MD. ABU ZAFAR SHAMSUDDIN, SAVP & MANAGER (CR & FX) Trust Bank Ltd.

, Gulshan Corporate Branch

Sales/Purchase Contract and Related Documents :

Every foreign trade transaction is the result of a sale contract between the seller and the buyer. In a sale contract, the seller agrees to sell and the buyer agrees to buy a specified quantity of goods on terms mutually agreed upon. However, the exact form of the sale contract varies from transaction to transaction. A sale contract need not necessarily be a formal and legally executed document as is often believed. It can even be an exchange of correspondences between the seller and the buyer. In some trades legally drafted contracts may be used. The following are most common clauses in a contract: a) b) c) d) e) f) g) h) i) j) k) l) m) Which conditions to apply. Definition of the terms. Conclusion of the contract. Assignment (Transfer of the right and obligations to a third party) Trade terms. Quality and Quantity. Pre-shipment inspection. Price and payment. Patent rights and indemnity. Delivery. Warranty/Guarantee. Liquidated damages (Penalty for late delivery) Force Majeure (In the situations like natural disaster, war, revolutions, the performance of a contract becomes impossible, then how to sort out the rights and obligations of each party). n) Packing and Marking. o) Shipping documents p) Dispute settlement.

MD. ABU ZAFAR SHAMSUDDIN, SAVP & MANAGER (CR & FX) Trust Bank Ltd., Gulshan Corporate Branch

The following documents are usually used in contract as per URC 522, Articles 2b 1) Financial Documents Bill of Exchange 2) Commercial Documents Commercial Invoice Transport Documents Insurance Documents Others Documents

1) Financial Documents:
These documents are used in payment by the buyer to the seller of goods in the international trade transactions. Bills of Exchange, Promissory Notes are very commonly used such documents.

Bill of Exchange: As per interpretation of Uniform Rules for Collection, the Bills of
Exchange (B/E) is treated as a financial document through which majority of international payments, arising out of international trade. A bill of exchange is a negotiable instrument and is payable to the bearer or to the person in whose favor it is endorsed. There are six parties involved in a bill of exchange. They are: (i) the drawer (ii) the drawee (iii) the payee (iv) the endorser (v) the endorsee, and (vi) the acceptor

2) Commercial Documents:
As per URC 522, Articles 2b, Commercial documents means invoices, transport documents, documents, of title or other similar documents, or any other documents whatsoever, not being financial documents.

MD. ABU ZAFAR SHAMSUDDIN, SAVP & MANAGER (CR & FX) Trust Bank Ltd., Gulshan Corporate Branch

Commercial Invoice:
A Commercial Invoice is the sellers bill for the merchandise. The document describes the goods which are subject of contract of sale between the buyer and seller. A commercial Invoice: i. must appear to have been issued by the beneficiary ii. must be made out in the name of the applicant. iii. must be made out in the same currency as the credit; and

Transport Documents:
These are the documents which evidence that the goods have been delivered to the named shippers, airlines or transporters for the carriage to a named port, airport or place of delivery. Following transport documents are being used at present in the international trade: i) ii) iii) iv) v) vi) Bill of Lading Airway Bill/Air Consignment Note Railway consignment note/ Railway Receipt Road Bill Post Parcel Documents Mates Receipt

Bill of Lading : The bill of lading is one of the most important documents is
international trade operation. It is a document signed by the master of the ship or shipping company or its agents acknowledging receipt of specified goods on board the vessel for carriage which are deliverable to the consignee named in the bill, or to his order or his assignees in the same condition as they were received at an agreed destination on payment of freight. The bill of leading serves three main purposes. Viz: a) as a document of title to the goods b) as a receipt from the shipping company c) as a contract for transportation of the goods Insurance Documents: The banks are largely responsible for financing the overseas trade in the world. There are risks of damage, loss or destruction of goods during the time of transit. Insurance company

MD. ABU ZAFAR SHAMSUDDIN, SAVP & MANAGER (CR & FX) Trust Bank Ltd., Gulshan Corporate Branch

takes the responsibility to fulfill any damage or risks arise from any part through their policy or cover note.

Others Documents:
Other documents are issued as per terms of contract.