Spain holds a strong position in the annual International “Doing Business” Index, which measures the ease of doing business globally. In this context, we will analyse the key aspects that must be considered when drafting an international sale of goods contract, focusing on the applicable regulation, the essential elements, and the clauses to take into account.
The Vienna Convention
The most relevant legal framework for international sale of goods contracts is the United Nations Convention on Contracts for the International Sale of Goods (CISG), also known as the Vienna Convention. Its purpose is to harmonise the rules governing international commercial transactions and applies to contracts between parties located in signatory countries.
Main characteristics of the CISG:
- Optional instrument: The parties may exclude its application, fully or partially, if they so agree.
- Scope: It applies to the sale of tangible goods between parties with their places of business in different countries, provided those countries are signatories.
- Flexibility: The parties may modify or exclude certain CISG provisions to adapt the contract to their specific needs.
Essential Elements of an International Sale Contract
An international sale contract must include certain essential elements:
- Identification of the parties: Full identification of both buyer and seller must be included: company names, addresses, contact persons, and tax information.
- Description of the goods: The goods must be described clearly and in detail: quantity, quality, technical specifications, and packaging.
- Price and payment terms: The price and currency must be agreed, along with payment conditions (advance payment, payment on delivery, etc.) and methods (bank transfer, etc.).
- Delivery terms: Delivery conditions must be clear and specified through Incoterms, which determine responsibilities and risks relating to transport, insurance, and customs procedures.
Key Clauses in an International Sale Contract
To avoid disputes, the contract should include a number of essential clauses. Some of the most important are:
Dispute resolution clause
The parties may choose to resolve disputes through national courts or international arbitration—the latter being generally recommended for international transactions due to its speed and flexibility. It is essential to define jurisdiction and applicable law.
Force majeure clause
This clause exempts the parties from fulfilling their contractual obligations when unforeseen events beyond their control occur, such as natural disasters or pandemics. The contract should specify which events qualify as force majeure and their consequences.
Warranty and returns clause
The contract must establish the process and conditions for returning goods that do not meet the agreed specifications.
Confidentiality clause
If sensitive information is exchanged, the contract should include a confidentiality obligation covering commercial and technical information.
Factors Affecting International Sale Contracts
In addition to contractual clauses, other external factors may affect contract performance:
- Tariff barriers: Customs duties and regulations differ widely between countries. It is important to understand the customs rules in both the exporting and importing countries.
- Currency fluctuations: Exchange rate volatility can significantly affect the final price. To mitigate this risk, the parties may include a price-adjustment clause or opt for a stable currency.
- Transport and logistics: Delivery times, responsibilities, and potential delays must be clearly defined.
Specialised International Trade Lawyers
International sale of goods requires knowledge of legal, linguistic, commercial, and logistical variations. A well-drafted international contract is essential to protect your interests, reduce risks, and ensure success.
With the support of our expert lawyers in European and International Commercial Law, you will reduce risks, achieve secure and efficient trade, and minimise costs.
