INTERNATIONAL CONTRACT OF SALE

Article 1529 of the Peruvian Civil Code establishes that: "By the sale the seller is obliged

to transfer ownership of a good to the buyer and the latter to pay its price in money" (as cited

in Obregón, 2012). This contract must be made with the consent of both parties and with the

commitment that the provisions of the contract are complied with.

According to Sierralta (2007) "The international sale represents one of the basic functions

of foreign trade: the transaction. It is an exchange operation by means of which a certain

thing is delivered against its equivalence in money. It can broadly be defined as a mutual

convention by virtue of which the seller is obliged to deliver the thing he sells and the buyer

the price agreed for it. It is a link between production and international consumption of goods

and services "(p.131). This is done between two or more parties located in different countries,

in which the exporter undertakes to deliver a certain amount of goods and the importer agrees

to pay for the price of these goods. Both parties must comply with the deadlines for delivery,

quality and quantities as established at the time of signing the contract.

CHARACTERISTICS

● CONSENSUAL, agreement of wills between the importer and exporter, in which

both parties must be in agreement with the agreement before signing the contract.

● BILATERAL, at the time the contract is signed, each of the contracting parties have

obligations and these must be fulfilled until the end of this.

● COMMUNITY, the value of the delivered goods must be equal to the price paid at the

time of the transaction.

 ● NOMINATED, this contract is regulated by the United Nations Convention on

international sales contracts signed in Vienna in 1980.

It is important that all international negotiation is done formally (in writing), either

through letters, mail, etc. When making an offer, it must be personalized, concise and have

the times set. In an international sales contract you can have other participants as a bank

intervention, it can also be done in a place different from the origin of the pacts.

According to De la Fuente and Echarri (1999), these are some data that should be included

in a contract:

- Date and Venue

- Identification of the contractors

- Detailed description of the merchandise

- Delivery conditions

- Insurance of the merchandise

- Price and comprising

- Payment method and guarantees

- Applicable legislation, litigation courts

There are certain obligations that must be met, either by the seller or the buyer (Challenges

in supply chain, 2018). The seller is obliged to deliver the goods according to the

characteristics established during the conclusion of the contract (quantity, quality, packaging,

etc.), deliver the documents related to the goods and transport if agreed in the contract. For its
part, the buyer has the obligation to make the payment of the goods on the date, place and

amount established in the contract.

In the event that the buyer does not comply with its obligations, the seller must demand

from the buyer the fulfillment of all obligations within a certain period; If the new obligations

are not met, the seller may consider the contract terminated or demand compensation for

damages for breach of contract.

With respect to the seller's breach, the buyer may demand compliance with the obligations,

in case there is a problem with the merchandise may require the replacement or repair of

these, the price reduction of the goods and all this within a defined period by the seller. If it is

not met, the contract may be declared solved and compensation for damages may be

requested.

DISTRIBUTION CONTRACT

The distribution contract is an atypical contract, since it does not have a legal norm that

regulates it; This contract, listed doctrinally as consensual, allows the manufacturer of various

products to sell them to a person called distributor who will be in charge of retail sales

(Bravo, 2003), this will allow the manufacturer to have a greater introduction of their

products since the distributor has more information and tools for the expansion of your

product.
 At the moment the contract is signed, the producer agrees to supply the goods and the use

of the brand, but this must be done in a delimited territory at the time of making the contract.

The distributor fulfills a function of intermediary between manufacturers and consumers, but

at the same time has benefits due to the difference between the purchase price and the sale

price, this is well known as the resale price (Obregón, 2012).

CHARACTERISTICS OF THE DISTRIBUTION CONTRACT

● Bilateral, because it was done by mutual agreement between the parties.

● Accession contract, since the vast majority of the clauses of the contract have been

drawn up unilaterally by the seller and the buyer.

● It is a non-formal contract, it can be verbal or written or the forms that the parties

establish, the important thing is that the agreements must be accredited.

● Exclusivity, exclusivity is reserved between the distributor and buyer, which will be

carried out within a certain area, therefore, the producer can not sell the products

granted to the distributor by itself within the agreed term.

OBLIGATIONS OF THE MANUFACTURER

● Deliver the merchandise in the agreed way.

● Do not carry out direct sales in the area reserved to the distributor.

● Comply with the commitments linked to advertising.

OBLIGATIONS OF THE DEALER

● Comply with the clauses set out in the contract

 ● Do not exceed the distribution area established in the contract.

