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International Sell Purchase Contract

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					   International Sell-
 Purchase Contract –
Procedure & Comments
       10/05/2006
        Procedure - 1

Seller and Buyer conclude a
sales contract, with method
of payment usually by letter of
credit (documentary credit).
Essential Clauses of the Contract

Description of GOODS
Specification + Quality & Quantity
Price
Terms of payment
Terms of delivery
         Quality Identification
by inspection
by     types/specifications numbers
referenced to
catalogues, leaf-lets, web-sites, and other
official corporative sources
by personal testing – auctions
by detailed descriptions plans, manuals,
drawings, agendas, etc.
by useful outputs
ETC (agreed by the both Parties)
      Methods of Payment in
International Trade - Risk Spectrum

                   TRADE TERMS
 EXPORTER RISK       Open Account          IMPORTER RISK


HIGH              Documents Against                   LOW
                     Acceptance

                  Documents Against
                      Payment

                 Time Letters of Credit

       LOW       Sight Letters of Credit       HIGH

                 Payment in Advance
        Procedure - 2

Buyer applies to his issuing
bank, usually in Buyer's
country, for letter of credit in
favor of Seller (beneficiary).
         Procedure - 3

1. Issuing bank requests
   another bank, usually a
   correspondent bank in
   Seller's country, to advise,
   and usually to confirm, the
   credit.
        Procedure - 4

Advising bank, usually in
 Seller's country, forwards
 letter of credit to Seller
 informing about the terms and
 conditions of credit.
       Procedure - 5

If credit terms and conditions
conform to sales contract,
Seller prepares goods and
documentation, and
arranges delivery of goods to
carrier.
          Procedure - 6
Seller presents documents
 evidencing the shipment and draft
 (bill of exchange) to paying,
 accepting or negotiating bank
 named in the credit (the advising
 bank usually), or any bank willing
 to negotiate under the terms of
 credit.
        Procedure - 7

Bank examines the
documents and draft for
compliance with credit terms.
If complied with, bank will pay,
accept or negotiate.-
GASTRONOM Case
      Procedure - 8

 Bank, if other than the
issuing bank, sends the
documents and draft to
the issuing bank.
        Procedure - 9

Bank examines the
documents and draft for
compliance with credit terms.
If complied with, Seller's draft
is honored.
      Procedure - 10

Documents release to
 Buyer after payment, or
 on other terms agreed
 between the bank and
 Buyer.
       Procedure - 11

Buyer surrenders bill of
 lading to carrier (in
 case of ocean freight) in
 exchange for the
 goods or the delivery
 order.
            Delivery Order
A document from the consignee, shipper, or
owner of freight ordering the release of
freight to another party.
Bank Delivery Order to an Airline -- A letter
addressed to an air carrier from a bank who is
shown as consignee on an airwaybill
instructing the carrier to release a shipment.
Often airlines will accept as a delivery order a
bank's endorsement on the airwaybill,
although an airwaybill is a non-negotiable
document.
Delivered Ex Ship (named port of destination)

" DES" means that the seller
delivers when
the goods are placed at the
disposal of the buyer on board
of the ship
not cleared for import
at the named port of destination.
       Delivered Ex Ship - 2
The seller has to bear all the costs and
risks involved in bringing the goods to the
named port of destination before
discharging.
If the parties wish the seller to bear the
costs and risks of discharging the
goods, then the DEQ term should be
used.
                          EXPORTATION CUSTOMS CLEARENCE


                                                          IMPORTATION CUSTOMS CLEARENCE
SELLER’S RESPONSIBILITY                                                                   BUYER’S RESPONSIBILITY




                                                                                                                   POINT OF DESTINATION
   GOODS HANDLING                                                                            GOODS HANDLING




     SELLER’S RISK                                                                             BUYER’S RISK




    SELLER’S COST                                                                             BUYER’S COST



                                                                               PORT OF DESTINATION
               Checklist:
The following points should be kept in mind when
             choosing an Incoterm.


