Terms & Conditions

Contents

1. Definitions
2. Interpretation
3. This contract
4. Entire agreement
5. The Price
6. Acceptance
7. Payment (general terms)
8. Payment by letter of credit
9. Transportation
10. Delivery
11. Risk and retention of title
12. Compliance with standards
13. Goods not as Ordered
14. Liability for subsequent defects
15. Intellectual property rights
16. Confidentiality
17. Limitation of liability
18. Assignment
19. Interest
20. Dispute resolution
21. Uncontrollable events
22. Miscellaneous mattersThis agreement is dated [date] and made between:

NZ Forest Products Group Limited , a Duly Incorporated Company incorporated in New Zealand NZ Forest Products Group Limited NZBN: 94290474667705 whose registered office is at 668 Dairy Flat Highway Albany Auckland 0792 New Zealand  herein after  (“Supplier”)

[DEF Limited], a Supplier registered in [Country of Import ] whose main place of business is at [full address], (“Customer”).

It is now agreed as follows:

1. Definitions

In this agreement, the following words shall have the following meanings, unless the context requires otherwise:

2. Interpretation

In this agreement unless the context otherwise requires:

1. 1. A reference to a person is a reference to one or more individuals, whether or not formally in partnership, or to a corporation, government body, or other association or organization;
   2. Incoterms 2010 apply to this agreement whether specified in full or abbreviated form;
   3. These terms and conditions apply to all supplies of Goods by the Supplier to the Customer. They prevail over any terms proposed by the Customer;
   4. Any agreement by any party not to do or omit to do something includes an obligation not to allow some other person to do or omit to do that same thing;
   5. [except where stated otherwise], any obligation of any person arising from this agreement may be performed by any other person;
   6. In this agreement references to a party include references to a person to whom those rights and obligations are transferred or pass as a result of a merger, division, reconstruction or other re-organisation involving that party;
   7. The headings to the paragraphs and schedules (if any) of this agreement do not affect the interpretation;
   8. In any indemnity, a reference to costs or expenses shall be construed as including the estimated cost of management time of the indemnified party [such cost to be calculated $ 400 per hour].
   9. This agreement is made only in the English language. If there is any conflict in meaning between the English language version of this agreement and any version or translation of this agreement in any other language, the English language version shall prevail.

3. This contract

1. 10. This is the over-arching contract, the terms of which will apply to all transactions between the parties. Additional terms may be made in relation to any specific consignment of Goods.
   11. In any conflict between these terms and the terms subsequently documented in relation to a particular consignment of Goods, the terms of the subsequent document shall prevail.
   12. Any amendment to this contract must refer to this contract, be signed by both parties and dated.

OR

3. 13. This agreement regulates the sale by the Supplier to the Customer of the Goods specified in Schedule [1] [at the prices there specified].

4. Entire agreement

1. 14. This agreement contains the entire agreement between the parties and supersedes all previous agreements and understandings between the parties.
   15. Each party acknowledges that, in entering into this agreement, he does not rely on any representation, warranty, information or document or other term not forming part of this agreement.
   16. The Purchaser admits that the Goods have been inspected by him or on his behalf; and
   17. Conditions, warranties or other terms implied by statute or common law are excluded from this agreement to the fullest extent permitted by law.
   18. As an exception to the last previous sub paragraphs, the parties do rely on information provided in writing as follows:

The Incoterms 2010

[Enter list of other docs and dates containing information relied on]

5. The Price

1. 19. The Price of the Goods shall be the price stipulated in the Supplier‘s published price list current at the date of dispatch of the Goods.

OR

5. 20. The Price is as set out in the Order.

OR

5. 21. The Price is as set out in Schedule [2] of this agreement.

AND

5. 22. Once agreed, the Price for the Goods shall remain fixed for [1 month] unless otherwise agreed in writing by the parties.
   23. The Price includes the cost of packaging.
   24. Prices are exclusive of import duty or any other tax charged or imposed by the country of importation, all of which are payable by the Customer.

6. Acceptance

1. 25. The Customer’s Order is an offer to buy from the Supplier.
   26. Nothing said or done by the Supplier is an acceptance of an Order until the Supplier actually dispatches the Goods.

OR

6. 27. Nothing said or done by the Supplier is an acceptance of an Order until the Supplier confirms acceptance in writing, referring to the Order.

