Term of Contract
Chapter 1: Negotiating Delivery
1. The five steps in Negotiating Delivery.
To deal with problems arising if there is a delay or if delivery is not as planned the Buyer and the Seller should negotiate delivery systematically. That means making sure all foreseeable problems are discussed and approaches to solving such problems are agreed. An overview of the five negotiating steps is suggested to simplify discussion of the ideas and to avoid problems: Timing, Location, Transport, Risk Title and Insurance, Terms of Trade.
2. Timing: When must Delivery take place ?
- Good negotiators should mention a delivery date in negotiating the timing of an export deal and then other issues relating to coming into force, delay and compensation for delay. Delay might be classified into two categories, excusable and non-excusable. Excusable one involves a ‘grace period’ and is mostly subject to a force majeure provision. Any losses to the buyer caused by non-excusable delay must be compensated. The amount of compensation is usually set in advance and called ‘liquidated damages’
- Use a straightforward calendar date to name the delivery date: 15th September 2010, for example. The parties often plan for the contract to come into existence in two steps: the signature date and the date of coming into force. The date of coming into force is not usually a calendar date, but the date on which the last precondition is met. Common preconditions are:
+ Receipt of import and/ or export approval
+ Receipt of foreign exchange approval from a central bank
+ Issuance of a letter of credit or bank guarantee.
+ Making of a down-payment by the buyer
+ Issuance of an insurance policy
+ Issuance of a certificate of origin
+ Delivery by the buyer of plans, drawings or other documentation.
- Negotiators may agree on a cut-off date: if the contract has not come into
force within a certain
1. The five steps in Negotiating Delivery.
To deal with problems arising if there is a delay or if delivery is not as planned the Buyer and the Seller should negotiate delivery systematically. That means making sure all foreseeable problems are discussed and approaches to solving such problems are agreed. An overview of the five negotiating steps is suggested to simplify discussion of the ideas and to avoid problems: Timing, Location, Transport, Risk Title and Insurance, Terms of Trade.
2. Timing: When must Delivery take place ?
- Good negotiators should mention a delivery date in negotiating the timing of an export deal and then other issues relating to coming into force, delay and compensation for delay. Delay might be classified into two categories, excusable and non-excusable. Excusable one involves a ‘grace period’ and is mostly subject to a force majeure provision. Any losses to the buyer caused by non-excusable delay must be compensated. The amount of compensation is usually set in advance and called ‘liquidated damages’
- Use a straightforward calendar date to name the delivery date: 15th September 2010, for example. The parties often plan for the contract to come into existence in two steps: the signature date and the date of coming into force. The date of coming into force is not usually a calendar date, but the date on which the last precondition is met. Common preconditions are:
+ Receipt of import and/ or export approval
+ Receipt of foreign exchange approval from a central bank
+ Issuance of a letter of credit or bank guarantee.
+ Making of a down-payment by the buyer
+ Issuance of an insurance policy
+ Issuance of a certificate of origin
+ Delivery by the buyer of plans, drawings or other documentation.
- Negotiators may agree on a cut-off date: if the contract has not come into
force within a certain