Do you remember this saying: “what you don’t know won’t hurt you”? That is why your attention is needed here now. As a matter of fact I will advise you drop or pause whatever you are doing and give this 100% concentration. When it comes to exportation; everybody is a suspect unless it is proven otherwise. That is why we need to protect yourself against being scam in case you fall in the wrong hand. More so, before we could start to talk about protecting yourself; I think it is important we understand somethings else…you know the rest. Ignorance is not an excuse!!!There are basically two types of exportation transactions:
- The isolated sales transactions
- The ongoing sales transactions
1. What is Isolated Sales Transactions?
This is usually the kind of sales transactions given to a non-trusted customer – it is situational base. It means that after some time this kind of sales transaction will change as soon as the customer is trusted – that is why is called situational sales. In other sense, it is a sale made on a trial basis in the anticipation of establishing an ongoing sales relationship, or when a customer is not being granted any credit until a satisfactory history of payment has been established.
Sales agreements for such transactions should be in writing, and the seller and buyer may use a variety of common, pre-printed forms.
Importance of Written Agreements
In some industries, it is common to conduct purchases and sales orally through telephone orders and acceptances. Sometimes oral agreements occur in international sales when the seller receives an order at a trade show, by long-distance telephone, or in a meeting.
It is highly advisable to formalize the purchase and sale agreement in a written document, even for domestic sales, and there are many additional reasons why export sales should be embodied in a written agreement.
You will remember sometimes when people argue over transactions even when they are close to each other. How much more transactions between two distance people; it is better to have a sales agreement in other to save your ass!
The Formation of Sales Agreements
The sales agreement is a formal contract governed by law. In general, a sales agreement is the agreement between the seller and the buyer. It is also the passing of title to and ownership of goods to the buyer at a price. Agreements are ordinarily reached by a process of offer and acceptance.
This gives both the seller and the buyer the best opportunity to understand the terms and conditions under which the other intends to transact business, and to negotiate and resolve any differences or conflicts. This type of sales agreement is often used if the size of the transaction is large; if the seller is concerned about payment or the buyer is concerned about manufacture and shipment; or if there are particular risks involved, such as government regulations or exchange controls, or differences in culture, language, or business customs that might create misunderstandings.
Quite often, however, the process of formation of the sales agreement is an exchange of documents that the seller and buyer have independently prepared and that, in the aggregate, constitute the sales agreement. These documents may contain differences and conflicts. Although not all documents will be used in all sales transactions, these documents are in common use.
Common Forms for the Formation of Sales Agreements
There are a number of forms customarily used in the formation of sales agreements. Not all of the same documents are used by the seller or the buyer in all sales transactions. For example, a seller may submit a quotation to a potential buyer without receiving any request for quotation, or the first communication the seller receives may be a purchase order from the buyer. However, it is important to be familiar with the various forms and the role they play in bringing the negotiations to agreement.
- Price Lists
- Requests for Quotations
- Quotations and Costing Sheets
- Purchase Order Acknowledgments, Acceptances, and Sales Confirmations
- Pro Forma Invoices
- Commercial Invoices
2. What Is Ongoing Sales Transactions?
This is the type of sales transaction that occurs when a customer begins to purchase on a regular basis, or when the seller desires to make regular sales to a particular customer or reseller, the seller and the buyer should enter into a more comprehensive agreement to govern their relationship. Often these types of agreements are a result of the buyer’s being willing to commit to regular purchases, and, therefore, to purchase a larger quantity of the goods, in return for obtaining a lower price.
There are three major types of agreements used in ongoing sales transactions are:
- International Sales Agreements: This is the supply agreements where the seller sells directly to an end-user customer who either incorporates the seller’s product as a component into a product he or she (the buyer) manufactures, or consumes the product and does not resell the product.
- Distributor Agreements: This happens when the seller sells the product to a buyer, usually located in another (destination) country, who resells the product in that country, usually in the same form but sometimes with modifications.
- Sales Agent or Sales Representative Agreements: This happens when a person, usually located in the destination country, is appointed to solicit orders from potential customers in that country. In the last case, the sale is not made to the sales agent, but is made directly to the customer, with payment of a commission or other compensation to the sales agent.
When an ongoing sales relationship is being established with a particular customer, it is usual to enter into an umbrella or blanket agreement that is intended to govern the relationship between the parties over a longer period of time, for example, one year, five years, or longer.