AND

6. 28. At any time before the Goods are dispatched, the Supplier may decline to supply the Goods to the Customer without giving any reason.

7. Payment [general terms]

1. 29. Payment of the Price shall be due as per the terms stated in the letter of credit 
   30. All sums due under this agreement:
       1. shall be made in full, without any set-off or counter claim and without deduction of or withholding for any tax now or subsequently imposed by or in any country;
       2. shall be made by the due date, failing which the Supplier may charge the interest on late payments, calculated on a daily basis from the due date until the payment at the rate of [5%] per annum above the cash rate  from time to time of the Reserve Bank of New Zealand;
       3. shall be paid in United States Dollars  dollar by Letter of Credit  made payable to NZ Forest Products Group Limited  to its nominated account 

OR

7. 30. 4. [Specify method of payment and due date].
   31. If any applicable law requires any tax or charge to be deducted before payment, the amount due under this agreement shall be increased so that the payment made will equal the amount due to (party) as if no such tax or charge had been imposed.
   32. Any sum due under this agreement not expressed in New Zealand dollars shall be converted into NZ dollars at the official rate of exchange in New Zealand at the close of business on the last day before the payment became due.
   33. The parties shall collaborate to take advantage of any double taxation treaties in force. Where there is an error on the letter or credit, or for whatever reason the Supplier’s bank rejects the letter or credit, the Customer shall pay all the bank charges and other costs of the Supplier in relation to such error and ensure that a correct letter of credit is issued forthwith.
   34. Where credit has been agreed in writing between the parties, all invoices shall be paid by the Customer within 5 working days of the date of invoice.
   35. No right of set off shall arise.

OR

8. Payment by letter of credit

1. 36. Payment for the Goods shall be in United States  dollars.
   37. The Customer shall within [7] days of the Customer’s receipt of the Supplier’s acceptance of the Order, open [one or more] letters of credit.
   38. Each letter of credit must be confirmed, transferable, irrevocable, without recourse, providing for payment at sight [allowing partial deliveries and collections] and issued by a bank acceptable to the Supplier, in favour of ASB Bank Limited .
   39. The letter of credit shall be payable  at sight against production of a commercial invoice for the Goods [and a clean on board bill of lading].
   40. Each letter of credit shall remain open for at least 60 days or such longer period as may be agreed by the parties in relation to individual letters of credit.
   41. The terms of the letter of credit may be specified by the Supplier from time to time and payment for Goods shall be made in full without deduction, set off or counterclaim.

9. Transportation

The Goods will be supplied / carried / delivered as follows:

9. 42. EXW – Ex Works at [named place of delivery].
   43. FCA – Free Carrier [named place of delivery].
   44. CPT – Carriage Paid To [named place of destination].
   45. CIP – Carriage and Insurance Paid to [named place of destination].
   46. DAT – Delivered at Terminal [named terminal at port or place of destination].
   47. DAP – Delivered at Place [named place of destination].
   48. DDP – Delivered Duty Paid [named place of destination].
   49. FAS – Free Alongside Ship [named port of shipment].
   50. FOB – Free on Board [named port of shipment].
   51. CFR – Cost and Freight [named port of destination].
   52. CIF – Cost, Insurance and Freight [named port of destination].
   53. All rights, obligations, conditions and matters relating to the above Incoterm shall apply to this contract. So far as any cost is not allocated by the relevant Incoterm, it shall be payable by the Customer.
   54. The Customer shall pay any handling and shipping or other incidental costs and expenses the Supplier has incurred or will incur in relation to the Goods.

10. Delivery

1. 55. The Supplier shall deliver the Goods to the address specified on the Order, unless otherwise agreed in writing.
   56. Time for delivery specified on the Order, if any, is an estimate only and time shall not be of the essence.

11. Risk and retention of title

1. 57. The Goods shall be at the Customer’s risk as from delivery.

OR

11. 58. Ownership of the Goods which are the subject of this contract shall not pass to the Customer until they are fully paid for, but the risk in the Goods shall be borne by the Customer from [the date of the delivery / other date].

