Export Contract and Confirmation of Acceptance

 

Export Contract and Confirmation of Acceptance

 

Export Contract and Confirmation of AcceptanceExport Agreement, Export Order and Export Contract signify the same essence. It indicates the decision of foreign buyer to buy specified items from the Indian exporter at the mutually agreed terms and conditions. This can take place in three ways.

(i) Exporter may send the proforma invoice, in triplicate, to the importer. Importer accepts and sends two copies of proforma invoice, duly signed. As offer has been accepted, a binding contract has formed. However, exporter sends one copy of the proforma invoice, duly signed, again, to the importer as a token of confirmation of acceptance. This confirmation is, indeed, a precaution to ensure that the exporter has received the acceptance of contract from the importer and confirmation of acceptance would be a record to the importer.

(ii) Instead of exchanging the proforma invoice, a second way is for the importer to place a purchase order, duly signed, on the exporter, which is accepted by the exporter. Then, a confirmation follows from the exporter to the importer. It is commercially prudent to send confirmation in the form of a documentary evidence. There is no specific format of this confirmatory letter and an ordinary letter also would serve the purpose. In certain countries, it may be a legal requirement.

(iii) A contract may incorporate all the terms and conditions such as description of goods, quantity, price, total amount payable, delivery schedule, mode of payment, payment of freight and other clauses such as certificate of origin and inspection that may be mutually agreed upon between the importer and exporter. When both the parties sign the contract, it becomes a binding contract between the exporter and importer.

 

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