SPECIMEN CONTRACTS

Specimen Contract 1

CONTRACT FOR THE SALE OF GOODS

Between
<NAME OF SELLER> hereinafter called “the SELLER”
And
<NAME OF THE BUYER> hereinafter called “the BUYER”

Preamble
The agreement between the parties to this Contract is based on
the following understandings:
[NOTE: the following clauses are example only.]
[NOTE: if the SELLER is making goods to unusual
specifications, the preamble might state:]
1. The Buyer is acting partly on its own behalf and partly as a
purchasing agent for other companies
2. The buyer is acting as purchasing agent for…
3. Both parties understand that Goods made to the BUYER’s
specifications may have no value, or very limited value, on
the open market.
4. The SELLER understands that the BUYER in specifying the
Goods has relied to a large extent on the expertise of the
SELLER.
5. The SELLER understands that the BUYER is under Contract
to resell the Goods, and that if the Goods are defective or
non-conforming in quality or quantity, the BUYER may be
liable for damages in an amount exceeding
<AMOUNT><CURRENCY>.
6. The SELLER understands that the BUYER intends to install
the Goods as a component part in equipment to be resold,
and that if the Goods are defective or non-conforming in
quality or quantity, the BUYER may be liable for substantial
damages.

1. Applicable Law
This Contract, and all questions relating to its formation,
validity, interpretation or performance shall be governed by the
law of <COUNTRY>
[NOTE: The additional clause below is optional]
This Contract shall not include, incorporate or be subject to the
provisions of the “United Nations Convention on Contracts for
the International Sale of Goods.”

2. Definitions
In this Contract, including the preamble and the appendices, the
words below have the meanings ascribed to them unless the

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context otherwise clearly dictates:
2.1 Unless expressly modified by the parties, “FOB,” “CIF”
and other trade terms have the meanings and obligations
ascribed to them in Incoterms 2000, Publication 460 of the
International Chamber of Commerce, Paris.
2.2 “Contract” means this Contract, its preamble and
appendices, as well as all documents expressly listed as Contract
documents or otherwise expressly mentioned in this Contract.
2.3 “Goods” means the Goods specified in Clause 4 below.
2.4 “Price” means the Price as specified in Clause 9 below
payable to the SELLER for the Goods.
2.5 “Delivery” means Delivery as specified in Incoterms
2000 under the Incoterm or Incoterms agreed in this Contract.
2.6 “Day” means a calendar Day. For the purposes of this
Contract, Saturday, Sundays and all holidays are considered as
Days.
2.7 “Direct” Cost and Losses are costs and losses arising in
immediate connection with any failure to delivery, any delay in
Delivery, or any defect in Goods delivered under this Contract.
Such costs and losses must have an immediate, foreseeable and
provably causal connection with the delay or defect. All other
costs and losses are deemed by this Contract to be “indirect.” In
particular, loss of profit, loss of use, and loss of Contract are
considered indirect losses.
2.8 “Government” means national Government, local
Government, local authorities, and their agencies. In particular
customs and / or excise departments are considered as
Government agencies.
2.9 “Termination” means the discharge of the Contract by
one of the parties under any right expressly granted by this
Contract. The discharge of the Contract by any other right
arising from the applicable law or any other source is deemed to
be “cancellation” of the Contract.

3. Entire Agreement and Contract Documents.

This Contract constitutes the entire agreement and
understanding between the parties. There are no understandings,
agreements, conditions, reservations, or representations, oral or
written, that are not embodied in this Contract or that have not
been superseded by this Contract.
[NOTE: The sub-clause and the list below are optional]
In addition to the text of the Contract itself, the documents listed
below shall form part of the Contract. All listed documents and
the clauses of this Contract shall be read, if possible, so as to be
consistent. In the event of conflict, the order of precedence for
the provisions and documents which constitute this agreement
shall be as follows:
[NOTE: the list below contains examples only]
a. Any alterations made on the face of the printed Contract

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 b. The Contract itself
c. Specifications;
d. Manufacturing drawings;
e. The BUYER’s Special/General Conditions of Purchase;
f. The SELLER’s Special/General Conditions of Sale.

