Q&A - Should I set up a different type of contract for overseas customers?

01/06/2015

Q: I own a company that has been trading in this region for many years. Until now we have only traded in the UK but last year we decided to try and widen our horizons as we have been struggling due to the recession. Following a fierce marketing campaign and with the help of some good business connections we are currently tendering for an overseas contract. As this will be our first venture into export marketing I am wondering whether we can use the same contract that we use for our UK clients, or do we need to set up a new agreement?

A: When dealing with export sales, unless you are prepared to negotiate contracts with each buyer, it would be a good idea to incorporate International Commerce Terms (incoterms) into your standard agreement.  Incoterms are internationally recognised standard terms maintained by the International Chamber of Commerce that relate to the costs, risks and practical arrangements of the sale of goods.  Consequently, because incoterms are internationally recognised, they are very useful for cross border trade.

There are a number of incoterms and it is important that you select the right one. It is also important to ensure that it has been properly incorporated into your agreement and to make the specific details, such as the description of the goods and the delivery address, as precise as possible.

Whilst incoterms undoubtedly assist those companies which are venturing into international trade, they do not cover everything that a good agreement should cover.  For example, incoterms do not cover limitation of liability, payment terms, intellectual property issues or the country in which any dispute will be resolved.  It would therefore be commercially practical for you to seek legal advice from a reputable commercial lawyer before setting up any contracts for overseas clients.

Robert Williams

Robert Williams

Partner

A Partner and Head of the Civil Litigation, Personal Injury and Dispute Resolution team in Wrexham