When an importer imports a product sample then he check it thoroughly. After that when he is
satisfied from the product sample as well as the supplier, the next step is to finalize the terms and
conditions of import. The terms and condition must be in writing, for this both the parties should forms a contract.
A formal contract incorporates terms and conditions settled between the importer and overseas supplier.
It is a significant document for execution of the contract, settlement of disputes, as well as fulfills
the customer purpose.
All the specifications regarding terms of purchasing the goods must be cleared in an import contract like:
What is the import price?
What is the mode of payment?
What is the type of packaging?
Which is the port of shipment?
What is the delivery schedule?
What are rules of replacement of defective goods supplied?
What are the after sales services/warranty coverage etc.?
The import contract should mention:
Description of goods: Every importer should give proper description of goods to the overseas supplier it is important in case of a special product because the supplier should have the basic knowledge about the product before exporting.
Description of parties: Proper description of both the parties that who imports the goods and who export it should be mention in an import contract like, for each party name of company, full address and nationality, company type (Public Limited Company, Limited Liability Company), etc.
Standards of goods: Importer should specify that the imported product should meet the product standards like ISO certification and Agmark Certifications.
Quantity: In an import contract, importer should mention the desired quantity of product. Before entering into a contract an importer should also check the capacity of supplier to fulfill the contract.
Name of inspection agency: It must be clear in an import contract that inspection is done by whom, either by the importer side or exporter side or by an inspection agency. If it is done by an inspection agency then name of inspection agency and who will bear the inspection charges.
Terms of Delivery: Delivery term explain the obligation and the responsibilities during the delivery of goods of both parties the buyer and the seller. Importer should check all the terms of delivery as mentioned in the Incoterms to avoid any feature doubts.
Mode of payment: Mode of payment must be cleared in import contract. The payment can be done by many ways:
By Cash, check or bank transfer within specific days from the date of invoice
By documentary collection (drafts) to the account, in this case bank branch designated by the Seller.
By Irrevocable Letter of Credit (L/C)
The creditworthiness of the importer, previous history of payments, regulations on foreign exchange and licenses in different countries, as well as vested business practices all have an influence on selecting the mode of payment.
Import License and Import Permits: As stipulated by law, traders have the right to import all types of goods, excluding goods included in the list of goods banned from import. Importer must check whether the imported goods are prohibited or restricted or need any license. An importer should also have the knowledge of all duties and charges imposed on the imported goods.
Delivery period: Delivery period may be fix by following ways:
Delivery of goods will take place on specific date
Delivery of goods will take place during a specific period of time
Delivery of goods will take place within calendar days of the signing of the present Contract
Delivery of goods will take place within calendar days counting from the date on which the Seller receives first payment.
Delivery of goods will take place within calendar days counting from the date on which the Seller receives the notification of the opening of a Letter of Credit (L/C) by the Buyer.
Importer should also mention the charges that importer will imposed on the exporter in case of late delivery.
Packing and Labeling of product: An importer should clearly mention in the import contract about the packaging and labeling requirement because proper packaging and labeling not only makes the final product look attractive but also save a huge amount of money by saving the product from wrong handling the export process.
Insurance Particulars: Importer can ask the exporter to insure the goods. Insurance can also be done from the importer side but it must be made clear in the document that who will bear the cost of import insurance.