Negotiation Scenario

Beginning Assignment Time: September 15th 2011 Place: Manila, Philippine Lady and Gentlemen, now, we will take you to the negotiation meeting on rice sale contract between two companies of Vietnam and Philippines. Please, enjoy yourselves Introduce members of group Leader P: Have they come yet? P: Yes, they have just come P: Oh, invite to come in. P: Yes sir P: Hello sir V: Hello sir P: Yes, Im pleased and honored to introduce to you. Im companys deputy director, Lia Andrea Ramos. This is our technical specialist, Mr Sedigh Esmaeil Mahmoud. This is our legal specialist, Mr Avelino Baltazar Cortado. And Im economic specialist, Ms Ester Marie Singson. V: Im pleased and honored to introduce to you. My name is Le Duc Truong, companys sale director. This is Ms Tran Thi Hien, our economic specialist. This is Mr Pham Duy Khanh, our technical specialist. This is Ms Truong My Hanh, our legal specialist. And this is Ms Dang Minh Huong, our interpreter. Ladies and gentlemen, todays September 15th 2011, in Manila, capital of Spokesmen Philippine - beautiful country, there will be held the talk about rice export contract between two companies: Vietnam's rice export company and Philippines import rice company. As of today, both sides went through a process of negotiation with three talks were underway. The two sides have carried out the agreement and agreed on some terms as follows: article 1: name of goods, article 3: the number of goods, article 4: packaging, article 5: transport and delivery, article 9: insurance, article 10: arbitration, article 11: the delivery terms, article 15: other provisions. But some problems have not reached a consensus of two sides, so the meeting today to address some issues not yet agreed to this. That the following issues: 1. Specifications 2. Price 3. Terms of payment 4. Pre-shipment Inspection 5. This law applies 6. Force majeure Persons who participate in negotiations of both sides have changed slightly to suit the requirements of the talks this time. If you reach an agreement, both parties will be willing to sign a contract.

The problems of contract VN: Here are the specifications of the U.S. rice products we have listed fully. Do you have any questions?

We'll start with the problem has not reached consensus. Specification:

Technologis ts (Mr.SEDIG H ESMAEIL PHIL: We have reviewed and very satisfied with the type and quality of rice MAHMOU products that your company offered. However, because of in the recent, our D and Phil market strict for agricultural products, especially rice. Phil consumers Mr.Khanh) more and more demand higher quality, so with the parameters that you offers, we want to negotiate about some of the following criteria: - Firstly, the percentage of broken seeds in the contract stated that: "no more than 25%." We realize that this is a high rate, does not fit the situation and necessities of the Phil consumers, now. We want your company to review and give a better rate. - Secondly, the percentage of intact seeds in the contract stated that "at least 40%." This is also a sensitive relative proportion, it has a huge affection to the design and quality of rice. Therefore, in the competitive situation improve as now, your company should also give us a more appropriate rate. These are two problems that arise on the quality of the products that we hope to achieve the best agreement. Thanks for the consideration of your company. VN: These are the two specifications is quite important for the quality of rice. We had to consider, research carefully and put up a good parameters for both sides. In fact, when we learn about the rice exporting market of the other countries or companies, we found that the rate set in the contract as an ideal percentage and not all companies can make be. So, with the reality, what percentage do you want? May you tell us? PHIL: Our products have obtained appropriate 38% market share of whole Phil market. To get such this large market share, we are always looking for quality-work and reputable company as your company. We hope your company can improve to suit better the actual demand now. Through the market survey and assessment, we give two figures need to be changed as follows: - The percentage of broken seeds: less than 15% - The percentage of intact seeds: at least 60% We expect your company to review and make reasonable comments. VN: ... Through the discussion, we make the following comments: Our company's rice products have always been inspected in accordance with international import and export standards, thus, the criteria for quality products has always been our top priority and keep updated to keep pace with the general situation of consumption of the world market. Both our companies are longtime partners, we consider the reputation very seriously and always want to give you the best we can with the best price. Two quality criteria you want to change also are our extremely desire to achieve. However, it is very difficult because with the parameters of this contract, we had made deals with

