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Processing of an Export Order & Entering in to Export Contract back
The immediate task of the exporter is to acknowledge the export order which is different from its acceptance. Then he should proceed to examine the export order carefully in respect of item, specification, pre-shipment inspection, payment conditions, special packaging labeling and marketing requirements, shipping and delivery date, marine insurance, documentation, arbitration, applicable laws and jurisdiction, etc. The various aspects relating to processing of an export order as are discussed as under :

Scrutiny :
The exporter purchase order should be examined carefully and its contents scrutinized in terms of the Performa invoice / contract sent to the foreign buyer, on the following aspects :
1. Item (product) : The order has been received for the product for which quotation/offer was sent and the exporter is still in the position to supply the product.
2. Size and Specifications : Should be same as per offer / quotation.
3. Pre-shipment inspection : Should be either by exporter himself or any agency easily available. If the buyer desires the inspection to be done by an agency/agent of his choice, financial and physical aspects of inspection should be examined and communicated to the buyer. If compulsory pre-shipment inspection by Indian Export Inspection Agency is required, the buyer should be informed about the applicable scheme.
4. Payment Conditions : are same and stipulated. A confirmed sight and irrevocable letter of credit (L/C) has been opened, where required.
5. Packaging, Labeling and Marking requirements : If any should be noted for compliance. Particular attention should be paid to the individual packaging of consumer goods required for direct sale to the consumers. In such a case labels, price tags, poly pack/skin packing etc. would be required and supply be assured.
6. Shipment and delivery date : It should be in conformity with the exporters plans and whether :
  • Part shipment is allowed.
  • Trans – shipment is permissible or not.
  • Port of shipment/destination is same or changed.