● Distribute the product exclusively in favor of the manufacturer, as long as it has been

established in the contract.

● Allow the manufacturer to carry out the due inspection according to the contract.

● Make the respective publication in the territory or area designated as a distribution

area, with the purpose of promoting the products that are the object of the contract.

● Pay the manufacturer the invoices for the purchase of the goods established in the

contract.

● Provide a guarantee service to the purchasers of the products sold.

TYPES OF DISTRIBUTION

The exporter has to decide which is the type of distribution that will be used to supply the

market (Llamazares, 2017). There are three types of distribution.

● Open or intensive distribution: the exporter intends to be present in the largest number

of points of sale to reach a high sales figure.

● Selective distribution: the exporter limits the number of retailers with the aim of

establishing a greater degree of cooperation with them.

● Exclusive distribution: the exporter undertakes not to distribute the product except

through a single merchant in a specific geographical area

AGENCY CONTRACT
The agency contract consists in that one of the parties, called an agent, undertakes before the
other party to carry out, in a continuous or stable manner, acts and operations of trading for
third parties as an independent intermediary and without assuming the results of said activity
(except agreement to the contrary) in exchange for remuneration.

Main Characteristics

- ​It is a contract between independent businessmen, that is, without any dependency or
subordination relationship. Each of them has its own business structure and develops its
activity in an organized and autonomous way.

-​It is bilateral onerous, in that the activity of the agent must be remunerated.

-​Permanency or stability is required, as the agent is obliged to permanently promote the

business of the employer while the contract is in force. It is of successive tract, either of
determined duration or indeterminate.

-​The agent does not assume the risk of operations that he promotes or hires as an employee,
although he can guarantee compliance as in the case of the guarantee commission.

Obligations of the contracting parties

Obligations of the agent:

● Deal with the promotion and sale entrusted to you

● Inform the entrepreneur of everything necessary for good commercial management

and, above all, the solvency of future buyers.

● Follow the instructions of the employer as long as they do not affect their
independence.

● Address the complaints and claims of their buyers on behalf of the employer.

● Carry independent accounting for each of your businessmen.

Obligations of the employer:

 ● Supply the agent with samples, catalogs, rates and other things necessary for its
activity.

● Provide the agent with information necessary in the development of the activity and
warn him if he knows that the volume of operations will be less than what the agent
expects.

● Within a period of fifteen days, you must notify the agent of the acceptance or
rejection of the operations communicated to you.

● Notify the agent, depending on the product sold, the execution of the total, partial
contract or if it is not executed.
● Pay the agent the remunerations according to contract

Prohibition of competition

The contract may include a clause prohibiting competition to the agent after its termination.

This prohibition can only affect the area of ​the agent, the clients entrusted to him, and the
products that the agent dealt with.

Its duration will not exceed two years and, if the contract has been of less than two years, of
one year.

Termination of the contract

The contract can be concluded for a fixed or indefinite period.

If it is for a certain time it will be extinguished when it is fulfilled.

If the agreed period is met and the parties continue working as if it had not been complied
with, it will be considered that it has been agreed to convert the contract into an indefinite
one.

If it is for an indefinite period, the contract will be terminated by decision of any of the
parties that must pre-advise the other within a period of one month per year that the contract
existed (with a minimum of one month and a maximum of six months). But other longer
terms may be agreed in writing, which in any case must be identical for both.
 REPRESENTATION CONTRACT

It is a type of contract through which a company that provides products or services and is
interested in expanding its sales to foreign markets, hires a natural or legal person
(Representative) with extensive knowledge and experience in foreign trade and international
marketing .

Unlike the International Commercial Agency Agreement, there is the possibility that the
representative negotiates and concludes operations on behalf of the company. However, when
negotiating with customers, the Representative will offer the products, strictly according to
the clauses and conditions of sale that the company has indicated.

The representative carries out his activity on an ongoing basis and his remuneration is
established through commissions on the sales obtained, although occasionally the payment of
a fee may be agreed as management and representation expenses.

Main characteristics:

The representative is contractually bound to account for their activities.

The costs of sale and distribution are absorbed by the company represented.

The representative must work with the promotional material provided by the represented
company and can not modify it without the express authorization of the company.

Usually the representation contracts present a clause that establishes a trial period to evaluate
the services provided by the representative, to proceed to work for periods that can be
multi-year; It is important to record the temporary validity of the contract and under what
conditions it is terminated.
 CONTRATO DE MANAGEMENT

Mediante este contrato se confía el gerenciamiento de una empresa o negocio a un tercero,

durante un cierto tiempo. La cual una sociedad se hará cargo de la dirección del negocio de
la empresa y contar con cuadros administrativos que le garanticen un rendimiento.

