Contents

INTERNATIONAL NEGOTIOATIONS AND CONTRACTS ......................................................... 2

ABSTRACT AND LEARNING OUTCOMES .............................................................................................. 2
1. INTERNATIONAL NEGOTIATION ...................................................................................................... 2
1.1 What is a Negotiation? ............................................................................................................ 2
1.2 Properties of Negotiation Process .......................................................................................... 2
1.3 Negotiation Techniques .......................................................................................................... 5
1.4 Persuasion Techniques............................................................................................................ 7
2. INTERNATIONAL COMMERCIAL CONTRACTS .................................................................................. 9
2.1 Key Points to Drafting an International Contract .................................................................... 9
2.2 Checklist for International Commercial Contracts ................................................................ 10
GLOSSARY OF TERMS ........................................................................................................................ 15
SUPPORTING MATERIALS AND LINKS ................................................................................................ 20

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INTERNATIONAL NEGOTIOATIONS AND CONTRACTS

ABSTRACT AND LEARNING OUTCOMES
The purpose of this training module on International Negotiations is to inform companies,
which do not have enough experience in international trade activities, on how they should
begin their activities in this field. By providing information regarding negotiation process,
properties, techniques and also practical information about international commercial
contracts, this module might help those companies to take their first steps in exports and
expand their business.
By the end of this module the trainees are expected to:
o Learn what an international negotiation is
o Set up a clear strategy for negotiation process
o Be able to select the best formal negotiation and persuasion techniques to use in
their negotiation process
o Make sure that their international contract entail all important elements with
appropriate use of provisions
The training module proceeds as follows. In the first chapter it is described what negotiation
is and its overall properties from development of a strategy to conclusion of negotiation
process, followed by the elaboration of the most commonly used techniques in negation
process. The second chapter key issues on how to set up an international contract are
described and a checklist is included to make sure none of the important steps are forgotten.

1. INTERNATIONAL NEGOTIATION
1.1 What is a Negotiation?
Negotiation is a process in which, the issues which are subject to the mutual agreement of
the parties are considered and evaluated, during the phase starting from the attempt to
enter into trade with the companies reached in the countries chosen, as a result of the
market research conducted, until the commencement of the first commercial transaction.

1.2 Properties of Negotiation Process

1.2.1 Strategy of Negotiation
Negotiations are carried out, using the strategies adopted by both the buyer and the seller.
The sale and delivery methods, price of the goods or services, the methods of payment, the
content of the commercial relationship to be established between the buyer and seller
(short/long term sale contract, distributorship, representation, etc) are the areas to be
determined before initiating the negotiations. Both the buyer, and the seller, leans to the
objective of maximizing their profit. Therefore, both parties should meet and an optimum

point. In most cases, the buyer is the party who sets the rules; while in some sectors, the
situation is different. The sellers in oligopolistic sectors are the parties which set the rules
and expect those buyers who wish to purchase their goods to contact them. Excepting this
situation, the buyers are the party which gets to set rules.
1.2.2 Preparations of Negotiation
A firm, which intends to export, conducts its necessary preparations, business plans, market
researches, and, initiates the negotiations by contacting the potential buyers.
Among all, the most important step is the acquisition of relevant information which will be
key input for the others. For this reason, it is substantially important to conduct desktop
studies prior to submitting an offer. In most cases, this information can mostly be obtained
from the study of the research of various entities or from the internet, as well as via
telephone connections or correspondence. During this research, the below mentioned
matters should be evaluated, for the negotiations to be conducted and concluded
successfully, and for parties to enter into a sustainable cooperation:
o Evaluation of the political and economic stability of the target country,
o Evaluation of the level of the intervention of the target country government to trade
and the potential cooperation between parties, on investment and commerce,
evaluation of the applicable law, and whether there exists any limitations especially
to the trade of the goods and limitations to the foreign currency movements,
o Research of the existence of mutual agreement, which may affect your future
commercial activities, such as the membership of the target country to the World
Trade Organization, the free trade agreements between countries, agreements to
avoid double taxation,
o The economic development level, the leniencies of companies and their business
culture in the target area,
o Research regarding the leniency of growth in the target area, the target sector, the
existence of competition,
o Research regarding the administrative and financial capacity of the target company,
its place among the sector and research for reference regarding the company,
o Evaluation of the banking system and financing opportunities in the target market
and the presence of banks which have the ability to conduct foreign transactions and
their ability and power to act as correspondent banks,
o Information regarding accounting standards and evaluations,
o Research for the transportation conditions to the target company,
o Research regarding the legal atmosphere in the target company; evaluation of the
arbitration claims, central government and local jurisdiction, customs legislation,
WTO control mechanisms, transportation limitations, business and travel visas and
limitations.

1.2.3 Initiation of Negotiation Process

The company which intends to export a product should initiate the first attempt, and make
an offer to the other party. A complete summary of the offered good should be included
during the first contact. This offer should be in writing, for it to include all necessary details
and aspects, and should be communicated via facsimile or e-mail. Prior to the offer to be
submitted, it would be wise to have a telephone correspondence, to make sure that the
offer reaches the appropriate authorized person. The offer letter should be written with an
amicable tone and should include the proposal clearly, including details. An excessive
amount of details should be avoided, and should include a level of information which will be
required by the other party. Information introducing your company should be included and
reference works or persons should be specified.
1.2.4 The Language Issue in Negotiation Process
The language of the offer letter can be in any language internationally accepted, yet the
most preferred language is English. It is also an option for the language of the other party to
be used in the commercial negotiations. In the event that it does not seem possible for the
parties to come to an agreement in an internationally accepted language, during the
negotiations with the company which you intend to sell your goods, a translator will be
necessary. The translator, in such case, should be well equipped and with a high capacity, to
conduct the negotiations between the parties successfully. Some large companies employ
personnel, with a capacity to act as translators. It should be preferred for the translator to
be chosen from among the company personnel, since such an employee would be
accustomed to the company policy and applications. While employing translators, solely the
level of language skills should not be taken into consideration, but their knowledge of the
culture of the target country and their knowledge of the general business culture should also
be considered. The translator services to be used during the negotiations, should not be left
to the discretion of the other party. Even if the good faith of the other party is assumed,
such discretion should not be allowed, since in such case, the other party will hold the
initiative.
1.2.5 Means of Communication in Negotiation Process
With the developments in the communication technologies throughout the world, it is
common that the negotiations are carried out and concluded via communication means such
as; the internet, telephone and video conference and even social and professional networks
(e.g. Facebook, Twitter, Linked in).
However still, prior to entering into a commercial cooperation with the buyer, there are
numerous advantages in going to the country of the buyer and having face to face
negotiations. It is crucial to visit the home country with a well planned, detailed agenda, in
which all the subjects of the negotiations are included, to avoid unnecessary time and
money consumption. It is important for all of the subjects in this agenda to be covered

during the negotiations and parties come to an agreement on all issues, for the success of
the potential cooperation.
1.2.6 The Negotiation Team
Another crucial point, along with the preparation of the agenda, is the formation of the
negotiation team. Even though the members of the negotiation team constitute the main
support to the negotiations, the mutual interaction takes place between the two chief
negotiators. Not every person is capable for becoming a negotiator, since the qualities
required in the international business life are much more different and much higher than
those required locally. Therefore, the team leader, who will carry out the negotiations,
should be equipped with high technical, social and communication attributions. In many
companies, one of the high level directors or the boss undertakes such role. In the event that
the boss lacks in such qualities, he should assign the task to another person who has the
characteristics sufficient for such a task.
Since travelling abroad is costly, it is only natural for the number of the negotiation team to
be kept low. In such a case, it is important that the negotiation team is small but effective.
The number of members of the negotiation team should be determined as to provide a
strong communication between team members, making sure that the team is prepared for
changes of strategies, and that a balance of powers is maintained, against the opposite
party.
1.2.7 Conclusion of Negotiation
Negotiating concludes by either parties establishing a new cooperation or by parties leaving
the table without agreement. The conclusion of negotiating by agreement means that a
commercial agreement is concluded between parties. Parties should make sure that every
topic, subject to negotiations are thoroughly covered and that parties have agreed upon all
these subjects, before concluding negotiating.

1.3 Negotiation Techniques

When it comes to negotiation strategies, the first thing that needs to be done is defining the
value of the product and starting the negotiation when it is time. As mentioned before, a
very important condition is gathering information about the other party and the product or
service.
Another condition which can contribute to a successful negotiation is the use of various
techniques during negotiation process. The most common techniques are described below:
1.3.1 Use of Documents
Documents play an important role in negotiations. Negotiations are typically managed
through the use of various documents, including agendas, position papers and settlement
agreements. Documents are also useful to both persuade and illustrate the position, which
may include photographs.

An important part of negotiation strategy is to be aware of when and how one uses a
document and for what purposes. Below a few advises regarding how to deal with the
documents:
o The initial draft of any operative document should be over-inclusive. It is more
difficult to seek to add terms than it is to remove them
o When using documents as a persuasive tool, try to use documents created by the
other party or by a neutral party to minimize questions about the authenticity of
such documents.
o When using documents to illustrate a complex point, try to keep them simple.
o Always fully explain the illustration when the delegation presents it.
1.3.2 Use of Mediators and Experts
For a strategic advantage the negotiation process can be conducted through a mediator. A
mediator may facilitate the provision of responses to questions that have thus far been
refused or ignored in the negotiation process or to better define the interests and goals of
each side to the other.
Another strategic advantage can be provided by using an expert. Experts can be very useful
in negotiations involving complex or technical issues. When choosing an expert, all involved
parties need to have confidence in her/his neutrality and the usefulness of her/his opinion.
But, be aware that no expert can be truly neutral. Every expert brings his or her own biases,
individual and cultural, to the negotiation. Examples of experts are: interpreters, scientists,
economists and lawyers. These experts can advise you on complex issues and offer solutions
for it.
1.3.3 Effective Use of Time
Using time effectively is another important negotiating technique. The negotiating party
should know what their priorities are and recognize whether the settled appointments and
issues may be resolved in the time planned. They should be realistic about the time needed
to accomplish the goals set. Very few negotiations are open-ended, but if there are no
external time constraints, your delegation may want to set a time limit on the negotiations
to keep the parties focused and the negotiations efficient and effective.
1.3.4 Use of Ultimatums
As stated throughout this chapter, it is important to be fully aware and understand the
culture and customs of all parties at the negotiation table including the use of ultimatums. In
some cultures, ultimatums are considered a regular part of negotiations. However,
ultimatums generally are quite risky and are a drastic measure in any negotiation. If the
other party rejects your delegations ultimatum, then your delegation may be faced with a
difficult decision to either end the negotiation or withdraw the ultimatum and risk losing
credibility. However, should the negotiations reach a point where no progress is being made

and only a few issues remain, issuing an ultimatum may encourage the other parties to make
a better offer.

1.4 Persuasion Techniques

When it comes to face to face communication with the other party, various persuasion
techniques can contribute to a successful negotiation. There are many techniques to
persuade the other party, but there is no single technique that is appropriate in all
situations, this asks for flexibility and being able to estimate which technique can be used in
which situation. The most commonly used techniques are given in detail below.
1.4.1 The Language of Communication
One of the most important persuasion techniques is the use of language. However there are
a few more techniques which can influence the negotiation. The use of body language, facial
expression, tone and even silence are other important techniques which are used in a
negotiation process. The manner in which a person sits, the tone used while speaking can
communicate the way the person is feeling or maybe what he/she might think.
It is of big importance to understand what the goals and interests of the other party are, this
can be accomplished by:
1. Encouraging dialogue
o Ask open-ended questions this encourages the other side to provide unsolicited
information
o Give the opportunity to the other party to speak openly, especially if they are
emotional or emphatically, this could give you important and useful information.
o Give the opportunity to other parties to express their position
o Avoid making non-negotiable statements, because the other party might avoid
addressing important topics
2. Active listening
o Focus on the speaker and what is being said
o Respond to the speaker and not only to already prepared remarks beforehand
o Use body language to show the speaker that you are actively listening and
understand what he is saying. This can be done by nodding and sometimes orally
expressing understanding
o Do not interrupt, let the speaker finish his statement
o Repeat, summarize what the speaker has said, to show that you understand what is
being said
3. Eye contact
o Maintain eye contact with the other parties while talking, this will show that you are
interested in what is being said and shows trust in each other. Be informed about the
cultural differences, because in some cultures it is inappropriate or could even send
the wrong message when you make to much eye contact

4. Silence
o Often silence is seen as a bad thing, but do not speak just for the purpose to fill an
uncomfortable silence. When silence is used properly it can encourage other parties
to talk in an unguarded manner.
1.4.2 Storytelling
Another technique for persuasion is the use of storytelling. This includes the way of speaking
but also the use of visuals. In order to convince the other party more easily it is important to
use vivid language. Presenting the message in the context of a story that explains the
expectations, problems and goals and demonstrate what the proposal is to reach that. To
achieve the maximum effect during a negotiation it is critical to use factual details. These
details can be demonstrated by using media like, presentations, pictures, graphs and videos.
1.4.3 Use of Arguments
For convincing the other party, having good arguments can have a significant persuasive
effect. It is the most effective way to present the stronger argument first and reserve
arguments to use throughout the negotiations. There are general rules which can be applied
for every argument:
o Build your argument based on facts
o Draw your overall conclusions based on facts
o It may be important to begin with broad statements to define your scope of the
arguments before proceeding with the specific items of your argument. Present
specific subparts of the overall conclusions based on examples.
o Be aware that often the first and the last arguments are those that are best
remembered by the other parties. So make sure that you start with a strong
argument and finish with a strong argument.
1.4.4 The Way of Asking Questions
To gain an advantage in a negotiation, there are different ways of asking questions. As many
as open-ended questions should be asked to find out more about the other parties position.
This manner of asking questions can engage the other party and make them feel more
comfortable. The following ways of asking questions could provide more information and
make the cooperation more effective and the negotiating process run smoothly:
o It is advised to start asking questions which begin with Who, What, Where, How,
Why, Explain and Describe rather than immediately challenging the other partys
position. This gives you the opportunity to discover what is motivating the other
party during the negotiation.
o To get more information, the following questions could be asked to the other party:
What are their main concerns and/or Why are those concerns important to you?
o If you have assumptions about something you might ask questions such as Have you
thought about.

1.4.5 The Way of Responding Questions

There are many ways to respond to the other parties position or actions, one of those is
emotion. If you decide to use any kind of emotion, through speaking, body language, facial
expression or tone make sure that those emotions are showed intentionally. You need to
estimate when to use which emotion. For example: by reacting unemotional in particular
difficult times of a negotiation the other party might think that the only thing what matters
to you or to your party is success. This might cause difficulties and misunderstandings in a
negotiation.
1.4.6 Extending Courtesy
Another persuasion technique is making the decision to extend or not to extend courtesy.
o To create open communication, the most effective way is to maintain the proper
courtesies.
o Having appropriate courtesies will encourage the negotiation process and as will
maintain a long-term relationship with other parties.
o Extending courtesies does not mean that your delegation has to accede to the other
parties demands.

2. INTERNATIONAL COMMERCIAL CONTRACTS

A commercial contract refers to a legally binding agreement between parties in which they
are obligated to do or not do certain activities. Contracts may be written or verbal and
drawn up in a formal or informal way. Most businesses create contracts in writing to make
the terms of agreement clear. These contracts are set up according to the law of the country
where the negotiations take place. However, international commercial contracts have much
more complex formation; the parties have different values, cultures and are subject to the
laws of different countries. All these differences can lead to misunderstanding between
parties, which should be avoided by being well prepared and informed about the differences
in culture, economy, politics and laws.

2.1 Key Points to Drafting an International Contract

International contracts bring parties with different cultures, subject to different legal
systems under one single regime for that particular transaction. Consequently, international
contracts are under many different risks, including risks towards the interpretation,
enforcement, execution and validity of the contract, arising out of the disparities of parties.
Clarity and precision are the two key factors for international contracts. The nature of the
international contract causes many grey and indefinite areas to appear. A clear and precise
wording of the contract will minimize these indefinite points and will leave much less space
for the need to interpretation.

The Dos and Donts for a clear and precise international contract are listed in the below
table:
Dos
Use the language as clear as possible,
without leaving as little room for
interpretation.
Define terms in detail.

Donts
Do not use ambiguous words such as
reasonable, substantial, material.
Do not allow implied terms. Make sure the
contract does not need or cause parties to
come to conclusions by reading between
lines.
Do not use complex and long sentences.
Even avoid technical or legal terminology, if
required so for clarity.
Do not leave time periods to vague
descriptions, such as within a reasonable
period.

Use short and articulate language

Double check all time period and limitations,

use precise wording, e.g. spell out the name
of the month while giving dates, provide
whether the time period is given in days or
business days etc.
Take a compromising attitude.
Include flexible provisions. Flexible
provisions are much more comprehensive
than those lists of an exclusive nature.

Do not linger on every detail.

Do not try to cover all points by detailing
every issue.

2.2 Checklist for International Commercial Contracts

The following key elements and their use with appropriate provisions on the contract should
be clearly defined and checked in an international commercial contract.
1

Contract Date:
This Agreement has been executed on [date].

Identification of Parties:
2

This Agreement (Agreement) has been executed on [date], by and between [full
name of A], a Company duly established and existing under the laws of [country of
A] having its registered business centre at [address of A] (Seller) and [full name
of B], a Company duly established and existing under the laws of [country of B]
having its registered business center at [address of B] (Buyer).

Goods and purchase price:

3

Subject to the terms and conditions set forth in this Agreement, the Seller agrees to
sell to the Buyer, and the Buyer agrees to purchase from the Seller, [goods] (the
Goods) as set forth [either in Annex A of this Agreement orin this article, as listed
below].

Terms of Payment:
4

The Buyer will pay the Purchase Price of [amount of purchase price, including
currency] on or before [date] or no later than [number] of days before the Delivery
Date. The payment must be remitted to the Seller at [address]. The payment must
10

be made in [currency] by means of [instrument of transfer].

Invoices:
5

The Seller shall issue provisional invoices and final invoices for the shipment of the
Goods. The invoices must specifically describe the specifications, quantity and price
of the Goods, and shall be issued within [number] days before/after delivery of the
Goods. The Seller should cause all invoices to be in compliance with specific
requirements imposed by the laws and regulations of the countries of both Parties
(and the country of delivery, as applicable).

Costs and Charges:

6

The buyer is responsible for the following costs and charges incurred in the sale
and transport of the goods: [list]. The seller is responsible for the following costs
and charges incurred in the sale and transport of the goods: [list].

Packaging Arrangements:

The Seller is responsible for the packaging of the Goods to withstand

transportation, prevent any and all damages to the Goods during transport and
comply with the following requirements: [should be specified], at its sole discretion
and at its own expense. The Seller shall endeavor to complete all packaging within
time for the Delivery Date. In the event of any delay, the Seller shall immediately
notify the Buyer of the delay, the expected time for completion, and the reason for
the delay, in detail to the extent possible. The Buyer shall then have the option to
(i) renegotiate with the Seller for a new Delivery Date on which both Parties shall
confirm in writing as a modification to this Agreement, or (ii) to notify the Seller
that the Agreement is terminated.

Transportation and delivery of Goods:

The Goods shall be delivered [trade term, e.g. FOB], to [place] on or before the
Delivery Date / [date]. The Seller shall deliver the Goods in a single shipment. The
Seller shall use every endeavor to transport the Goods as to arrive promptly, on or
before the Delivery Date. In the event of any delay in the Delivery Date, the Seller
shall immediately notify the Buyer, specifying the reason of delay and the expected
time for delivery. The Buyer will then have the following options: (i) to renegotiate
with the Seller for a new Delivery Date, which will be confirmed by the Parties in
writing as an amendment to this Agreement, or (ii) to notify the Seller of the
termination of this Agreement. The execution of any of the rights of the Buyer set
forth in this Article shall not constitute a waiver to any of the rights of the Buyer
under this Agreement.

Insurance:

The Buyer/Seller shall obtain at its own cost, for all insurance on the Goods, during
their transit. The insurance shall be acceptable to the Buyer/Seller, and the prior
written consent of the Buyer/Seller shall be obtained, provided that such consent
shall not be unreasonably withheld; and shall provide for the covering of all of the
following: [list]. Evidence of the insurance, in the form of a copy of the policy or any
other statement provided by the insurer, shall be provided to the Buyer/Seller
before the Goods are shipped.

Title to Goods:
10 The title to the Goods shall pass to the Buyer at the time the Goods are delivered to
[place], provided that the Buyer has transmitted payment to the Seller, subject to
the provisions of this Agreement.

11

Import/Export Documentation:
The Seller shall be liable for obtaining, completing and presenting to [country]
customs all export documentation and fees required for clearance, including the
following: [list]. The Buyer shall be responsible for obtaining, completing and
11 presenting to [country] customs all import documentation and fees required for
clearance, including the following: [list]. The Buyer must notify the Seller that all
import requirements have been met. The Seller shall not be required to ship the
Goods until the Buyer furnishes the Seller with written proof that the import
requirements and fees have been or will be timely fulfilled. In the event that
shipment is delayed because of the default of the Buyer under this Article, the
Seller shall not be deemed to have conducted any breach of this Agreement.

Re-exportation Prohibition:
12 The Buyer covenants that the Goods will be shipped to and delivered in [country]
and that the Buyer will not ship or deliver the Goods to any other country, nor will
the Buyer re-export the Goods after delivery in [country].

Inspection Rights:
The Buyer shall be entitled to inspect, or have an agent inspect the Goods at the
point of shipping [or some place else]. The inspection shall be conducted within
[number] days following the delivery and the Buyers failure to inspect the Goods
13 will constitute a waiver of the right of inspection, and the Buyer will be deemed to
have accepted the Goods as delivered. Such inspection shall be concluded within
[number] days; on completion of the inspection and acceptance of the Goods, the
Buyer or its agents will execute a certificate of inspection and acceptance, at the
sole cost of the Buyer. The Seller shall pay return freight charges and will replace
the Goods that the Buyer or its agent rejects with Goods that meet the description
and specifications set forth in this Agreement.

Timely Performance:
14

The Parties agree that the timely performance of the provisions of this Agreement
is of essence to the Parties.

15 Conditions precedent:
This Agreement is subject to [conditions precedent]

9
9

Intellectual and Industrial Property Rights:

The Buyer understands that the Seller owns an exclusive right in the designs,
patents, trademarks, trade names, and company names (Intellectual Property)
used in connection with the Sellers Goods. The Buyer is given no rights in any of
the Sellers Intellectual Property. The Buyer shall not use the Sellers Intellectual
16 Property, nor will the Buyer register the Sellers Intellectual Property in any country
as if it were the Buyers own. The Buyer acknowledges that its unauthorized use or
registration of the Sellers Intellectual Property, or of any intellectual property that
is confusingly or deceptively similar to the Sellers Intellectual Property, shall be
deemed an infringement of the Sellers exclusive rights. Any and all damages
related to or arising out of the breach of this Article shall be indemnified by the
Party in breach.

Termination:
17 The engagement of the Parties with this Agreement shall terminate on [__], unless
extended by mutual written consent by the Parties or earlier terminated as
provided below. Buyer may terminate this Agreement, and the Seller will have no

12

right to indemnity or lien, in the following cases: [list, e.g.If Seller fails to comply or
irregularly complies with the terms and conditions set forth in this Agreement.]

Liquidated Damages:
Each Party understands and agrees that a breach of this Agreement shall result in
the non breaching Party damages which are incalculable and difficult to foresee. In
the event that the Seller does not deliver the Goods on or before the Delivery Date,
18 the Seller shall reimburse the damages by paying the Buyer liquidated damages of
a total sum of [amount and currency]. In the event the Buyer fails to furnish
shipping instructions, wrongfully refuses to accept the Goods, or fails to pay the
Sales Price on due time, the Buyer shall pay the Seller, liquidated damages of
[amount and currency]. This Article shall not be deemed or construes as a waiver
to any further remedies, rights or entitlements of either of the Parties under law or
the provisions of this Agreement.

Force Majeure:
Occurrence of any of the following events, however, without being limited thereto,
will be deemed as a force majeure event:
ii. Contagious diseases or acts of God such as earthquake, flood, storm, avalanche
or lightning; or,
iii. Acts of war or terrorism or conditions arising out of or attributable to war,
19 whether declared or undeclared; riot, civil strife, insurrection or rebellion.

In an Event of Force Majeure, such Party (the Affected Party) shall give notice
and details of such Event of Force Majeure in writing to the other Party, as
promptly as possible after its occurrence. The Affected Party shall use all
reasonable endeavors to mitigate the effects of the Event of Force Majeure and
shall diligently do all things reasonably required to remove the causes or to repair
the effects thereof. In case one of the Parties can not fulfill its obligations due to
the force majeure events, the other Party shall have a right to request for making a
suitable amendment or cancellation of the Contract.

Dispute Resolution and Arbitration:

20 Any and all disputes, arising under or in connection with this Agreement, including
but not limited to the validity, interpretation, effectiveness, implementation,
termination, cancellation, approvals by the Parties and other conditions hereof
shall be settled by arbitration.

Governing Law and Choice of Forum:

21 The parties understand and agree that the laws of [country] will be applied to

interpret this Agreement. This Agreement [is/is not] to be interpreted by the

application of the United Nations Convention on International Sale of Goods. Any
action filed to resolve a dispute between the parties must be brought in [location].

Amendments:
22

All modifications of this Agreement shall be made in writing and signed by the
Parties or their authorized agents.

No waiver:
23 Neither Party's right to require strict performance in accordance with the terms of
this Agreement shall be affected or deemed to be waived by any failure by it to
enforce any of the terms hereof.

13

Assignment:
24

Neither Party may assign the rights or delegate the performance of its duties under
this Agreement without the prior written consent of the other Party.

