How to prepare an international sales contract

International sales contracts can be complex, making expert help a necessity.

Australia has recently finalised several contracts with overseas groups for the construction of naval vessels. Defence Industry Minister Christopher Pyne explained in a recent interview that: "The more export contracts that our businesses can get, they can smooth out their books to ensure that they continue to maintain their workforce." 

It's essential for businesses to know how to prepare international sales contracts.

If your business is expanding and is looking at exporting a product, you'll need to start thinking about international sales contracts. These can be incredibly complex, and range from specially prepared contracts through to standard terms and conditions, defined by the Vienna Convention on Contracts for the International Sale of Goods (CISG). Australia is a signatory to the CISG, which fortunately does provide a degree of certainty when it comes to commercial exchanges internationally. 

Even so, it's essential for businesses to know how to prepare international sales contracts, as along with other measures such as trade credit insurance, they play a huge part in ensuring business success. 

How to prepare an international sales contract

Before negotiating any international sales contracts, seek advice from an expert. There are plenty of legal and business professionals who specialise in these contracts, and they'll be able to demystify the process and define the key terms you'll need to know. The most important aspects of an international sales contract are:

  • Limiting agreement to the contract
  • Description of the goods
  • Clause covering the contents of the payment
  • Clause covering the retention of property until payment
  • Definition of trade terms
  • 'Force majeure' contingency – covering unforeseen circumstances where the contract may not be able to be fulfilled
  • Process for dispute resolution
  • Information on fees and charges, and which party is responsible for these
Exporters in Australia must understand the minutiae of a sales contract.Exporters in Australia must understand the minutiae of a sales contract.

These aspects of international sales contracts can be confusing, so seek advice early to make sure you're completely aware of all your obligations, as well as the credentials of overseas buyers. 

Why the right contract is important

Australian exporter contracts are important for a number of reasons, but primarily because they provide a degree of financial protection that's invaluable in international trade. Before exporting your product, it's important to have a financial safety strategy in place. If you don't, there's the potential to sustain significant losses or even be taken advantage of by a scam operation.

Of course, even with a strong international sales contract in place, some of your customers still may not pay on time. This could be due to a dispute or other issues such as a natural disaster or political turmoil, but in any case, trade credit insurance provides a safety net. 

Coface is a global leader in providing trade credit insurance for businesses of all sizes, and to find out more about the best protection available, you can get in touch with our team today.