Currently, international sales have become a fundamental pillar for the growth and maintenance of the global economy. What previously seemed to be a difficult process and destined only for those companies with gigantic infrastructures, today it has become a growth mechanism for any company. Thanks to the internet and the digitization of all business areas, you can buy and sell internationally without even having to leave your home or office.
International sale contract
An international sales contract is an agreement, which can be verbal or written, between a buyer and a seller, which enables the international purchase or sale of a good or service in exchange for a price, which can also be paid with a good or service. International sales and purchases are primarily governed by the United Nations Convention on Contracts for the International Sale of Goods (CISG).
The transaction method used for the purchase and sale operation will be different depending mainly on the value of the sale, the nature of the asset and the complexity of the agreement. As an example, organizing the purchase of a pen, which can even be done verbally, is not the same complexity as organizing the purchase of thousands of pens, which, in order to enjoy all the protection provided by law, would be convenient to do so through a written sales contract, in order to avoid possible future problems that may arise in this type of transaction and to be able to clearly explain to a judge what the conditions that have been agreed upon have been. A written contract makes it easy to know and remember in detail the terms of the agreement, and thus know exactly at all times what is the object of the contract and its conditions. In addition, sales contracts must be drafted in such a way as to make it possible for anyone to understand them, without the need for them to be experts and knowledgeable in legal matters. If your contract is explained in a way that makes it impossible for you to easily understand the terms of the agreement, from Swintfair we suggest that you contact us or a legal expert to avoid future inconveniences.
In real life, the vast majority of contracts between buyers and sellers are not signed in a document by the presence of both parties, but are almost always done online, without even, on occasions, the parties having contacted each other. The different internet portals, including Swintfair, offer the possibility that these contracts are carried out safely and remotely, without both parties being present in person or having to deal with each other.
Clauses of an international sales contract
Unlimited clauses can be listed in an international sales contract. But generally, the clauses focus on drafting the legal part related to the description of the product, the price, the delivery conditions, the deadlines and the payment conditions. Apart from these, other clauses found in practically all contracts are the following:
Reservation of ownership: the retention of title clause is one of the most common clauses of all types of purchase and sale contracts. It establishes that the seller will retain ownership of the goods until the buyer has paid the full price of the objects of purchase, and, in the event of non-payment, the seller may claim the return of the products. There are various forms of domain reservation clauses, some simpler and others more complex, but all have the same purpose, to protect the buyer in the event that the seller does not pay for all the goods.
Force majeure: it is usual for all contracts to have a force majeure clause, which exonerates the parties from any responsibility when there are circumstances that are difficult to foresee that prevent the correct execution of the contract. An example of this could be that, in the case of land transport, an earthquake ends up destroying the truck that was transporting the goods.
Dispute resolution: both national and international contracts may also have a dispute resolution clause, where the parties choose the method of resolution of possible disputes that may arise, which may be mainly through a mediator, arbitrator or litigation. In addition, the parties must choose the place where the dispute will be dealt with, which will be governed mainly by the laws of that place unless the parties have agreed otherwise.
Example of an international sales contract
There really is no specific model for an international sales contract. The parties are totally free of the content of the contract and its conditions, but as an example, from Swintfair we always recommend that the contracts have and address the following points:
Price: we have to pay attention to both the price and the payment conditions. The agreed price may be different from the price drawn up in the contract, since the seller may not have taken into account the different taxes when awarding a price, while the buyer may have taken them into account. Therefore, it is essential to observe the price in detail, to avoid future surprises.
Description of the goods: the contract must clearly reflect a detailed description of the goods, which are the main object of the contract. You must specify in detail what type of merchandise it is and the quantity, so that we know and have controlled at all times what we must send or what must arrive.
Transport method: the most widely used method of transport is transport by air or road transport. The world exporting country par excellence is China, so in most cases they use a combination of several transports so that the merchandise reaches its recipients. This point must be written in the contract.
Pre-shipment inspection carried out by independent third parties: it is a method widely used especially in the purchase of goods found in countries such as China. An external third party is hired to review the merchandise before it is shipped. Normally, not all merchandise is checked, but a part of it is taken as a sample.
Post-shipment inspection and rejection: buyers must have a time, after receiving the purchase, so that they can reject it in case they do not agree with the merchandise received. The contract will specify the time available to the buyer to make use of this right.
Guarantees: refers to the terms and conditions that must be negotiated by the buyer and the seller and included in the sales contract.
Incoterms: Incoterms identify what and in what situations the buyer and seller are responsible for. You can read more about incoterms by clicking here.