OR

11. 59. The Supplier shall deliver the Goods, duty and delivery paid, to the Customer’s premises at [place].
    60. In spite of delivery having been made, property in the Goods shall not pass from the Supplier until:
        1. the Customer has paid the Price in full; and
        2. no other sums whatever shall be due from the Customer to the Supplier.
    61. Until property in the Goods passes to the Customer, the Customer shall hold the Goods on a fiduciary basis as bailee for the Supplier.
    62. The Customer shall store the Goods (at no cost to the Supplier) separately from all other Goods in its possession and marked in such a way that they are clearly identified as the Supplier’s property.
    63. Notwithstanding that any of the Goods remain the property of the Supplier, the Customer may sell or use the Goods in the ordinary course of the Customer’s business at full market value for the account of the Supplier.
    64. Any sale or dealing shall be a sale or use of the Supplier’s property by the Customer on the Customer’s own behalf, so that the Customer deals as principal and not as agent for the Supplier.
    65. Until property in the Goods passes from the Supplier the entire proceeds of sale of the Goods shall be held in trust for the Supplier and shall not be mixed with other money or paid into any overdrawn bank account and shall be at all material times identified as the Supplier’s money.
    66. The Supplier shall be entitled to recover the Price notwithstanding that property in any of the Goods has not passed from the Supplier.
    67. If the Supplier asks the Customer to return Goods unsold he shall do so.
    68. If, when asked, the Customer fails to return the Goods, the Supplier may enter the Customer’s premises and repossess the Goods.
    69. The Customer shall not in any way charge by way of security for any indebtedness any of the Goods which are the property of the Supplier. Without prejudice to the other rights of the Supplier, if the Customer does so, all money owing to the Supplier shall immediately become due and payable.
    70. The Customer shall keep the Goods insured to their full value against all risks to the reasonable satisfaction of the Supplier until sold on by the Customer.
    71. If, when the Supplier asks, the Customer fails to deliver to the Supplier a copy of his insurance policy covering risks to the Goods, all money owing by the Customer to the Supplier shall immediately become due and payable.
    72. While ever the Supplier has title to any of the Products, which the Customer has attached to or incorporated into new products, then:
        1. title to the new products shall vest in the Supplier;
        2. the Customer shall hold such products as bailee of and to the order of the Supplier until the Supplier has received payment in full;
        3. all the Supplier’s rights in relation to the Products (including its rights under this agreement) shall extend to such new products.

12. Compliance with standards

1. 73. In so far as the Goods must comply with the standards of any country, the Supplier shall ensure that they comply with all regulations of any authority in his own country, applicable to goods for export and relevant to the Goods.
   74. The Customer shall ensure compliance of the Goods with the laws of his own and every other relevant country.
   75. If the Customer fails to provide in the Order for any national or international requirement in the specification, and he subsequently requires help from the Supplier in achieving that compliance, the Supplier may charge a reasonable fee for such time and work.
   76. The Customer shall indemnify the Supplier against all loss and liability, including legal fees on an indemnity basis, arising from claims by the Customer’s customer based on non-compliance of the Goods with any local law or intellectual property right.

13. Goods not as Ordered

1. 77. The Supplier shall use all reasonable endeavours to ensure:
       1. 13.77.1.the Goods comply with their description on the Order; and
       2. 13.77.2.are of satisfactory quality and/or fit for their purpose; and
       3. 13.77.3.are delivered to the Customer.
   78. Immediately upon taking delivery of any Goods, the Customer shall examine the Goods and shall satisfy himself that they comply with the Order, are of merchantable quality and in safe, clean and usable condition.
   79. If the Customer finds any defect in the quality or quantity of the Goods, or a failure to comply with the Order, he must immediately inform the Supplier of that defect. If no notice is received by the Supplier within [5] days from the time of delivery, then it shall be presumed that the Customer has accepted the Goods.
   80. If the Customer claims that the Goods were under-delivered or defective, the Customer will return any damaged Goods at its own expense to the Supplier.
   81. If the Supplier agrees with the shortage or defect, he will top up the Order to the correct number and / or will replace the damaged Goods at his own cost and refund to the Customer the cost of returning the Goods.
   82. The above procedure shall be the Customer’s only remedy.

