Purchase Contract
                                            16. 3. 2010





                                          Radka Chlebcova

Aims of this class

n   Information you need

n   Structure of purchase contract

n   The most important provisions

n   Tips for drafting

n   Evaluation of HW (Feedback)

n   Summary

Negotiating & Request for Draft

The most typical one:

    „Hi, I need a draft of purchase contract for Gravel pack Equipment, Quotation No. 08-24175rev.1
dtd. 07. October, 2009, Seller Baker Hudges, ASAP.

    Br, James“





n   Do you have all info you need to draft?







Info Check-list:

n    Contracting parties (details)

n    Goods specification – purchase order reference

n    Payment terms

n    Delivery details

n    Passing of risks, passing of title

n    Warranties

n    Use of standard terms?  - Integration, battle of forms

n    Risks you have to deal with? Eg. Contractor’s delay, subcontractor delay, the buyer won’t be
able to pay

n    Sanctions and remedies

n    Hardship, force majeure

Let’s start!





Ok, but how?



The Contracting parties



n   Which info should be / must be in the heading?

n   Where to get and verify them?



n    http://portal.justice.cz/Justice2/uvod/uvod.aspx

n    http://ec.europa.eu/taxation_customs/vies/lang.do?fromWhichPage=vieshome&selectedLanguage=EN

n    http://wwwinfo.mfcr.cz/ares/ares.html.cz



Preamble

n   What is it good for?

n   What shall be written there?

n   How to formulate it?

Subject of the Contract

n   Describe as precise as possible!

n   Reference to other documents? Eg. Purchase order?

n   Dangers of such reference?

n   Battle of forms

n   How to minimise?

Price & payment terms

n   How much, with or without VAT?

n   In words?

n   Payment terms, cash, bank deposit, letter of credit, documentary collection

n   Term of payment

n   In advance, hire purchase

n   Invoicing details



Terms of delivery

n   Delivery dates

n   When is the shipment delivered?

n   Passing of title & passing of risk

n   International terms?

n   Shipping documents

Handover/ takeover & quality

n   Quality requirements

n   Packing requirements

n   Handover and inspection

n   Content of the handover certificate

Warranty

n   Contractual warranty or implies terms?



¡   Length

¡   Content? Responsibility for….

¡   Warranty claims? Notification requirements

¡   Duty to remove defects

Liquidated damages, penalties



n   Differences?

n   Amount?

n   Choose the better one?

n   Which duties are essential?

n   Be careful with the translation of terms like “liquidated damages” or contractual penalty

Force majeure

Other & Conditions

n   Validity of contract

n   Confidentiality

n   Changes

n   Jurisdiction

n   Choice of law

n   Predictability of damages

n   Ineffective provision

n   Signatures

Feedback

n    Deadline!!

n    Is the contract as whole compatible?

n    Are you sure that every clause in the contract has its sence? Do NOT just copy provisions!

n    Have you evaluated the impact of the provisions you have included into the contract?

n    Either protect your client or formuate balanced provisions

n    Parties definition

n    Define the purpose

n    Stipulate precise the payment terms

n    Passing of risk and title must reflect the need of the parties









        Thank you for your attention!