 What method of transport is to be
 used?
 What are the terms currently used?
 Are there any company policies on
 which terms should be used and
 how much responsibility should be
 taken?
             Checklist:
Are there any restrictions on the term to
be used imposed by the country of
importation?
Are there any commercial norms in the
country with which you are dealing?
Discuss the terms to be used with your
trading partner - it is important to take
their point of view into account.
           Checklist:
Ensure that both parties understand
and can carry out their obligations.
Ensure that you are able to obtain
enough information to give a quote for a
certain Incoterm.
Read Incoterms 2000. The introduction
gives good advice and can clarify certain
issues and the individual terms
themselves are accurately described.
              Checklist:
Ensure all staff (especially those involved in
sales and marketing) are properly trained in
order to understand the basic principles of
Incoterms and in particular the details of the
individual Incoterms.
Incorporate the terms decided into all
relevant commercial paperwork such as
invoices, quotations, terms and conditions of
sale.
Review the terms periodically and change
them if necessary.
INCOTERMS REGULATE:
distributions of documents,
delivery conditions,
distrubution of operation costs
and distributions of operation risks.

INCOTERMS DOES NOT REGULATE:
legislation applicable to points not reflected in
Incoterms,
payment method of the operation.
                   Goods
Seller                    Buyer
  Provide the goods,       Accepting GOODS
  commercial invoice or    delivered
  electronic message,
  and other
  documentation as
  required by the sales
  contract.
Payment

     Pay for the goods as
     provided in the sales
     contract.
        Licenses and Customs
             Formalities
Obtain at own risk and   Obtain and pay costs
cost any export          of all import licenses
licenses and             and authorizations
authorizations and       and carry out all
carry out all export     import formalities.
formalities and
procedures, including
those associated with
transshipment to the
named port of
destination.
   Carriage and Insurance
Contract for and pay    No obligation to the
all costs of carriage   seller for either
and transshipment       carriage or
(if necessary) to the   insurance.
named place and port
of destination.
No obligation to
provide insurance.
                Delivery
Make the goods           Take delivery of the
available to the         goods once they are
buyer uncleared for      made available at
import on board the      the port.
vessel at the named
place and port on the
date or within the
time period specified
in the sales contract.
           Risk Transfer
Assume all risks of     Assume all risk of
loss or damage to the   loss or damage from
goods until they        the time the goods
have been made          have been made
available to the        available at the port.
buyer at the named
place and port.
                  Costs
Pay all costs until     Pay all costs for the
the goods have          goods once they have
been delivered,         been made available
including all export    at the port including
formalities, carriage   unloading.
and transshipment       Pay all costs
(if necessary) to the   relating to import
named place and         formalities including
port.                   duties, taxes and
                        other charges.
                Notices
Provide sufficient      If, according to the
notice of dispatch      sales contract, the
and projected arrival   buyer is able to
that the buyer can      specify a time for
take appropriate        and/or a place of
action to arrange       delivery, to give the
pick-up of the goods.   seller sufficient notice.
Proof of Delivery, Transport
        Documents
Provide the buyer       Accept the seller's
with the delivery       transport document
order and/or a          so long as it is in
transport               conformity with the
document enabling       sales contract.
the buyer to take
delivery of the goods
at the port of
destination.
Proof of delivery is a method to establish
the fact that the recipient received the
contents sent by the sendor.
  Checking, Packing, Marking
SELLER ___Pay all costs associated with
checking the quality and quantity of the goods
to be in conformity with the sales contract.
Provide appropriate packing (unless the
goods are traditionally delivered unpackaged)
as required for the transport of the goods, to
the extent that the buyer has made transport
circumstances known to the seller prior to the
execution of the sales contract.
Provide marking appropriate to the packaging.
         Inspection(s)-
BUYER ___ Pay for the costs of pre-
shipment inspection(s) except inspections
required by the country of export.
                      Other
Provide the buyer at the     Pay all costs associated
buyer's request, risk        with securing
and expense any and          documentation from the
all assistance in securing   country of origin or
documentation                export required for
originating in the country   import.
of export or of origin       Reimburse seller for
required for import.         costs in providing such
 Provide the buyer with      documentation or
information necessary        assistance.
to obtain insurance.
          Maritime and Inland Waterway Transport Only

