Chapter 2

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 Commodity and Description

Objectives

  After studying this chapter you should be able to

  1. name and describe the commodity

  2. explain the quality of the goods

  3. explain the quantity of the goods

  4. explain what the more or less clause is

  5. describe kinds of packing

  6. make and identify the shipping mark

Key Terms

  Shipping mark                 Quality latitude

  Quality tolerance               Quantity latitude

  Conditional weight              More or less clause

CISG clearly stipulates that the seller must deliver the goods that are of the quantity, quality and description required by the contract. If the goods delivered by the seller do not conform to the terms of quality, quantity and description stipulated in the contract, the buyer has the right to ask for compensation for losses, substitution or recovery of the goods, or can even refuse to accept the goods or cancel the contract.

In international trade, the seller must deliver the goods in accordance with the quality and quantity stipulated in the contract and in accordance with the manner stipulated in the contract. Any discrepancy will cause disputes between buyers and sellers. Therefore, special attention should be paid to the trade conditions of the commodities traded: the name of the commodity, quality of commodity, quantity of commodity and packing of commodity.

2.1 Name and Quality of Commodities

2.1.1 Name of Commodity

This is one of the main clauses in an international sales contract, which is also sometimes named as “Description of Goods”. As the basis of trade, it  concerns the rights and obligations of both parties. If the goods delivered by the seller do not conform to the name stipulated in the contract, the buyer reserves the right to claim against the seller, reject the goods or even cancel contracts. Therefore, the name of the commodity must be clearly defined in the contract. When naming a product, try to be specific and adopt the widely accepted name agreed by both parties. 

2.1.2 Quality of Commodities

1）Importance of commodity quality

The quality of commodity is a combination of its outer appearance and inner quality.(size, length, structure, design, type, model, color, width, weight, smell, smoothness, its physical composition, chemical component, technical index, etc.)

In international trade, the quality of commodities not only affects the value in use and price of commodities, but also relates to the sale of commodities and the reputation of the manufacturer. Goods delivered by the seller in accordance with the provisions of the United Nations Convention on Contracts for the International Sales of Goods must be in line with the stipulations . Otherwise, the buyer has the right to require delivery of substitute goods or require the seller to remedy ,or even reject the goods and cancel the contract .

 The clause “Terms of quality” can either be an independent one or an integral part of the “name of Commodity” in the contract. Whatever form it takes in a contract, it is the basis to judge whether the quality of the goods to be delivered later by the seller is qualified or not and serves as an evidence of settling disputes thereof.

2) Ways to specify the quality of goods

In international trade, buyers and sellers are usually far apart. Only when the goods arrive ‘can they see and know the quality of goods . But how do you know the quality of the goods before the buyer buys them? There are usually three ways to specify goods quality : Sale by sample, sale by actual quality and sale by description.

(1) Sale by sample.

Samples are goods used to represent the quality of the whole lot of goods. There are three kinds of sale by sample: sale by seller's sample , sale by buyer's sample and sale by counter sample.

Sale by Seller's Sample: In this way, the Seller provides representative samples. These samples are usually from one lot or specially designed or processed to reflect the quality of the goods to be delivered in the future. When sending samples ,the Seller shall retain "duplicate samples" for verification in case of future disputes.

Sale by Buyer's Sample: In this way, the Buyer sends the Sample to the Seller and the Seller is asked to delivers the goods in accordance with it.However, the seller should first consider whether he can obtain the new materials and processing technology needed for processing the products.

Sale by counter samples: In order to take the initiative, the seller processes a similar sample according to the sample provided by the buyer and send to buyer for confirmation. After the buyer's confirmation, the buyer's sample becomes the counter sample .

Quality is an important component of the Description of the Goods, serving the basis of a deal. The goods delivered by the seller should be of the agreed quality. However, it is always important to add an elastic clause like “ Quality to be about equal to the Sample” or a “ Quality to be similar to the Sample” if it is acceptable to the buyer. Furthermore, to avoid disputes upon the quality of goods, the method of sealed sample can be applied if necessary. It is also useful to clarity the buyer’s rights if quality of the goods shipped is lower than intended in the sales contract.

（2）Sale by actual quality

In this way, the buyer or his agent first goes to the seller's place to inspect the goods. After the transaction is concluded, the Seller shall deliver goods according to inspected goods.

( 3 ) Sale by description.

