Buyer and Seller Agreements in Importing and Exporting
Part of the Import/Export Kit For Dummies Cheat Sheet
Whether you're importing or exporting goods, business agreements need to exist between the person you're buying from or selling to, and the following key points need to be included in those agreements:
The products: You need to be clear about their exact specifications so that you know what you're getting.
Sales targets: This includes things like order quantities and the frequency of shipments.
Territory: In which territory may the distributor sell? Will the distributor have exclusivity there?
Prices: What are the prices of the products and the allowable markups?
Payment terms: Will you use letter of credit, sight draft, open account, 30 days, consignment, and so on?
Shipping terms: Will your terms be free on board (FOB) airport; free alongside ship (FAS); cost and freight (C&F); cost, insurance, and freight (CIF); and so on?
The level of effort required of the importers: How hard does the importer have to work to sell the products, including minimum order commitments and long-term commitments?
Sales promotion and advertising: Who will do it, who will pay for it, and how much will be invested?
Warranties and service: How will defective or unsold products be handled?
Order lead time and price increases: Lead time is the time required to ship the product to the company purchasing the product. When negotiating with the supplier, you need to be clear on who's responsible for any increases in material or transportation from the time the order is placed and the time it's actually available for shipment.
Trademarks, copyrights, and patents: Who will register, and in whose name will it be in?
Provision for termination of the agreement: Under what circumstances can the agreement be dissolved?
Provision for settlement of disputes: If a product is defective or there is a misunderstanding about some aspect of the purchase or sales agreement, what process will be used to resolve disagreements?