International Commercial Practices
Introduction
Business is an activity that involves buying and selling goods or services. Companies or individuals involved in business activities often transact with clients from different countries – this is called international commercial activity. It implies a direct exchange of goods or services between two members of different nationalities. Therefore, when engaging in international commercial activities, it is important to be familiar with international commercial practices. These practices include issues such as contracting, payment terms, customs procedures, and dispute resolution.
Contracting
Contracting is an essential part of commercial activities, whether domestic or international. When entering into an international commercial contract, various factors need to be taken into account, such as the governing law, parties’ obligations, and dispute resolution options. The most crucial factor, however, is that both parties need to be aware of the legal implications of the contract. An effective international commercial contract should be tailored in terms of its terms and conditions to the respective jurisdiction of both parties in order to ensure that it is valid and enforceable.
Payment Terms
Payment terms are a crucial element in international commercial activity. It is important to determine how the transaction is to be settled and the different payment methods. A variety of payment methods can be used, such as wire transfer, letter of credit, payment on delivery (COD) and cash on delivery (COD). Each method has its own advantages and disadvantages depending on the context of the transaction. For instance, a wire transfer is usually the safest and most reliable payment method, however it can be expensive due to charges imposed by the bank. On the other hand, letter of credit is often a preferred method in international commercial activity as it offers more security in case the buyer is not able to meet the payment conditions.
Customs Procedures
In international commercial activity, customs procedures are very important as they govern the import and export of goods and services. It is vital that all parties involved in a transaction understand the different requirements necessary to successfully transfer the goods or services across two countries’ boundaries. Common customs procedures include preparation and packaging of goods, obtaining necessary documents, and paying customs duties and taxes.
Dispute Resolution
International commercial activities involve various disputes between the parties, such as failure to comply with the terms and conditions of the contract, non-payment of invoices and goods, goods not arriving on time, or discrepancies in the goods delivered. These disputes can be resolved through negotiation, arbitration or litigation. Negotiation is usually the more cost-effective option, however, arbitration often provides a more reliable outcome as it is a neutral and binding way to settle disputes. In case the parties have already agreed to arbitration, the next step would be to proceed with the case according to the rules set out in the arbitration agreement.
Conclusion
International commercial activity involves a direct exchange of goods or services between two members of different nationalities. It is, therefore, important to take into consideration the issues such as contracting, payment terms, customs procedures, and dispute resolution to ensure that the transaction is lawful and efficient. As long as parties involved in the international commercial activity are aware of the applicable regulations and procedures, they should be able to conduct business with ease and efficiency.
