Article Index

The text of the International Contract sets out, quite clearly, the rules you are working to and, by virtue of this fact, the rules the ‘other guy’ is working to. It cuts both ways! As such the International Contract is a form of security. . There can be no misunderstanding - the wordings are quite precise.

"2. Definitions": Clauses 2.1 to 2.11 are very clear. Likewise with "3. Quality", Clauses 3.1 and 3.2 spell out that "Goods to be of Fair Average Quality of the mark and/or description. Fair average Quality means that the goods must conform to the quality standards that are normal for the products of the origin indicated in the Contract. For any inferiority of quality an allowance to be made.....", etc..

This should act as words of caution to those wishing to trade across the world’s markets. Each origin or goods from recognised and designated geographical regions of hide and skin supply have their own standards and specifications.

Likewise certain well-known and established Shippers?Marks carry individual gradings and specifications. What applies to one does not necessarily apply to another. But to know these things is part of what makes a successful trader. These things are not learnt overnight - as many of you will already know!

"4. Quantity"; "5. Marking" and "6. Destination and Freight" are all referred to in order to avoid ambiguity. Coming to "7. Freight Variations", in previous contracts we had a problem regarding who should or should not pay any freight increases which were made by the Shipping Companies or carriers after the contract was agreed.

Skipping over "8. Shipment" and "9. Notices of Shipment", which you can read on your own, to "Risk and Title". Clauses 10.1 to 10.4 are essential reading particularly as they refer to current trading conditions in which bankruptcies, receiverships and administration have become, sadly, more common. As you all know the task of identifying your own goods, once they are in the hands of the Buyer, can be very difficult indeed. In fact, the great question often asked is, "At what point does title to the goods pass from Seller to Buyer?"

These four clauses set out your rights and privileges accordingly. Precautions should be taken at all times to ensure you retain identity of your own goods.

Under "11. Insurance" the procedures to be adopted are highlighted. You must know what you are doing! Clause 11.1 sets out to how the goods are sold. If it is your responsibility to cover the insurance it is a reminder to you to do so for it states, "Seller to provide policies/certificates of marine insurance including Institute Commodity Trade Clauses (A), Institute War Clauses (Commodity Trades) and Institute Strikes Clauses (Commodity Trades), covering the goods at the contract price plus twenty per cent and, where applicable, to state: "On deck cargo held covered at a premium to be arranged (any additional premium for Seller’s account) and to provide payment of all agreed claims in the currency of the contract.", etc.. If we were to be very honest it takes a very experienced trader to think of all these points should they be necessary!

Proceeding to "12. Documents" and "13. Invoicing" again, everything is spelt out. Clause 12.2 could have been considered very appropriate in the light of recent European legislation as set out in the Balai Directive 92/118. This Directive was responsible for the introduction of new sanitary certificates and controls for imported goods from third countries to those of the European Union. However such clauses were included in the contract long before 1998 when the E.U. actually started to apply the Directive.

You can read, "If sanitary certificates, certificates of origin and/or other certificates are required and are obtainable in the country of shipment and /or origin, these to be supplied at the seller’s expense. Consular invoices [if requested by buyer after date of contract] and their legalisation fees for buyer’s account. Buyer to give seller in good time a detailed list of the documents required ...." and so on, again. The objective is to make the Buyer give full details to the Seller of any and all documentary requirements to allow the import to be freely admitted at the destination country.

Again moving on to "14. Payment" you will see that there is no complicated jargon which defies comprehension about the International Contract. In this section the wording leaves no-one in any doubt about what is required. Likewise with "15. Weighing and Taring" and "16. Measurement". In addition, where further clarification is required, it is set out in the Annexes. For raw hides and skins, for example, Annexe A.1 "Weighing and Taring" deals with more particular aspects of this which are relevant..

Understandably a different set of rules must apply in each of the cases of dry, dry salted and wetsalted material. The same rate of percentage allowance would not work. Similarly the rules governing measurement vary with the different conditions in which the hides or skins are sold. You hardly need to think about a pickled skin, say, and a vegetable tanned crust skin to realise that they do not handle in the same way. The "stretch factor", to coin an expression, is far greater with pickled skins. So ... turning once again to the end of the International Contract you will see that there are, again, specific rules applicable to measurement in the case of the different materials covered by Annexes B, C and D.

When one considers the, sometimes, immense amount of monies tied up in contracts, responsibility for trading hides and skins should be taken by trained and knowledgeable people. In certain cases the basis of that knowledge may be acquired through courses of study at colleges, but, in many other instances it is built up over a lifetime of direct trading experience.

Never is such information more valuable than when it comes to disputes. In the International Contract procedures for handling disputes are set out in "17. Inspection", "18. Claims", "19. Rejection" and "20. Default". But here again, more specific information relating to these subjects is given in the Annexes dependant upon the type of goods being traded.

"21. Notice of Force Majeure", or a declaration of certain circumstances which are deemed to be beyond the control of the Seller and which excuse a party from performing his part of a contract. This is simply covered by "A party claiming force majeure to give notice as soon as possible and, if required, to furnish satisfactory evidence of force majeure." Usually this means that shipment cannot be effected. War, floods, storms, and earthquakes are some of the more common reasons for declaring force majeure.

"22. Bankruptcy" is again a very relevant clause at this particular time given the global economic situation. You would do well to acquaint yourself with the content of these clauses. To some extent they have to be considered hand in hand with "10. Risk and Title" should the goods have already been shipped. Either way your rights are clearly set out.

The two penultimate clauses "23. Arbitration and Appeal" and "24. Proper Law of the Contract" cover what you should do in the event that amicable settlement negotiations prove to be unsuccessful. Here you are reminded of what you should have put, right at the beginning, in Clause 1 - Particulars. Clause 23.1 "Any dispute arising out of this contract to be settled by private treaty, if possible, failing which it shall be referred to arbitration according to the International custom of the trade and subject to the rules for arbitration and appeal obtaining in the places specified for that purpose in Clause 1." Whilst 23.2 is quite specific in stating that "No party may begin an action in the Courts under this contract until the dispute has been determined by arbitration as hereby provided ...." Clause 24.4 states, "The United Nations Convention on contracts for the International Sale of Goods (Vienna 1980) shall apply to this Contract.".

So you can see that the International Contract draws not only on the combined expertise of both the hide and skin traders and tanners but, also, INCOTERMS and The United Nations Convention (often referred to as the Vienna Convention).

Perhaps for those of you who may not be familiar with INCOTERMS, we should mention that it is published by the International Chamber of Commerce in consultation with its Commercial Practices Commission and Trade Terms Working Party.

Finally we have "25. Text"which simply applies to cases where language translation errors may arise. English is the definitive text.

At this point we hope you may begin to realise why we are so enthusiastic about the International Contract. We see it operating successfully throughout most parts of the world. As it has evolved over the years its content has become more comprehensive to a point where nearly all Courts of Law rule in its favour and uphold the arbitration rulings based upon it. In fact it is generally considered to be one of the finest commodity contracts in use today throughout the world!


Download this file (No6long.pdf)Contract No 6 Long[ ]646 kB
Download this file (No6short.pdf)Contract No 6 Short[ ]731 kB
Download this file (No7long.pdf)Contract No 7 Long[ ]623 kB
Download this file (No7short.pdf)Contract No 7 Short[ ]1256 kB