Preventing Risks of Additional Clauses in International Trade Contracts

Category:Trade Essentials Date: November 4, 2024 11:30 Source: Border trade, due to its geographical advantages and unique business environment, has become an important link connecting the economies of different countries and regions. Taking the timber trade between border cities in Heilongjiang and the Primorsky Krai of Russia as an example, logs, boards, etc. have become important trade items between the two places. The vast majority of enterprises in Suifenhe and Fuyuan are engaged in timber import trade. Years of cooperation based on trust have formed the fixed business habits of both parties, such as payment upon receipt of goods. Is this habit, which seemingly can avoid risks, really safe and reliable?

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I. The Meaning and Importance of International Trade Contracts

In international trade, the signing of a contract is the cornerstone of establishing a trade relationship. It is not just a simple agreement on the goods transaction; it more profoundly reflects the rights and obligations of both the buyer and the seller. When there is a breach of contract in trade, the contract and its additional clauses will become the primary basis for handling disputes.

II. Analysis of Actual Cases

1) Background:In early 2022, there was a dispute over the payment for goods between export enterprise A and the buyer. The buyer believed that the product weight per unit was inconsistent with the contract and demanded a 10% deduction from the payment.
2) Problem:The buyer provided incorrect product weight per unit information when placing the order. Although Company A corrected it via email and obtained the buyers confirmation, the contract between the two parties was not modified.
3) Dispute:Although Company A had fulfilled its obligations as a seller and requested full payment, the buyer invoked the punitive provisions in the additional clauses of the contract, claiming that it had the right to deduct 25% of the payment due to Company As late shipment.

Relationships among Characters in the Case

III. Enlightenments We Can Obtain from the Cases

1) Carefully review the contract:When signing a contract, all clauses should be carefully checked, especially the standard contract provided by the buyer. Any additional clauses should be reviewed item by item, and countermeasures should be formulated.
2) Guard against unfavorable clauses:For unfavorable or difficult - to - meet clauses, export enterprises should raise objections and strive for reasonable adjustments. At the same time, enterprises can request to add clauses that are beneficial to themselves, such as the retention of title clause or the quality objection period.
3) Strictly execute according to the contract:Once the contract is signed, export enterprises should operate strictly in accordance with the contract requirements. If there are any discrepancies, the contract must be modified in writing and relevant evidence should be preserved.