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Specimen Contract 1

CONTRACT FOR THE SALE OF GOODS


Between <NAME OF SELLER> Hereinafter called the SELLER And <NAME OF THE BUYER> Hereinafter called the BUYER Preamble The agreement between the parties to this Contract is based on the following understandings: [NOTE: the following clauses are example only.] [NOTE: if the SELLER is making goods to unusual specifications, the preamble might state:] 1. Both parties understand that Goods made to the BUYERs specifications may have no value, or very limited value, on the open market. [NOTE: if the BUYER is relying on the SELLERs expertise, the preamble might state:] 2. The SELLER understands that the BUYER in specifying the Goods has relied to a large extent on the expertise of the SELLER. [NOTE: If the delivery of defective or incomplete goods would seriously hurt the BUYER, the preamble might use one of the following:] 3. The SELLER understands that the BUYER is under Contract to resell the Goods, and that if the Goods are defective or non conforming in quality or quantity, the BUYER may be liable for damages in an amount exceeding <AMOUNT><CURRENCY>. 4. The SELLER understands that the BUYER intends to install the Goods as a component part in equipment to be resold, and that if the Goods are defective or non conforming in quality or quantity, the BUYER may be liable for substantial damages. 1. Applicable Law

This Contract, and all questions relating to its formation validity, interpretation or performance shall be governed by the law of <COUNTRY> [NOTE: The additional clause below is optional] This Contract shall not include, incorporate or be subject to the provisions of the United Nation Convention on Contracts for International Sale of Goods. 2. Definitions In this Contract, including the preamble and the appendices, the word below have the meanings ascribed to them unless the context otherwise clearly dictates: 2.1. Unless expressly modified by the parties, FOB, CIF and other trade terms have the meanings and obligations ascribed to them in Incoterms 2000, Publication 460 of the International Chamber of Commerce, Paris. 2.2. Contract means this Contract, its preamble and appendices, as well as all documents expressly listed as Contract documents or otherwise expressly mentioned in this Contract. 2.3. Goods mean the Goods specified in Clause 4 below. 2.4. Price means the Price as specified in Clause 9 below payable to the SELLER for the Goods. 2.5. Delivery means Delivery as specified in Incoterms 2000 under the Incoterm or Incoterms agreed in this Contract. 2.6. Day means a calendar Day. For the purposes of this Contract, Saturday, Sundays and all holidays are considered as Days. 2.7. Direct Cost and Losses are costs and losses arising in immediate connection with any failure to delivery, any delay in Delivery, or any defect in Goods delivered under this Contract. Such costs and losses must have an immediate foreseeable and provably casual connection with the delay or defect. All other costs and losses are deemed by this Contract to be indirect. In particular, loss of profit, loss of use, and loss of Contract are considered indirect losses. 2.8. Government means national Government, local Government, local authorities and their agencies. In particular customs and/or excise departments are considered as Government agencies. 2.9. Termination means the discharge of the Contract by one of the parties under any right expressly granted by this Contract. The discharge of the Contract by any other right arising from the applicable law or any other source is deemed to be cancellation of the Contract. 3. Entire Agreement and Contract Documents.

This Contract constitutes the entire agreement and understanding between the parties. There are no understandings, agreements, conditions, reservations, or representations, oral or written, that are not embodied in this Contract or that have not been superseded by this Contract. [NOTE: The sub-clause and the list below are optional] In addition to the text of the Contract itself, the documents listed below shall form part of the Contract. All listed documents and the clauses of this Contract shall be read, if possible, so as to be consistent. In the event of conflict, the order of precedence for provisions and documents which constitute this agreement shall be as follows: [NOTE: the list below contains examples only] a. b. c. d. 4. The Contract itself Specifications; Manufacturing drawings; The SELLERs Special/General Conditions of Sale. Scope of Supply

The Goods to be delivered under this Contract are specified <CLAUSE/ANNEX WHERE GOODS ARE SPECIFIED> 5. Delivery 5.1. Date, Place and Terms of Delivery Delivery of the Goods shall be made <INCOTERM>. The scheduled date of Delivery shall be <DATE OF DELIVERY>. Risk and title to the Goods shall pass from the SELLER to the BUYER on Delivery. [NOTE: In the interest of clarity, when using the Incoterms CIF, CFR, CIP, and CPT, the parties may wish to add the clauses below.] 5.2. Naming and arrival of Vessel [NOTE: This clause is intended primarily for use in FOB and FAS Contracts] The BUYER shall advise the SELLER of the name of the vessel not later than <NUMBER> Days before the agreed Delivery date. If the vessel named by the SELLER may at his discretion deliver the Goods to a bonded warehouse in the port of <PLACE OF DELIVERY> and shall be deemed to have fulfilled his Delivery obligations under this Contract. In this event, the SELLER must notify the BUYER of the full circumstances of the Delivery to the warehouse, all costs, including but not limited to cost of storage and insurance are to the BUYERs account. 5.3. Shipping Marks and Packaging

[NOTE: the following clauses are example only.] On the surface of each package delivered under this Contract shall be marked: the package number, the measurements of the package, gross weight, net weight, the lifting position, the letter of credit number, the words RIGHT SIDE UP, HANDLE WITH CARE, KEEP DRY, and the mark: <MARK> Goods are to be packed in <REQUIRED PACKING> and are to be well protected against dampness, shock, rust or rough handling. The SELLER shall be liable for any damage to or loss of the Goods attributable to improper or defective packaging. 6. Notification of Delivery [NOTE: This clause applies largely to Contracts under which delivery takes place in the country of the SELLER.] Immediately on Delivery, the SELLER shall notify the BUYER of Delivery by <MEANS OF NOTIFICATION>. This notification shall include <INFORMATION AND DOCUMENTS TO BE INCLUDED>. 7. Inspection before Shipment 7.1. Inspection by the BUYER The BUYER may, at the BUYERs option, inspect the Goods prior to shipment. At least <FIGURE> Days before the actual Delivery Date, the SELLER shall give notice to the BUYER, or to any agent nominated by the BUYER, that the Goods are available for inspection. The SELLER shall permit access to the goods for the purposes of inspection at a reasonable time agreed by the parties. [NOTE: Customs requirements for information of goods into some countries require inspection by SGS prior to shipment from the SELLERs country. The following clause is recommended for sales to these countries.] 7.2. Inspection by Inspection Service The parties understand that importation into <NAME OF COUNTRY> requires inspection of Goods by SGS before shipment from the SELLER agrees to cooperate fully with the SGS in providing access to and necessary information about the Goods for the purposes of such inspection. 8. Early, Partial and Late Delivery 8.1. Early Delivery [NOTE: the three sub-clauses below are alternatives.] Choice A: Early is not permitted under this Contract. Choice B: Delivery up to <NUMBER> Days early is permitted; however, payment shall not become due until the date agreed for payment under this Contract.

Choice C: Delivery up to <NUMBER> Days early is permitted; in this case, payment shall fall due as though the actual Delivery date were agreed in the Contract. 8.2. Partial Shipment [NOTE: the two sub-clauses are alternatives.] Choice A: Partial shipment is not permitted under this Contract. Choice B: Partial shipment is permitted under this Contract, subject to the agreement of both parties; however, any cost arising from partial shipment shall be to the account of the <BUYER/SELLER.> 8.3. Delay in Delivery In the event of late Delivery for reasons other than Force Majeure as defined in Clause 17 below, the SELLER shall pay as the value of the undelivered part per Day of late Delivery up to a maximum of of the Contract Price. Payment of liquidated damages shall be due without the BUYER having to furnish proof of any loss, damage or injury. [NOTE: The two sub-clauses below are alternatives.] Choice A: Payment of liquidated damages shall constitute full and complete satisfaction of any claim of the BUYER against the SELLER arising from or in connection with late Delivery of any Goods. In particular, the SELLER shall not be liable for any indirect loss or damage, as defined in Clause 2.7 above, arising from or in connection with late Delivery of any Goods. Choice B: Payment of liquidated damages by the SELLER shall not preclude the BUYER from seeking compensatory damages from the SELLER for any loss, injury or damage arising from or in connection with late Delivery of any Goods. In particular the BUYER shall be entitled to compensation from the SELLER for any indirect or consequential loss or damage, including but not limited to loss of profit, loss of use or loss of contract, arising from or in connection with late Delivery of any Goods. However, payments made as liquidated damages shall be offset against any compensatory damages recovered from the SELLER for the late Delivery of any Goods. 8.4. Termination for Delay In the event that the SELLER becomes liable to pay the maximum sum payable as liquidated damages under Clause 8.3 above, then the BUYER shall, upon due notice, have the right to terminate the Contract. 9. Price The Price for the Goods to be delivered under this Contract is <Currency and symbol> <currency and figures in words> 10. Terms of Payment

Payment shall be made by means of an irrevocable confirmed Letter of Credit. The BUYER shall open the Letter of Credit on or before --<Date of opening of Letter of Credit> ---- on the terms agreed by the Parties and annexed to this Contract as Appendix -<appendix number> ----This Contract shall not come into force under Clause 16 below until the SELLER has received advice that the Letter of Credit has been opened in his favor and has ascertained that the terms are in accordance with those agreed between by the Parties and the letter of Credit as issued shall be notified by the SELLER to the BUYER immediately. 11. Inspection of the Goods 11.1. Duty to Inspect and Notify Discrepancies The BUYER shall inspect the Goods on their arrival at the place of destination. If the Goods fail to conform with the Contract in either quality or quantity, then the BUYER shall notify the SELLER of any discrepancy without delay. 11.2. Failure to Notify Discrepancies If the BUYER does not notify the SELLER of any such discrepancies within <Number of days> Days of the arrival of the Goods, then the Goods shall be deemed to have been in conformity with the Contract on arrival. 11.3. BUYERs Rights in the Event of Discrepancy in Quantity If a material discrepancy in quantity exists and is duly notified to the SELLER, the BUYER at his discretion and subject to Clause 8.2 above may either: a. Accept the delivered portion of the Goods and require the SELLER to deliver the remaining portion forthwith; or b. Accept the delivered portion of the Goods and terminate the remaining portion of the Contract upon due notice given to the SELLER. If any material discrepancy in quantity exists such that <Description of fundamental discrepancy> and if such discrepancy is duly notified to the SELLER, the BUYER may at his discretion: a. Adopt either of the remedies prescribed above in this clause; or b. Reject the delivered portion of the Goods and recover from the SELLER all payments made to the SELLER as well as all costs, expenses and customs duties incurred by thr BUYER in association with the shipment, movement through customs, insurance or storage of the Goods. 11.4. BUYERs Rights in the Event of Discrepancy in Quality Discrepancies in quality shall be considered as defects and shall give rise to claims under the defects liability provision of this Contract in clause 12 below.

However, a fundamental discrepancy in quality shall give the BUYER the right to refuse Delivery of the Goods in whole or in part and to recover from the SELLER all payments made for the unaccepted portion of the Goods as well as all costs, expenses and customs duties incurred by the BUYER in association with the shipment, movement through customs, insurance or storage of the unaccepted portion of the Goods. 12. Defects Liability 12.1. SELLERs Liability for Defects The SELLER warrants that the Goods supplied under this Contract shall at the date of their Delivery: a. Be free from defects in materials; b. Be free from defects in workmanship; c. Be free from defects inherent in design, including but not limited to selection of materials, and be fit for the purpose for which such Goods are normally used. If any defect provably present in any of the Goods on the date of Delivery comes to light during the defects liability period, then the BUYER shall forthwith notify the SELLER. The SELLER, without undue delay, shall at his own risk and cost and at his discretion repair or replace such item or otherwise make good the defect. The SELLERs liability for defects is subject to the BUYER having adhered to all procedures and instructions applicable to the <Condition of use <e.g. Storage, installation, use or operation>> of the item, and expressly exclude damage to the Goods caused by fair wear and tear or by misuse occurring after Delivery. 12.2. Defect Liability Period The SELLER shall be liable for defects which come to light during a period of <Number of Days> Days from <Date of start of defect liability period>. After the end of this period, the BUYER shall have no right to raise claims of any kind against the SELLER for any defect in any Goods of the SELLERs supply. The defect liability period shall be prolonged by the length of any period during which the Goods cannot be used by the BUYER because of a defect. However, if new Goods are delivered to replace defective Goods, the defects liability period shall not begin on the replacement Goods. 12.3. Limitation of Defects Liability [NOTE: the two clauses below are alternatives. Delete as necessary] Choice A: The duty to repair and replace or otherwise to make good defects is the only duty of the SELLER in the event of Delivery of defective Goods. In particular the BUYER shall not be entitled to compensation from the SELLER for any indirect loss or damage as defined in Clause 2.7 above, arising from or in connection with Delivery of defective Goods.

