International Sales Contracts:
International Sales Contracts are made in order to sell the goods to someone who resides abroad. For example, a sales contract between a seller who resides in United States and a buyer who resides in Germany is an international sales contract.
One of the parties state rules usually govern those contracts, in accordence to the rules of internatonal conflict of laws. Parties may agree on the governing law and jurisdiction also.
The governing law may be both national and/or international regulations such as:
- CISG https://uncitral.un.org/en/texts/salegoods
- ICSID https://icsid.worldbank.org/
- ICC https://iccwbo.org/
The difference between a regular sales contract and an international sales contract is the exportation and importation of the goods. Such procedure has to be held with an experienced professional in this field in order to avoid any issues down the way.
Often, parties conduct international transactions without the benefit of an international sales contract. Instead, the seller provides a quotation and the buyer responds with a purchase order. This may be sufficient for back-to-back sales between well acquainted parties. To avoid issues later on, experienced professionals should initiate the contract drafting and negotiation procedures.
Elements Of International Sales Contracts
An adequate international sales contract should identify those given below:
Parties of the Contract
The contract should identify parties by mentioning name of the companies, their head offices addresses and the name of respective representatives.
Nature of the Contract
After identifying parties, the first thing to do is to define the aim of the contract. Parties may fill in this part by describing their intent the purpose of the contract.
Description of goods
This clause is one of the central clauses in a sale contract. If the contract do not describe the goods precise enough, the buyer may have goods that are unsatisfactory for the buyer´s commercial purposes. Therefore, exporters would like to define the goods precisely when they are sure of delivering exactly those goods.
Prices and Modes of Payment
Parties may specify the price in any currency or foreign exchange with including the risk of exchange rate. The contract should indicate the down payments and letter of guarantees, if the parties agreed on.
Methods of Transport
ICC Incoterms Rules (https://iccwbo.org/resources-for-business/incoterms-rules/) are the most preferred rules to define the methods of transport. Depending on the Incoterm, respective obligations of the contracting parties are stated. However, parties may determine different methods and transfers which fits to the nature of their business.
Terms of Delivery
Delivery period is one of the major obligations of the seller. One must provide and impose in advance penulties for delay. Therefore, to avoid casualties, parties should specify the delivery date, place of destination and place of loading.
Inspection of Goods
The parties should indicate whether they agree to inspection before and/or after the shipment. Parties may indicate the place of inspection as well as other details such as inspection company. Seller should notify buyer for the availability of the goods for inspection.
Transfer of the Ownership
At some cases, parties agree that they will not ship the goods under a Bill of Lading. Therefore, parties should specify in the contract when and/or how ownership passes from seller to buyer. Depending on the payment terms, this clause could imply a retention of title situation that would require compliance with the formalities in the buyer’s country.
If any Incoterm other than CIF or CIP is used, the parties should determine outside of the Incoterms who is responsible to provide insurance cover.
The parties should add a list of documents that seller requires for the importation and exportation of the goods.
Commercial contracts often include Force Majeure or hardship clauses setting out requirements for establishing the existence of a Force Majeure or hardship event that prevents or impedes a party’s performance of its contractual duties.
Guarantees provide advantages to the buyer in case of defect, which are more extensive than those stipulated by the law. In addition, these guarantees enable the seller to determine its own guarantee conditions and expand, remove or limit the liability surrounding defects.
Jurisdiction and Governing Law
Parties should include this clause if they want to authorize any courts for all disputes arising from the contract. A party expressly submitting to the courts of a particular jurisdiction will find it difficult to argue that those courts are not the appropriate forum for the trial of disputes. Parties may agree on arbitration or mediation also, rateh than bringing the matter to any court.
When the parties of an international contract use different languages a language clause should be included in the contract. Even if the parties adopt as the only language one in particular, there must be a clause specifying which version of the document is the official one.
Moreover, when there are two language versions of a contract, parties should insert a clause specifying which language prevails. It is also important to specify which language to use for notifications.
Confidentiality clauses, also known as non-disclosure agreements, prevent the signing party from divulging sensitive information, personally identifiable information, and trade secrets. The purpose of this clause is to protect a company from the disclosure of their trade secrets and sensitive information. These protections are for documents as well as verbal communications. Regardless of the methods of communication, industry, or position, a confidentiality clause protects companies if they need to file a claim against someone who disclosed informations to someone, whether they planned to exploit the information or not.
Including a Notices clause in a contract provides the parties with an agreed method of communication. Parties are free to specify the requirements for giving valid notice under a contract. A notice that does not satisfy those requirements will be invalid.
Expertise International Sales Contracts
Antroya has both national and international professional expertise, specialized and experienced legal staff that provide consultations to the client for both pre-signing and post-signing procedures which pertain to the international sales contract preparation, international sales contract negotiation, preparation of exportation / importation documents, and any other related processes. To see our experienced staff, you may visit https://antroya.com/our-team/