many other foreign companies. This doesnt violate general international standards and national standards of Phil in particularly. We hope you understand and accept these terms. PHIL: This term isnt our desire to make difficulty for your company. We are the long-term partners which too understand the way each other's work. Therefore, it is important to develop the relationship in a better way. We also have many business partners from many countries, but we still look forward to this transaction with your company. There are many rice export company in Thailand, Indonesia agree to change the quality of rice as we had suggested earlier and with the same price. What do you think? VN: We are happy as your company has esteemed the long-term cooperation of our two companies. Thereby, the next time we can consider and strive to offer a better quality while maintaining the current price. But now, accepting lower quality indicators of broken seeds at less than 15% and higher percentage of intact seeds at least 60% is a huge problem. Can your company review it? PHIL: ... It is difficult for the consumption of rice products in Phil market. It not only reduces the purchasing power but also reduces the prestige and brand of our company because our slogan is: always give our customers the best products. Because in this time, we import in bulk so we dont want to do business with a new partner without understanding each other. Through the meeting we would like to express an opinion to bring about favorable terms for the two parties: our company will have concession to increase the acceptable rate by 5% broken seeds, reduce the acceptance rate of intact seeds by 10% and your company also like, is to reduce the rate of broken seeds by 5% and increase the rate of intact seeds by 10%. So, the specific data would be: the rate of broken seeds not more than 20%, percentage of intact seeds at least 50%. This is a huge concession that we have never given to any one partner before. We tried our best to reach agreement of both parties, if you accept, we can complete an unified criteria for rices quality, and we will not make any request about the quality of products. VN: ... We unified to agree with your opinion. This also a difficult responsibility to change the criteria of quality in the current situation but we will try our best. Thus the problem of quality of product will not be discussed further and will be specified in the contract as follows: - The percentage of broken seeds: less than 20% - The percentage of intact seeds, at least 50% PHIL: Thank you for accepting the agreement. We hope that this contract will be implemented smoothly as desired by both parties.

Discount P: We buy in bulk, so we hope your company can discount at least 5%.

Economists (Ester Marie Singson and

V: When we give the parameters of broken and intact seeds, we have agreed Lia Andrea to improve rice quality for your company. Furthermore, we only offer the Ramos) highest discount is 3% for longtime customers. So we can discount only 3% for your company. P: We agree with this term. Delivery terms: P: As you know, we import a huge quantity of product, the amount of which is quite large, so we request to defer the payment 30 days after the goods are delivered instead of 15 days as you have required. V: We can not change the term. Instead of that, we may offer 2% discount for your company if your company implement the payment within 15 days after delivery. If your company implements the payment within 30 days, we need to calculate the interest rate is 4% / year and can not carry out the payment discount for your company anymore. P: So we agree to pay at sign with payment discount of 2%.

Pre-shipment Inspection: P: According to this contract, respectfully request your company for our preview and check the list of agencies which will grant the certification under Article 7 (PAYMENT). V: Well, we have prepared, your company can consider. P: Thank you. We will send you the inspection company name before Secretary shipment (under Article 8) mention Legal V: So we agree that the goods will be inspected before they are delivered at professor Hai Phong port at piers No. 1 at 13:00 on October 15th , 2011. The (Mr.AVELI participants will include: technologist in inspection of the two-party, and NO company SGS Philippine we hired. BALTAZA R CORTADO Applicable rules: V: With the nature and the scale of the contract, we wish to apply Vietnam and Ms.Hanh) Commercial Code in 2005 to this contract. Apply to contracts with terms as following: if there are any dispute or force majeure event, they will be dealed with Vietnam Commercial Code Vietnam

in 2005. P: Well, we know the nature and the scale of this contract clearly. However, because the contract was signed in Manila, so we want that the law apply to this contract will based oneself by the law of Philippine in 2010. Apply to contracts with terms as following V: Yes, I know, we all want the contract under our domestic law. However, we can see the delivery of goods at Haiphong port in Vietnam. The risk and problem with goods are generated in Vietnam. Therefore, we propose to apply Vietnam Commercial Code Vietnam in 2005 for this contract. P: Well, I understand your intent and desire. However, to ensure contracts be implemented and the long-term partnership between two companies, we suggest that the law applied to contracts will based oneself by Singapore law of 2008. Any dispute and the issue is not defined or incompletely defined in this contract will be settled in accordance with Singapore law. Vietnam: Well, we found the solution that your company offers is really satisfactory for both sides. We agreed with that plan and we decide to sign a new contract with your company. Thus the law applied to this contract which both parties agreed that: Singapore Trade Law in 2008. Terms of force majeure: V: We provide a force majeure clause for mutual consideration. If unforeseen events occur, besides the comparison with the Article 1 of 421th edition issued by the ICC, we hope both sides can resolve with the spirit of friendship prior to the decision of the arbitration. P: Yes, if any party is unable to perform its contractual liability due to any force majeure event, the affected party may notify the other party within 7 days upon the occurrence of such event, and must present written evidence issued by the appropriate authorities within 15 days upon the end of such events and could partially or wholly exempt from the liability in the light of the impact caused by force majeure. P: Well, so finally we come to the agreement. Congratulations! So now, lets begin signing revised the contract. P: Now, please sign here V: Now, please sign here P: Wish this cooperation was successful V: We, too. Shake hands. In summary, through the negotiation today, September 15th 2011, both sides spokesmen have agreed in a funny atmosphere. We can see the prospects for future

cooperation of both parties, laid the foundation for the new business partnership to new heights.