The culpable behavior of one of the contracting parties generally creates a unilateral right to withdraw from the contract as far as the other contracting party is concerned. This may include: the vendor's default in delivery; the delivery of defective goods, the buyer's default in payment, provided the goods have not yet passed into the buyer's possession or at least the purchase price has not yet been credited. In the case of goods sold with the rights of property still vesting in the vendor, even these last two provisos do not hold. On the basis of error, a party to a contract who was mistaken about important features of the contract can dispute the validity of the contract.

Events occurring after the conclusion of the contract which may lead to the cancellation of the contract include the deterioration of the buyer's financial standing, occurrences which prevent shipping, provided the vendor is not in default; circumstances which make the attainment of the business aim or of a business profit impossible (export restrictions, force majeure, etc.); finally total loss of the shipment (wreck at sea) or a material deterioration of the shipment.

In the case of circumstances which make the attainment of the business aim or a profit impossible, the contract is regarded as cancelled only if this is expressly provided for in the contract.

Contract clauses frequently state that alterations in certain circumstances, as for instance the increase of shipping expenses to the detriment of the party who is bound to bear them, shall not lead to a cancellation of the contract. Altered circumstances may form the basis of special contract stipulations. Such altered circumstances may relate to a deterioration in the financial standing of the buyer, and then it is sometimes customary, instead of cancelling the contract, first to demand payment from the buyer, and to consider the contract annulled only when payment is denied.

Where one of the contracting parties is given the contractual right to withdraw from the contract of his own volition, he generally has to pay a forfeit or a conventional fine. Finally the buyer or the vendor may become insolvent, which in commercial usage entitles the other contracting party to withdraw from the

contract.

The withdrawal from the contract ordinarily necessitates the return of the portions of the contract already performed, where this is possible, and likewise an economic annulment of the effects of the contract as far as both parties are concerned. Or, as indicated by forfeits and conventional fines, other modes may be agreed upon.

c) Miscellaneous Stipulations Regarding the Per

formance of Contracts.

Miscellaneous stipulations regarding the performance of contracts may include the right of transfer of contract to third parties. This must be either stipulated in the contract or permissible by commercial usage. It is generally the right of the buyer, for the vendor's part in the performance is as a rule individual. The transfer is effected either by endorsement or by assignment, on the basis of the original documents. The endorser or assignor may be liable to the endorsees and assignees or to the second party to the original contract or not.

The two contracting parties may agree that in the place of the actual transfer of goods a settlement may be made at the time when the contract performance is due on the basis of the difference between the contract price and the market price then prevailing.

The endorsement or assignment to third parties is not such a substitution, even if the endorser or assignor instead of transferring the goods to the endorsee or assignee effects a settlement on the basis of a price difference, transferring his contract generally against a consideration.

Additional obligations supplementary to the principal obligations may include the obligation on the part of the vendor of machinery to operate the same for demonstration purposes, or on the part of the vendor of various classes of goods to assist the buyer in a publicity campaign. It may be stipulated that the vendor is obligated to reserve the sale of certain articles for a given territory exclusively to the buyer. Or vice versa that the buyer is obligated to buy certain articles exclusively from the vendor.

The vendor may be obligated in the case of marketing certain articles in the future to give the buyer the right of refusal or the first choice at a stipulated price.

Failure to fulfill these miscellaneous supplementary contract obligations has not the same effect as ordinary default, but entitles the injured party merely to damages, unless other consequences are provided for in the contract.

CHAPTER XIII.

SPECIAL TYPES OF INTERNATIONAL SALES CONTRACTS.

A.

THE INDENT BUSINESS WITH ASIATIC CUSTOMERS.

a) General Remarks.

Indent business in the broad sense of the term is prevalent in the Far East, in India and Australia. It is essentially an import business from the point of view of these territories. It consists in the acceptance by an importer in the Far East, in India or in Australia, or by an exporter in Europe or America, of an order to furnish specified goods. Since the supply of these goods is conditioned, as a rule, on a specified price, and the party who accepts the order is, as a rule, obliged to purchase the goods after receiving the order, he naturally aims to keep himself free from any definite obligations until he has secured the goods at a price leaving him a reasonable profit, though in doing his "shopping" he is sure of his own customer and of his sales price.

Indent business in the strict sense of the term provides the seller with a customer, assures him a certain sales price and certain sales conditions, but leaves him free to enter into a binding contractual relationship with the customer at a later time. This business originated in India and has spread to Zanzibar and East Africa on the one hand and to the Far East on the other. It generally marks business relations between European and American exporters and Asiatic wholesalers. It has assumed certain definite types which are discussed below.

The word "indent" means a cut or notch in the margin, and hence it was applied to documents or contracts separated from the original by tearing through along an indented line, in order to identify them. In England the word "indent" has attained in loose usage a meaning almost equivalent to order, and covers practically all orders from overseas which are sent to an exporter, though in its stricter application the term "indent" is even

in England applied specifically to orders from native merchants in the territories mentioned above.

The acceptance of indent orders may be on the basis of dealings for the exporter's own account or as a purchase on commission basis. The former is the more prevalent method, and the tendency is increasingly in that direction. This is only rational, for it is against good usage and commercial common sense in purchasing on commission basis to limit the commissioner to a price determined in advance and fixed in the order. This may be done in cases where the buyer has binding offers on hand, or the price indicated may merely mean a limit beyond which the commissioner is not supposed to go in placing the purchase. Ordinarily, however, the indent names the price which the buyer is agreed to pay, thus leaving it to the exporter accepting the indent to place his purchase on the basis of a price yielding him a certain profit. It may be said, therefore, that as a rule the exporter receiving an indent from an Asiatic merchant buys the goods ordered for his own account, and not on commission basis.

This is particularly indicated in the fact that the Asiatic customer must have quotations on a entirely different basis from those received by the exporter from his source of supply. The buyer must have quotations cif., and in fact "free godown," preferably in English or Indian currency, whereas the exporter buys either at factory or fob. port of shipment. The exporter cannot undertake to combine freight and insurance calculations and exchange fluctuations with purchasing for his Asiatic customer strictly on commission basis, and can cover himself only if between the price basis of the indent purchaser and his own costs there exists a sufficient margin.

In practice, the indentor has the advantage of a fixed price as a basis of his calculations, the indentee has the choice of accepting the business, if the price permits him to place his own purchase with a sufficient profit margin, or of rejecting it.

It happens relatively seldom that the receipt of the indent coincides with a definite obligation to furnish the goods. This is the case when the indentor has on hand firm quotations from the indentee. But the indentor is immediately bound by his indent.