Severability:
If one or more of the provisions contained in the Agreement shall for any reason be

25 held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality

or unenforceability shall not affect any other provisions hereof and the Agreement
shall be construed as if such invalid, illegal or unenforceable provisions had not
been contained herein.

Integration:
This Agreement is the entire understanding between the Parties. Parties are not
26 bound by any statements, representations, promises, or inducements, regardless of
whether made by such Party, its agent, employee or affiliate, unless it is set forth in
this Agreement. The Agreement supersedes and replaces any and all prior oral or
written communications made between the Parties in relation to the subject
matter hereof.

Notices:
27 All and any notices to be delivered pursuant to this Agreement shall be made in
writing and delivered to the address (or any other address a Party may duly notify
the other Party pursuant to this Article) stated herein.

Language and Counterparts:

28 This Agreement has been negotiated and executed in the English language. The
English version of this Agreement shall prevail over any other counterparts, to the
extent permitted under local law.

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GLOSSARY OF TERMS
TERM
Amendments

Assignment

Conditions Precedent

Contract Date

Commercial Contract

Costs and charges

Courtesy

Dispute Resolution and Arbitration

Force Majeure

DEFINITION
A change made in a contract, law, motion or
constitution. To avoid misunderstandings all
amendments need to be written and signed by
the parties or their authorized agents.
A clause that allows the holder of a policy to sell
or give the policy to another person or company.
Conditions precedent are any events which the
parties expect to occur before the performance
of the obligations. These may include obtaining
licenses, documentation, receipt of advance
paymentsetc. If the contract depends on the
occurrence of the conditions precedent, then
the conditions should also be repeated in the
clauses regarding termination, to ensure that the
intent of the parties is clear. Usually, under
general practice, parties do not wish to include
strict conditions leading to termination, such
conditions are usually construed very strictly in
most of the countries.
The date is an important factor for a contract; it
determines the effective date of the contract,
the validity of it and which legislation can be
applied if needed. To avoid confusion, the date
should be drafted clearly and spelling out the
month.
A commercial contract refers to a legally binding
agreement between parties in which they are
obligated to do or not to do certain things.
Contracts may be written or verbal and drawn
up in a formal or informal way. Most businesses
create contracts in writing to make the terms of
agreement clear
In the contract it must be mentioned which costs
and charges are for the buyer and which are for
the seller. The items which need to be included
are: the import, export, shipping, customs fees,
expenses for licenses, expenses arising out of
the execution of the agreement.
Polite behaviour
All disputes, arising under or in connection with
this agreement, including but not limited to the
validity, interpretation, effectiveness,
implementation, termination, cancellation,
approvals by the parties and other conditions
hereof shall be settled by arbitration.
Standard clause found in contracts, it exempts
the contracting parties from fulfilling their

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Good and Purchase Price

Governing Law and Choice of Forum

Identification of Parties

Import/Export Documentation

Integration

Intellectual and Industrial Property Rights

contractual obligations for causes that could not

be anticipated and/or are beyond their control.
In the contract is required to have a clear
description of the goods and the agreed price.
Be aware about the detailed description by
listing the specific qualities, quantities and the
technical specification as agreed. It is necessary
to indicate the price clearly, per item or a total
price.
The commercial contract is will be legally
approved according the law of the country
where the negotiation takes place.
To avoid confusion, the full name of each party
should be provided, along with specific details:
nationality and address, both for real person and
legal entity parties. In some contracts, it may be
preferred to include the address of the parties at
the end of the contract, with the signatures of
parties.
This provision regulates which party is
responsible for custom clearance. Usually the
seller will have the responsibility for the
requirements of the exporting country, and the
buyer for the importing country. The parties may
choose to allocate the liabilities with a different
arrangement; however, to provide each party to
incur the liability of the requirements most
familiar to each, will give room for fewer
complications.
A provision in a contract stating that the
contract represents the full and final agreement
of the parties and supersedes any other
agreements, oral or written, on the same
subject. The purpose of an integration clause is
to prevent one party from later claiming that
what the parties actually agreed to was different
from what was written in the contract.
Intellectual property rights are divided in two
main areas:
1. Copyright and rights related to copyright
The buyer understands that the seller owns an
exclusive right in the design, patents,
trademarks, trade names, and company names
which are related to the sellers goods. So the
buyer is not allowed to use or register sellers
intellectual property.
2. Industrial property
These include patents to protect inventions; and
industrial designs, which are aesthetic creations
determining the appearance of industrial
products.