14. Liability for subsequent defects

1. 83. The Supplier will repair or replace Goods showing a defect in the following circumstances:
       1. 14.83.1.the defect is reported to the Supplier within 5 working days  of Delivery;
       2. 14.83.2.the defect results only from faulty design;
       3. 14.83.3.the Customer has returned the defective Goods or parts to the Supplier if he has so requested.
   84. If the Supplier agrees that he is liable, he will refund the cost of return carriage and will repair or replace the Goods free of charge.
   85. If the Supplier repairs or replaces Goods, the Customer has no additional claim against the Supplier either under this agreement or by statute or common law, in respect of the defect.

15. Intellectual property rights

1. 86. The Supplier owns all Intellectual Property rights in the Goods.
   87. The Customer shall not claim nor register any intellectual property right in the Goods, but shall notify the Supplier if it discovers any infringement of such rights by a third party.
   88. The Customer acknowledges that it has no right or licence to manufacture the Goods or any other goods which could either be mistaken for any of the Goods or which perform a similar function to any of the Goods.
   89. The Customer agrees that he will use his best endeavours to notify all persons who may aware of the Goods, that all Intellectual Property rights are owned by the Supplier and others and not by the Customer.

16. Confidentiality

The Customer acknowledges that in dealing in the Goods, he will acquire knowledge and Confidential Information relating to those Goods. Accordingly, he agrees:

16. 90. to prevent disclosure of the Know-how or other Confidential Information to anyone (including employees) who has not signed a confidentiality agreement in a form approved by the Supplier;
    91. to restrict visitors to the premises of the Customer so as to prevent access to any element of the Know-how;
    92. Know-how shall be disclosed only to those employees of the Customer to whom it must be disclosed to enable them to do their job;
    93. the obligation of confidence shall continue until the Know-how is in the public domain;
    94. it shall not be a breach of this agreement for either party to disclose in general terms relevant items of the Know-how to the Customer’s customers so far as it is necessary to do so to promote sales;
    95. to compensate the Supplier for any use by the Customer of the Know-how otherwise than in accordance with this agreement;
    96. to indemnify the Supplier for any liability incurred to third parties for any use of the Know-how otherwise than in accordance with this agreement;
    97. to give the Supplier (at the Supplier’s expense) any assistance it may require in connection with the registration of any trade name or designation as a trademark in any part of the world;
    98. not to interfere with, nor attempt to prohibit, the use or registration of any trade name or designation by any other licensee of the Supplier;
    99. when required to do so by the Supplier, to become a registered user of any trademark and to pay the expenses, including registry fees, involved in such registration as user;
    100. 16.100.not to tamper with any markings or name plates or other indication of the source of origin of or any part of it which may be placed by the Supplier on or upon the containers and packaging in which [the Product] may be supplied;
    101. 16.101.not to use any name or mark similar to or capable of being confused with any trade name or designation associated with the Supplier;
    102. 16.102.not to use any trade name or designation associated with the Supplier or any derivation of them in its corporate name.
    103. 16.103.All Confidential Information and other manufacturing data, supplied by the Supplier to the Customer, whether marked as confidential or not, shall be held in strict confidence by the Customer and only used for the purposes for which it was supplied.

17. Limitation of liability

1. 104. 17.104.As far as the law allows, the maximum limit of liability of the Supplier to the Customer, whether in contract, tort, negligence, breach of statutory duty or otherwise shall be $ [100,000] in aggregate.
   105. 17.105.Neither party shall be liable to the other in any way, for any loss or expense which is:
        1. 17.105.1.indirect or consequential loss; or
        2. 17.105.2.economic loss or other loss of turnover, profits, business or goodwill.
   106. 17.106.Nothing in this agreement excludes liability for fraud.
   107. 17.107.The Supplier shall not be liable in any circumstances for loss or damage to any person arising from modification of any Goods or their incorporation into any other product or Goods.

18. Assignment

Neither party may assign, delegate, sub-contract, mortgage, charge or otherwise transfer any or all of its rights and obligations under this agreement without the prior written consent of the other party, except thata party may assign and transfer all its rights and obligations under this agreement to any person to which it transfers all of its business, provided that the assignee undertakes in writing to the other party to be bound by the obligations of the assignor under this agreement.

19. Interest

1. 108. 19.108.All sums due from either of the parties to the other which are not paid on the due date shall bear interest, calculated on a daily basis from the due date until payment at the rate of [10%] per annum above cash rate from time to time  of the Reserve Bank of New Zealand.
   109. 19.109.Interest shall be calculated and compounded monthly.

20. Dispute Resolution

In the event of a dispute between the parties to this agreement, then they  undertake to attempt to settle the dispute by engaging in good faith with the other in a process of  mediation before commencing arbitration or litigation.

21. Uncontrollable events

Neither party shall be liable for any failure or delay in performance of this agreement which is caused by circumstances beyond its reasonable control, [including any labour dispute between a party and its employees].

OR

If this Agreement cannot be performed or its obligations fulfilled for any reason beyond either party’s reasonable control for a continuous period of [3 months] then either party may, at its discretion, terminate this Agreement by notice in writing at the end of this period.

OR

If any uncontrollable event delays or prevents the performance of the obligations of either party for a continuous period of more than [one month], the other party may give notice to terminate this Agreement. The notice must specifying a date at least [7] days ahead, when the termination will take effect.

21. 110. 21.110.A termination notice is irrevocable unless both parties agree to re-instate this agreement.
    111. 21.111.Costs arising from the delay or stoppage will be borne by the party incurring those costs;
    112. 21.112.Regardless of the reason for stoppage or delay, if it continues for more than [30] days, [either party] may terminate this agreement with immediate effect on giving written notice to the other.
    113. 21.113.The party claiming the Uncontrollable Event will take all necessary steps to perform this agreement despite the Uncontrollable Event.
    114. 21.114.So long as the Uncontrollable Event continues the Customer may contract with others for the supply of any items and/or services which the Supplier fails to supply in accordance with the terms of this agreement.

22. Miscellaneous matters

1. 115. 22.115.The schedules, if any, to this agreement are part of the agreement and have the same force and effect.
   116. 22.116.No amendment or variation to this agreement is valid unless in writing, signed by each of the parties or his authorised representative.
   117. 22.117.Unless otherwise provided, time shall be of the essence of any date or period is mentioned in this agreement,
   118. 22.118.If any term or provision of this agreement is at any time held by any jurisdiction to be void, invalid or unenforceable, then it shall be treated as changed or reduced, only to the extent minimally necessary to bring it within the laws of that jurisdiction and to prevent it from being void and it shall be binding in that changed or reduced form. Subject to that, each provision shall be interpreted as severable and shall not in any way affect any other of these terms.
   119. 22.119.The rights and obligations of the parties set out in this agreement shall pass to any permitted successor in title.
   120. 22.120.No failure or delay by any party to exercise any right, power or remedy will operate as a waiver of it nor indicate any intention to reduce that or any other right in the future.
   121. 22.121.Any communication  to be served on either party shall be delivered  by hand or by express  post or recorded delivery  or by email. 

1. 8. This agreement does not give any right to any third party.
   9. In the event of any conflict between any term of this agreement and the provisions of the constitution of a limited Supplier or any comparable document intended to regulate any other corporate or collective body, then the terms of this agreement shall prevail.
   10. Each party shall bear its own legal costs and other costs and expenses arising in connection with the negotiation and drafting of this agreement.
   11. The validity, construction and performance of this agreement shall be governed by the laws of New Zealand. Any dispute arising in connection with this agreement shall be subject to the exclusive jurisdiction of the New Zealand courts.

Signed by / on behalf of the named parties by their representatives who personally accept liability for the proper authorisation by their respective employer or principal to enter into this agreement

OR

Signed by / on behalf of the first named party by its representative who personally accepts liability for the proper authorisation to enter into this agreement and by the second party personally / as a partner in [name of partnership]

For, and on behalf of [ ]

Print name

For, and on behalf of [ ]

Print name

Explanatory notes:

Export contract: terms and conditions for sale of goods abroad

General notes

In approaching this contract, there is a fundamental decision to be taken. Shall you use the incoterms, or any one or more of them? We strongly advise that you should do so because most of the countries in the world are connected to the International Chamber of Commerce. As a result most people involved in any way with cross border trade, including courts, are conversant with the meanings of the terms and the rights and responsibilities which flow from them.

When you have chosen an incoterm, it is written into the agreement as you will see. That means you should delete all the other incoterms and also check every other relevant paragraph to make sure there is no conflict between the incoterm and other provisions.

Despite that advice we accept that there are situations where you may choose to create your own terms. For you, we have provided a menu of terms from which to choose.

