Foreign trade contract

Foreign trade contract: an agreement between a resident and a non-resident. It is also called an international contract, because the parties are in different countries. Most often it is a contract for the international sale of goods, but the term also covers contracts for work, services, contracting, leases and transfer of rights. The contract is the basis for payments, for customs and for currency control.

What it must contain

• the parties, with full names, addresses and registration details;
• the subject: the goods, their quantity, quality, specification;
• the price, the currency of the price, the currency of payment and the total amount;
• delivery terms under Incoterms;
• payment procedure and deadlines: prepayment, in installments, after delivery;
• delivery deadlines;
• the parties’ bank details;
• the documents the seller provides;
• liability, force majeure, governing law and dispute resolution.

Which law applies

The parties choose the governing law and the forum for disputes themselves, most often international arbitration. If both companies are from countries that are parties to the 1980 Vienna Convention on Contracts for the International Sale of Goods, it applies to the supply unless the contract expressly excludes it. Russia and China are parties to it.

What matters for currency control

The bank checks each payment against the contract: the amount, the currency, the beneficiary, the deadlines. If the contract amount reaches the threshold set by the Bank of Russia instruction, the contract is registered with the bank: the bank assigns it a unique contract number (UCN), and all payments and deliveries are then recorded against it.

Deadlines in the contract matter not only for logistics. The deadline for performing obligations affects repatriation and the deadlines for submitting documents. For an advance, the importer still has an obligation: the goods must arrive, and if the delivery falls through, the advance must come back within the period set in the contract.

If an agent pays

The contract with the supplier remains yours, but the money comes from a third party. To avoid questions from the supplier’s bank and from yours, it is worth adding a clause to the contract in advance: payment on behalf of the buyer may be made by a third party. If the contract is already signed, the same is done by an amendment or a letter from the supplier.

What to watch for

• The supplier’s bank details in the contract and in the invoice must match.
• Document changes to price and deadlines with amendments, not correspondence.

Before payment, we check the parties, the subject, the amount, the currency and the bank details in the contract and the invoice. For a series of payments under the contract, we select an agent from our pool: the agency agreement is signed once, and each payment gets its own payment order with the rate and the fee. At the end you have a complete set of documents. More on the Contract support and Foreign currency contract payments pages.