In international trade, the vast majority of goods are suitable for sale by description which can subdivided into the following categories:

*Sale by specifications: The specifications of goods refer to some main indicators that adequately indicate the quality of goods, such as composition, content , purity, size, length, etc. Describing the quality of goods by specifications is simple and concise, so it is widely used in international trade practice.

 e.g.:Chinese peanut kernels can be described as follows:

Moisture (maximum) 13%

Admixture (maximum) 5%

Oil content (minimum) 44%

e.g. China Sesame seed

 Moisture (max)  8%

 Admixture (max)            2%

 Oil content (wet basis)        52%basis

*Sale by grade: The grade of goods refers to the classification of goods indicated by words, numbers or symbols. Commodities can be divided into different grades: large, medium and small; Grade A ,Grade B, Grade C and so on.

 Example: Fresh hen eggs ,shell light brown and clean ,even in size

Grade A 55-60 grams each

Grade B 50-55 grams each

 Grade C 45-50 grams each

u Sales by Standard: The standard of goods refers to the specifications or grades stipulated and announced by the government or the Chamber of Commerce. When sale is made by standard , it is important to indicate the publication year of the standard

e.g.ISO, IEC(int’l electric committee), BS(British Standard), ANSI (US), NF(FRANCE), DIN (Germany), JIS, JAS (Japan)

F.A.Q (fair average quality

G.M.Q.(Good merchantable quality)

u Sale by Brand or trademarks: As those goods with stable quality and good reputation, customers are familiar with them, we usually sell them by trademark or brand, such as "Haier Air Conditioner", "Coca-Cola". But because of their varieties and diversityies,  for example, Sony has many products, including Sony TV, Sony Walkman, Sony DVD, etc. In this case, the specific quality and detailed technical indicators should be described in detail.

u E.g. Hisense Brand Color TV Set, model:SC376 PAL/BG SYSTEM, 220V，50HZ，2-round-pin plug,with Remote Control

u 

u Sale by name of origin, or sale by geographical identification: There are some agricultural products or by-products whose origin is well known all over the world, the origins may well indicate their qualities,

E.g .Jingdezhen Porcelain, French Perfume, China Northeast Rice

u Sale by description, drawing or diagram: Some commodities such as technical equipment, electrical appliances and so on. can not be simply indicated by quality indexes.Their quality can not only refer to quality. It is necessary to specify their structure, materials, properties and operation methods,.If necessary ,pictures ,photos etc. must be provided.

e.g. Quality and teachical data to be strictly in conformity with the description submitted by the seller

( 4 ) FAQ or GMQ

.  In the international market of agricultural products and by-products, it is difficult to determine a uniformed quality standard for such products . It is regular practice to use “FAQ " (Fair Average Quality) or “GMQ” (Good Merchantable Quality ) to indicate the quality of the products. "Good Average Quality" refers to the average quality level of exports within a given period of time. It means that the quality of the products offered is equivalent to that of current group recent shipment,etc. "GMQ" refers to the sound quality that is free from defects and sufficiently good to satisfy the buyer’s purpose of using the goods or the seller's desire for the use of the goods.

E.g. American Soybean,2018 New Crop, FAQ

Quality clauses in sales contracts

Quality clauses usually include the specifications, grades, standards or brands of goods.But the quality of different goods is differen,and tne methods of stipulating the quality are also different. Examples are as follows:

(1) Sample No. 123  Cloth Doll.

(2) Brazilian soybean ,2018 New Crop ,F.A.Q

(3) Quality as per the Sample No. 3456 and Technical Features indicated in the illustrations submitted by the seller.

In order to fulfill the contract smoothly, we should pay attention to the following two points when stipulating quality clauses:

Stipulate the Quality Tolerance

Quality tolerance means that the quality of the goods delivered by the seller is allowed to have certain difference within a certain range. It is unavoidable for some industrial products to have some tolerance .Quality tolerance is usually used in the trading of industrial products .For industrial manufactured qualitySome quality tolerances are internationally recognized and some tolerances are stipulated in sales contracts. If the quality deviation of the goods falls within the scope of quality tolerance, the buyer has no right to reject the goods or request price adjustment.

Stipulate Quality Latitude

The Quality Latitude means that the quality indexes of the goods delivered by the seller can be flexibly controlled within a certain latitude. Since the quality of some primary products is unstable, in order to facilitate the transaction, the quality index of primary products should be stipulated flexibly. There are two ways to stipulate the quality latitude :

 To specify a certain range

e.g."the width of cotton cloth is 47-48 inches".

 To set a certain limit (maximum or minimum),    

e.g."rice moisture maximum 15%, admixture maximum 1%".

When sale is made by samples, sometimes it is not easy for the quality of the goods to be exactly the same as the samples, or we are not sure of the qualityb. Therefore, it is better to stipulate in the contract that the quality of the goods is approximately in conformity with the sample.

