Sales Contract in Import Export Business

Sales contract is an instrument meant to be more psychological than enforceable although it could be in countries where you may stand a legal chance of having your case heard in court and a just decision may be expected. Your chances of succeeding in such a legal battle will be increased if you’re a recognized business. When you may be doing business in a Third World country, however, where courts are notoriously slow in acting on cases in front of them, not to mention possibly corrupt, please do understand that this contract is but an agreement between you, the Buyer, and the Seller for your mutual benefit, meant to discourage either one of you from breaching your agreement, knowing that you had both agreed on certain issues of importance.

Sales ContractAny issue which you may feel could result in a disagreement can be addressed in this form. Namely, you, the Buyer, and the Seller can agree on some issues that could potentially become unclear later on in your transaction and addressing the issue beforehand may prevent the other party from negligence or from unduly forcing the responsibility on the other party. For example:

-Decide what expenses will be for the account of the Buyer, and what for the account of the Seller; up to which point/from which point Buyer or Seller are responsible for the movement of goods.

-Not having a clear Sales Contract specifying whose responsibility starts and ends where may be the reason why shipments end up at portside and buyer’s broker may have to arrange for inland transport to final destination. Example: your shipment arrives to Los Angeles instead of all the way to Denver, the final destination; you, the buyer, has to provide for transportation to Denver, the final destination. Not only it’s an extra work for you but the task will surely result in added expenses increasing your landed cost of your import shipment.

-Decide on who pays if there are losses while the goods are in port.

-Decide on the method of the inland transport, namely, how do you want your goods to go from the inland point of origin, where you purchased the goods, to the seaport, the point of embarkation, and, how do you want your goods to go from the coast to destination, if that’s the case, in the United States on arrival, say from Los Angeles to Denver – by air, rail or truck?

-Decide who pays warehouse fees, unloading, reloading, and document handling. While some of these expenses are routinely part of your freight routing order, document handling fees alone can add up if your shipment is of only small dollar invoice value.

-Remember, Buyer is to obtain Marine Insurance, but Seller may do it for him if asked!

There are other reasons for Sales Contract and will be mentioned below.