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ChapterNine FiveLinksofInternationalBusinessNegotiation Everythingconsidersitselftoberightandotherstobewrong itselftobebeautifulandotherstobeugly Everythingiswhatitis Theopinionsoftheoneandtheotheraredifferent thattheybothhaveopinionsisthesame KuoHsiang Keyissuestobepresented 1 Abriefintroduction2 Fivelinksindetails EOCAC 3 Casestudies empiricalanalyses 1 Abriefintroduction A IBN foreigntradeB FormulaofIBN written spokenC IBN termsD Fivelinksingeneral A IBN foreigntrade InternationalBusinessnegotiationisanimportantpartofconductingaforeigntrade Itisthedealingsbetweensupplierandcustomerinordertoreachagreementontheprice quantity quality paymentandothertermsandconditionsofasale Obviously theconclusionofsalescontractresultsfromthebusinessnegotiationtothesatisfactionofbothsides Internationalbusinessnegotiationsarecarriedouteitherbywritingorverbally Inthelattercase traderstalkaboutthetermsandconditionsofatransactionwitheachotherin B FormulaofIBN written spoken personorbytelephone Theforeignbusinessmanmaycallonthedomestictraderuponinvitation ortheexporterwillmakeavisittoanoverseasimporteronhisownaccount Businessnegotiationsarealsoheldatinternationalfairswherebusinessmenallovertheworldcannegotiatewithoneanotheroverexportandimporttrade ThroughverbalnegotiationstradingtransactionsbetweenChineseandforeignbusinessmenareconcludedinlargeamountsattheChinaExportCommoditiesFairinGuangzhoutwiceayear C IBN terms Whenbusinessnegotiationisdonebywriting communicationsbyletter fax orbye mailaretheusualmeanstradersuse Inpractice letter writingplaysamajorroleandthat swhyaprosperoustraderalwayshasagreatdealofcorrespondencetodealwith However sometimesbothtypes communicationsinwritingandinspokenwords areusedinterchangeablyinonesingletransaction asthecasemaybe Theformulationoftheexport importsalescontractrepresentstheconclusionofsomepossiblydifficultnegotiationsand accordingly particularcareshouldbetakenregardingthepreparationofitsterms Thefollowingtermsaretalkedover forthemain inordertocometo D Fivelinksingeneral anagreementduringabusinessnegotiation Theyarethosetermsaboutthedescriptionsofthegoods abouttheirquality quantity packing price shipment insurance payment inspection claimsanddisputes arbitrationandforcemajeure Onlywhenthetwopartiesallagreeonthevarioustermsconsultedcanthebusinessbedoneandthesalescontractconcluded Toreachtoanagreementofthevarioustermsmentionedaboveintheinternationalbusinessnegotiation generally needsgoingthroughfivelinks enquiry offer counter offer acceptanceandconclusionofacontract ProceduresofconductingForeignTrade Enquiry Offer Counter offer Acceptance Contract 2 Fivelinksindetails EOCAC LinkI Enquiry 1 Whomakes importer exporter 2 Whatincluded pricelist catalogues samples detailsaboutgoodsandtradeterms conditions 3 Legalvalidity liability4 GlobalcommercialpracticeCasestudy Writtencommunicationskills draftingenquiries repliesSampleenquiries replies general specific Businessnegotiationsininternationaltradeusuallystartwithanenquirybyanimportertoanexporter askingforthepricelists catalogues samplesanddetailsaboutthegoodsortradetermsandconditions However atsometimes anexportercanalsoinitiatethenegotiationbymakinganenquirytoaforeignimporter includinghisintentionofsellingcertaingoodstothelatter Itisworthyofnotethatwhoevermakesanenquiryisnotliableforthebuyingortheselling Andtheoppositeside atthesametime canmakenoreplyatall But accordingtothecommercialpracticethereceiverofanenquirywillrespondwithoutdelayintheusualformofaquotation anoffer orabid 2 Fivelinksindetails EOCAC LinkII Offer 1 Definition2 Classification legalvalidity liability3 SixitemstobeincludedCasestudy Writtencommunicationskills draftingoffersSampleoffers Fax oral Anofferisaproposaloftermsandconditionspresentedinapotentialcontractbyoneparty calledtheofferor toanotherparty calledtheofferee Inorderfortheagreementtobebinding theoffereemustfirstaccepttheoffer otherwisethereisnolegalcontract Therearetwokindsofoffer offerwithengagement firmoffer offerwithoutengagement non firmoffer Offerwithengagementisdifferentfromofferwithoutengagement Thelatterisjustanindicationofpricewithoutcontractualobligation