Termimology practice

The following terms appeared in the text. Select one correct term for each of the following statements.

SampleDescriptionSpecificationTrade mark

（1）A special mark that is placed on a particular brand of article or commodity to distinguish it from similar goods sold by other producers.

（2）An example，usually given free，of article or commodity being offered for sale，so that possible buyers can examine and test it.

（3）Any detailed description of the form and content of an article or commodity，or the process by which something is produced.

（4）An account in words giving information about something or somebody.

2.2Quantity of commodity

Any business deal consists of a certain quantity of goods supplied by the seller and a certain sum of money paid by the buyer. Without a certain quantity of goods，any business deal would be groundless. Thus，the quantity of goods is an indispensable factor in a transaction. According to United Nations Convention on Contracts for Sales of Goods，if the seller delivers a quantity of goods greater than that provided for in the contract，the buyer may take delivery or refuse to take delivery of the excess quantity. If the buyer takes delivery of all or part of the excess quantity，he must pay for it at the contract price.

2.2.1Calculating methods of quantity of the goods

 Measurement System

Different countries adopt different measurement systems in terms of length, volume and weight, so the measurement units are different.

The most commonly used measurement systems in the world are Metric system, British system, American system and International unit system.

Metric system: Under the metric system, the main units are kilograms, meters, square meters and liters. There are others such as metric tons(M/T) and Kilometer（Km.）and so on .This system of measurement is widely used in some countries and other countries on the European continent.

British system: Under this system, the main units are pounds and yards. Commonwealth countries use this system . 

American system: The primary units under this system are the same as those under the British system. But there are also some differences in some units . For example ,the British system is long ton, which equals  to 2,200 pounds, the U.S. system is short ton ,which is equivalent to 2,000 pounds. In addition, some volume units, such as gallons and bushels are of the same  in British and American systems, but their actual capacities are different.

International Unit System: This system was promulgated by the International Standard Metrical Organization on the basis of the metric system. Its main units Include kilograms, meters, etc. This is China's legal metrical system.

Units of measurement

The choice of the unit of measurement should be in accordance with the nature of goods. The units of measurement generally used in international trade are listed in the table

Methods of calculating weight

n （1）By Gross Weight. The gross weight refers to the weight of the cargo itself plus the tare，i.e.，the weight of the cargo plus the weight of the packing material.

e.g.100M/Ts rice in single gunny bags of 100kg each ,gross for net

n （2）By Net Weight. The net weight is the actual weight of the goods. The tare is not included. Net weight equals gross weight minus tare. The methods of calculating the tare are as follows:

n By the actual tare weight: the actual tare weight is the actual weight of the whole package of goods.

By the average weight: first calculate the average weight of some packages, then calculate the weight of all packages.

By Customary tare weight: The weight of certain standardized packages has been recognized and can represent the weight of such packages.

By computed weight: According to the pre-agreed tare weight of the buyer and seller , the weight of the package is calculated

(3) By conditioned weight : This method is applicable to goods with unstable moisture content, such as wool, raw silk, etc. conditioned weight is equal to the dry weight of the commodity plus the standard moisture content.

(4) By theoretical weight: Some commodities, such as tinplate and steel plate, have regular specifications and sizes,.The quantity of each unit is the same. We can get the total weight by multiplying the total number and the weight of each unit

2.2Quantity of commodity

2.2.1Quantity clause in the contract

The quantity clause in the contract is very important. It is the foundation for effecting shipment and taking delivery of the goods. The basic contents of the quantity clause are the quantity to be delivered and the measuring unit to be used. In order to avoid disputes during the fulfillment of the contract，both parties shall stipulate this clause clearly.

e.g Chinese rice,500 M/Ts, Packed in new gunny bags ,50kgs per bag , net weight .  

n （1）Don’t use such words as“about”or “circa”or“approximate”before the quantity of the goods. As to the word “about” ,the indications are different in different countries .But according to Unforms Customs and Practice for Documentary Credit 600(UCP 600) the word “about” or “approximately” used in connection with the amount of the credit or the quantity or the unit price stated in the credit are tobe construed as following tolerance not to exceed 10% more or 10% less than the amount, quantity or the unit price to which they refer.

e.g. Quantity :about 5000 M/Ts

n （2）To stipulate the quantity latitude, we often use more or less clause to specify the quantity latitude . The more or less clause clauses are often used in the trade of agricultural and mineral products, because the quantity of delivery of these goods is difficult to control. It means that the quantity of goods delivered by the seller can be increased or decreased by a certain percentage according to the quantity latitude determined by the two parties through consultation. The more or less clause is usually at the seller’ s option .The settlement for the more or less  parts is  usually based on the contracted price. However, if the seller and buyer are concerned that the price of the goods will change greatly at the time of delivery, they may stipulate in the contract that the more or less part shall be settled in accordance with the market price at the time of delivery.

e.g. Shandong peanut, 80,000 metric tons, 2018 crop, FAQ, with more or less in quantity and amount to be allowed at the seller’ s option.

