International trade offers tremendous growth opportunities for businesses, but success hinges on mastering export contracts. This guide provides key considerations for businesses entering the global market.
1. Know local laws and regulations
Understanding the intricacies of trade laws and regulations in both the exporting and importing countries is fundamental. Businesses must stay informed about licensing requirements, permits and any shifts in regulations to ensure ongoing compliance and avoid legal pitfalls.
2. Tailor contracts to needs
Customising contracts is crucial to align with the unique aspects of the business and the target market. Clearly defining terms related to product specifications, quality standards and pricing fosters mutual understanding.
3. Understand international commercial terms
Understanding international commercial terms (Incoterms) is crucial for transparent international transactions. These standardised terms define the responsibilities and risks between buyers and sellers during shipping and delivery, providing clarity and minimising misunderstandings that may arise from different interpretations of trade terms.
See Austrade for the latest Incoterms 2020.
4. Secure payment terms
Ensure the contract is clear on the price and payment terms. Clearly defining payment terms, including the specified currency and method, ensures both parties are on the same page
More information on secure payment terms.
Other Resources
- CCIWA’s export toolkit for an overview on exporting
- Five times to increase your chances of export success
- How to find the right export market
5. Mitigate risks and insure
Identifying and addressing potential risks associated with international trade is imperative. The contract should clearly state the obligations of each party’s insurance requirements, including marine cargo. Each party should be willing to show evidence of insurance held.
6. Protect intellectual property and confidentiality
The protection of intellectual property rights is a non-negotiable aspect of international trade. It’s important to include clauses in contracts to safeguard trademarks, patents and copyrights. Additionally, businesses are urged to proactively register their intellectual property in the target market to prevent infringement and legal complications.
Include clauses to protect confidential information.
7. Establish dispute resolution
Disputes are an inevitable part of business, so it's important to be clear on the governing law of the contract which should be distinguished from the jurisdiction clause, which states where disputes, mediation or court hearings, will be adjudicated.
8. Monitor, adapt, succeed
Success in the global market requires a proactive approach to changes. Give consideration to the application of any unfair terms. If the unfair contact term regime applies to the agreement, the proposing party should give the other party a meaningful opportunity to negotiate any amendments.
By embracing these key considerations, businesses can navigate export contracts with confidence, positioning themselves for success in the global marketplace. Seek professional advice and stay vigilant to further enhance the prospects of a smooth and prosperous international expansion.
Want advice on this or other commercial legal matters? Get in touch on (08) 9365 7746 or via mailto:[email protected].
CCIWA’s International Trade and Investment Centre helps businesses reduce the time, cost and risk of going global. Contact the team for a free consultation on (08) 9365 7620 or via [email protected].