4. Scope of Supply
The Goods to be delivered under this Contract are specified
<CLAUSE/ANNEX WHERE GOODS ARE SPECIFIED>

5. Delivery
5.1 Date, Place and Terms of Delivery
Delivery of the Goods shall be made <INCOTERM>. The
scheduled date of Delivery shall be <DATE OF DELIVERY>.
Risk and title to the Goods shall pass from the SELLER to the
BUYER on Delivery.
[NOTE: In the interest of clarity, when using the Incoterms CIF,
CFR, CIP, and CPT, the parties may wish to add the clause
below.]
The place of delivery under this Contract is <PORT OF
SHIPMENT>.

5.2 Naming and arrival of Vessel

[NOTE: This clause is intended primarily for use in FOB and
FAS Contracts]
The BUYER shall advise the SELLER of the name of the vessel
not later than <NUMBER> Days before the agreed Delivery
date.
If the vessel named by the BUYER fails to arrive on or before
<DATE>, then the SELER may at his discretion deliver the
Goods to a bonded warehouse in the port of <PLACE OF
DELIVERY> and shall be deemed to have fulfilled his Delivery
obligations under this Contract. In this event, the SELLER must
notify the BUYER of the full circumstances of the Delivery to
the warehouse, all costs, including but not limited to cost of
storage and insurance are to the BUYER’s account.

5.3 Shipping Marks and Packaging

[NOTE: the following clauses are example only.]
On the surface of each package delivered under this Contract
shall be marked: the package number, the measurements of the
package, gross weight, net weight, the lifting position, the letter
of credit number, the words RIGHT SIDE UP, HANDLE WITH
CARE, KEEP DRY, and the mark: <MARK>
Goods are to be packed in <REQUIRED PACKING> and are to
be well protected against dampness, shock, rust or rough
handling. The SELER shall be liable for any damage to or loss
of the Goods attributable to improper or defective packaging.

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5.4 Disposal of Packing
Responsibility for the disposal of any packing shall be the
BUYER’s

6. Notification of Delivery
[NOTE: This clause applies largely to Contracts under which
delivery takes place in the country of the SELLER.]
Immediately on Delivery, the SELLER shall notify the BUYER
of Delivery by <MEANS OF NOTIFICATION>. This
notification shall include <INFORMATION AND
DOCUMENTS TO BE INCLUDED>.

7. Inspection before Shipment

7.1 Inspection by the BUYER
The BUYER may, at the BUYER’s option, inspect the Goods
prior to shipment. At least <FIGURE> Days before the actual
Delivery Date, the SELLER shall give notice to the BUYER, or
to any agent nominated by the BUYER, that the Goods are
available for inspection. The SELLER shall permit access to the
goods for the purposes of inspection at a reasonable time agreed
by the parties.
[NOTE: Customs requirements for information of goods into
some countries require inspection by SGS prior to shipment
from the SELLER’s country. The following clause is
recommended for sales to these countries.]

7.2 Inspection by Inspection Service

The parties understand that importation into <NAME OF
COUNTRY> requires inspection of Goods by SGS before
shipment from the SELLE’s country. The SELLER agrees to
cooperate fully with the SGS in providing access to and
necessary information about the Goods for the purpose of such
inspection.

8. Early, Partial and Late Delivery

8.1 Early Delivery
[NOTE: the three sub-clauses below are alternatives.]
Choice A: Early Delivery is not permitted under this Contract.
Choice B: Delivery up to <NUMBER> Days early is permitted;
however, payment shall not become due until the date agreed for
payment under this Contract.
Choice C: Delivery up to <NUMBER> days early is permitted;
in this case, payment shall fall due as though the actual Delivery
date were the Delivery date agreed in the Contract.

