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Contract Terms To Avoid Export Risks

2009/1/3 15:56:00 41947

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The contract clearly defines the responsibilities, rights, obligations, costs and risks of buyers and sellers in international trade and has legal effect.

For exporters, contracts are not only a clear requirement for buyers to fulfill their obligations, but also a definition of obligations that they must fulfill.

To make a perfect contract, at least we should do it: we must understand the terms and conditions of the contract accurately and profoundly. We should be careful and comprehensive when negotiating the paction, and make the contract strictly and completely.

This requires business personnel with solid knowledge of import and export and rich experience, proficiency in foreign languages, and familiarity with relevant legal knowledge and international trade practices.

　 合同條款理解須透徹

A complete export contract should make clear provisions on all aspects and parts of the paction.

Every practice adopted in each clause stipulated in the contract has its specific contents and is the basis for future performance.

There is always a certain connection between the clauses and the terms and practices.

At the same time, all clauses can be regarded as a clear stipulation on the obligation to fulfill their obligations, and it can also be regarded as a restriction to the seller.

For example, commodities are the material basis of import and export contracts, and the agreement on their quality is the most important content in the whole contract.

How to determine the quality, quantity and packing of the seller's delivery involves the terms of inspection of the goods in the contract.

In the terms of commodity inspection, the scientific and reasonable agreement between the commodity inspection authorities and the time limit for inspection is not only a guarantee for the buyer to exercise the right of re inspection, but also a restriction. Moreover, the right to re inspection and its exercise period are effective ways for the seller to effectively protect the quality of his goods.

At present, the fixed form contract of many export companies stipulates that the commodity inspection certificate issued by the China Commodity Inspection Bureau shall be the final basis for the quantity, packaging and quality of the goods when the goods are shipped.

In fact, according to Mr. Xiao Zhiming, deputy director of the China International Economic and Trade Commission, the unequal nature of the clause deprives the buyer of the right to re examine.

According to international practice, after the buyer receives the goods, it does not mean that the buyer accepts the goods. The buyer still has a reasonable opportunity to inspect the goods.

However, in the contract, the Seller shall limit the buyer's right to re examination in writing.

If the goods are required to be re inspected within several days after the arrival of the goods, they must be the inspection certificates issued by the authoritative inspection bodies mutually agreed by both parties.

The words "agreed by both sides" are very important, because many notary offices abroad are non-governmental and not authoritative. If there are malicious businessmen in the international trade, they can collude with notarial institutions to entrap sellers.

Generally speaking, foreign economic contracts include two parts, including commercial clauses (including technical terms) and legal provisions, and these two parts are inseparable from each other.

Therefore, when using, we should pay attention to the integrity of the contract. We should not abandon or neglect other important clauses (such as dispute settlement clauses), such as force majeure clause, arbitration clause, etc., in order to haggle over some clauses (such as price terms).

　　交易磋商細(xì)心全面

According to Mr. Xiao, the main performance of seller's breach of contract in international trade is: no delivery; no delivery on time (delayed delivery and early delivery); the goods delivered are not in conformity with the sales contract (quality, specification, type, packing, quantity, etc.).

Under the current "buyer's market", the seller's intention to default is not large.

He believes that many sellers default now because he did not correctly estimate his ability to perform in the trade negotiations.

From the following cases, we can see that the negligence of the consultations has caused much trouble to the exporters themselves.

An export company in China agreed with an Egyptian customer on the export business of chemical products produced by a factory designated by foreign businessmen. The contract stipulates shipment within 20 days. The price terms are FOB Shanghai, and foreign businessmen have appointed a shipping company as the carrier.

Because the paction price is quite good, the salesman of the export company signed the contract without hesitation.

But after contacting the supplier, we learned that the product of the factory is very popular in the international market. The order has been placed in 2 months, so it is impossible to deliver within 20 days.

The export company then negotiated with the buyer, hoping to postpone the delivery or to replace the products of other manufacturers, which the customer could not accept. The export company had to buy a lot of goods required by the contract from another foreign trade company to perform the contract.

As a result, when the contract was signed, the original budget was favorable, but later, in order to fulfill the contract, it lost thousands of dollars.

In the above case, if the export company does more work in consultation, it will not be passive.

A good paction price is certainly an attractive factor, but it can not be ignored only for the sake of price.

Since a foreign businessman has specified that the product must be produced by a factory, the exporter should at least check with the factory about their supply before agreeing to the conditions of the foreign merchant.

Zhejiang San Mu Industrial Co., Ltd., which is engaged in stationery production and export, has a contract review system to effectively resolve risks in the consultation stage.

Mr. Zhu Zhenchao, manager of its import and export department, said that when negotiating with foreign businessmen, business personnel must record the conditions put forward by customers in detail, such as the type, type, color, quantity, packaging, price, delivery time, payment method and so on, and then evaluate the feasibility of the execution of the contract by the general manager of the company and the heads of various departments, including the production department, the business department and the finance department.

