Key takeaways
- Incoterms allocate cost and risk in carriage — they do not transfer legal title.
- Separate title transfer from risk transfer explicitly in the contract.
- Match payment security to counterparty risk: advance, letter of credit, documentary collection or open account.
- Name one governing law and one dispute forum, with language and seat stated.
Delivery, risk and title
Incoterms deal with who arranges and pays for carriage, insurance and export or import formalities, and at what point risk of loss passes. They deliberately say nothing about ownership. If your contract is silent on title, you may find risk has passed to the buyer at the port while ownership has not passed to them at all — which matters if the buyer becomes insolvent before paying.
- State the Incoterm with the named place and the version used.
- State separately when title passes — commonly on full payment, via a retention of title clause.
- State who insures the goods in transit and for what value.
- Address partial shipments and transhipment explicitly if they are possible.
Payment mechanisms by counterparty risk
| Mechanism | Seller protection | When it is appropriate |
|---|---|---|
| Advance payment | Highest | New counterparty, made-to-order goods, or difficult jurisdiction |
| Letter of credit | High, if terms are workable | Larger shipments where bank intermediation is worth the cost |
| Documentary collection | Moderate | Established relationships in reliable banking corridors |
| Open account | Lowest | Long-standing buyers, often with credit insurance |
Where a letter of credit is used, align the contract with the credit: description of goods, shipment window, permitted tolerances and required documents should be identical. Most LC discrepancies are drafting mismatches rather than performance failures.
Currency, taxes and duties
Name the contract currency with its ISO code, say who bears conversion cost, and state whether prices are exclusive of taxes and duties. Allocate responsibility for export clearance, import clearance, duties and any local taxes explicitly rather than leaving it to be inferred from the Incoterm — the Incoterm covers formalities, not the underlying tax liability.
Language, notices and governing law
- State the contract language and, if a translation exists, which version prevails.
- Give notice addresses including email, and say when notice is deemed received.
- Name a single governing law — usually one connected to the transaction.
- Choose one dispute forum: named courts, or arbitration with the institution, seat, number of arbitrators and language specified.
- Consider whether the UN Convention on Contracts for the International Sale of Goods applies to your parties, and state clearly whether you adopt or exclude it.
DocMak provides document-generation tools and general drafting guidance, not legal advice. For high-value, cross-border or unusual transactions, have the agreement reviewed by a qualified lawyer in the relevant jurisdiction. Whether particular conventions or mandatory local rules apply depends on the parties' locations and the contract terms.
Force majeure and supply disruption
Draft force majeure as a process, not just a list: what qualifies, the notice requirement and timing, the effect on obligations during the event, mitigation duties, and a termination right if the event continues beyond a stated period. Vague force majeure clauses are the ones that generate arguments precisely when both parties are already under pressure.
Create the document
Use DocMak's Sale of Goods Agreement Maker to produce the contract, and the Proforma Invoice Maker for the commercial document your buyer's bank will work from. For recurring supply, the B2B supply agreement guide covers the framework structure.
Frequently asked questions
Is a signed proforma invoice enough for an export sale?
For small, simple, prepaid shipments it is often what parties use. For credit terms, staged deliveries or bespoke goods, a written agreement covering quality, liability and disputes is worth the effort.
Should we choose arbitration or courts?
Consider where the counterparty's assets are and whether a judgment or award would be enforceable there. That practical question usually decides it.
Can one agreement cover several countries?
Yes, with schedules for country-specific requirements. Keep the governing law and dispute clause singular even when the delivery destinations vary.