The basic clauses of the sales contract

Luca Davini
Lawyer in Milan and Turin


With regard to the general regulation of the international sales contract, it should be recalled that, settled the application of the 1980 Vienna Convention (hereafter referres as the “Convention” or the “CISG”) in the cases provided for therein, the contracting parties always remain free to derogate from the content of the CISG, including – and especially with reference to – clauses of the contract that regulate parameters that are of fundamental importance in order to be able to safely conclude business.

In this way, the Convention will automatically supplement, where necessary, the contractual provisions expressly agreed upon between the seller and the buyer within the contractual text as a result of the negotiations that have taken place.


But what are the clauses of an international sales contract that Italian exporters absolutely cannot overlook during negotiations?

Since this is by far the most common contract in international trade, it may be seemingly easy for the trader to use, since the focus is usually placed primarily on the traditional basic elements of the contract, like, commercial aspects such as price, payment and time of delivery of the goods. However, it is essential to place the same –if not even greater- attention on some critical points of the relationship, outlined below, which can be considered as the basic clauses of an international sales contract.


The parameters of conformity of goods


Regarding the conformity of the goods, it should be clarified that, upon delivery, the goods must reflect the contractually identified specifications, since in the vent that the conformity of the goods to the aforementioned parameters is not met, the buyer will have the right not to accept the goods.

In absence of specific covenants on the point, the Convention stipulates that the seller must ensure the quantitative, qualitative, type and packaging conformity of the goods supplied, while at the same time providing a series f guarantees, borrowed largely from Anglo-Saxon trade practice.

The guarantee given by the seller to the buyer

However, the aforementioned right not to accept the goods, established in favor of the buyer, is not unconditional;
in fact, the buyer, in order to be able to assert his reasons, will have to manifest his exceptions within the contractually established time limit or, in the absence of specific contractual agreements, within a reasonable time limit in accordance with the CISG.

As for the warranty offered by the seller to the buyer in case of defects, it will be good for the exporter to provide certain remedies to be offered at his discretion to the buyer, thus derogating from the discipline of the Convention, as well as to limit the duration of the warranty within a shorter period than the one established by the Convention of two years from the delivery of the goods.


The delivery of the goods and the associated passing of risk


Referring to the next section, which focuses entirely on the ICC’s Incoterms, for necessary further discussion, further attention should be drawn here to the need to identify, within an international sales contract with absolute certainty the place, time limit and particular mode of delivery of the goods. Incoterms are, for this purpose, an invaluable working tool.

With reference, on the other hand, to the discipline dictated by the Convention in relation to the time of delivery of the goods, where the parties have not indicated anything in the contract, it will be necessary to remember that the seller is obliged to deliver the goods within a reasonable time from the signing of the contract.


The risk of non-payment or delayed payment


With reference to the possibility of preventing or at least limiting the risk of non-payment, given that there is not absolute “the best method of payment”, it is necessary that the Italian economic operator, already during negotiation with a foreign counterpart carefully evaluate as much information as possible which, when put in relation to each other, will make it possible to identify the means of payment that is most suitable to the specific transaction.

For what concerns the contract, it will be necessary to pay attention to the clauses outlined here, so as to limit specious disputes as much as possible by clearly defining what is to be done or transferred and by determining in advance before which judge or arbitrator the dispute, if any, is to be brought, as will be seen below.


The modalities for resolving any disputes


As a rule, when negotiating a contract, the parties are free to choose the court that will have jurisdiction to settle disputes that could potentially arise in its execution.

This is an aspect that economic operator, at the time of concluding a deal, rarely takes into consideration, partly because of the little “impact” from a commercial point of view that resides in negotiating with the other party the place “where the litigation will take place” even before the relationship is initiated.

In the absence of a valid choice between the parties, however, it will be the international conventions, or the individual national regulations of private international law, that will settle the question about the identification of the competent court, which could lead to unpleasant surprises, which is why it is advisable to pay close attention to the choice of court clause. Incidentally, among the methods of dispute resolution, consideration should undoubtedly be given, especially in the context of cross-border transactions, to the possibility of using arbitration as an alternative to ordinary courts.

Only through proper consideration of these aspects of the international sales contract, the Italian exporter will be able to negotiate with their foreign trading partners a clear, complete and secure text, that will enable them to minimize the risks of the transaction.

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