INTERNATIONAL SALES CONTRACT

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This TIP deals with the fundamental aspects of the contract for the international sale of goods. It emphasises the importance of establishing a written contract, including terms and conditions such as the identification of the parties, the object of the sale, the price of the goods, the method of payment, the delivery of the goods, guarantees, the applicable law, among others. 

It also mentions the most commonly used means of payment in international sales and purchases, such as the cheque (see+), the bill of exchange (ver+), the bank transfer (see+), documentary remittance and documentary credit.

In addition, Incoterms are highlighted as a useful tool to determine the obligations of the parties with respect to the delivery of the goods. In conclusion, the article provides practical advice and recommendations to ensure a successful international business transaction.

The international sale of goods is a transaction of great importance in the development of international trade. The contract of sale is formed by the concurrence of an offer and an acceptance. In principle, the contract is concluded at the moment when the acceptance of the offer takes effect.

An offer, acceptance or any other expression of intention is to be deemed to reach the addressee when it is communicated orally or delivered to him by any other means evidencing its execution.

The seller is obliged to deliver the goods, transfer their ownership and hand over the documents relating to them. He must also guarantee the buyer against eviction and hidden defects of the goods.

In general terms, the seller must deliver the goods

• On the date fixed in the contract or as may be determined in accordance with the contract. At any time within a period fixed in the contract or as may be determined in accordance with the contract.
• In any other case, within a reasonable time after the conclusion of the contract. The documents relating to the goods must be delivered at the time, at the place and in the manner specified in the contract. The documents to be delivered are those necessary to be able to take possession of the goods and market them.

It is up to the buyer to request the necessary documents from the seller. In general, we can cite the commercial invoice, the certificate of origin, insurance policies, quality, analysis and inspection certificates, etc. These documents also make it possible to prove that the seller has fulfilled the obligations arising from the contract. 

The seller is not only obliged to deliver the goods sold, but must also guarantee the buyer the legal and peaceful possession of the goods sold (eviction) and the absence of hidden defects or defects.

With regard to eviction

It is stipulated that the seller must deliver the goods free of any rights or claims of a third party, unless the buyer agrees to accept them subject to such rights or claims. The buyer is primarily obliged to pay the price stipulated and to take delivery of the goods. 

The buyer's obligation to pay the price includes the obligation to take the steps and fulfil the requirements laid down in the contract or in the relevant laws or regulations to make payment possible.

Payment must be made on the date fixed in the contract or, if nothing has been stipulated, when the seller places the goods or the corresponding representative documents at the seller's disposal. The manner of payment is of particular importance in the practice of international sales and purchases. 

These particularities are due to the physical distance between the seller and the buyer, an inconvenience that prevents or hinders the use of means of payment that are common in other types of sales, such as payment in cash, and which has led to the use of other means of payment that are not so frequently used in other types of sales.

THE MOST COMMONLY USED MEANS OF PAYMENT ARE

1. Check.
2. Bill of exchange.
3. Bank transfer.
4. Documentary remittance.
5. Documentary credit.

The buyer's obligation to take delivery consists of:

• Perform all acts that can reasonably be expected of him to enable the seller to effect delivery.
• Taking charge of the goods.

In general, the transfer of risk occurs when the seller has the goods at the disposal of the buyer and the buyer takes over the goods.

The issue is complicated in international sales because of the frequent existence of intermediaries between the seller and the buyer, so that the provision of the goods by the seller and their receipt by the buyer do not occur simultaneously.

ADVICE AND RECOMMENDATIONS

The minimum content of the contract of sale.

THE CONTRACT OF SALE SHOULD CONTAIN THE FOLLOWING TERMS AND CONDITIONS:

• Identification of the parties: buyer and seller.
• Definition of the object of the sale.
• Obligations of the buyer's parties: to pay for the goods purchased from the seller on the agreed terms and in accordance with the agreed means of payment. 

• • Receipt of goods from the seller:
  • Deliver the goods in accordance with the agreed conditions and deadlines.
  • Recovery for eviction and for hidden defects.

• Price of goods.
• Delivery of goods and passing of risk.
• Method of payment: 

• • Means of payment.
  • Management of non-payments.
  • Possible guarantees.

• Potential non-compliance mechanisms.
• Applicable law. Regulations
• Typical contract: is regulated by the Commercial Code, and the Civil Code on a supplementary basis.
• Rome Convention: in the absence of a choice made by the parties, the law of the country in which the seller has his habitual residence would apply.
• United Nations Convention on Contracts for the International Sale of Goods: establishes a general regulation of the contract, from its formation to the cases of non-performance. 

The relevant rule applies to contracts of sale of goods between parties having their places of business in different states, irrespective of their nationality and provided that one of the following circumstances applies:

• Both states must be contracting states. 
• That the rules of private international law provide for the application of
• The rules of the convention are of a dispositive nature and will therefore apply only if the contracting parties have not stipulated otherwise. 

Incoterms (+): are internationally standardised contractual terms which determine, in a clear and simple manner, the place where the goods are to be delivered and the main obligations of the parties with respect to such delivery. 

Practical recommendation from a commercial point of view is recommended: 

• Establish precisely the price and the object of the sale and purchase. 
• Securing the collection of sales through the use of Incoterms and secure means of payment (i.e. documentary credit). 
• Take out liability insurance for possible product defects. From a legal point of view, it is essential to formalise in writing any commercial relationship between buyer and seller. 

Since in most negotiation processes with a buyer there is not enough time to draw up a purchase contract, it is advisable to have a standard (framework) contract in advance, which has been reviewed by an experienced lawyer and can be modified by the company on a case-by-case basis. 

The Garrigues factor Our experience in drafting, negotiating and terminating international sale and purchase agreements in a wide range of sectors enables us to offer comprehensive advice on those aspects which, in a commercial relationship of this type, are most important from a business standpoint: delivery of goods, transfer of risk, events of default, payment mechanisms and potential damages, among others.