Legal responsibilities and liabilities are automatically imposed by law between the exporter and his distributor, and between the exporter and purchasers sold via an agent. These legal relationships exist whether or not there is a written contract.

Furthermore, these legal relationships can also be affected by verbal unwritten undertakings. Discuss with your lawyer what contractual terms are imposed under Canadian law or foreign law, when no other agreement exists between the parties. You may choose to modify or add to those terms based on your findings.

Preparing a Written Contract

You should ensure that suitable legal relationships regarding your exports are set forth in written contracts. Various laws in Canada and foreign countries subject vendors and purchasers to obligations and liabilities that can be modifed by written agreement.

The laws of the country where the offer to enter into a sale is accepted - or which has the more substantial tie to the transaction - will normally govern the legal relationship between you and your representative. A written contract can designate a different governing law in most business relationship matters.

United Nations Convention on Contracts

The U.N. Convention on Contracts for the International Sale of Goods may also apply in addition to, or as part of, the domestic law otherwise governing the export sale. This applies in stipulated circumstances i.e. if the countries of both parties have adopted the Convention, or if the law of the country that has adopted the Convention governs the contract. The Convention is in force in Canada and automatically governs most international trade contracts entered into by Canadian companies.

Checklist: Writing Your Contract

A written contract for the export sale of goods should:

• Be executed by persons empowered to legally bind the parties;
• Stipulate the country whose law will govern the contract.
• Exclude any terms imposed by law that the parties do not want to apply.
• Stipulate price, terms of sale, terms of payment and currency of settlement (consider any foreign exchange controls).
• Assign responsibility for compliance with local standards and codes in the export market (e.g., packaging and labeling laws, etc.).
• Provide for arbitration if this type of dispute resolution is preferred over resorting to the courts.
• Transfer financial liability to the extent that governing laws impose warranties, product liability, etc., in a manner not usual for the parties.
• Stipulate all other matters agreed to by the parties.

Be sure to have the general form of the contract to a particular country reviewed by competent lawyers in that country and in Canada.