A foreign trade contract (Sales Contract / Purchase Order) is the legal basis for the rights and obligations of the buyer and seller. Many newcomers to foreign trade have their first dispute arise from contract terms — "I thought it was included," "I thought the other party understood" ... But the contract looks at the black and white letter, not "I thought."
I. Core Clause Checklist for a Contract
A complete foreign trade contract usually includes the following clauses (sorted by importance):
① Description & Specifications → ② Quantity → ③ Price Terms → ④ Delivery
→ ⑤ Payment Terms → ⑥ Packing & Marks → ⑦ Insurance
→ ⑧ Inspection → ⑨ Force Majeure → ⑩ Arbitration/Dispute Resolution📌 Reference: United Nations Convention on Contracts for the International Sale of Goods (CISG); ICC Model Contracts
Clause 1: Description and Specifications
This is the most basic clause in the contract — state what you are selling.
Content to be clarified:
| Item | Description |
|---|---|
| Product Name | Official name of the goods (in Chinese and English) |
| Specifications | Model, dimensions, material, color, technical parameters |
| Quality Standard | National standards, industry standards, or mutually agreed standards |
Common Issue: A vague product description can lead to disputes when the buyer rejects the goods. It's advisable to clearly state key parameters.
Clause 2: Quantity
Content to be clarified:
| Item | Description |
|---|---|
| Quantity | Number of pieces, weight, volume |
| Unit of Measurement | Carton, piece, ton, cubic meter |
| More or Less Clause | Allowed range of quantity variance (usually ±5%-10%) |
Note: Natural loss can occur during the transport of bulk goods (e.g., agricultural products, mineral products). It is recommended to include a more or less clause.
Clause 3: Price Terms
Content to be clarified:
| Item | Description | Example |
|---|---|---|
| Unit Price | Unit price for each product | $5.00/pc |
| Trade Term | Boundary of costs included in price | FOB Shenzhen, CIF Hamburg |
| Total Price | Total value of the contract | $50,000.00 |
| Currency | Settlement currency | USD |
Special Note: You must specify the "Trade term + Version". The correct form is "FOB Shenzhen, Incoterms 2020".
Clause 4: Delivery (Shipment)
Content to be clarified:
| Item | Description |
|---|---|
| Delivery Time | Latest shipment date |
| Port of Loading | Departure port |
| Port of Destination | Port of arrival |
| Partial Shipments | Whether partial shipments are allowed |
| Transshipment | Whether transshipment is allowed |
Common Issue: The delivery time is only written as "30 days" but the starting date is not specified. The correct way is: "Latest shipment date: within 45 days after receipt of deposit".
Clause 5: Payment Terms
This may be the most important commercial term in a contract. For exporters, the payment clause determines the security of receiving payment.
Please refer to the detailed explanation in the previous section "Foreign Trade Settlement Methods".
Common wording:
"30% T/T deposit before production, 70% balance against copy of B/L"Clause 6: Packing & Marks
Content to be clarified:
| Item | Description |
|---|---|
| Packing Method | Carton, wooden case, pallet, bale |
| Packing Requirements | Moisture-proof, shock-proof, export standards |
| Markings | Markings on the case (Buyer's initials/Contract No./Case No.) |
| Inner Packing | Quantity per inner carton |
Clause 7: Insurance
If CIF or CIP terms are used, the seller must buy insurance.
Content to be clarified:
- Who buys the insurance
- Type of insurance (All Risks / With Particular Average / Free from Particular Average)
- Insured amount (usually 110% of the CIF value)
Clause 8: Inspection
Content to be clarified:
| Item | Description |
|---|---|
| Inspection body | SGS, CCIC, personnel appointed by both parties |
| Inspection Timing | Pre-shipment inspection / inspection upon arrival |
| Inspection Standard | Standard for determining compliance |
| Inspection Cost | Who bears it |
Dispute Prevention Recommendation: For large or high-risk goods, it is recommended to have an inspection report issued by a third-party inspection agency before shipment.
Clause 9: Force Majeure
The Force Majeure clause protects the buyer and seller from being held liable in the event of uncontrollable special circumstances (natural disasters, war, government actions, etc.).
Content to be clarified:
- Definition and scope of force majeure
- How to handle it if it occurs (delayed delivery / contract termination)
Clause 10: Arbitration
In foreign trade, if a dispute occurs, cross-border litigation is costly and time-consuming. Therefore, most foreign trade contracts stipulate dispute resolution through arbitration.
Content to be clarified:
| Item | Recommendation |
|---|---|
| Arbitral Body | HKIAC (Hong Kong), SIAC (Singapore), CIETAC (China) |
| Place of Arbitration | Choose a place relatively fair to China |
| Arbitration Rules | According to the institution's rules |
| Governing Law | Law of which country governs the contract |
II. Pre-Signing Checklist
| Serial | Item to Check |
|---|---|
| 1 | Correct company names/addresses (match the business license) |
| 2 | Trade term version written (Incoterms 2020) |
| 3 | Accurate product description (corresponding to the HS code) |
| 4 | Are payment terms clear (timing + ratio + form) |
| 5 | Is delivery time flexible enough |
| 6 | Has the dispute resolution clause been stipulated |
💡 The contract is your first line of defense. Signing a contract is not just about going through the motions; every clause deserves careful attention.
📞 Need help with logistics clauses? Bofeng Logistics can assist in reviewing logistics-related clauses in contracts. Hotline: 13075678958 | info@zhbfwl.com
Related Logistics Services
Bofeng Logistics offers the following related services, feel free to inquire:
