Trade between companies
When your company does business with another company, always draw up an unambiguous contract, preferably in writing. In it, define all the issues relating to the transaction such as division of responsibility between the buyer and seller. You can benefit from standard contract terms in your business sector and delivery terms. A contract is always binding except for a few exceptions.
In business between companies, the seller must provide the goods that are the subject of the transaction to the buyer within a reasonable time and in proper condition.
Always prepare a contract regarding the transaction with the other Party. The contract should cover all the details of the transaction as unambiguously as possible.
Make the contract in writing, if it is at all possible. In the event of a dispute, you can use a written contract as evidence of what was originally agreed. However oral contracts are also binding.
Note that that both parties must accept the contract for it to become legally binding. In addition, neither party may cancel the contract or amend it unilaterally.
Review the regulations relating to business between companies and trade contracts in advance. The regulations include the Sale of Goods Act and the Contracts Act. If your company also undertakes foreign trade, familiarise yourself with the Contracts for International Sale of Goods (CISG) as well. Note that the Consumer Protection Act does not apply to contracts between companies.
Always check the reliability of the new trading partner. Check, for example, whether the company is entered in the prepayment or VAT registers. Also check whether the company has any payment defaults and other credit data.
Specify and clarify in advance the details and characteristics of the transaction. Consider how responsibilities should be divided between the Seller and the Buyer.
The form and contents of the contract depend on what it applies to. The contract can often be freeform. In some cases, however, the law may specify the form of the contract, for example, for property sales.
In many sectors such as construction, standard contract terms and conditions have been drawn up to facilitate the conclusion of contracts. The need for them is highlighted in international trade where the different jurisdictions of various countries may cause problems.
If the trade involves the transport of goods, delivery terms should be included in the contract. Among other things they define the sharing of costs and the transfer of risk between the Seller and the Buyer. The most common delivery terms and conditions are Incoterms 2010, used in international trade, and Finnterms 2001 used in domestic trade.
Agree the division of responsibility with the other party separately in the sales contract. If the contract does not contain separate terms regarding responsibility, the provisions of the Sale of Goods Act and the CISG will apply.
According to the Sale of Goods Act and the CISG, the Seller is generally responsible for costs relating to the goods that are incurred before the goods are transferred to the Buyer. Responsibility for the goods is generally transferred to the Buyer at the moment of the transaction. However, the Seller shall always be responsible for any damage that it knew about at the time of the transaction, but did not disclose to the buyer.
If, for reasons independent of the seller, the goods are destroyed, lost, degraded or reduced during transport, the buyer must generally still pay the purchase price.
If the goods are faulty, the Buyer can demand that the fault be repaired, new goods be supplied or the price be reduced. The Buyer can also cancel the transaction and demand payment of damages. The Buyer shall, however, notify the Seller about the fault within a reasonable period of time.
If transport of goods is part of the transaction, use delivery terms and conditions. They define, for example, at what point responsibility for transport of the goods is transferred from seller to buyer.
The starting point for concluding a contract is that both parties undertake to comply with it. If the contract is not observed, the consequence is a breach of contract.
A breach of contract occurs, for example, if the buyer does not pay the purchase price. In that case, the Seller can cancel the contract and claim damages and interest. You can also cancel a contract, if the buyer does not collect or accept delivery of the goods. If the Buyer has not notified you in such a case, you can also demand damages.
Similarly, if the Seller fails to supply the goods, as the Buyer you can cancel the contract and claim damages.
Failure to comply with the contract should nevertheless be accepted if the reason is force majeure (an unforeseeable and overwhelming barrier), such as natural disasters or a general strike. It must also be accepted if the terms are unreasonable for the other party.
It is also not necessary to observe a contract if it is not binding. It may not be legally binding because of an error in the form of the contract or because it is contrary to the law. It may also be due to the fact that one Party does not have the right to express their will in legal matters.