Certificates

Certificate of Quality

A certificate of quality in respect of goods may be required in certain export trade. It may be issued by a governmental or non-governmental body. It may certify compliance in relation to   conditions, quality or requirements in relation to particular goods. The requirement for the certificate is provided by the relevant contract.

Goods may be certified by a trade association as conforming with a particular standard. They may be certified by a governmental authority as compliant with hygiene phytosanitary or other standards.

A certificate of standard / quality may be applicable generally or may be issued so that it is made to a specified addressee. This depends on the intention of the parties. Certificates issued by public authorities or recognised organisation bodies are usually issued for the benefit of all persons.

The certificate may be provided by the contract to be binding on the parties in the absence of fraud or patent error. It may be binding unless and until set aside in litigation or arbitration. Generally, the courts will lean against making a certificate final and binding when its terms are contrary to the true position.


Certificate of Inspection I

A certificate of inspection requires and confirms that the inspectorate concerned has inspected the relevant goods and certified their conformity with particular criteria. What is required will depend on the particular circumstances and must be specified by contract. Inspection may deal with quantity, quality, price, customs classification and other contracted matters and obligations.

The inspection may be carried out by an independent organisation. There are numerous inspecting organisations and bodies which play a role in particular sectors in international trade.

A contract is usually entered bya person who procures the certificate with the inspecting authority. The inspector has a duty of reasonable care to the parties. If may be liable for breach of duty in contract or negligence subject to the relevant terms and conditions of its appointment.


Certificate of Inspection II

The use of a certificate of inspection reduces the possibility for disputes regarding loss and damage, quality, condition and conformity. The use of pre-shipment certificates is required by law in some countries.

The goods are typically inspected when placed in the carrier’s custody. The inspection may refer to their quantity, condition or other matters. Scientific testing may be required. Samples may be tested.

In some cases, certification as to price (as to reasonableness) is required, in particular by developing countries. This may be controversial in that the seller may not wish to disclose the makeup of its pricing, costs, profits and margins.

The World Trade Organisation has sponsored the agreement on Pre-shipment Inspection. It seeks to provide transparency in the process and the resolution of disputes at an early date.


Licence Requirements

Questions may arise as to whether a contract is frustrated, if a Governmental license or consent cannot be obtained. Where the sale contract does not expressly provide that the obligations are subject to licence, subject to quota or a similar condition, it is a matter of interpretation of the intention of the parties as to on whom, if either, the duty falls.

There may be a duty on one or both parties to take all reasonable steps to obtain the licence or quota. The question arises, whether if he fails to do so, he is discharged. In some cases, the obligation may be unconditional.

The use of the expression or term “subject to” is not necessarily sufficient to introduce the element of conditionality. It will depend on the context and setting as to whether it places the risk on one party or the other, or on neither party. The courts may hold that the obligation to obtain the relevant quote or license may be absolute.

Where the contract specifically provides that it is subject to licence or quota et cetera, it is generally implied that the seller must use due diligence to take all reasonable steps to obtain the relevant licence or quota et cetera. Generally, he must show that he took the requisite steps, unless he can prove that such steps would have been futile.

In some cases, both parties may have an obligation to cooperate in order to obtain the relevant licence. In this case, the buyer is under an implied duty to cooperate with the requirements of the relevant licensing body. Either party may breach their respective obligations.


Invoicing

Invoices are important in international trade. The invoice should set out the names and addresses of the buyer and seller, refer to the order number, describe the goods, include details of packages, quantum and markings. Shipping details should be included including the vessel and route where practicable.

The invoice should conform with the contract. If the relevant terms such as e.g. CIF or FOB etc, are used, they should be in conformity with the other documents.

The invoice should set out in detail the particulars of the price and any further charges and expenses that are billed to the buyer. The particular VAT treatment will depend generally, on whether the sale is made within the State, within the EU or where the goods are exported out of the EU.

Particular foreign laws which are applicable may make requirements in respect of invoices.