Paragraphs specific notes:

Notes following the numbered paragraphs

1. Definitions

You should first decide on the contents of the document, then return to check what definitions are needed and whether they really fit the text you have left in place.

2. Interpretation

Leave these items in place unless there is a good reason to edit or remove.

3. This contract

It is important to specify what is to be sold under the terms of the contract. Either you are setting up repeat sales or you are dealing with a single sale – even if others follow.

This paragraph offers alternatives. The first alternative sub paragraphs apply only to a contract which you will use as your “terms and conditions” for repeat business. If you use this document for a single deal only, then use the second alternative. Either way, make sure you have provided for the goods to be identified either in a schedule, or by reference to some other document, or by using the “over-arching” reference to future business

4. Entire agreement

So far as possible, try to name every contractual document. This paragraph prevents a party from later saying he was relying on some other document or web site or what was said. If other documents are to be relied on, let them be listed here, so that both parties know the basis of the deal.

5. The Price

There are many ways to specify the price. You may have discussed it in different ways. So make quite clear where the price can be found, if not right here in this document.

If the price varies for different goods in a consignment, of over time, it is best to write the details in a schedule. Have the schedule initialled at signing time for good measure.

6. Acceptance

Take great care to specify what constitutes acceptance. From that moment both sides are committed to the contract.

7. Payment, general terms

We have provided several ways for you to cover payment but we cannot give you the fundamental statement of what arrangement you want. That is for you to decide. If you choose payment by LC, do not delete all of this paragraph. Some may still be very relevant to you.

8. Payment by letter of credit

We very strongly advise payment by LC. You will have to agree the terms, which may well be tied up with your incoterm.

9. Transportation 

Now choose your incoterm. Below is a basic summary of what is involved with each.

Rules for Any Mode(s) of Transport

The seven rules defined by Incoterms 2010 for any mode(s) of transportation are:

EXW – Ex Works (named place of delivery)

The seller makes the goods available at its premises. This term places the maximum obligation on the buyer and minimum obligations on the seller. The Ex Works term is often used when making an initial quotation for the sale of goods without any costs included. EXW means that a seller has the goods ready for collection at his premises (works, factory, warehouse, plant) on the date agreed upon. The buyer pays all transportation costs and also bears the risks for bringing the goods to their final destination. The seller doesn’t load the goods on collecting vehicles and doesn’t clear them for export. If the seller does load the good, he does so at buyer’s risk and cost. If parties wish seller to be responsible for the loading of the goods on departure and to bear the risk and all costs of such loading, this must be made clear by adding explicit wording to this effect in the contract of sale.

FCA – Free Carrier (named place of delivery)

The seller hands over the goods, cleared for export, into the disposal of the first carrier (named by the buyer) at the named place. The seller pays for carriage to the named point of delivery, and risk passes when the goods are handed over to the first carrier.

CPT – Carriage Paid To (named place of destination)

The seller pays for carriage. Risk transfers to buyer upon handing goods over to the first carrier.

CIP – Carriage and Insurance Paid to (named place of destination)

The containerized transport/multimodal equivalent of CIF. Seller pays for carriage and insurance to the named destination point, but risk passes when the goods are handed over to the first carrier.

DAT – Delivered at Terminal (named terminal at port or place of destination)

Seller pays for carriage to the terminal, except for costs related to import clearance, and assumes all risks up to the point that the goods are unloaded at the terminal.

DAP – Delivered at Place (named place of destination)

Seller pays for carriage to the named place, except for costs related to import clearance, and assumes all risks prior to the point that the goods are ready for unloading by the buyer.

DDP – Delivered Duty Paid (named place of destination)

Seller is responsible for delivering the goods to the named place in the country of the buyer, and pays all costs in bringing the goods to the destination including import duties and taxes. This term places the maximum obligations on the seller and minimum obligations on the buyer.

Rules for Sea and Inland Waterway Transport

The four rules defined by Incoterms 2010 for international trade where transportation is entirely conducted by water are:

FAS – Free Alongside Ship (named port of shipment)

The seller must place the goods alongside the ship at the named port. The seller must clear the Goods for export. Suitable only for maritime transport but NOT for multimodal sea transport in containers (see Incoterms 2010, ICC publication 715). This term is typically used for heavy-lift or bulk cargo.

