What Is Export Sales Contract: Everything You Need to Know
If you're asking "what is export sales contract," you first need to understand that foreign companies have more buying power than ever before.3 min read
If you're asking "what is export sales contract," you first need to understand that foreign companies have more buying power than ever before due to the standards of living improving all over the globe. Exporting provides optimal opportunities for industrial companies to experience growth.
Are Export Sales Contracts Formal or Informal?
Depending on the foreign buyer, an export sales contract can be either informal or formal. An informal contract may be a verbal agreement made over the phone while a formal contract will be more proper and official. There are multiple techniques and tools used to facilitate an export sales contract. Let's look at various courses explaining how export sales contracts are created.
Can Export Sales Contracts Be Made Over the Phone?
A verbal agreement is made between two parties over the telephone, with an understanding of the type and quantity of product(s) to be sold. The buyer has accepted the price(s) per unit, delivery, and payment terms, or an offer has been accepted from the importer.
Do Negotiations Take Place When Creating Export Sales Contracts?
It is not uncommon during negotiation that multiple offers and counter-offers are made before settling on a final cost. The agreement and final cost may or may not be reflected in a sales contract. These types of agreements are often between longstanding trade partners, affiliated companies, or trustworthy companies that deal with various forms of merchandise that are subject to rapid price changes.
Electronic communication has become an accepted method of conducting business deals ranging from sales agreements to payment transactions. An offer to sell may be presented by facsimile, e-mail, Facebook, etc.
Commonly used are pro-forma invoices, which is an estimated invoice, sent by the seller to inform the buyer in advance of delivery. These can be sent by facsimile, air mail, Facebook, or other forms of electronic digital communication. A detailed formal contract is signed by both parties, along with a clear explanation of the terms and conditions.
Indirect Export Checklist
1. Prepare a list of trade houses who might be of interest.
2. Research potential clients by gathering references and recommendations.
3. Contact potential clients and explain your interest and build rapport.
4. Visit potential business clients and make inquiries of their interest and motives.
5. Know which foreign markets you are most interested in.
6. Make note of the foreign markets you desire to export directly to for future contact.
7. Provide your company information to your top potential clients.
8. Begin negotiations by inviting the trading house to buy directly from you or act as your export agent.
9. Each export order should be filled as received.
Direct Export Checklist
- Decide if you will export using an import agent or directly to a foreign user or a foreign distributor who would resell your product.
- Inform and present product information, provide potential clients with your company's sales and marketing literature.
- Prepare a sales campaign if you are selling directly to foreign users and make note of potential clients.
- Follow up with prospective clients by sending letters.
Import Agent or Distributor Checklist
For each foreign market of interest, search and identify a suitable agent or distributor.
- Make your selection and negotiate to obtain an agency or distribution agreement.
- Observe the agent or distributor's performance.
- Enter into a written sales contract.
You will also need to state the names of all parties entering into the agreement. List the quantity and a detailed description of the product(s) to be supplied. Include detailed information regarding how inspections will be handled. A foreign buyer may demand the use of a specific inspection agency for pre-shipment inspection requirements.
When discussing money, indicate the currency that is reflected in the contract. Clarify in writing who will be responsible for paying taxes, along with any payment terms. Prices quoted by the seller may or may not include tax and fees. Details of which party will be responsible for the levies in the country of importation are matters that need to be addressed and specified in the contract. The contract should include the location of dispatch and delivery.
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