In order to avoid disputes, it is necessary to enter into an export contract with the overseas buyer. For this purpose, export contract should be carefully drafted incorporating comprehensive but in precise terms, all relevant and important conditions of the trade deal. There should not be any ambiguity regarding the exact specifications of goods and terms of sale including export price, mode of payment, storage and distribution methods, type of packaging, port of shipment, delivery schedule etc. The different aspects of an export contract are enumerated as under:
1. Product, Standards and Specifications
2. Quantity
3. Inspection
4. Total Value of the Contract
5. Terms of Delivery
6. Taxes, Duties and charges
7. Period of Delivery/Shipment
8. Packing, Labeling and Marking
9. Terms of Payment – Amount /Mode & Currency
10. Discounts and Commissions
11. Licences and Permits
12. Insurance
13. Documentary Requirements
14. Guarantee
15. Force Majeure of Excuse for Non-Performance of Contract
16. Remedies
17. Arbitration
It will not be out of place to mention here the importance of arbitration clause in an export contract. Court proceedings do not offer a satisfactory method for settlement of commercial disputes, as they involve inevitable delays, costs and technicalities. On the other hand, arbitration provides an economic, expeditious and informal remedy for settlement of commercial disputes. Arbitration proceedings are conducted in privacy and the awards are kept confidential. The Arbitrator is usually an expert in the subject matter of the dispute. The dates for arbitration meetings are fixed with the convenience of all concerned. Thus, arbitration is the most suitable way for settlements of commercial disputes and it may invariably be used by businessmen in their commercial dealings. The Indian Council of Arbitration, Federation House, Tansen Marg, New Delhi
BRIEF SPECIMEN CONTRACT FORM FOR SALE
1. Name and address of the parties…………………(state correct appellation and complete address of their parties).
2. We, the above named parties have entered into this contract for the sale/purchase, etc. ………………………….(state briefly the purpose of the contract) on this ……………..(date) at…………….(Place)…………... subject to the following terms and conditions:
(a) Goods……………………………………………………………….
(b) Quantity……………………………………………………………..
Quality………………………………………………………………
(Describe the quantity, quality and other specifications of the goods precisely as per agreement. An agency for inspection/certification of quality and/ or quantity may also be stipulated).
(c) Price………………………………………………………………...
Mode of payment…………………………………………………...
(Quote the price, terms, i.e. ex-works/FOB (free on board) CIF (cost, insurance & freight) etc. in the currency agreed upon and describe the mode of payment i.e. payment against L/C (letter of Credit/DA (document against acceptance) /D/P (document against payment) etc. It is also desirable to mention the exchange rate.)
(d) Shipment……………………………………………………………
(Specify date of delivery and the maximum period upto which delivery could be delayed and for which reasons, Port of Shipment
(e) Packing and marking……………………………………………….
(Requirements to be specified precisely).
(f) Insurance……………………………………………………………
(State the type of Insurance cover required, i.e. FPA (free from particular average)/WA (with average)/All Risks, etc. State also the party responsible for the insurance).
(g) Brokerage/Commission……………………………………………
(if any payable may be mentioned)
(h) Passing of the property and of risk.
The property or ownership of the goods and the risk shall finally pass on to the buyer at such stage as the parties may agree, i.e. when the goods are delivered at the seller’s place of work/pass the ship’s rails are covered by insurance etc. as per agreed terms.
Arbitration
Arbitration clause recommended by the India Council of Arbitration:
“All disputes or differences whatsoever arising between the parties out of/ relating to the construction meaning and operation or effect of this contract or the breach thereof shall be settled by arbitration in accordance with the rules of Arbitration of the Indian Council of Arbitration and the award made in pursunace thereof shall be binding on the parties.”
3. Any other special condition, prevalent in or relevant to the particular line of trade or transaction, may also be specified.
Sd/- Seller
Sd/- Buyer
Notes : The above specimen contract form, draw up in brief essentials, is meant for simple small scale transactions and is intended to draw the attention of the parties to important aspects of the trade deal in drafting the contract. The parties are free to add to or modify the terms as per the peculiar nature of their trade transaction. They may also consult with advantage, experienced commercial or arbitration bodies for the purpose or study published literature on the subject.
The use of arbitration clauses in commercial contracts is becoming increasingly common, particularly in export-import transactions, with a view to promoting smooth and swift flow business.
The Indian council of Arbitration (ICA) which is partly founded by the Government of India, provides comprehensive institutional arbitration service to all government departments and public undertakings are well as private traders, exporters and importers in India
It has been suggested by the Ministry of Commerce that all commercial organisations should make use of the arbitration clause of the Council in their commercial contracts with Indian and foreign parties.
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