International Sale Contracts
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India is completely integrated in the global production, manufacturing, service and consumption chain. Most manufacturing companies buy components, raw material, equipment and plant and machinery from the international market. This includes industries engaged in electronic goods, automobile manufacturing, consumer durables, drugs and pharmaceuticals, chemicals, cosmetics, petroleum products and power and electricals. The companies providing services procure equipment, machinery and materials from the international markets. This includes the industries in telecommunications, information technology, construction, aviation, broadcasting, health care, real estate, education, entertainment, transportation, banking, ports and infrastructure development.
The user companies buy directly from the international sellers. Subsidiaries of foreign companies buy from the other subsidiaries and third parties. Dealers and distributors of foreign manufactures buy, import and sell the goods to domestic businesses and retailers. Importers specialise in and import and sell diverse kinds of goods, including consumer goods, industrial goods, spare parts, raw materials and chemicals. The online stores have emerged as a category procuring goods from the international market and retailing in India.
While India has a large domestic market for its manufactures, it is also a manufacturing base for exports. A large variety and quantities of manufactured goods are exported all over the world. The exports are done by three classes of companies. Indian companies, for example pharma companies, sell in the international market, either directly or through their subsidiaries. Foreign companies have subsidiaries in India who export goods manufactured by them to other subsidiaries and third parties. Then there exporting companies who specialise in exporting diverse goods to different countries.
The sale, import and export of goods happens through international sale contracts. All contracts have the risk of failures, more so, international sale contracts. An international sale contract involves different national legal systems. The contract terms, including quality of goods, delivery and documents, risk and damages to goods, and exclusion clauses may get understood differently by the parties. Well intentioned parties too could readily get into a dispute over the contract. Arbitration in neutral jurisdiction mitigates the differences in the national laws of the parties but it adds a new element to the contract. A thorough understanding of the nature and scope of the terms of international sale contracts would lead to efficient and successful performance of the contract.
The buying and selling companies have their General Conditions of Contract (GCC) on which they buy and sell; and import and export goods. After the parties negotiate the sale, 'the battle of forms' starts, where each insists the contract would be on its GCC. Eventually, one party succeeds and has the contract on its terms, with or without revisions. The terms of the contract set the rights, duties and obligations of the parties. Managing the sale contract means negotiating the terms of the contract and performing the duties and obligations under the contract.
The objective of the programme, then, is to help the executives develop comprehensive understanding of the terms of the sale contract.
The programme will cover the following themes and contract terms:
- Formation of contract: Offer and acceptance, 'battle of forms', email communications, online contracts and contract by signing of documents.
- Goods: Scope of goods; composite contracts involving goods and services; and intellectual property rights and goods.
- Quality of goods: The right of the buyer to get the described goods; goods of merchantable quality; reliance on the seller to get suitable goods; express and implied condition and warranties; and clauses excluding conditions and warranties.
- Inspection and examination: The buyer gets the right to examine and reject the goods before delivery only if the contract provides it.
- Repair and maintenance: The warranty clauses settle the right of the buyer to receive post- purchase replacement of parts, repairs and maintenance and servicing.
- Transportation and delivery: Incoterms define the means and mode of transportation; risk in transportation; delivery of goods and documents; and insurance. Incoterms also settle as to who would pay custom duty.
- Ownership: Transfer of ownership, risk of damage and loss of goods; insurance; and the right to re-sell.
- Payment mechanism: Letters of credit and the chain of international banks; confirmed and unconfirmed letters of credit; the Uniform Customs and Practice for Documentary Credits (UCP 600); and guarantees and counter-guarantees.
- Termination of contract: Termination of contract for breach, convenience and impossibility (force majeure).
- Award of damages: Commercial damages, liquidated damages, indirect and inconsequential losses; and limitations on damages.
- Product liabilities: Indemnities cover all risks and losses the buyer could suffer in performance of the contract or from the goods.
- Taxation: International sale and incidences of taxations; tax regimes; custom duties; and sale on high seas.
Who should attend
The programme is intended for all levels of managers in private and public sector organizations handling international purchase and sales; and imports and exports. The fields include, organisations engaged in electronic goods, automobile manufacturing, consumer durables, drugs and pharmaceuticals, chemicals, cosmetics, petroleum products, power and electricals, telecommunications, engineering goods, information technology, construction, aviation, broadcasting, healthcare, real estate, education, entertainment, transportation, banking, ports and infrastructure development, agricultural produce, marine produce, leather goods, textiles, plantations and handicrafts.