8.2 Partial Shipment

[NOTE: the two sub-clauses are alternatives.]
Choice A: Partial shipment is not permitted under this Contract.
Choice B: Partial shipment is permitted under this Contract,

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subject to the agreement of both parties; however, any costs
arising from partial shipment shall be to the account of the
<BUYER/SELLER.>

8.3 Delay in Delivery:

In the event of late Delivery for reasons other than Force
Majeure as defined in Clause 17 below, the SELLER shall pay
as liquidated damages and not as a penalty the sum of… the
value of the undelivered part per Day of late Delivery up to a
maximum of …………………… of the Contract Price.
Payment of liquidated damages shall be due without the
BUYER having to furnish proof of any loss, damage or injury.
[NOTE: The two sub-clauses below are alternatives]

Choice A: Payment of liquidated damages shall constitute full

and complete satisfaction of any claim of the BUYER against
the SELLER arising from or in connection with late Delivery of
any Goods. In particular the SELLER shall not be liable for any
indirect loss or damage, as defined in Clause 2.7 above, arising
from or in connection with late Delivery of any Goods.

Choice B: Payment of liquidated damages by the SELLER shall

not preclude the BUYER from seeking compensatory damages
from the SELLER for any loss, injury or damage arising from or
in connection with late Delivery of any Goods. In particular the
BUYER shall be entitled to compensation from the SELLER for
any indirect or consequential loss or damage, including but not
limited to loss of profit, loss of use or loss of contract, arising
from or in connection with late Delivery of any Goods.
However, payments made as liquidated damages shall be offset
against any compensatory damages recovered from the SELLER
for the late Delivery of any Goods.

8.4 Termination for Delay

In the event that the SELLER becomes liable to pay the
maximum sum payable as liquidated damages under Clause 8.3
above, then the delay shall be deemed breach of contract and the
BUYER shall, upon due notice, have the right to terminate the
Contract and/or seek any any other remdu available to him.

9. Price
The Price for the Goods to be delivered under this Contract is
………. <Currency and symbol>…………….
………………… <currency and figures in words> …………

10. Terms of Payment

Payment shall be made by means of an irrevocable, confirmed
Letter of Credit. The BUYER shall open the Letter of Credit on
or before ........--<Date of opening of Letter of Credit>........----

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on the terms agreed by the Parties and annexed to this Contract
as Appendix ........-<appendix number>........-----
This Contract shall not come into force under clause 16 below
until the SELLER has received advice that the Letter of Credit
has been opened in his favor and has ascertained that the terms
are in accordance with those agreed between by the Parties; Any
discrepancy between the terms agrred by the parties and the
letter of Credit as issued shall be notified by the SELLER to the
BUYER immediately.

11. Inspection of the Goods

11.1 Duty to Inspect and Notify Discrepancies
The BUYER shall inspect the Goods on their arrival at the place
of destination. If the Goods fail to conform with the Contract in
either quality or quantity, then the BUYER shall notify the
SELLER of any discrepancy without delay.

11.2 Failure to Notify Discrepancies

If the BUYER does not notify the SELLER of any such
discrepancy within ............... <Number of days> days of the
arrival of the Goods, then the Goods shall be deemed to have
been in conformity with the Contract on arrival.

11.3 BUYER’s Rights in the event of Discrepancy in Quantity

If a material discrepancy in quantity exists and is duly notified
to the SELLER, the BUYER at his discretion and subject to
Clause 8.2 above may either:

a. Accept the delivered portion of the Goods and require the

SELLER to deliver the remaining portion forthwith; or

b. Accept delivered portion of the Goods and terminate the

remaining portion of the Contract upon due notice given to the
SELLER.
If any material discrepancy in quantity exists such that
................ <Description of fundamental discrepancy> and if
such discrepancy is duly notified to the SELLER, the BUYER
may at his discretion:
a. Adopt either of the remedies prescribed above in this clause;
or
b. Reject the delivered portion of the Goods and recover from
the SELLER all payments made to the SELLER as well as all
costs, expenses and customs duties incurred by the BUYER in
association with the shipment, movement through customs,
insurance or storage of the goods.

11.4 BUYER’s Rights in the Event of Discrepancy in Quality

Discrepancies in quality shall be considered as defects and shall
give rise to claims under the defects liability provision of this

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Contract in clause 12 below.
However, a fundamental discrepancy in quality shall give the
BUYER the right to refuse Delivery of the Goods in whole or in
part and to recover from the SELLER all payments made for the
unaccepted portion of the Goods as well as all costs, expenses
and customs duties incurred by the BUYER in association with
the shipment, movement through customs, insurance or storage
of the unaccepted portion of the Goods. Further, a refusal to
accept delivery in part shall be considered termination of that
part of the Contract affected by such refusal.

