The Contract

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 What is a Contract
1. A binding agreement between two or more
parties,

3. Evidence of an agreement between two parties

which is legally enforceable

5. document specifying conditions for business

relationship e.g. goods, services, licensing,
franchising, etc. detailing rights and obligations
of parties
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 Elements of a Contract
1. Same as the proposal, plus
2. Allocations of risk and responsibility
3. Clarifying articles
4. Choice of laws, jurisdictions and dispute
settlement mechanisms

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 1. Subject Matter of Sale
• Clear and accurate description of the
goods or services being contracted for.

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 2. Delivery
• When
• Where
• When does title and risk of loss pass to
buyer
• What documentation will be included
• Note: Positions are no longer STPS or
STAP – they are firm between the parties
except for excused performance
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 3. Price
• All details of the pricing are included
• Since the product has been defined the
pricing that fits that product is shown
• Any possible changes, such as escalation,
or changes required to meet import
regulations are identified and responsibility
for paying the cost of any such changes is
assigned
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 4. Taxes
• Responsibility for payment of any taxes or
duties is assigned

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 5. Payment
• The payment schedule is incorporated
• The currency is stipulated
• Responsibility is assigned to ensure that all
currency controls have been complied with
• Advance payments are primarily designed to
provide surety for the performance of the buyer
• Conditions about return or keeping of the deposit
are not laid out – if buyer defaults then seller will
keep any advance payments as well as seek
further damages – common law
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 6. Excusable Delay
• All reasons for any excusable delay plus “any
other cause to the extent it is beyond sellers
control or not occasioned by sellers fault or
negligence”
• Ability to terminate if the delay is too long, and
what happens to rights and obligations of buyer
and any advance payment already received
• What happens if the goods or damaged or
destroyed.
• Limitation of liability – termination and receipt of
any advance payment is buyers only remedy

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 7. Changes to the Product
• Must be in writing and mutually agreed

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8. Changes to meet regulations
• Responsibility is assigned
– e.g. the importer’s country can create a non-
tariff barrier on behalf of the buyer for a
number of reasons. It is imperative that buyer
be assigned the obligation to meet import
requirement, if only to keep his/her
government honest
• What happens if documentation required
in the contract changes.
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 9. Use of the product
• Any use of the product for testing, proving
etc. must be agreed to by the parties

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 10. Assignment of rights and
responsibilities
• Not allowed without mutual agreement
generally, and no increase in other parties
possible liability
• Exception – right to receive money
• Seller wants to control resale, ‘flips’ of the
product

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 11. Termination of the contract for
certain events
• If buyer or seller ceases business,
suspends operations, declares bankruptcy
need/want the right to terminate

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 12. Inspections
• Conditions on inspection of the goods are
agreed

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 13. Product Assurance
• Post delivery obligations are spelled out

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 14. Notices
• Official points of contact for all matters
dealing with the contract are established.

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 15. Others
• Entire Agreement – supersedes any
previous proposals, understandings,
commitments or representations. No
changes unless in writing and agreed by
both parties
• Governing Law
• Negotiated Agreement
• Alternative Dispute Resolution - arbitration
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