The Significance of the Contract of Sale

The contract of sale is the master contract in an international trade transaction. All other contractual arrangements that follow — for transport, insurance, and financing — should conform to its provisions. It is the most important document in an international sale of goods and is the starting point for managing risk:

  • It is evidence of the agreement between Seller and Buyer. 
  • It records the agreed goods, time of delivery, and point(s) of delivery. 
  • It records the agreed payment method, amount, and terms. 

From a logistics provider’s perspective, a correctly worded contract of sale provides the basic information needed to manage the movement of cargo safely and efficiently. All parties — buyer, seller, and service providers — have a direct interest in ensuring that as much accurate information as possible is captured in the contract.

Both parties have an equal interest in addressing each key element of the contract. A proactive service provider will always encourage clients to consider any element they appear to have omitted before the physical movement of cargo begins.

Note

In practice, it is the buyer who prepares the contract. This is why it is referred to as a Contract of Sale (issued by the purchaser), rather than a Sales Advice (which would be issued by the seller). The buyer does so on behalf of both parties, reflecting the agreed conditions.