Contract

A contract forms is the basis of a transaction between the Buyers and the Sellers and great care is exercised when the Contract is being prepared to ensure that all the legal obligations have been stated. As a rule the Contract contains a number of clauses, such as:

Subject of the Contract

Price

Terms of Payment

Delivery

Inspection and Tests

Guarantee

Packing and Marking

Arbitration

Transport

Insurance

and other conditions

Here are clauses of a Contract signed by a Russian trading organization (the Buyers) and a British company (the Sellers):

I. Subject of the Contract

The Seller undertakes to sell and the Buyer to buy on the basis of delivery FOB London, Manchester or Hull (at the Buyer's option) the complete equipment, technology and technical documentation of the plant.

II. Price and Total value of the Contract

The total value of the Contract including the cost of the complete equipment for the plant as well as technical documentation, knowledge and experience (know-how), engineering, after-guarantee spares and services is £... (... pounds sterling).

III. Terms of Payment

The total amount of £... stated in Clause II shall be paid in English pounds sterling by the Bank for Foreign Trade of Russia, Moscow, in accordance with the following terms:

10% advance payment of the total Contract value shall be made within 30 days of the effective date of the Contract...

80% of the total Contract value shall be paid in accordance with the Credit Agreement between the Bank for Foreign Trade of Russia and the Middland Bank, United Kingdom.

5% of the total Contract value shall be paid within 30 days of the date of receipt by the Bank for Foreign Trade of the following documents...

The Guarantee amount of 5% shall be paid within 30 days of receipt by the Bank of the Acceptance Protocol confirming the acceptance of the plant for commercial operation.

IV. Time of Delivery

The delivery of the equipment under the present Contract shall begin in 8 (eight) months and shall be completed in 26 (twenty six) months from the date of signing the Preliminary Project Acceptance Protocol.

V. Inspection and Test

1. Inspection and / or test of the equipment shall be carried out at the Seller’s and his sub-contractors’ works at the expense of the Seller in the presence of the Buyer’s inspectors.

2. The Seller is to notify the Buyer about the readiness of the equipment for inspection and / or test not later than 15 days before the proposed time of the inspection and / or tests.

3. The Buyer’s inspector shall issue in due time to the Seller a Release Certificate for Shipment on the basis of the test Certificate.

4. If the Buyer’s inspector cannot be present, the Seller shall have the right to carry out the tests without the Buyer’s inspector.

The Seller shall issue a test Certificate which is to be sent to the Russian Trade Delegation in the UK who will issue a Release Certificate for Shipment without delay.

5. Final tests and acceptance of the equipment for putting it into operation are to be made in Russia.