DERECHOS Y OBLIGACIONES DE LAS PARTES

KNOW HOW CONTRACT

CHARACTERISTICS OF THE KNOW HOW CONTRACT:

 ● Bilateral, which is handled by the owner (transferor) and on the other hand the
beneficiary, which is the natural or legal person who will produce or marketer with
proper authorization, the knowledge or experiences given by the transferor.
● It is a contract of reciprocal benefits, as the transferor transfers a set of techniques or
knowledge, and the beneficiary is obliged to pay in return an economic benefit that
often will be called compensation or royalties.
● It is temporal.
● It is very personal, knowledge and techniques are assigned to a particular person
enabling him or training him.
● Atypical contract, there is no special law regulating.
● Successive, whenever the essential benefit of the beneficiary is to periodically pay an
amount to the transferor of know-how but it can also be agreed a single lump sum
payment.

WHAT RIGHTS AND OBLIGATIONS DOES THE LICENSOR HAVE -

GRANTOR OR GIVER?

- Right to receive an economic consideration by the licensee.

- Supervise the fulfillment of the contract.
- Obligation to transfer the technical knowledge, provide the formulas, knowledge,
techniques, tools, calculations, projects, documents, and others, object of the contract.
- Training or training of personnel, workers of the beneficiary, ie technical assistance.
- Provide the beneficiary with all the means so that he can fully exercise the know-how.

WHAT OBLIGATIONS DOES THE LICENSEE OCCUR?

- Pay the licensor for the transferred knowledge, the payment can be total or through
royalties.
- Caution, save the knowledge received, in order to avoid disclosure.
- Communicate to the licensor the advantages or improvements that the use of know-how
has generated.
- Transfer the inventions or improvements obtained with the use of know-how technology to
the licensor.
- Facilitate the supervision tasks performed by the licensor, in order to verify if the content of
the contract is being fulfilled.
- At the end of the term of the contract, the beneficiary must abstain in general from holding,
or use everything related to the exploitation of the know how, as well as return the relevant
documentation.

WHO ARE PARTS IN THE KNOW HOW CONTRACT?

THE LICENSOR, transferor, transferor or donor, is the owner of the

knowledge, techniques, tools, calculations, projects, etc.
THE LICENSEE or user, is one who receives the rights of the licensor, agrees to the agreed
payment - royalties - keep in strict reserve the knowledge acquired, inform about the
obtained advantages and return at the end of the contract.

FUTURE CONTRACTS

The futures contract, commonly known as "futures", is a contract between two parties that
agree to exchange an asset, called an underlying asset, which may be physical, financial,
real estate or assets, at an established future date and at a certain price. of raw material.

ELEMENTS OF A FUTURE CONTRACT:

UNDERLYING ASSET: It is the asset on which the future contract is based. Any option must
refer to a certain underlying asset.

TERM: It is the term of the contract

PRICE OF THE FUTURE: It is the price established at the moment of closing the contract,
that is, it is the price at which, at the end of the term, it will be possible to buy, or sell, the
underlying asset.

DELIVERY DATE: The place and date of delivery of the underlying asset must be
established.

SETTLEMENT SYSTEM: It establishes the way in which the delivery of the product is made
against the delivery of the money.

CHARACTERISTICS OF THE FUTURE CONTRACT:

Futures contracts, have characteristics that every investor must know before starting to
actively negotiate with them.

They must also be formed by certain components, which we will see below:

The asset on which the futures contract is based.

The expiration date of the contract.
The size or objective of the contract.
The way in which the contract is settled once it reaches maturity.

Also, and among the features we were discussing at the beginning of the post, it is worth
noting the following:

As it is a practically speculative product, it presents a high risk, so in the same way you can
obtain high profits as losses in your operations.
Futures contracts are based on the price of assets, and these assets usually have high
volatility, so they can sometimes be unstable.
Futures contracts tend to have relatively short maturities for the most part. This can be
positive to operate in the short term.
Futures contracts work with leverage, so multiply the chances of earning more by investing
less, but the risks also increase.
They also offer the possibility of winning both bull and bear markets.

WHAT ARE FUTURES CONTRACTS TRADED ON?

When trading futures contracts, there are raw materials, precious metals, agricultural
products and various merchandise, financial products such as futures on short, medium and
long term interest rates, currency futures and futures on stock indices and others.