On the premise of meeting the requirements of customers, the company will conduct a comprehensive inspection of its performance capability, such as whether the delivery date can be fulfilled, whether the production capacity of large orders can be met, and whether the special requirements of quality packaging can be achieved.

After these procedures, unless a force majeure occurs, the execution of the contract will not normally be a problem.

Small and medium-sized enterprises have low ability to resist risks, but it is easy for all departments to coordinate, control and manage.

　　科學(xué)措辭內(nèi)容準(zhǔn)確

The meticulous work in the negotiation stage is the premise for signing the contract, but the concrete repair work can not be ignored.

After summing up the contract dispute he had arbitraged, Mr. Xiao said: "the proper wording of a contract can reduce many potential risks and increase the security in the paction.

A foreign trade contract should be scientific, flexible, rigorous and complete in writing statement.

China A signed a contract with Singapore B company to export a batch of children's clothing.

During the negotiation, B read the sample supplied by A and agreed to use it as the quality standard for delivery.

The quality specification of the export contract simply states the specification, material and color.

The terms of the commodity inspection are: "30 days after arrival of goods, foreign businessmen have the right of re inspection".

When the goods arrived in Singapore, the buyers put forward "incorrect color and rough sewing process" and submitted a certificate of inspection from a Singapore inspection institution as a basis for return and compensation.

A company has confirmed that the goods are sold by sample and the samples have been confirmed by Singapore B company.

B pointed out that the contract did not specify the word "sample sale" or the sample number. Moreover, A company did not seal up the samples as evidence.

A explains that there will be color difference in textiles according to common sense.

B responds to the contract that the quality specification does not indicate that the goods will be chromatic aberration.

A also said that it did not accept the inspection certificate of B company. The inspection organization found by B company was not authoritative and did not get the consent of A company.

The B company argues that the contract only promises that B has the right to reinspect, and does not specify the name of the inspection institution or must agree with the A company.

A realized that even if he submitted to the arbitration organization, he could not submit strong evidence himself, so he had to promise the price reduction made by the Singapore company on price, so that the dispute could be resolved.

The two terms of quality and commodity inspection in export contracts are often controversial.

In the above case, the B company has made use of the defects due to the lack of strict wording in terms of quality and commodity inspection clause two in the contract.

He introduced that the expression method of quality in contract has two kinds of instructions and samples. The two ways of statement require accurate and necessary flexibility.

The quality of some goods must be specified in a range of maneuvers, that is, the quality indicators of the goods delivered by the seller are allowed to vary in a certain range, such as duck down, and the amount of cashmere is 90%, allowing +/-1%.

In the case of a sample paction, the seller is obliged to make the goods delivered exactly the same as the sample, whether or not the above stipulates in the contract.

If the quality of the goods does not conform to the sample, the buyer has the right to terminate the contract, refuse to accept the goods and claim damages.

Therefore, the seller should retain a similar description in the contract for goods that are sold according to the buyer's sample or are technically difficult to comply with the sample: "the delivery is similar to the sample"; "quality is approximately the same as the sample"; "quality is close to the sample"; and so on.

In the case, A and B are traded on a sample basis. In the quality terms of the contract, except for the necessary items such as the name, trade mark, brand, specification and type of the commodity, it is also clear that the seller and buyer's sample, sample number, date of sending the sample and correspondence for sending the sample can not be simply described as a general description.

Moreover, clothing products should be marked "allow chromatic aberration".

If A company lists these contents in the contract, it will not be unclear when B puts forward quality problems.

Mr. Xiao also reminded exporters that in addition to the strict substantive business terms, they should also pay attention to the terms of default.

Maybe you have already prepared the goods, but the buyer has not yet opened the letter of credit, or the shipping company which was originally appointed by the buyer has not yet arranged the shipment, causing the port to store up the cost, or the buyer does not want the goods at all.

Therefore, in the export contract, it is necessary to specify the time for the buyer to open the letter of credit, or when the FOB paction is made, the buyer should send the ship to the port of shipment stipulated in the contract. At the same time, it is also agreed that if the buyer is defaulted, the buyer should bear the responsibility for breach of contract and be responsible for any loss. When the buyer fails to perform the contract, the exporter can make corresponding claims to the buyer.

As Mr. Huang said, every clause of the contract is very important, because no matter what goes wrong, you will get into trouble.

For example, in the shipment clause, when the export contract is concluded, it is not possible to determine where the shipment or the quantity available for shipment can be made, so that several ports of shipment can be specified, or simply "CMP- Chinese Main Ports".

However, the provisions of the port of destination must be clear and specific. Both basic ports with liner liners and general words such as "European main ports" should not be used, because there is no uniform explanation in the world, and the loading and unloading conditions and expenses of different ports are quite different.

If the port is exported to a port without direct vessel or direct vessel, the word "allow pshipment" should be stipulated in the contract.

　　合同審查

When a contract has been prepared, it is necessary to conduct a careful examination and make a final check when the signature comes into effect.

Read the contract carefully.