Formation of the sales contract

Composing of the sales contract includes three stages:

1) Pre-contractual stages

2) Commercial offer (see pp.9-11)

3) General conditions of export sales (GCES)

Pre-contractual stages

The different stages of commercial negotiation can give rise to a certain number of documents which are neither offers nor contracts. Every time, it is necessary to enquire as to the legal value of these documents as they can have a legal impact. The documents can, more or less strongly, according to the legal system, on the one hand show the intention of the parties to engage themselves and on the other explain to the judge the intention of the parties in the contract which they enter into following these negotiations.

These documents can be of a diverse nature. One can notably find the letter of intent. It is about a document drawn up in long negotiations and carrying high sums. The finality of this document is generally to make known to the consignee the intention of contracting.

To find out more about pre-contractual documents and their legal impact, refer to the section relating to the general presentation on international contracts.

General conditions of export sales

General conditions of export sales (GCES) enables companies to define their legal relations in a commercial context. They determine the rights of the seller and allow him to defend his interests towards likely purchasers for his products. From then on, they are appropriate for each exporter.

General conditions of sales are not made the object of any specific regulation as such, and analyse themselves as part of the offer made to an undetermined person to which it misses an acceptation so that a sale is definitely and satisfactorily concluded. they enable the legal framework to be defined in advance, applicable to each order which avoids having to draft contractual measures for each piece of business.

a) Characteristics of GCES

They need to be drafted in a clear manner and be free of ambiguity either in the language of the buyer's country or in english. The exporter must go for the essential and look into the most important elements such as conditions of payment, clauses connected with the regulation of disputes, extent of responsibility treatment of complaints.

To protect the financial interests of companies and to harmonise the commercial operations of professional organisations, international organisations (UNO in particular) have drawn up general conditions for export. The latter, which cannot be listed because they are too numerous, can be classed according to three categories:

from a territorial point of view: some of them are applied in EU countries or in the whole of Europe, Asia, Africa,... others have a universal vocation;
from a product point of view: they are grouped according to whether they apply themselves to consumer goods, capital goods, technology transfer,... They are often drawn up by professional organisations;
from a both territorial and sector point of view: in this case the GCES define the products concerned and the territorial field of their application at the same time.

All companies anxious to export must make enquiries to a professional organisation to which it is affiliated to know if GCES have been drawn up.

b) Principals of drawing up

Avoid excessive or improper clauses - many national legal systems forbid improper clauses which would deprive the client of all guarantee or resort in responsibility.
Suiting the essential - General conditions must contain important arrangements relating to price, conditions of payment,the extent of the supplier's responsibility (time limit, guarantees) and to the methods of regulating disputes.
Distinguishing the general from the particular - general conditions must only normally present what is permanent and repetitive in space and time. The parameters when essentially depend on the nature of the envisaged operation must be grouped in "particular conditions".
Do not hesitate to modify - Sales conditions do not constitute an unchanging given and it can be necessary to put them in if once confronted by reality, they present weaknesses, if repetitive incidents produce themselves, notably on conditions of payment or also if modifications in the regulations have been noticed.
Draw up general, legible conditions - It is necessary to avoid very small characters or they can be opposable. When general conditions are printed on the reverse of contractual documents, it is advisable to put very apparently on the front a mention of the variety "See our general sales conditions on the reverse".

GCES are subject to legal regime in the country to which you are exporting. Their interpretation therefore depends on the purchaser's country. Make enquiries on this subject in order to know the impact of GCES in the purchaser's country.

c) Acceptation of the GCES

GCES communicated from the stage of the offer enables the applicable legal system for the future contract to be defined at the earliest. If this is not the case, the seller must communicate them before the contract is concluded, without what they would consider as legally inefficient. Furthermore, the enumeration of general conditions on commercial invoices is legally inefficient since it intervenes after the contract has been concluded.

In law, general conditions are only applicable if the client or supplier has accepted them (expressly or tacitly). The conditions of this acceptance are can vary according to the country. As long as the purchaser, you need to be vigilant, as in certain countries, the purchaser's silence can be seen as acceptance. For the seller, the ideal situation is that where the client accepts the GCES in a formal manner, in this way facilitating the proof of this acceptance. It is preferable to obtain the partner's signature accompanied by the company stamp on the Proforma invoice or the purchase order. Failing that, the seller can re-send an order confirmation stating the GCES.

If you are a purchaser and that you are confronted with GCES at the time when you receive the invoice which you have not accepted, you have not even been kept informed, respond! For example, they can determine a competent court which would not forcibly be in your interest.

d) GCES and General sales conditions

Certain countries impose general sales conditions. By nature, these conditions are opposite, general sales conditions protect the seller and general purchase conditions protect the purchaser. Furthermore, in the majority of cases, the two parties must negotiate and analyse the general conditions from the point of view of the law which governs the contract.

Figure 6.1. Negotiating on GCES

The problem posed here is extremely complicated. However, the following direct guidelines can be remembered:

general sales and purchase conditions which contradict cancel out each other;
particular clauses reserved for certain clients take precedence over general conditions;
partial contradictions lead to the annulment of conflicting clauses;
when general purchase conditions are considered as partially acceptable, it is hoped for that the supplier sends his proposals for modifications by fixing a deadline for their acceptance in the shortest possible delay. The consignee's silence will be considered as a tacit acceptation of the recommended modifications;
a typed text takes precedence over a printed text as a hand-written comment takes precedence over a typed text by virtue of the principle according to which the particular conditions prevail over general conditions.