12. Defects Liability

12.1 SELLER’s Liability for Defects
The SELLER warrants that the Goods supplied under this
Contract shall at the date of their Delivery:
a. be free from defects in material;
b. be free from defects in workmanship;
c. be free from defects inherent in design, including but not
limited to selection of materials, and be fit for the purpose for
which such Goods are normally used.
If any defect provably present in any of the Goods on the
date of Delivery comes to light during the defects liability
period, then the BUYER shall forthwith notify the SELLER.
The SELLER, without undue delay, shall at his own risk
and cost and at his discretion repair or replace such item or
otherwise make good the defect.
The SELLER’s liability for defects is subject to the BUYER
having adhered to all procedures and instructions applicable to
the ................ <Condition of use <e.g. “ Storage, installation,
use or operation”> of the item, and expressly exclude damage to
the Goods caused by fair wear and tear or by misuse occurring
after Delivery.

12.2 Defect Liability Period

The SELLER shall be liable for defects which come to light
during a period of ................ <Number of days> Days from
................ <Date of start of defect liability period>. After the
end of this period, the BUYER shall have no right to raise
claims of any kind against the SELLER for any defect in any
Goods of the SELLER’s supply.
The defect liability period shall be prolonged by the length of
any period during which the Goods cannot be used by the
BUYER because of a defect. However, if new Goods are
delivered to replace defective Goods, the defects liability period
shall not begin again on the replacement Goods.

12.3 Limitation of Defects Liability

<Note: the two clauses below are alternatives. Delete as
necessary>

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Choice A: The duty to repair and replace or otherwise to make
good defects is the only duty of the SELLER in the event of
Delivery of defective Goods. In particular the BUYER shall not
be entitled to compensation from the SELLER for any indirect
loss or damage as defined in Clause 2.7 above, arising from or
in connection with Delivery of defective Goods.
Choice B: The SELLER shall indemnify and hold harmless the
BUYER against any loss or damage however arising whether
direct or indirect which shall be suffered by the BUYER as the
result of defective or faulty Goods delivered by the SELLER.

13. Liability to Third Parties

<Note: the two clauses below are alternatives. Delete as
necessary>
Choice A: The <Name of the Party giving the indemnity-
BUYER or SELLER> shall compensate and hold harmless the
<Name of the Party receiving the indemnity-BUYER or
SELLER> from any award of damages, reasonable costs,
expenses or legal fees, in the event of any action or lawsuit by a
third party resulting from any injury loss or damage to the third
party caused by a defect in the Goods delivered under this
Contract.
In the event of any such lawsuit, the ................ <<Name of the
Party giving the indemnity-BUYER or SELLER> shall
immediately notify the ................ <<Name of the Party
receiving the indemnity-BUYER or SELLER> and shall fully
cooperate with the <Name of the Party receiving the indemnity-
BUYER or SELLER> in taking any necessary legal action.

Choice B: In the event of any action or lawsuit by a third party

resulting from any injury, loss or damage to the third party
caused by a defect in the Goods delivered under this Contract,
the Party against whom the action of lawsuit is brought shall
bear all costs, expenses, awards of damages or legal fees arising
therefrom.

14. Taxation
All income taxes, value added taxes, customs duties, excise
charges, stamp duties or other fees levied by any Government,
Governmental agency or similar authority shall be borne
exclusively by the party against whom they are levied.

15. Assignment of Rights and Delegation of Duties

The rights under this Contract may not be assigned nor the
duties delegated by either party without the prior written consent
of the other party.

16. Coming into Force

This Contract shall come into force after signature by both

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parties and after:
a. The issuance of a letter of credit in accordance with the
terms of Clause 10 above
b. <OTHER>
If the Contract has not come into force within <NUMDER>
Days of its signature by both parties, all its provisions shall
become null and void.

