- EXPORT-IMPORT CONTRACTS (Outline)
An export-import contract is essentially an agreement between the exporter and a foreign buyer. The export contract can take many different forms. For example:
- A verbal offer to sell, covering essential issues such as the product details, quantities offered, price per unit, delivery particulars and payment terms, made by the exporter to the foreign buyer (or an offer to buy by importer ) and confirmed by the second party is one example of a legitimate export contract. Such an agreement may or may not be confirmed in writing. Oral contracts by telephone etc. can be risky and are not that common in international trade. They may occur, however, between long-standing trade partners or between reputable firms dealing in commodities that are subject to rapid price fluctuations. Countries that are members of the Convention on International Sale of Goods (CISG) do recognize verbal contracts as valid.
- Any written offer (quotation), either contained in a formal written contract and posted or couriered to the importer, or sent by e-mail, fax, telex or cable to the importer, and confirmed (usually also in writing) by the importer, is another form of legitimate contract. Again this could also be a written offer to buy, initiated by the importer, which is then confirmed by the exporter, although this is seldom the way it works unless it is a long-standing customer.
- A pro-forma invoice sent (exporter to importer) by fax, e-mail, courier or post to the importer (usually on his/her request) and confirmed by the importer, is generally accepted as an export contract. Acceptance could take various forms: a) "I agree to the terms and conditions" on the pro-forma invoice and signing it or b) the importer may generate a separate, signed document agreeing to the pro-forma invoice which is then attached as reference. The importer may accept the pro-forma invoice and request for the conclusion of a written and signed by both parties.
The first offer is seldom accepted
It is seldom the case that the importer will accept the first offer made by the exporter and normally this first offer will be followed by a series of counter-offers sent back and forth between the exporter and the importer until each party is satisfied with the terms and conditions outlined in the final offer and agree to abide by it.
You need to be clear and precise
Whatever form the export contract takes, you need to be careful in formulating this document as they are drawn up between companies from countries which may have very different legal systems, regulations and attitudes to doing business. These differences may cause disputes even when trading with other fairly developed nations. The challenge is to make your export contracts as clear, precise and comprehensive as is possible.