Group F            FAS         Free Alongside Ship (named
                               port of shipment)

                   <            Free on Board (named port of
                   FOB          shipment)

Group C            CFR         Cost and Freight (named port
                               of destination)
            Any Mode of Transport

Group E   EXW         Ex Works (named place

Group F   FCA         Free Carrier (named place)

Group C   CPT         Carriage Paid To (named
                      place of destination)

          CIP          Carriage and Insurance Paid
                       To (named place of
                       destination)

Group D   DAF         Delivered at Frontier (named
                      place)

          DDU          Delivered Duty Unpaid
                       (named place of destination)

          DDP          Delivered Duty Paid (named
                       place of destination)
  STRUCTURE of CONTRACT
              CONTRACT No
200_,                                   Moscow
ABC, hereinafter referred to as the
«Buyer», represented by abc, on the one
part, and XYZ, hereinafter referred to as the
«Seller», represented by xyz, on the other part,
have concluded the Contract on the following:
   1. SUBJECT OF THE CONTRACT
The Seller has sold and the Buyer has bought
 on the basis of CIP as per INCOTERMS 2000
 the Equipment indicated in the Attachment No l.
The scope of work to be performed by the
 Seller consists of supply of the equipment
 and fulfillment of the service, specified in
 Attachment No l.
        2. CONTRACT PRICE
The total value of the contract amounts to
  XXX,XXX.YY USD (write out figures by
words) including:
  the equipment price YYY,YYY.yy USD
  the service price ZZ,ZZZ.zz USD
and is understood CIP (POD), the cost of packing
  and marking included.
The total contract value and prices for each
  contract item of the equipment and the service
  are specified in Attachment No 1.
       3. TERMS OF PAYMENT
3.1. All payments under this contract are made in
  US Dollars by T/T remittance.
3.2 Advance payment in the amount of one
  hundred percent (100%) of the total value of the
  contract USD XXX ( in writing ) shall be paid by
  the Buyer to the Seller against the Seller's
  invoice within YY (in writing ) days from the
  date when the Seller make out an invoice to
  the Buyer
       4. TERMS OF DELIVERY
4.2. The delivery date of the equipment shall be
  considered the date of air waybill and/or
  multimodal transportation, to be issued by the
  first Seller's forwarder or carrier.
  The arrival date of the equipment is the date of
  arrival of the equipment at the customs
  warehouse in POD
4.3. The Consignee under the contract is
as follows:
Consignee: DATA
4.4. The name of Sellers forwarder or carrier and
   transportation route are to be confirmed by the
   Seller to the Buyer by fax message not later
   than XX days before the shipment date.
4.5. Prior delivery of the equipment is allowed
   after the Buyer's consent only.
4.6. Shipping documents of each shipment (lot)
   of the equipment shall include:
   invoice;
   packing List;
   waybill;
   insurance policy.
4.7. The Seller shall send by fax to the Buyer a shipping
advice on shipment with attached invoice and packing list not
later than XX before the shipment date.
The following data shall be specified in the shipping advice:
  contract No;
                                 AWB No;
  invoice No;
                                 Flight No;
  invoice amount;
                                 B/L No;
  description of the
                                 Vessel name;
  equipment;
                                 Number of packages;
  port of loading;
                                 Gross weight;
  port of destination;
                                 Measurements/volume.
  consignee name;
  shipping date;
  Summary: Doing Business in
      ANYWHERE…
         Remember……



“Experience is the name every one
    gives to their mistakes…”

             (Oscar Wilde)

				
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