Export Contract under Import and Export


Buying Contract in International Trade


Export Contract under Import and ExportThe term "Elements" is a bit confusing that refers to the general conditions in contracts. Export contracts invariably refer to the subject matter of the contract. In addition to the subject matter, it is advisable for both the parties to incorporate several general conditions in the contract, in particular, rights of the parties in case of failure of performance or other contractual obligations. The goods may be lost, stolen or damaged during transit. Who would bear the risk in such a situation? If the contract specifies the position clearly, lot of litigation and approaching the court can be avoided. Physical movement of goods involves cost. Who has to bear the costs and up to what point? These issues are resolved by incorporating the elements (general conditions) in export contracts.

Most exporters have developed standard general contracts. It simplifies the day to day operations and also reduces the possibility of missing certain items. The complexity of the conditions depends on what is exported. If the items exported are common items such as handicrafts, garments or normally used consumption items, standard general conditions contract is sufficient. However, if the goods exported are complex item such as petrochemicals, the export contract has to be drafted with a great deal of care, which may turn to be voluminous running into hundreds of pages.

For a majority of products being exported from India, the following elements have to be incorporated in the export contracts:

1. Names of the Parties

2. Description of the Products

3. Quality

4. Price per unit

5. Total value

6. Currency

7. Tax and Charges

8. Packing

9. Marking and Labelling

10. Mode of Transport

11. Delivery: Place and schedule

12. Insurance

13. Inspection

14. Documentation

15. Mode of Payment

16. Credit period, if any

17. Warranties

18. Passing of risk

19. Passing of property

20. Availability/non-availability of export-import licence

21. Force Majeure (Factors beyond the control of the parties that makes the performance of the contractual obligations impossible e.g. Wars, floods, fire, civil war. Once this specific clause is incorporated, parties are relieved of their mutual obligations, on the happening of the event. Contract comes to an end and no party is liable for damages)

22. Settlement of Disputes

23. Proper Law of the Contract

24. Jurisdiction.

The Ministry of Commerce, Government of India, has set up Indian Council of Arbitration. It has developed a model set of Contracts for the benefit of exporters. These model contracts are suitable, in case of most small and medium enterprises.


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ANAND: Hi, Where can I get a template for the standard general conditions contract ? It is not available in the Indian council of arbitration website

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