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Export contracts: Trust only the written word


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The contract lays down the "rules of the game" for the business, which are much more important and difficult to define in an international context than in a domestic one because of different cultures, languages and legal systems. For the exporter, the primary questions are: How do I get my money? Who bears the risks and costs of transportation? Which court will decide in the event of problems? Which law is applicable?

Trust only the written word

The purchase contract is not subject to any formal requirements, i.e. it can be concluded orally or in writing. For export transactions, contracts should be drawn up in writing and oral agreements should always be set down in writing.

Contracts for goods and services

A distinction is made between contracts for goods and contracts for services depending on the subject matter of the contract. Commodity contracts are commercial or transit transactions. The most important written sales contracts in foreign trade include correspondence contracts, closing letters and form contracts. Among the service contracts, agency contracts with commercial agents or proprietary traders and cooperation agreements (such as joint ventures) are of particular importance.

Exporter's services, mode of payment and terms of payment

The sales contract regulates the services of the exporter - quality and quantity of the goods, price and terms of delivery - and the importer such as payment mode and payment terms. The terms usually include payment protections for the exporter. For example, a retention of title, advance payment or debt security - such as credit insurance, bank guarantee, bank surety, forfaiting, factoring, documentary letter of credit or collection and a bill of exchange - may be agreed. The contract can also be provided with price adjustment clauses.

Place of jurisdiction, applicable law and defective delivery

The agreements on the place of jurisdiction, applicable law and the possible involvement of arbitration must always be agreed in writing in order to be valid. If the goods or the service show defects after delivery or completion, the Recipient must notify the Supplier of this by means of a notice of defects. If he does not report them, he loses the warranty claim.

Contact maintenance after conclusion of contract

The conclusion of a contract marks the beginning and not the end of the business relationship. The behavior that leads to success in maintaining contacts also depends on the culture. 

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