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Inspection Rights

Insurance

Invoices

Language and Counterparts

Liquidated Damages

Mediator
Notices

No waiver

The contract should include buyers right to

inspect the goods, to make sure the goods fit the
specifications set forth in the contract. In the
events which require a more complex
inspection, the person who will conduct the
inspection, e.g. a third party or licensed
inspection, should be specified, as well as the
period of time for the inspection and the place
of inspection.
In the contract, parties need to mention who is
responsible for the insurance of the goods.
With the contract, the necessary insurance
documents need to be provided.
The seller provides the preliminary invoices and
final invoices for the shipment of goods. The
goods and the services must be specifically
described: the amount, price per item and total
price of the goods.
The date of the payment must be mentioned in
the invoice (e.g. 10 days after delivery).
The seller prepares all invoices according to the
specific requirements, law and regulations of the
countries of both parties.
International contracts include the risk of the
different interpretations of parties, therefore,
the wording of the contract shall be as precise as
possible, emphasizing which language has been
used during the negotiations and drafting, and
that this language shall be used for the
interpretation.
Parties should include a specific clause for the
liquidated damages in case of the breach of the
contract, since in most of the cases, the legal
remedies are insufficient to reimburse the
damage of the non breaching party.
Parties may choose to include a specific amount
of liquidated damages, as far as the amount is
reasonable and in ratio with the damages which
might occur.
Someone who especially reconciles differences
between disputants.
All and any notices to be delivered pursuant to
this agreement shall be made in writing and
delivered to the address stated herein.
The purpose of a "no waiver" clause is to try to
ensure that a party to the contract does not
accidentally or informally waive its rights to
bring proceedings and recover damages etc
under the contract in the event of a breach of
the contract by the other party. Such a clause
may specify that contractual rights can only be

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Packaging Arrangements

Persuasion

Re-exportation Prohibition

Severability

Termination

Timely Performance

Title to Goods

Transportation and Delivery of Goods

waived by means of a written notice.

The seller is responsible for the packaging of the
goods to withstand transportation, prevent any
and all damages to the goods during transport
and comply with the following requirements:
(needs to be specified),at its sole discretion and
at its own expense. The seller shall aim to
complete all packaging with time for the delivery
date.
In the event of any delay, the seller and the
reason for the delay, in detail to the extent
possible. The buyer shall then have the option to
renegotiate with the seller for a new delivery
date on which both parties shall confirm in
writing as modification to this agreement, or to
notify the seller that the agreement is
terminated.
Process aimed at changing a person's (or a
group's) attitude or behaviour toward some
event, idea, object, or other person(s), by using
written or spoken words to convey information,
feelings, or reasoning, or a combination of them.
The exporting of goods which have been
imported.
The term refers to a provision in a contract
which states that if parts of the contract are held
to be illegal or otherwise unenforceable, the
remainder of the contract should still apply.
The terms of payment need to be described as
clear and detailed as possible. In the contract
needs to be mentioned when the payment will
be done, by who and which method will be used.
The parties agree that the timely performance of
the provisions of this Agreement is of essence to
the parties. Under most legal systems, it is wise
to specifically spell out that the timely
performance of parties is material to parties.
However, usually, under international conduct,
parties may prefer to renegotiate the terms of
the contract, in which case an optional provision
stating that the parties shall strive to renegotiate
the terms and conditions of the contract should
be included.
In case the goods get lost or damaged during the
transportation, this provision points out which
party is responsible at that moment.
In international contracts for transportation and
delivery of goods, needs to be noted when the
goods will be delivered and how. This factors are
mentioned in the International Commercial
Terms (Incoterms), which regulates the

18

transportation and delivery of goods including

the costs and the risks of parties. (For more
information about Incoterms, please refer to the
training module on International Trade
Documentation and Payment Methods.)
If the parties do not chose to include Incoterms
in the contract, all issues as to the transportation
and delivery of goods should be clearly defined
in detail. Such terms may include the name of
the carrier who will perform the freight
shipment,
the point at which and the date on which the
goods will be delivered and the party who will
pay for transportation; and in some cases
particular clauses such as the storage of the
goods, security, weather
protectionetc,depending on the nature of the
goods and the transport.

19

SUPPORTING MATERIALS AND LINKS

About Negotiation:
http://www.youtube.com/watch?v=7rzq2Bq_EsA&feature=fvsr
http://www.youtube.com/watch?v=1FeM6kp9Q80
http://www.youtube.com/watch?v=oy0MD2nsZVs

Lets have some fun!

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