17. Force Majeure

If either party is prevented from, or delayed in, performing any
duty under this Contract by an event beyond his reasonable
control, then this event shall be deemed Force Majeure, and this
party shall not be considered in default and no remedy, be it
under this Contract or otherwise, shall be available to the other
party.
[NOTE: the sub-clause below contains examples only. It should
be modified as necessary.]
Force Majeure events include, but are not limited to: war:
<whether war is declared or not>, riots, insurrections, acts of
sabotage, or similar occurrences; strikes, or other labor unrest;
newly introduced laws or Government regulations; delay due to
Government action or inaction, or inaction on the part of any
inspection agency; fire, explosion, or other unavoidable
accident; flood, storm, earthquake, or other abnormal natural
event.
[NOTE: the sub-clause below on non-force-majeure events is
optional.]
Force Majeure events do not include <EVENTS NOT
INCLUDED>
If either party is prevented from, or delayed in, performing any
duty under this Contract, then this party shall immediately
notify the other party of the event, of the duty affected, and of
the expected duration of the event.
If any force majeure event prevents or delays performance of
any duty under this Contract for more than <NUMBER> Days,
then either party may on due notification to the other party
terminate this Contract.

18. Termination
Notice of Termination of this Contract as defined in Clause 2.9
shall be subject to notice in writing as stipulated in Clause 22
and shall take effect <FIGURE> Days from the receipt of such
notice by the party notified.
In the event of termination, the duties of the parties shall be as
incurred up to the date of termination. In particular, the
SELLER shall receive the full Price of any Goods delivered and
accepted by the BUYER. The provisions of this Agreement
dealing with defect liability, arbitration, and such other
provisions as are necessary in order to resolve any post-

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Termination disputes shall survive termination.

19. Partial Invalidity

If any provision or provisions of this Contract are invalid or
become invalid, then this shall have no effect on the remaining
provisions. Further, the parties agree to replace any invalid
provision with a new, valid provision having, as far as possible,
the same intent as the provision replaced.

20. Modification and Waiver

Modification of the terms and conditions of this Contract shall
be binding on both parties even without consideration if the
modification is in writing, is signed and is expressly stated to be
a modification of this Contract.
Any waiver of any right under this Contract is binding on the
party making the waiver even without consideration provided
the waiver is in writing, is signed, and is expressly stated to be
awaiver of the said right.

21. Language
The language of the Contract, of all Contract Documents, and of
all correspondence and other communication between the
parties shall be English.

22. Notices
Notices served by one party to the other under the Contract shall
be made, in the first instance by facsimile transmission
<hereinafter called “fax”>. A further copy of each notice shall
be sent by registered letter and signed.
The effective date of the notice shall be the date of fax
transmission. In the event of a dispute about the receipt of a fax,
however, the effective date of the notice shall be the date of
receipt of the registered letter or a date seven Days after the
registered mailing, which ever is the earlier. The above
stipulations notwithstanding, notice transmitted and received by
written means such as telegram, telex, courier or normal mail
shall be deemed valid notice under this Contract.
Notices shall be sent to the following addresses and fax
numbers:
SELLER:
Address:
Fax Number: BUYER:
Address:
Fax Number:
Any change in an address or fax number shall be the subject of a
required notice under this Contract.

23. Settlement of Disputes

All disputes arising in connection with this Contract shall be

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finally settled under the Rules of Conciliation and Arbitration of
the International Chamber of Commerce by <FIGURE>
arbitrators appointed in accordance with the said rules.
The place of arbitration shall be <PLACE>. The language of
Arbitration shall be English.
[NOTE: the three sub-clauses below are alternatives.]
Choice A: in the event of arbitration, each party shall bear its
own costs.
Choice B: in the event of arbitration, the court shall assess the
amount of the costs to be borne by each party.
Choice C: in the event of arbitration, the party against whom the
award is made shall bear the entire costs of both parties to the
action.
The parties agree that any award made in accordance with the
probisions of this clause is final and binding on both parties.

24. Execution
The parties, intending to be legally bound, have signed this
Contract on the dates and at the places stated below:

For and on behalf of the SELLER:

Title:
Date:
Place: For and on behalf of the BUYER:
Title:
Date:
Place:

[NOTE: the witnessing of signatures is not required by all

national laws]
Witness of SELLER’s signature
Witness of BUYER’s signature

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