Understanding International Sales Contracts

14 июня 2021, 21:55

In order to become a successful exporter, understanding how an international sales contract works is a must. Here are the following key points to consider for the next time you need to create one:

What is an International Sales Contract?

To begin, an international sales contract is a legal document between a seller and buyer that specifies the different parties involved, the services or products being sold, the conditions and terms governing the sale, and the price agreed for the transaction. All sales are governed by the UN Convention on Contract for the International Sale of Goods (CISG). A sales contract between two parties may be binding, even if it is just a verbal agreement. However, it should usually require documents like purchase orders and formal buyer/seller agreements. The type of agreement you will need will usually depend on the nature of the products, the value of the sale, and the complexity of the terms.

Written Sales Contract is a Must

To operate at the highest level, exporters must have a written sales agreement. It forces all parties involved to seriously consider the details of the sale before making final commitments. Make sure to bargain and iron out any differences before formally drawing out a written agreement. When a written contract is in place, both parties cannot go back on their words and no longer need any reminders regarding the terms of the sales. Lastly, a written contract can be legal protection that outlines the details of the contract to authorities such as a judge or an arbitrator.

Putting a Sales Contract Together

The signing of a formal contract involves a drawn-out process that includes an offer, rejection, acceptance, or counteroffers. However, not all of these components may happen in every sale. In any case, it is vital to refer to the UN Convention on Contracts for International Sale of Goods (CISG) and Uniform Commercial Code (UCC) to ensure that the agreements are accepted and recognized.

Negotiating a Sales Contract

There are certain terms sellers must include in their confirmation documents and buyers in their purchase orders. These include:

  • Price (currency, payment terms, taxes, the agreed-upon price, etc.)
  • Detailed product descriptions
  • Bill of lading and carriage method
  • Terms of transfer of ownership
  • Pre-shipment and post-shipment inspection/rejection
  • Warranties
  • Incoterms

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