Questions

（1）List several methods of calculating weight of the goods.

（2）What is the more or less clause？

Termimology practice

The following terms appeared in the text. Select one correct term for each of the following statements.

Gross weightTare weightF.A.Q.Excess

（1）The amount by which one quantity exceeds another，or is above a certain limit.

（2）The full weight of a package or shipment，including goods and package.

（3）Words used to describe the standard quality of wheat，esp. that from the Argentine，on the London Corn Exchange.

（4）The weight of a container and/or packing material，but without the goods being shipped. The gross weight of a shipment less the net weight of the goods being shipped.

2.3 Packing of Commodity

In international trade, packaging is one of the basic components of commodity production, and it is becoming more and more important in the competition of international market. The basic purpose of packaging is to protect good. The second target is to make the product look appealing to the customers. In addition, packaging can provide some information about the commodity inside , facilitate its transportation, and provide convenience in using the product.

2.3.1 Types of Packaging

Commodities can be divided into nude packed goods, bulk goods and packed goods. Bulk goods and nude packed goods There have little or no forms of packing. Nude packed goods, such as steel, rubber and automobiles, are shipped without packages or in simple bundles; bulk goods, such as coal, grain and ore, must be transported by means of transport with special purposed shipping  equipment. However, in international trade, most commodities belong to packaged goods, which need to be packed in the process of transportation, storage and sale. Packing can be divided into transport packaging (also known as outer packing) and sales packaging (also known as inner packing).

n Transport packing

Transport packing is mainly to keep the goods safe and sound during transportation. It must be solid enough to prevent the packed goods from any damages，pilferage and be easy enough to store and convenient to load and unload.

Types of transport packing

①case: wooden case, crate, carton, corrugated carton, skeleton case

②drum/cask: wooden drum, iron drum, plastic cask

③bag: gunny bag, cloth bag, paper bag, plastic bag

④bundle/bale

⑤pallet

⑥container

Bag：It is made of strong paper，linen，canvas，rubber，etc.

Sack：It is a large bag usually made of jute.

Case：It is a strong container made of wood. The inside of the case may be “lined”with various materials，e.g.，damp resisting paper，tinfoil，to prevent damage by water，air or insects.

Carton：It is made of light but strong cardboard or fiberboard with double lids and bottoms，fixed by glue，adhesive tapes，metal bands or wire staples. Sometimes a bundle of several cartons is made up into one package，held by metal bands.

Box：It is a small case，which may be of wood，cardboard or metal，and may have a folding lid.

Crate：It is a case，but not fully enclosed. It has a bottom and a frame，sometimes open at the top. Crate is often used for the particular things that they have to carry.

Drum：It is a cylinder⁃shaped container for carrying liquids，chemicals，paint，etc. It is usually made of metal. Certain dry chemicals or powders are sometimes packed in wood or cardboard drums.

Bale：It is a package of soft goods（e.g. ，cotton，wool，and sheepskin）tightly pressed together and wrapped in a protective material. It may be strengthened by metal bands.

Container：It is a very large metal box for transport of goods by road，rail，sea or air. Packing goods in a large container facilitates loading and unloading by mechanical handling.

Bundle：A number of small cartons fixed together are called a bundle.

Sales packing

Sales packing is not only adopted as a form of protection to reduce the risk of goods being damaged in transit and prevent pilferage，but mainly with the purpose of promoting sales. It can help to improve the image of commodities and enable the consumers to easily identify，select，carry and use the commodities，so sales packing has become an important factor directly affecting the sales volume and price.

Neutral packing

Neutral packing is a special type of packing without the name and address of the manufacturer，the country of origin，the trade mark and brand. Chinese export products are usually marked “Made in China”. But sometimes at the request of the buyer，the seller would accept neutral packing. Neutral packing is divided into two types：neutral packing with designated brand and neutral packing without designated brand. neutral packing with designated brand means that brand or trade mark designed by the buyer are marked on the product and/or the packages, but the origin of the product is not indicated. neutral packing without designated brand refers to the fact that neither the brand nor the trademark of the product nor the origin of the product are marked on the product or/or on the package. The purpose of using neutral packaging is to break through tariff and non-tariff barriers in some importing countries, meet the special needs of trade, and help exporters to enhance the competitiveness of their products and expand exports.

