customs procedures and tax calculation mechanism

Clearly define regulations related to customs and taxes, and identify the party responsible for customs procedures and related costs to estimate shipping costs within the allowable capacity of the contract.

Above is an article detailing the drafting of international freight contracts. If you have any difficulties related to contract drafting consulting, please contact Viet An Law Firm for detailed advice