Preparing an International Sale Contract

The start-up of export or import operation requires the consent of the two parties ( buyer and seller ). This agreement takes shape generally by means of a sale contract, which aims at dividing the expenses and risks between the seller and the buyer. The drafting of this contract is of prime importance, for, it facilitates the trade and exchange and especially avoids disputes. The international sale contract is governed by different rules having the objective of harmonising and facilitating international trade and exchange.

Vienna Convention

The Vienna Convention, developed under the aegis of United Nations, regulates international trade and exchange of merchandise. Signed in April 1980, it counts today 57 signatory countries. It is applied exclusively in the case of problems linked with formulation of a contract of sale and regulates the duties and obligations of contracting parties. Taking into account the problems posed by the choice of duty applicable, the said convention allows the choice of a neutral right. The application of Vienna convention depends entirely on the willingness of the two parties. The companies can either exclude it totally or apply it partially. As a matter of fact, the companies desiring to develop an international activity, must take cognizance of the legal system in the target country and the Vienna Convention.

Incoterms

The Incoterms are trade acronyms which regulate the problems relating to international logistics and to the transfer the property rights in merchandise. They allow distribution of expenses and risks in the onward journey of the goods from the seller to the buyer. The Incoterms constitute today the basis of the rules of international trade.

Contract

In order that the contract is prepared, it is necessary that the two parties are in absolute agreement. The agreement between the contracting parties depends on the offer price, general condition of sale and acceptance.

Offer price and pro-forma invoice

The commercial offer is the basis of sale contract. It has to be firm, clear and without any ambiguity. An offer price is based on a written document and must be drafted in a language perfectly understood by the client.

The pro-forma invoice is the document which gives shape to the trading offer. It is considered as a rate schedule which determines the general outline of the sale. The pro-forma invoice includes all the elements found in a trade invoice and affords to the buyer to take cognizance of specifications relating to the offer. Finally, if everything is normal, the contract must define legal relationships between the two parties, and that is the aim of the general conditions of sale.

 

General Conditions of Sale

The general conditions of sale allow the companies to define the legal frame work of their trade relations. The general conditions of sale are specific to each exporter. They define the duties of the buyer while allowing him to defend his own interests.

The general conditions must be written down in a clear manner and free from equivocation. They are written down either in the language of the country of the buyer, or in English. The exporter must go to the essential and give emphasis on the most important points such as price, conditions of payment, period of delivery and modalities connected with settlement of legal disputes.

The buyer must take cognizance of general conditions of sale before signing the contract. Otherwise, they would be considered legally ineffective.
In fine, one must know that some countries lay down general conditions of purchase. As a general rule, they oppose the conditions of the seller. In that case, the two parties must negotiate and analyse the general conditions from legal point of view governing the contract. Every buyer who would not have denounce the general conditions of sale is supposed to have accepted them and would only have the general conditions of purchase for being able to oppose them.

Acceptance

Acceptance of an offer constitutes an agreement with the client and allows finalisation of the sale contract. The contract assumes concrete shape only at the time when the offer is followed by its acceptance. So long as it has not been accepted, the offer can be withdrawn. An acceptance must be transmitted in a written form so that the seller obtains a certain guarantee and a proof in case of legal disputes. In that precise case, acceptance takes the form of a trade bill or a trade contract.
Oral acceptance is not advised due to the fact that there is no proof available unless the contract is simple and is executed by persons who are loyal and of good faith. In spite of any thing, written confirmation is always recommended. One has to pay attention in the case of legal dispute to the acceptance by telex or fax which does not constitute sufficient proof. Companies also have recourse to typical contracts for formalising the agreement between two parties. Typical contracts are practical means but, the only inconvenience is that they cannot be negotiated. The surest means is to prepare tailor -made contracts for each client by preparing two documents: on one hand general conditions of sale and on the other hand special conditions for the client.

Contractual Clauses

Interex Lebanon Services

Interex Services proposes you to be contacted by our partner, the law office Raphaël & Associés specialized in international law in order to draft an international Commercial Contract that suits to your requirements