CONCLUSION

Thanks to futures contracts we can now have a better control of future events and the risk
that this implies. To ensure a sale price of our product and to be protected from the
international uncertainty of the markets is paramount to commercial success.

Countries such as the US, Brazil, Colombia and Chile have been using future contracts for
decades to protect their farmers, miners, processors, ranchers and exporters. This is the
way forward for a sustained economic development and increase the sales / exports of the
sector.

Peru, is a country very rich in resources, we have to take advantage of this competitive
advantage, exploit it and above all, protect our industry. By reducing and managing market
risk, farmers can be more competitive internationally.

https://digitalcommons.law.uga.edu/cgi/viewcontent.cgi?referer=https://www.google.com/&htt
psredir=1&article=1958&context=gjicl

https://www.bbva.com/es/que-son-los-contratos-de-futuros/

https://www.brokersdeforex.org/que-son-los-contratos-de-futuros/

https://economipedia.com/definiciones/contrato-de-futuros.html
 LEASING

It a financial tool used mostly by companies to acquire and use assets, for a fixed period of
time, and/or get high amounts of liquidity. All of these depend on the type of lease the
companies will use.

The main types of Leasing are:

Financial Leasing
It’s when a company wants to use an asset from a provider without having to pay all the
money to the provider, but to pay it in periods to the bank. For example, the business
company wants to buy 10 cars to the provider, but the business company does not have
enough cash to pay them all, so the business company asks for a financial leasing to a local
bank (having first negotiated with the provider). So the local bank pays the entire amount of
money to the provider and the provider gives the 10 cars to the business company. The
business company will have to pay, in periods of time, to the bank. The business company
have the option to stop paying to the bank because the business company may have ran
bad their business and they will not use the 10 cars anymore, so they will sell the cars to a
third party.

Operating Leasing
It’s when occurs the same process but without participation of the bank. This option is
usually used when the need of a business company for some equipment is for a short time.
The leasing company will have to sell second-hand the equipment to a third party after
finishing the operating leasing.

Lease Back
It’s when the business company sells their assets (equipment) to the bank in order to obtain
liquidity, so the bank can lease those assets to the business company. The business
company will have to pay, for fixed periods of time, the amounts of money arranged with the
bank.

In Peru, the Leasing has increased 544% from year 2003 ($1,238 millions) to year 2014
($7,975 millions). The most participating industries are machinery and industrial equipment
with a 38.64%, real estate with 27.57% and transport vehicles with 22.53%.

https://www.tutor2u.net/business/reference/finance-leasing-as-a-source-of-finance

http://adiperu.pe/noticias/el-segundo-mayor-uso-del-leasing-es-para-la-adquisicion-de-inmue
bles/
 FACTORING

The factoring is a financial operation that consist in selling your accounts receivables (short
time) to an investor, also called as factor. You sell your accounts receivable at discount price
(lower price) but you get the liquidity fast. This is in order to increase operations to your
company, show transparency to SUNAT and increase the capital market.

The factoring is useful on weak juridical systems, because the loans are not guaranteed, the
processes are inefficient and the bureaucracy is too high. Peru and other emergent countries
have not developed the factoring because people is not used to this kind of operations,
besides the fact people is usually late on their payments and the informality (fraudulent
contracts), increasing the risk for this operations.

Only 10% of peruvian companies use factoring. “We have to stop the fear of many
companies to the factoring. The process is very simple, once you get in with factoring, you
don’t want to get out because of the fast transactions and the liquidity” (Seminario, 2018)
(Gestión).

“The non traditional exports use factoring and has a potential market of $1,200 million
anually, but the annual turnover of this sector is only $50,000” (Martinez, 2017)(Gestión).

The average discount taxes from operations of companies that sold products to corporations
in factoring passed from 6.83% (december 2016) to 5.41% (december 2017). This helps
because this will increase these type of operations.

http://www.bcrp.gob.pe/docs/Publicaciones/Reporte-Estabilidad-Financiera/2015/Mayo/ref-m
ayo-2015-recuadro-4.pdf

https://gestion.pe/economia/factoring-10-empresas-peruanas-herramienta-financiera-250142

https://gestion.pe/economia/factoring-exportaciones-tradicionales-mercado-potencial-us-1-2
00-millones-144304

https://andina.pe/agencia/noticia-bancos-operaciones-factoring-se-dinamizaran-2018-mejor-
pbi-694096.aspx