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In the world of international trade, an export contract is not just a paper agreement; it is the backbone of a successful partnership. When exports are not properly planned and documented, legal disputes, financial losses, and even the loss of business relationships are possible. For this reason, familiarity with the principles and structure of a safe and professional export contract is a prerequisite for successful entry into foreign markets, especially for Iranian companies.
In this article, we will show you step by step how you can write a safe, legal, and international export contract, what clauses you should consider, what mistakes you should avoid, and finally, how to prevent potential losses with the help of expert legal consultants like Mahir Group.
Basic understanding of an export contract
An export contract is a written agreement between the seller (exporter) and the buyer (importer) that specifies how goods or services will be transferred. Unlike domestic transactions, these types of contracts are subject to the laws of several countries, different languages, and different business cultures. For this reason, its preparation requires precision, legal expertise, and knowledge of international business customs.
The most important goal of preparing this contract is to reduce disputes and precisely determine duties, responsibilities, payment methods, delivery times, and dispute resolution methods. These contracts are usually prepared based on the Convention on the International Sale of Goods (CISG) or ICC rules.
What clauses are required in an export contract?
To secure the contract, you should know its key elements and avoid forgetting or writing them vaguely:
1. Details of the parties to the contract
This section should include the detailed legal information of the parties: full company name, registration number, country of operation, legal address, contact number, and authorized signatory. A mistake in writing the legal name or not having a valid signature will invalidate the contract.
2. Description of goods or services
The exact specifications of the goods or services in question must be written: type, customs tariff code, quality, quantity, weight, standards, packaging, production date and similar matters. Any ambiguity in this section can lead to major disputes.
3. Price and payment currency
The type of currency (dollar, euro, dirham, etc.), unit and total price, as well as exchange rate fluctuations and exchange rates at the time of payment must be specified. Note that without determining the official central bank rate or a fixed currency contract, the risk of loss due to fluctuations is high.
4. Payment terms
The payment method (LC, advance payment, letter of credit, Open Account, etc.), payment schedule, intermediary banking institution and payment confirmation method are important. To reduce risk, it is recommended to use LC or minimum advance payment.
5. Delivery method and responsibilities (Incoterms)
The choice of one of the Incoterms rules such as FOB, CFR, CIP or DDP must be entered accurately. Each of these methods indicates which party is responsible for the cost of transportation, insurance, customs and transportation risk. A mistake in choosing or interpreting Incoterms can threaten the entire export profit.
Protective clauses against disputes and risks
6. Force Majeure conditions
This clause should foresee conditions such as war, sanctions, earthquakes, strikes or epidemics that are beyond the control of the parties so that the parties are exempted from liability in these circumstances.
7. Dispute resolution
The choice of international arbitration or domestic courts is very important. It is essential to accurately determine the place of arbitration (for example, arbitration at the Tehran Chamber of Commerce, ICC or UNCITRAL arbitration), the language of the proceedings and the authority for enforcing the judgment.
8. Governing law
Specify which law governs the contract (Iranian law, the law of the buyer’s country or international law). Preferably, use the law of a third country or agreed international rules.
9. Insurance obligations
Exporting without insurance is a dangerous risk. In the contract, determine what types of insurance should be taken out (cargo insurance, civil liability, export credit insurance) and who should provide it.
Common mistakes in preparing an export contract
1. Using sample online contracts without localization
2. Writing the contract solely in Persian for the foreign party
3. Not including a performance guarantee in case of breach of obligations
4. Choosing an inappropriate governing law without examining the consequences
5. Determining Incoterms without fully understanding its requirements
6. Ignoring the sanctions or tax regulations of the destination country
7. Failure to sign the contract by an authorized and legal person
The best way to prepare a secure export contract
Preparing an export contract requires a combination of knowledge of international law, foreign trade experience, understanding the target market, and negotiation skills. Companies that intend to have sustainable exports without legal hassles should not leave this matter to non-specialists. The professional steps are as follows:
- Draft of the contract by an international law expert
- Review of the official translation of the contract into the buyer’s language
- Consultation with a tax and currency expert
- Final review by a lawyer specializing in arbitration and export
- Confirmation of the signature of the other party through the embassy or chamber of commerce
- Why is specialized legal advice vital in export?
Each country has many differences in its trade and customs laws. A simple mistake in interpreting the law of the destination country or ignorance of banking sanctions can invalidate the entire contract or even lead to seizure of goods and heavy losses.
Expert legal advisors, by considering judicial precedents, the provisions of conventions and real experience in drafting similar contracts, protect you from hidden risks. Also, in the event of a dispute, they can help resolve the issue through methods such as negotiation, mediation or international arbitration.
Introducing Mahir Group; A reliable partner in drafting export contracts
In the high-risk world of international trade, having a specialist legal team that can handle the complex needs of exporting is essential.
K.K. is a great competitive advantage. Mahir Group, with a team of international lawyers, commercial law consultants, and export and import specialists, offers comprehensive services in the fields of contract drafting, arbitration, dispute resolution, and export legal advice.
From legal review of the contract to drafting the final version in English and its implementation in the destination country, Mahir Group is with you at all stages. If you intend to export to countries in the region, Europe, or East Asia and want to be sure that your contract is accurate, professional, and enforceable, it is best to consult with Mahir Group’s legal team.
Conclusion
An export contract is not just a paper agreement; it is a shield against the complexities of global trade. If it is drafted with care, legal awareness, and professional advice, it can pave the way for your success in global markets. Otherwise, the smallest mistake can result in the biggest loss. We suggest that you do not enter the field without the assistance of international trade law experts.
For expert advice, you can use Mahir Group’s legal and contractual services and insure the future of your exports.
