(I) Contract trap
Contract trap is the most common fraud method. The trapper often uses the contract and lures importers with the signboard of “law”. Its manifestations are:
1. Utilizing contract terms
In international trade, many trappers use some imperfect terms or create imperfect terms to commit fraud, such as quality terms, claim terms, guarantee terms, liquidated damages terms, etc.
2. Changing contract terms
The trapper sets a trap to commit fraud by changing the contract terms. For example, if the main terms of the contract are changed, the trapper claims that for various reasons, it is recommended that a third party perform the contract on their behalf, and the deceived person often easily agrees to be deceived; the contract transportation terms are changed, and liner transportation is changed to charter transportation; the payment terms are changed, and the L/C payment is changed to collection or wire transfer payment; the inspection terms are changed, and it is required to be changed to an external inspection agency or a third-party inspection agency.
3. Not signing a written contract
The trap setter cited Article 11 of the United Nations Convention on Contracts for the International Sale of Goods as an excuse, and argued that importers do not need to worry about the lack of a written contract as long as both parties agree.
Case
An importer imported a batch of new triodes. After the arrival of the goods, the inspection showed that the chip could not be used normally, and the factory refused to pay. But the exporter believed that there was no problem with the quality of the goods. In the contract, the two parties did not stipulate the acceptance criteria for the goods. The exporter believed that the commodity inspection was the standard, and the importer believed that the technical inspection was the standard, but could not provide a valid commodity inspection report. The two parties argued with each other for a year. The exporter applied for arbitration and demanded payment, but the importer did not agree to pay. The terms in the contract did not support the importer’s appeal. The importer had to reluctantly give the money to the exporter.
Trade disputes often only talk about evidence, not the cause. Therefore, contracts must be signed with great caution. Foreign trade personnel must constantly study and familiarize themselves with the elements of contract terms to prevent mistakes and omissions.
(II) “Pie in the sky”
The most common fraud type case is the “pie in the sky” method.
Case
A domestic importer received various quotations from overseas. Some traders’ quotations were very low, and the profits were huge compared with similar products in the domestic market. Usually these traders would make various excuses saying that they were not familiar with L/C transactions and hoped to pay through T/T, and the payment was 30% advance payment + 70% payment after shipment against bill of lading. If you do this, the risk is very high. In the current context of economic globalization, it is rare to see huge profits. If you encounter this situation, you should be vigilant.