Scope: International goods sales; US, UK and European importers
Your purchase order states “CIF” and names a destination. The team assumes the seller carries every risk until arrival. Finance assumes ownership transfers only after payment. Neither assumption should be left untested.
Using Incoterms in China contracts helps allocate defined delivery responsibilities, costs and risks. It does not replace a complete sales agreement.
Specify the rule, place and version
Use the intended rule with a precise named port or place and the relevant edition. Match it to the transport arrangement. A term suited to one shipment structure may create confusion in another.
Ask the logistics and legal teams to review the same facts: pickup point, transport mode, customs responsibilities and insurance arrangements. The delivery point and destination may serve different functions under the chosen rule.
Keep payment and ownership separate
ICC explains that Incoterms do not determine transfer of title and do not replace provisions on payment, quality or dispute resolution. ICC explanation.
Your contract should therefore address when payment is due, what documents trigger it and how ownership is intended to pass, subject to applicable law. Do not let an invoice shorthand carry obligations it was never designed to define.
Review the payment method as its own risk decision
An advance transfer, documentary credit and staged payment structure create different exposures. Examine what evidence the buyer receives before releasing funds and what happens if the goods or documents do not match expectations.
For a documentary credit, coordinate the sales terms with the bank’s documentary requirements. Documents that appear compliant do not, by themselves, establish the physical condition of the goods. Obtain advice on the rules incorporated into the particular instrument.
Close the remaining contract gaps
State specifications, inspection rights, notice procedures, remedies and the dispute mechanism. Explain the relationship among the contract, purchase order and shipping instructions. If the chosen arrangement requires an importer or exporter role a party cannot perform, resolve that before shipment.
Choosing delivery and payment terms for a China purchase? Request a review from Jinyuan Law Firm with the route, transport method, proposed Incoterm and payment schedule. Ask how the combined arrangement allocates your actual commercial risks.
General information only. Advice depends on the facts and applicable jurisdiction. Contact does not by itself create a lawyer-client relationship. Local-law advice may be needed outside mainland China.
