Legal Risk Management Of Export Sales Contract

As a result of the trend of globalization and with the ever-increasing global economic exchanges and international cooperation, export expansion is not only relevant to the rapid growth of the national economy and country's competitive position in international trade, but also a key factor of the development of an export enterprise.Export trade is quite different from home trade. Because of its transnational business operation, it is vitally important for the export enterprise to analyze and control the increasingly export risk in more sophisticate international conditions.With China's entry into the World Trade Organization, export trade volume has increased sharply, and China overtook Germany as the world's biggest exporter in 2009. However,in the same year,the impact of international financial crisis is deepening, world economy is entering a period of adjustment with weakening growth momentum, and China's export trade is substantially affected. Financial crisis makes the risk control of export enterprises dominant and increasing. The export enterprise will meet with all kinds of risks, among which the legal risk is the most important one. What's more,export sales contract, as a vital link and a tool for business companies all over the world, shall be regarded as one of the most important aspects of legal risk management for export trade.The paper presents and discusses the potential risk of the drafting, signing, and execution of the export sales contract from the viewpoint of PRC export enterprises and looks to present the insight of the legal risk management practices for such enterprises. This paper is divided into four main parts. The first part is devoted to a general discussion of the importance of the export sales contract's risk prevention. The second part provides a legal risk analysis of terms and conditions for the export sales contract. The third part discusses the legal risk of performance of the export sales contract and its prevention. The fourth part analyzes the risk factors regarding export sales contract governed by CISG and Incoterms2000, and discusses how to take effective measures to avoid risk.Specifically, based on the definition and characteristics of the export sales contract, the following terms and clauses are presented and discussed: quality and specifications, quantity, price, packing, transportation, insurance, payment terms, inspection, force majeure, applicable law and dispute resolution. This paper finally analyses several legal issues which should be paid attention to when CISG and Incoterms 2000 is applicable to the export sales contract, such as delivery of goods, quality guarantee, warranty of title, the handing over of documents, and ownership transfer of export goods.