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The international sales contract sets what is sold, at what price, how it is delivered and paid for, and how disputes are resolved. In Peru it is governed by the Vienna Convention (CISG) when both parties are in Contracting States.
Goal: Explain when the CISG applies and what a sales contract must set out, and calculate payments and late-delivery penalties.
An international sales contract is the agreement under which a seller undertakes to deliver goods and transfer ownership of them, and a buyer undertakes to pay the price and take delivery. It is international when the parties have their places of business in different countries. The nationality of the people and the place where it is signed do not matter. This contract is the basis of the whole operation: transport, insurance, payment and documents depend on what was agreed there.
Which law applies? Peru is a party to the 1980 Vienna Convention on contracts for the international sale of goods, known as the CISG. It has been in force for the country since 01/04/2000. If seller and buyer have their places of business in States that are party to the CISG, it applies automatically, even if you do not mention it. The parties can exclude it or adjust it if they expressly agree (Art. 6). The CISG does not apply to sales to consumers and does not govern the validity of the contract or who ends up owning the goods. That is decided by the national law you choose or that applies.
The contract is formed by offer and acceptance. The offer (Art. 14) is a proposal addressed to specific persons, precise enough: it indicates the goods, the quantity and the price, or how to set them, and shows the intention to be bound if it is accepted. Acceptance (Art. 18) is a statement or conduct that expresses agreement; silence, by itself, is not enough. The CISG does not require the contract to be in writing (Art. 11), but without paper it is very hard to prove what was agreed. It pays to close everything in a signed document or in an accepted proforma invoice. The proforma invoice is covered in depth in the Exports course.
A good contract includes, at a minimum: the parties, the goods, the price and currency, the Incoterms® rule with its named place, delivery deadlines, the payment method, the documents, inspection, warranties, claims, the governing law and the forum for resolving disputes. Every vague point is a future dispute. Write figures, units and dates. Avoid phrases such as “good quality” or “delivery soon”.
The seller must deliver the agreed quantity, quality and description, with the relevant documents (Art. 35). The buyer must pay the price and take delivery of the goods. If one party fails to perform, the other can claim damages. If the breach is fundamental, that is, if it deprives the other party of what it could expect from the contract (Art. 25), the other party can terminate it. An impediment beyond your control that you could not foresee when signing can release you from liability (Art. 79). Even so, agree on a force majeure clause with examples and notice periods.
| Clause | What it must set | Example of precise wording |
|---|---|---|
| Goods | Description, quantity, quality and packing | 10 MT of organic cocoa beans, in 200 bags of 50 kg |
| Price | Unit value, total and currency | US$ 4,800 per MT; total US$ 48,000 |
| Delivery | Incoterms® 2020 rule, place and date | FOB Callao, shipment by 30/11/2026 |
| Payment | Amount, timing and method | 30% advance; 70% against copy of documents, by transfer |
| Quality and claims | Inspection, deadline and way to claim | Inspection at origin; claims in writing within 15 days of arrival |
| Law and disputes | Governing law, language and forum | CISG and Peruvian law; arbitration in Lima, in Spanish |
Result: With a two-page contract plus a technical annex, the parties know what is delivered (10 MT), how much is paid (US$ 48,000 in two payments), what happens if there is a delay (up to US$ 2,400) and which law governs.
25/03/1999
According to the official UNCITRAL registry, Peru acceded to the CISG on 25/03/1999 and the Convention entered into force for the country on 01/04/2000. Since that date, a sale between a Peruvian company and another with its place of business in a Contracting State is governed by the CISG unless the parties exclude it. Many exporters sign contracts without knowing they are already under this rule.
Before drafting, confirm whether your customer's country is a party to the CISG and decide whether to accept it or exclude it.
01/04/2014
Brazil acceded to the CISG on 04/03/2013 and the Convention entered into force for that country on 01/04/2014, according to the UNCITRAL registry. Since then, sales between Peruvian and Brazilian companies are governed by the CISG unless a clause excludes it. Anyone who had model contracts from before that date had to review them.
The list of Contracting States changes: check it every time you open a new market.
01/03/1991
Chile ratified the CISG on 07/02/1990 and the Convention entered into force for that country on 01/03/1991. According to the UNCITRAL registry, Chile made a declaration on written form (Art. 96): certain provisions that allow agreeing without a writing do not apply when one of the parties has its place of business in Chile. In practice, a verbal or informal agreement with a Chilean company is a bigger risk.
When one party is in Chile, always sign a written contract, and put any change in writing too.
04/03/2013
The International Chamber of Commerce (ICC) published on 04/03/2013 the updated version of its Model International Sale Contract, designed mainly for exporting manufactured goods intended for resale. It has specific conditions that the parties fill in and general conditions with standard legal clauses. It is adapted to sales under the CISG, and the announced version cites Incoterms 2010.
Use a model as a starting point, but check that it cites the current rule, Incoterms® 2020, and that it fits your goods.
Source: ICC (CCI) – New ICC Model International Sale Contract hits the shelves
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