Terms of Service

Exporting

Most exports of ordinary trade goods to friendly countries are made under a so-called “general license”. There are, however, export restrictions you need to be aware of:

  1. Some products (notably products that have military uses) are subject to export restrictions. Note that some products have “dual-use” applications, i.e., may be used for both civilian and military purposes. When in doubt seek advice as to whether your product may require a special export license, or may be unable to be exported.
  2. Exports to some countries may be restricted. The Bureau of Industry and Security of the U.S. Department of Commerce has a website listing countries affected by export restrictions (“Where are you Exporting” at http://www.bis.doc.gov/licensing/exportingbasics.htm). Note that you may violate export restrictions by selling a product to a buyer that you know, or should know, intends to re-export the product to a country to which direct exports from the U.S. are prohibited.
  3. Export sales to some purchasers may be restricted. You should consult the “do not sell” lists maintained by the Bureau of Industry and Security of the U.S. Department of Commerce (“Who Will Receive Your Item” at http://www.bis.doc.gov/licensing/exportingbasics.htm) and by the Office of Foreign Assets Control of the United States Treasury Department (http://www.treas.gov/offices/enforcement/ofac/sdn/index.shtml). Under U.S. law you have an affirmative obligation to “know your customer,” including the ultimate buyer if your customer re-exports the products. You will not be able to plead ignorance if your Canadian customer sells your products to the Cuban military and you knew or should have known that this was your customer’s intention.

Freight-Forwarders. When exporting products it will be helpful to develop a relationship with a reputable freight-forwarder who can help ensure that your company complies with the laws and regulations governing exports. Information on freight-forwarders may be found at http://www.export.gov/logistics/exp_whatis_freight_forwarder.asp.

Deemed Exports. It is possible to make a prohibited export of technology without knowing you are doing so. Technology whose export is restricted may be “embedded” in your product’s controls. And you may be “deemed” to export technology merely by giving individuals from foreign country access, in the United States, to that technology sufficient to enable those individuals to take that technology back home with them.

Importing

Importing (bringing goods into the United States) is also subject to restrictions as well as to special taxes known as “duties” (set forth in a “tariff” schedule). It will be helpful to develop a relationship with a reputable customs broker for advice and assistance when importing goods into the U.S. The customs broker can help you determine whether and what duties are applicable to the goods you are importing. Four factors play a role in the calculation of duties: classification under the Harmonized Tariff Schedule of the United States; the product’s country of origin; status of entry (for example, products imported into a foreign trade zone may have lower or no duties); and product value.

Additionally, quotas may limit imports of products of certain categories, such as textiles. For more information on imports, visit http://www.cbp.gov/xp/cgov/trade/trade_programs/textiles_and_quotas/guide_import_goods/, a website maintained by the U.S. Department of Homeland Security.

U.S. import laws require many imported products if being resold in the United States as is or with minimal change, to be marked to show the country of origin. Failure to comply with “country of origin” marking requirements can be very expensive.

Contracts for the Sale or Purchase of Goods

The following issues, among others, should be considered in international contracts for the sale or purchase of goods:

  • Payment. Exporters should protect themselves against the risk of non-payment by the foreign buyer because of the difficulty of collection in a foreign land. Letters of credit are frequently used as a payment mechanism because they give the seller confidence that a reputable financial institution is standing behind the buyer’s payment obligation. Under a letter of credit, the seller is paid, usually by the U.S. confirming bank, upon furnishing the bank with specific documentation, normally including an invoice and shipping documents. Note that special rules apply to letters of credit. Among other things, you should take great care to ensure that the documents you present accurately and completely meet the terms of the letter of credit; even minor defects can delay or prevent payment.
  • Currency. Most U.S. sellers price their products in dollars. If the customer requires pricing in another currency, then the contract should deal with the issue of the risk of currency fluctuations.
  • CISG. Most of the major developed countries have ratified the U.N. Convention on Contracts for the International Sale of Goods (CISG). Under the Convention, its terms will automatically become a part of transnational contracts for the sale of goods unless the parties expressly provide otherwise.
  • INCOTERMS. The International Chamber of Commerce (ICC) has developed shorthand trade terms (called INCOTERMS) that operate to (1) assign risk among the parties (and therefore the responsibility to obtain insurance against loss in transit) and (2) identify which party is responsible for the various stages of shipment and delivery and for export/import clearance. The ICC has published an inexpensive guide to INCOTERMS titled “ICC Guide to INCOTERMS 2000” which you will find a very useful resource. If you want INCOTERMS to apply you should note “(INCOTERMS 2000)” immediately after the applicable trade term. Be aware that certain terms commonly used in the U.S. (such as “FOB”) are also used by INCOTERMS, but have different meanings.
  • Dispute Resolution. Every agreement for the sale or purchase of goods, but especially agreements dealing with transnational transactions, should prescribe how disputes will be handled: whether by arbitration or court proceeding; what law will govern; and where the arbitration or court proceeding will take place. Before dismissing such provisions as mere boilerplate, bear in mind the burden that may be imposed by a foreign language trial in a distant continent under unfamiliar law before a judge from your customer’s home country.

If your contract for the sale or purchase of goods is made by use of a standard form of quotation, purchase order, or acceptance, the terms and conditions of sale or purchase printed on that form should be reviewed in light of the foregoing.