32-Risk Management by Contract
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Introduction of Credit Management for Overseas Trade

36 Things You Need to Know About Credit Management for Overseas Trade

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32. Risk Management by Contract

In order to consider risk management by contract, it is necessary to first know the "The United Nations Convention on Contracts for the International Sales of Goods (The Vienna Trading Treaty)".

 

The official name is "United Nations Convention on Contracts for Contracts for the International Sale of Goods (CISG)".

"United Nations Convention on Contracts for the International Sale of Goods (Vienna Trading Treaty)"

http://www.mofa.go.jp/mofaj/gaiko/treaty/treaty169_5gai.html

 

The Convention was drafted by the United Nations Commission on International Trade Law (UNCITRAL) to promote international trade, adopted at the Vienna Foreign Relations Conference in April 1980, and entered into force on January 1, 1988. As of January 2008, 70 countries have signed the convention and Japan has entered into force on August 1, 2009.

 

In international transactions with companies in these countries, the Vienna Trading Treaty (CISG) is considered to be basically applied unless there is a mandatory provision of domestic law or an agreement between the parties.

 

There are four points to keep in mind.

 

1. Applied automatically

If both parties are located in a Contracting State, the Vienna Trading Treaty is automatically applied.

By agreement between the parties, some or all of the CISG may not apply to the transaction.

 

2. Limited to corporate transactions, buying and selling goods

Not applicable to personal transactions or service offerings

 

3. The requirement for termination is limited to a serious breach of contract

The Japanese Civil Code can terminate a contract if there is a breach of the contract and cannot be corrected for a fixed period, but the CISG is limited to a serious breach (Fundamental breach).

 

4. The claim filing period is 2 years

In Japan, it is up to six months but CISG is in favour of the buyer two years after delivery. The buyer's duty to notify of non-conformance of contract goods is “within a reasonable period from the time it was discovered or should have been discovered” and is considered to be similar to “immediately after receipt” of Japan.

 

As a result of the CISG, the CISG will be applied to transactions that do not enter into contracts, and also to international transactions of SMEs, enabling risk management such as claim processing and debt collection based on international standards.

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【PDF】Introduction of Credit Management for Overseas Trade

Introduction of Credit Management for Overseas Trade

36 Things You Need to Know About Credit Management for Overseas Trade

This ebook was created as a resource for those who have trouble with diverse trading or want to learn Credit Management in a rational.

 

Chapter (Excerpt)

  • Major Differences Between International and Domestic Transactions 
  • Trade Reference
  • Bank Reference
  • Collection Agency
  • Reasons Behind Difficulty in Recovering Delayed Debts
  • Mistakes in International Transactions Where Japanese Companies are Prone to Fail
  • Customer Analysis ~ 5 C's of Credit
  • Dangerous Signs
  • Five Principles of Debt Collection