FOB – Free on Board (named port of shipment)

The seller must load themselves the goods on board the vessel nominated by the buyer. Cost and risk are divided when the goods are actually on board of the vessel (this rule is new!). The seller must clear the goods for export. The term is applicable for maritime and inland waterway transport only but NOT for multimodal sea transport in containers (see Incoterms 2010, ICC publication 715). The buyer must instruct the seller the details of the vessel and the port where the goods are to be loaded, and there is no reference to, or provision for, the use of a carrier or forwarder. This term has been greatly misused over the last three decades ever since Incoterms 1980 explained that FCA should be used for container shipments.

CFR – Cost and Freight (named port of destination)

Seller must pay the costs and freight to bring the goods to the port of destination. However, risk is transferred to the buyer once the goods are loaded on the vessel (this rule is new!). Maritime transport only and Insurance for the goods is NOT included. This term is formerly known as CNF (C&F).

CIF – Cost, Insurance and Freight (named port of destination)

Exactly the same as CFR except that the seller must in addition procure and pay for the insurance. Maritime transport only.

10. Delivery

There is little to add here because delivery depends on the incoterm you have chosen.

11. Risk and retention of title

Many books have been written on this subject so this note will do no more than slightly scratch the surface. We make points as follows:

1. 1. The concept and use of a provision for retention of title is only of use when you are competing against some other party to establish ownership. That person is usually a buyer or administrator or trustee in bankruptcy. Most of the terms here are intended to make clear what you still own.
   2. If your goods are far away, the chance of success in asserting title and bringing them home is far lower than in your own country.
   3. The only secure way to get paid is payment in advance.
   4. Payment through an LC is universally acknowledged and used. It ties in well with the incoterms.
   5. If you must give credit the terms we have proposed will give you the strongest protection available to you. If you are uncertain what to delete, leave it in place, or ask us.
2. Compliance with standards

This is a simple provision to make sure the situation is clear to both sides. This is a constant source of litigation.

13. Goods not as Ordered

We have provided suggestions. What you choose will depend on what goods you sell and other factors. Change this paragraph as much as you like.

14. Liability for subsequent defects

We have provided suggestions. What you choose will depend on what goods you sell and other factors. Change this paragraph as much as you like.

15. Intellectual property rights

This paragraph may be very important to you or not important at all. You will know if you are selling a product which is susceptible to copying. If not, this paragraph, and the definition, can be deleted.

16. Confidentiality

You may not need this paragraph at all. We have included it because a business has so many secrets which could easily be stolen that some safeguard is sensible. You should consider not only what you expect to disclose but what the other side could discover by “digging and fishing” in ways you did not expect.

Remember to tie up this paragraph with the sum you have selected in limitation of liability.

17. Limitation of liability

This is clearly important. The first question must be as to whether you can limit this to your own position rather than allow it to apply to the other party too.

Assuming it will apply to both parties, you must balance the risk of default by your counter-party and your consequent claim, against the cost of a claim against you.

The second part of this paragraph effectively limits a claim to one based directly on the equipment. If the equipment is worth say $50,000, and you inserted that figure in sub-paragraph 1, both sides would be limited to a claim which was both in respect of the machine, and no more than that $50,000.

18. Assignment

Give careful thought to this. Consider the circumstances on both sides which may require an assignment. You should not make rules and regret them later, but equally, you may not be happy to see the other side passing on either right or obligations under this contract.

Check that sub contracting is not necessary.

19. Interest

A useful provision to promote fast payment. The rate and cumulating period are for negotiation, but you should remember that the period of accumulation is every bit as important as the rate charged. (Interest is cumulated each time the outstanding interest is added to the principle to create “interest on interest”).

20. Dispute resolution

There are many ways to settle a dispute. But an action in court is the least desirable because it takes a long time and costs a lot of money. Some form of ADR is far more attractive. Arbitration was the old way. That too is expensive and subject to arbitrators who are not lawyers failing to understand the issues and simply “dividing the value down the middle”. Mediation is the new way and is now strongly recommended by most judges before they agree to take a case forward.

21. Uncontrollable events (force majeure)

Often referred to as “force majeure”. We advise that you should look at this list carefully and delete those which you do not need.

22. Miscellaneous

A number of points which should be included in the agreement in order generally to minimise disruption and expense leave them in place so far as possible.

End of notes