7. Documents particularly those which are required with the bill of exchange. These are :
  • Commercial invoice as usual or there is any specific notation required thereon.
  • Certification by an authority on the commercial invoice. For instance, it may require certification by Embassy Consulate of the foreign country.
  • Bill of lading ‘straight’ or ‘to order’, ‘shipped’, or ‘received for shipment’. Make sure that there is no clause in the contract which asks for the AWB or B/L. The importers using their influence with the Airlines/Shipping companies manage to release the goods even before the negotiable copy of the AWB or the B/L reaches through normal banking channels.
  • Certificate of origin whether the usual one issued by a trade association or chamber of commerce or special ones like that required for availing of GSP concessions or other preference. Also whether necessary certification on commercial invoice would suffice or a separate certification of origin is required.
  • Packaging list.
  • Insurance policy or certificate.
8. Guarantee/Warranty clause should be same as per quotation/offer.
9. Force Majeure clause should cover acts of Gods and other acts, beyond the control of exporter as mentioned at quotation / offer stage by exporter.
10. Arbitration as per Indian council of Arbitration clause for International contracts or other acceptable international clauses as agreed between the parties.
11. Laws applicable and jurisdiction, in case of default / dispute arising during the execution of the contract.
Entering in to Export Contract :
Export Contract should be explicit as possible and without any ambiguity regarding the exact specification of goods and terms of sale including export price, mode of payment, storage and distribution method, types of packaging, port of shipment, delivery schedule, etc. All theses “terms” have a special connotation and meaning in International trade which must be understood by the parties (seller & buyer).
1. Product Standards and specifications : The first important element of an exporter contract is to explicitly state the following :
  • Product name including technical name
  • Sizes, if any in which to be supplied
  • Standard / specifications, national or international or according to specific requirements of buyer or as the sample approved by him.
2. Quantity : Put the quantity both in figures and words clearly specifying whether it is in terms of number, weight or volume. If the quantity refers to goods by weight or measurement, specify the nature of the same.
3. Inspection : Whereas a number of goods are now subject to pre-shipment inspection by designated agencies, the foreign buyer may still stipulate his own conditions and manner of inspection by any other agency. Hence the parties must clearly states in their contracts the nature, manner, aspects and the agency for inspection of goods, different from those laid down under the Quality Control and Pre–shipment inspection rules.
4. Total Value of the Contract : The total value of the contract may also be put in both figures and words specifying the currency along with the name of the country.
5. Terms of Delivery : Also known as type of price, terms of delivery should be clearly incorporated in the contract. It could be f.o.b., c.i.f., c&f. etc.
6. Taxes, Duties and Charges : The taxes, duties and charges relating to exportation of goods are normally a part of price i.e. terms of delivery quoted by seller. Similarly such levies, if any in the country of importation are to be account of the buyer.
7. Period of Delivery / Shipment : As distinguished from terms of delivery, period of delivery/shipment relates to the actual dates of delivery/shipment. In addition, it must be place of dispatch and delivery because if it is not designated, the place of the business of the seller is usually deemed to be the place of delivery. It also depends upon the terms of delivery. Moreover, it should be clarified whether the time for delivery will run from the date of the contract or from the date of receipt of the advance money by the seller or from the date of receipt of the notice of issuance of the import license by the seller, etc. The importers invariably ask for a firm date of the receipt of the goods at the port in the country of import, whereas due to certain circumstances beyond the control of the exporter the goods do not reach the port of destination within the time frame mentioned in the contract. Hence the exporter should make sure that the L/C or contract should have specific date of dispatch from the country of origin, rather than the arrival date in the country of import.
8. Part shipment/Transshipment/Consolidation by Cargo scheme : The contract must clearly state whether part shipment / transshipment are agreed upon by the parties. In the absence of such stipulations, disputes generally arise when the exporter is enable to ship the goods in one lot or directly to the port of delivery. Also indicate the port of transshipment and the number, if any part shipment agreed upon. In case the goods are likely to be dispatched under the Consolidation of Export – Cargo scheme, do make a reference to the same in the export contract.
9. Packing, Labeling and Marketing : The exporter contract must be explicit as possible about the type of package and particulars labels and marking requirements. These requirements are normally quite different in case of export consignments and as such involve additional cost necessitating and upward revision in export prices. The language, color of labels and even marking have to be taken care as of required by the buyer.
10. Terms of Payment – Amount , Mode and Currency : The mode and manner of payment for the goods to be exported vary from contract to contract depending upon the terms settled between the parties. While quoting different payment terms, the exporter should specify as to whether the prices are based on current rate of exchange of the Indian rupee on the basis of another currency say US Dollar or any other currency.
11. Discounts and Commissions : Depending upon the source of export enquiry and the intermediary involved, if any in the execution of an order the contract should specify the amount of discount / commission to be paid and by whom i.e. by exporter or importer. The basis of calculation of commission and rate of the same may also be clearly stipulated. The commission / discount may or may not be included in the export price to be quoted / agreed by the exporter / importer.
12. Licenses and Permits : Normally all exporter/importer transaction involve obtaining the licenses and permits/quotas to the export/import in the country of exportation/importation. The problem with regard to import licenses in the buyer’s country is sometime more prominent and acute in different developing countries. The parties should therefore clearly state as to whether the export transaction would involve any export (import) licenses and whose responsibility and expense it would be to obtain the same.
13. Insurance : The terms of delivery normally take care of the aspects of insurances to be obtained by the buyer/seller. In any case, it is important in international trade contracts to provide for insurance of the goods against loss, damage or destructions during the voyage as it takes a long time before they are received by the buyer. The extent of insurance risk and its incidence needs to be clearly described and proper insurance policies should be obtained.
14. Documentary Requirements : International Trade transactions usually involve certain special documents which can be broadly divided in to four categories :
  • Documents required for exportation/importation of goods
  • Documents needed by the buyer for taking delivery of the goods
  • Documents relation to the payments.
  • Special documents depending upon the nature of goods and the conditions of the sale
 

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  • Agricultural and Processed Food Products Export Development Authority (APEDA)
    (Ministry of Commerce & Industry, Govt. of India)

  • NCUI Building 3, Siri Institutional Area, August Kranti Marg, New Delhi - 110 016
    Phone : 91-11-41486013, 20863919, 20867008, 20867007