Understanding International Sales Contracts

In order to become a successful exporter, it’s vital to understand the creation of international sales contracts. Here are the following key points you need to take note of to successfully draw up contracts for international sales. 

Defining an International Sales Contract

An international sales contract is a legal document between a seller and buyer that specifies the different parties involved, the services or products bought, 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 contract between two parties may be binding, even if it’s just a verbal agreement. However, it usually involves documents like purchase orders and formal buyer/seller agreements. The type of agreement you’ll need will usually depend on the nature of the products and their values. 

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. Because a written contract is in place, both parties cannot go back on their words and do not 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 any authorities such as a judge or an arbitrator.

Putting a Sales Contract Together

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

Negotiating a Sales Contract

For buyers at the international level, certain conditions and terms must be in the purchase order. Likewise, sellers need to have these on their confirmation or acceptance documents:

• Currency, payment terms, and the agreed-upon price
• Detailed product descriptions
• Bill of lading and carriage method
• Terms of transfer of ownership
• Independent third-party pre-shipment inspection
• Warranties
• Incoterms 
• Rejection and post-shipment inspection

These must appear on your international sales contracts to make your contracts valuable for a profitable export and import transaction. 

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Any business that engages in international trade knows the essential role that proper documentation plays in ensuring successful transactions. To gain more valuable information on trading, make sure to check out the rest of our site!