Letter of Credit

Where a payment is made under a letter of credit, the invoice is usually one of the commercial documents required to be given to the advising bank. The UCP requires that the invoice must

  • appear to have been issued by the beneficiary of the credit;
  • be made out in the name of the applicant for the credit (subject to exceptions);
  • made out in the same currency as the credit.

It need not be signed.

A nominated bank acting in examination, the confirming bank or the issuing bank may accept commercial invoice from working the amount allowed by the credit. This decision is binding on the parties provided that the bank has not honoured or negotiated an amount in excess of that permitted by the creditor.

The description of the goods or services must conform with that in the credit. Consular invoices are completed by local consuls. They are now less common.


Packaging I

The requirements as to packing and packaging are determined by the express or implied terms of the contracts. The Sale of Goods Act provides that goods must conform with their description.

Freight may be payable in accordance with the carrier’s terms and conditions. They may have specified forms of packing. Certain forms of packing may secure more favourable rates of freight. The quality of packing may be stipulated by the carrier. Where goods are transported on deck, stronger packing will be required. A bill of lading may be qualified/classed where packing is defective.

The packages should be marked so as to identify them as being compliant with the requirements of the contract. The buyer is entitled to refuse to accept, a bill of lading which does not conform to the contract.


Packaging II

The nature and value of the goods must be declared pre-shipment in order for the relevant limitations on liability under the various transport Conventions not to apply. In their absence, a less generous limitation may be applicable. The limitations may be expressed by weight or volume depending on the mode of transport in the applicable convention.

There are legal requirements for packaging, packing and labelling for certain products including in particular, dangerous and hazardous substances and goods. There may be different requirements depending on the mode of transport. The International Maritime Dangerous Goods Code provides classifications in relation to dangerous goods. A dangerous goods note is required.


References and Sources

Consumer Law  Long      2004

Commercial Law White  2nd ed    2012

Commercial & Economic Law in Ireland  White    2011

Commercial Law Forde  3rd ed    2005

Irish Commercial Precedents (Looseleaf)                               2004

Modern law of personal property in England and Ireland Bell 1989

Commercial & Consumer Law: Annotated Statutes O’Reilly           2000

UK Texts

Schmitthoff: The Law and Practice of International Trade 13th ed Carole Murray, David Holloway, Daren Timson-Hunt, Schmitthoffs 2018

Damages Under the Convention of Contracts for the International Sale of Goods 3rd ed Bruno Zeller 2018

International Economic Law 4th ed Asif Qureshi, Andreas Ziegler 2018

Law of International Trade: Cross Border Commercial Transactions 6th ed Jason C.T. Chuah 2018

World Trade Law: Text, Materials and Commentary 3rd ed 2018

The International Sale of Goods 4th ed Michael Bridge 2017

International Trade Law 6th ed Indira Carr, Peter Stone 2017

International Institute for the Unification of Private Law 2nd ed (UNIDROIT) 2017

Understanding the CISG Understanding the CISG 5th (Worldwide) ed 2017

The Law and Policy of the World Trade Organization: Text, Cases and Materials  2017

International Trade Law and Regulation:: Michael Blakeney, Aline Doussin, John Clarke, Mark Clough, 2017

International Sale of Goods: A Private International Law Comparative Edited by: Nicolas Nord, Gustavo Cerqueira 2017

International Sales Law Edited by: Franco Ferrari, Clayton P. Gillette 2017

The CISG Advisory Council Opinions Edited by: Ingeborg Schwenzer 2017

World Competition: Law and Economics Review – Editor in Chief: Jose Rivas 2017

Making Money with Incoterms 2010:  Strategic Use of Incoterms Rules in Purchases and Sales Arthur O’Meara 2017

World Trade Organization: Law, Practice and Policy World Trade Organization: Law, Practice and Policy 3rd ed Mitsuo Matsushita, Thomas J. Schoenbaum, Petros C. Mavroidis, Michael Hahn 2017