Itissubjecttochangewithoutpreviousnotice Whiletheformerisadefinitecommitmentonthepartofasupplier Asatisfactoryofferwillincludethefollowing 1 Nameofcommodities quality quantityandspecifications 2 Unitpriceandtypeofcurrency 3 Packingconditionanddateofdelivery 4 Termsofpaymentanddiscount 5 Thetermsofvalidityoftheoffer 6 Indicationofwhatthepricecovers 2 Fivelinksindetails EOCAC LinkIII Counter Offer 1 Definition2 Forms verballyorwritten 3 Essenceofcounter offer shiftingofrolesofofferee offerer 4 Artsofmakingacounter offer RRS SRS CaseStudy Empiricalanalysis1 Writtencommunicationskills draftingcounter offer2 Samplecounter offers written oral Acounter offerisanoffermadebyanoffereetoanofferor acceptingsometermsandchangingotherterms Itcanbemadeverballyorinwriting Infact acounter offerisapartialrejectionoftheoriginaloffer Itisanewoffer atthesametime theoriginalofferlapses Thebuyermaynotagreeontheprice orpacking orshipmentputbeforehimbythesellerorofferor andstatehisowntermsinstead Suchalterationsindicatethatbusinesshastobenegotiatedonarenewedbasis Theoriginalofferororthesellernowbecomestheoffereeandhehasarighttoacceptorrefuse Inthelattercase hemaymakeanothercounterofferofhisown Thisprocesscangoonformanyaroundtillthetransactionisconcludedorcalledoff Inmakingacounteroffer oneshouldexpressregret sorryatinabilitytoaccept explainreasonsfornon acceptanceandsuggestthattheremaybeotheropportunitiestodobusinesstogetherinthefuture RRS SRS 2 Fivelinksindetails EOCAC LinkIV Acceptance 1 Definition2 Legalcharacteristics firm valid effectiveandunconditioned 3 Forms written verbalprinted 4 AboutsilenceorinactivityWrittencommunicationskills draftingacceptanceSampleacceptance written oral Inbusinesslaw anacceptanceistheassenttothetermsofanoffer requiredbeforeacontractcanbevalid Itmustbeabsoluteandunconditional otherwiseitisnotanacceptancebutacounter offer maybetenderedonlybythepersontowhomtheofferismade andmustconfirmtoanyconditionsconcerningitthataresetforthintheoffer Inaccordancewiththeusualpracticeininternationaltrade anacceptanceshouldconfirmtothefollowingconditions Anacceptancecanonlybemadeintheformofastatementoranyotherconductbyanofferee theparticularpersonoragroupofpersons whoareclearlystipulatedinafirmoffer Eitheraverbalorawrittenstatementisgoodforthispurpose Theconductthatthesellerdeliversthegoodsorthebuyermakesthepaymentalsoserves Onthecontrary silenceorinactivityisbynomeansanacceptance Anacceptancemustbeunconditional Itshouldbeanunreservedassenttoallthetermsdesignatedintheoffer Inprinciple ifanyadditions modificationsorlimitationstotheofferaremadetheyareacounter offer andnotanacceptance Itisnecessarythatanoffereeshouldmakeanacceptancewiththelifeofafirmoffer Anacceptance asarule takeseffectwhenitreachestheofferor Anordercanbeanacceptanceofanofferorsentvoluntarilybyabuyer Itshouldbeclearlyandaccuratelywrittenoutandstateallthetermsoftransaction Manybuyersnowuseprintedorderformswhichensurethatnoimportantinformationwillbeneglected 2 Fivelinksindetails EOCAC LinkV Conclusionofacontract 1 Definition2 Components3 Forms4 DifferencesbetweencontractandconfirmationWrittencommunicationskills sales purchasecontractSpecimenofpurchasecontract written oral Acontractisanagreementthatcreatesanobligation thatisabinding legallyenforceableagreementbetweentwoormorecompetentparties Itgenerallyconsistsofanexchangeofpromise anofferandanacceptance resultinginanobligationtoperformsomeparticularact Inordertobevalid acontractmusthavethegenuineassentofthepartiestoit thatis itmustinvolvebothofferandacceptance Inexport importtradeasalescontractisalegaldocumentmadebyandenteredintobetweenasellerandabuyeronthebasisoftheirofferandacceptance Therightandobligationofboththepartiesaredefinitelystipulatedinthecontract Thecontractisbindingonthemall Inthecourseofbusinessnegotiation anofferwithengagementoracounter offerisaccepted thetransactioniscompletedandacontractualrelationshipbetweentheofferorandoffereeisconcluded Itmaybeformalorinformal Thecontractwhichisgenerallyadoptedinimportandexportbusinessistheformalwrittencontract eitherasalescontractorapurchasecontract sometimesintheformofpurchaseorderwhencountersignedbytheseller orasalesconfirmationwhencountersignedbythebuyer