2.3.2Packing mark

In order to facilitate loading and unloading, transportation and identification of goods, according to customer's instructions, some identifying symbols and figures should be clearly marked on the outer packing. These symbols and numbers arecalled the packaging marks. There are five kinds of packing marks: shipping mark, additional mark, indicative mark, warning mark and origin mark.

n Shipping mark

n According to the suggestions of International Standard Organization (ISO),It is usually made up of simple design，some letters，numbers and simple words，and mainly contains：

n •Code of consignor and consignee.

n •Name or code of destination.

n •Piece number，serial number，contract number，etc.

n An example of shipping mark is illustrated below（see Figure 3-1）：

n Additional mark

n Additional mark refers to any official marks required by authorities. Some countries require the country of origin，weight and dimensions to be marked on every package. An example of additional mark is shown below（see Figure 3-2）：

n Indicative mark

This kind of mark is used to reminder the relative workers of the items for attention when they load，unload，carry and store the goods. They are usually marked with pictures and languages（see Figure 3-3），for example，“Handle with Care”，“Keep Dry”，“This Side Up”，“Do not Crush”，“Fragile”. Handle with care  小心搬运

Glass  小心玻璃

Fragile  小心轻放/易碎

Perishable  易腐

Liquid  易流物品

Keep dry  保持干燥

To be protected from cold  避冷

To be Protected  from Heat  避热

Use No Hooks  请勿用钩

Top  顶部

Bottom  底部

This Side Up  此端向上

Keep Upright  请勿倒置

Do Not Crush  切勿挤压

n 

n  Warning mark

n It is also called dangerous mark（see Figure 3-4），which is brushed clearly and definitely on the shipping packing of the inflammable，explosive，poisonous，corrosive goods，so as to give warnings to the workers，for example，“Explosives”，“Poison”，“Radioactive Material”

n . 

n 

 Origin mark

n The origin of the goods is the basis of customs statistics and duties and is indicated in the certificate of origin. But we generally mark the origin on both the inner packing and the outer packing.

e.g. MADE IN CHINA

n 2.3.3Packing clause in the contract

    Terms of packing include the packing material, packing method, packing costs and shipping mark.

n Packing manner and packing material

n Packing manner and packing material should be clearly stipulated in the contract. Ambiguous terms like“seaworthy packing” or “customary packing” are not applicable. On the other hand，the packing manner and packing material should be appropriate for the commodity and meet the requirements of different means of transportation. For instance，cement requires waterproof package，and packages for glassware should be shockproof；while seaworthy packing should be strong and protective against squeezing and bumping，packages for air transportation should be light and compact.

n Packing expenses

n Packing expenses are usually included in the price，and shall be borne by the seller. If the buyer has special requirements for packing，the packing expenses shall be borne by the buyer.

n Shipping marks

n There is no need to stipulate the shipping marks in the contract，as they are usually decided by the seller. But if the buyer has special requirements，it is necessary to stipulate the details of it.

n Questions

n （1）How many types can the packing be classified into？

n （2）What dose packing mark include？

n （3）What is the shipping mark？ What contents does it include？

n Terminology Practice

n The following terms appeared in the text. Select one correct term for each of the following statements.

n Nude packed goodsBulk commoditiesConsigneeCountry of origin

n （1）The person or firm named in a freight contract to whom goods have been shipped or turned over for care.

n （2）The country in which the goods were produced，mined，grown or manufactured.

n （3）The commodities directly shipped and even sold without packages，are usually shipped by special purposed shipping equipment.

n （4）The commodities to be shipped without any packages or in simple bundle.

2.4 Key words，phrases and special terms

n Bulk commodity 散装货物

n Capacityn.容积

n Computed tare约定皮重

n Conditioned weight 公量

n Consigneen.收货人

n Consignorn.发货人

n Corrosiveadj， n.腐蚀的，腐蚀物

n Counter sample 对等样品

n Dimensionn.尺寸，尺度

n Downn.绒毛

n Explosiveadj.， n.爆炸的，爆炸物

n F.A.Q.良好平均品质

n Galvanizedadj.电镀的，镀锌的

n Gross weight毛重

n G.M.Q.上等可销品质

n Indispensableadj.绝对必要的

n Inflammableadj.易燃的

n Latituden.纬度，范围

n Nude packed goods裸装货物

n Pilferagen.偷窃

n Quality latitude 品质机动幅度

n Quality tolerance品质公差

n Sale by description 以说明买卖

n Sale by sample 以样品买卖

2.5Basic Skill Training