Choice B: The SELLER shall indemnity and hold harmless the BUYER against any loss or damage however arising whether direct which shall be suffered by the BUYER as the result of defective or faulty Goods delivered by the SELLER. 13. Liability to Third Parties [NOTE: the two sub-clauses below are alternatives. Delete as necessary] Choice A: The <Name of the Party giving the indemnity-BUYER or SELLER> shall compensate and hold harmless the <Name of the Party receiving the indemnity-BUYER or SELLER> from any award of damages reasonable costs, expenses or legal fees, in the event of any action or lawsuit by a third party resulting from any injury loss or damage to the third party caused by a defect in the Goods delivered under this Contract. In the event of any such lawsuit, the <Name of the Party giving the indemnityBUYER or SELLER> and shall fully cooperate with the <Name of the Party receiving the indemnity-BUYER or SELLER> in taking any necessary legal action. Choice B: In the event of any action or lawsuit by a third party resulting from any injury loss or damage to the third party caused by a defect in the Goods delivered under this Contract, the Party against whom the action of lawsuit is brought shall bear all costs, expenses, awards of damages or legal fees arising therefrom. 14. Taxation All incomes taxes, value added taxes, customs duties, excise charges, stamp duties or other fees levied by any Government agency or similar authority shall be borne exclusively by the party against whom they are levied. 15. Assignment of Rights and Delegation of Duties The rights under this Contract may not be assigned nor the duties delegated by either party without the prior written consent of the other party. 16. Coming into Force This Contract shall come into force after signature by both parties and after: a. The issuance of a letter of credit in accordance with the terms of Clause 10 above b. <OTHER> If the Contract has not come into force within <NUMBER> Days of its signature by both parties, all its provisions shall become null and void. 17. Force Majeure

If either party is prevented from, or delayed in, performing any duty under this Contract by an event beyond his reasonable control, then this event shall be deemed Force Majeure, and this party shall not be considered in default and no remedy, be it under this Contract or otherwise, shall be available to the other party. [NOTE: the sub-clause below contains examples only. It should be modified as necessary.] Force Majeure events include: but are not limited to: <whether war is declared or not>, riots, insurrections, acts of war: sabotage, or similar occurrences; strikes, or other labor unrest; newly introduced laws or Government regulations; delay due to Government action or inaction, or inaction in the part of any inspection agency; fire, explosion, or other abnormal natural event. [NOTE: the sub-clause below on non-force-majeure events is optional.] Force Majeure events do not include <EVENTS NOT INCLUDED> If either party is prevented from, or delayed in, performing any duty under this Contract, then this party shall immediately notify the other party of the event, of the duty affected, and of the expected duration of the event/ If any force majeure event prevents or delays performance of any duty under this Contract for more than <NUMBER> Days, then either party may on due notification to the other party terminate this Contract. 18. Termination Notice of Termination of this Contract as defined in Clause 2.9 shall be in writing and shall take effect <FIGURE> Days from the receipt of such notice by the party notified. In the event of termination, the duties of the parties shall be as incurred up to the date of termination. In particular, the SELLER shall receive the full Price of any Goods delivered and accepted by the BUYER. The provisions of this Agreement dealing with defect liability, arbitration, and such other provisions as are necessary in order to resolve any post-Termination disputes shall survive Termination. 19. Partial Invalidity If any provision or provisions of this Contract are invalid or become invalid, then this shall have no effect on the remaining provisions. Further, the parties agree to replace any

invalid provision with a new, invalid provision having, as far as possible, the same intent as the provision replaced. 20. Language The language of the Contract, of all Contract Documents, and of all correspondence and other communication between the parties shall be English. 21. Notices Notices served by one party to the other under the Contract shall be made, in the first instance by facsimile transmission <hereinafter called fax>. A further copy of each notice shall be sent by registered letter and signed. The effective date of the notice shall be the date of fax transmission. In the event of a dispute about the receipt of a fax, however, the effective date of the notice shall be the date of receipt of the registered letter or a date seven Days after the registered mailing, which ever is the earlier. Notices shall be sent to be the following addresses and fax numbers: SELLER: BUYER: Address: Address: Fax Number: Fax Number: Any change in an address or fax number shall be the subject of a required notice under this Contract. 22. Settlement of Disputes All disputes arising in connection with this Contract shall be finally settled under the Rules of Conciliation and Arbitration of the International Chamber of Commerce by <FIGURE> arbitrators appointed in accordance with the said rules. The place of arbitration shall be <PLACE>. The language of Arbitration shall be English. [NOTE: the three sub-clauses below are alternatives.] Choice A: in the event of arbitration, each party shall bear its own costs. Choice B: in the event of arbitration, the court shall assess the amount of the costs to be borne by each party. Choice C: in the event of arbitration, the party against whom the award is made shall bear the entire costs of both parties to the action. Execution The parties, intending to be legally bound, have signed this Contract on the dates and at the places stated below: For on behalf of the SELLER: Title: For and on behalf of the BUYER: Title:

Date: Place:

Date: Place:

[NOTE: the witnessing of signatures is not required by all national laws] Witness of SELLERs signature Witness of BUYERs signature