However inkeepingwiththeregularpracticeininternationaltrade awrittencontractorconfirmationisusuallysignedtobindboththesellerandthebuyer Aformalcontractorconfirmationshouldbepreparedinduplicate eachcopyshouldbesignedbybothparties andeachpartyshouldkeepasignedcopyofit Acontractcanbeworkedouteitherbythesellerorthebuyer anditiscalledasalescontractorapurchasecontractrespectively Thesameisalsoapplicabletoasalesconfirmationorapurchaseconfirmation informal Legally boththesalescontract orthepurchasecontract andthesalesconfirmation orthepurchaseconfirmation areequallybindingontheparties Onthewhole theformerismoreformal andthelatter lessformal Besides theformalconsistsofnotonlysuchmaintermsasthenameofcommodities specifications quantity packing marking price shipment portofshipmentandportofdestination andpayment butalsothoseclausesconcerninginsurance commodityinspection claims arbitrationandforcemajeure whilethelattercoversseveralmainitemsonly Itgoeswithoutsayingthatboththepartieswillbenefitfromthesalesorthepurchasecontractifdisputesoccurbecausethecontracthasprovidedindetailtherelativetermsandwaysofhowtohandleandsettlethedisputes Itis then appropriatetotransactionsoflargeamountandhugequantity Iftheamountisnotlargeorthebusinessisdonebymeansofagencyarrangementorexclusivesalesagreement thesaleorthepurchaseconfirmationisoftenused CaseStudyandempiricalanalyses GeneralEnquiry DearSirs WelearnfromtheChamberofCommerceinShanghaithatyouareaLeadingexporterinyourcountry Weare atpresent verymuchinterestedinimportingyourgoodsandWouldappreciateyoursendinguscatalogues samplebooksorevensamplesifpossible PleasegiveusdetailedinformationofCIFprices discount andtermsofpayment Wehopethiswillbeagoodstartforalongandprofitablebusinessrelation Yourssincerely ReplytoGeneralEnquiry DearSirs ThankyouforenquiryofMay2nd Weareenclosingsomecopiesofourillustratedcataloguesandapricelistslivingthedetailsyouaskfor Alsounderseparatecover wearesendingyousomesampleswhichwillshowyouclearlythequalityandspecifications Wetrustthatwhenyouseethemyouwillagreethatourproductsappealtothemostselectivebuyer Weallowaproperdiscountaccordingtothequantityordered AstothetermsofpaymentweusuallyrequireL Cpayablebysightdraft Thankyouagainforyourinterestinourproducts Shouldyouneedanyfurtherinformation donothesitatetocontactus Welookforwardtoyourorder Yourssincerely Enquiry SpecificEnquiry Gentlemen Weareoneoftheleadingimportersoftextilesinthiscityandshallbepleasedtoestablishdirectbusinessrelationswithyou Atthepresent weareinterestedinCottonPieceGoodsandshallpleasedtoreceivefromyoubyairmailcatalogues samplesandallnecessaryinformationregardingthesegoodssoastoacquaintuswiththequalityandworkmanshipofyoursupplies Meanwhilepleasequoteusyourfavorableprice C I F SanFrancisco inclusiveofour2 commission statingtheearliestdateofshipment Shouldyourpricebefoundcompetitiveanddeliverydateacceptable weintendtoplacealargeorderwithyou Trulyyours Reply Gentlemen WewarmlywelcomeyourenquiryofJanuary27andthankyourinterestinourcottonpiecegoods WeareenclosingourillustratedcatalogueandpricelistgivingthedetailsyouaskforAsforthepaymenttermsweusuallyrequireconfirmed irrevocableLetterofCreditpayablebydraftatsight WehavealreadysoldsomeoftheseproductstotheUnitedStatesandnowrepresentativestherebyTextilesExportLtd NewYork Maywesuggestthatyoucontactthecompanydirectly Wethinkthefirmmaysupplyyouwithmoredetailsofourcottonpiecesgoods Wefeelconfidentthatyouwillfindthegoodsarebothexcellentinqualityandveryreasonableinprice TrulyYours Offer DearSirs SunbirdMen sSilkShirtInreplytoyourfaxofApril12 wearegivingyouanoffer subjecttoyourreplyhereby6pmBeijingtime Sunday April18 asfollows Commodity SunbirdMen SilkShirtSpecifications Asperattachedlist Quantity 500dozen Packing Atbuyer soption Price US 600perdozenCIF2 NewYork Shipment May June 2002 Payment Confirmed IrrevocableLetterofCreditpayablebysightdrafttobeopened30daysbeforethetimeofshipment Inviewofthefactthatourstockonhandhasbeenquitelowowingtoheavycommitment yourearlyorderisabsolutelyessential Yoursfaithfully Counter offer DearSirs Re CannedBeefThankyouforyourofferbyfaxofSeptember5fo
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