45 What are the essential elements of an export sales contract?It is difficult to draw up a comprehensive contract that can be standardised for all export transactions.However, the exporter and the importer should be aware of certain minimum general requirements whendrawing up an export sales contract. The clauses covering these requirements will make up the basicelements of the contract and are outlined below:

Name and addresses of the parties. The parties to the contract should be clearly stated.

Product, standards and specifications. The export contract should explicitly state the product name,as well as technical names if there are any; sizes in which the product is to be supplied (if this isrequired); the applicable national or international standards and specifications; specific buyerrequirements; and sample specifications.

Quantity. The quantity should be clearly stated in both figures and words; units of measure should bespecified.

Inspection. Although a number of goods are now subject to pre-shipment inspection by designatedagencies, foreign buyers may stipulate their own inspection agencies and conditions for inspection.Therefore, the parties should clearly state the nature, manner and focus of the inspection envisaged, aswell as the inspection agency.

Total value of the contract. The total value of the contract should be put in both words and figures, andthe currency should be specified.

Terms of delivery. Terms of delivery (one of the Incoterms 2000) should be stated in the contract.

Taxes, duties and charges. The prices quoted by the seller may be inclusive of taxes, duties andcharges. Levies, if any, in the country of importation may be the buyers responsibility. Responsibility forpayment of all such taxes should be clearly specified in the contract.

Period of delivery, shipment, etc. The place of dispatch and delivery should be clearly specified, alsowhether the period of delivery will run from the date of the contract, from the date of notification of theissue of an irrevocable letter of credit, or from the date of receipt of the notice of issuance of the importlicence by the seller.

Part-shipment, trans-shipment, consolidation of cargo. The contract should explicitly state whetherthe parties to it have agreed on part-shipment or trans-shipment. The contract should also indicate theport of trans-shipment and the number, if any, of partial shipments agreed. If the goods are likely to beshipped under a consolidation of export cargoes scheme, this should be mentioned in the contract.

Packaging, labelling and marking. Packaging, labelling and marking requirements should be clearlystated in the contract.

Terms of payment, amount, mode and currency. When quoting different payment terms, the exportershould specify whether the prices are based on the current rate of exchange of the South African rand,or on the basis of another currency (e.g. the US dollar). Fluctuations in the rate of exchange should alsobe addressed.

Discounts and commissions. The contract should specify the amount of discount or commission to bepaid and by whom (i.e. by the exporter or by the importer). If required, the basis on which commission iscalculated and the rate to be applied should also be clearly stipulated. Discount or commission ratesmay, or may not, be included in the export price agreed upon by the exporter and importer.

Licences and permits. Import licences may be difficult to obtain in the buyers country. Parties to thecontract should therefore clearly state whether the export transaction will require any export or import

licenses, whose responsibility it will be to obtain them, and at whose expense.

Insurance. A contract should provide for the insurance of goods against loss, damage or destructionduring transportation. The contract should specify the type of risk covered and the extent of coverage.

Documentary requirements. Documents required by the buyer/importer, and which the exporteragrees to provide, should be stated. Where the exporter is required to take out marine insurance, it isimportant that he be asked to provide a certificate of insurance, rather than the policy, to enable him toship consignments under an open policy.

Product guarantee. The length of the period of guarantee should be fixed.

Delay in delivery. The contract should define the damages due to the buyer from the seller in the eventof late delivery owing to reasons other than force majeure.

Force majeure or excuse for non-performance of contract. Parties should include certain provisionsin the contract defining the unforeseeable circumstances that would relieve them of their liability for non-performance of the contract. Such provisions ntify the relief which may be available toeither party to the contract should superveni ccur during the period of validity of thecontract.

Remedial action. As defaults in contractuaadvisable to include in the sale or purchase actions should reflect the mandatory provision

Applicable law. The contract should state the

Arbitration. The contract should include asettlement of disputes or differences that may

Signature of the parties. The signing of thterms and conditions of the contract.

The passing of ownership is still a matter of ulinked to the transfer of the bill of lading wtransport, a bill of lading is not provided. ownership clause in the sales contract, to thesold until he has received the purchase price.

Webber Wentzel Bowens. Status: Privat5111. Activities: Diversified legal services, are intended to ideng circumstances ol obligations by any of the parties can occur, it is alwayscontract certain specific remedial actions. These remedials of the law applicable to the contract.

law of the country that is to govern the contract.

n arbitration clause to facilitate the amicable and quick arise between the parties.

e contract indicates the agreement of both parties to the

ncertainty in international trade. It is not, as many believe,hen shipment is by sea. In the case of road, rail or airIt would therefore be prudent to have a reservation of effect that the exporter reserves ownership of the goods

e. Location: Johannesburg. Tel.: (011) 240 5000. Fax: (011) 240including patent law.

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45 What are the essential elements of an export sales contract?