Ten essential clauses for machinery export contracts: ① Contracting Parties (full legal names and addresses of buyer and seller); ② Subject Matter (product name/model/specifications/quantity, with technical agreement attached); ③ Price and Trade Terms (FOB/CIF/DDP + currency); ④ Payment (30% deposit + 70% before shipment); ⑤ Delivery Schedule (15–30 days for preparation + liquidated damages for delay); ⑥ Packaging and Shipping Marks; ⑦ Warranty (12 months); ⑧ Acceptance (FAT/SAT); ⑨ Force Majeure; ⑩ Dispute Resolution (arbitration + governing law)—comprehensive terms ensure successful payment collection and contract performance.
I.
Subject Matter and Specifications
Product Name/Model/Quantity (must match HS code/customs declaration); Specifications/Parameters (verifiable: precision/load capacity/power/certification standards like CE/ISO); Customized Equipment (technical agreement as an attachment: drawings/materials/tolerances); Condition (specify if new or used)—write specifications that are “verifiable and auditable” (avoid vague terms like “good quality”).
II.
Price and Trade Terms
Trade Terms: EXW/FOB/CIF/DDP (defining the division of risk and costs); Price Terms: currency + unit price + total price (specify if tax-inclusive or exclusive); Taxes/Fees: allocation of export tax rebates (factory vs. agent); Exchange Rate Risk (locking in rates for long-term orders)—trade terms determine responsibility for freight, insurance, and customs clearance (based on Incoterms 2020).
III. Payment and Delivery Terms
Payment: 30% deposit + 70% prior to shipment (or L/C for large orders); Balance Payment Milestone: After Factory Acceptance Test (FAT) / upon presentation of Bill of Lading copy (specify trigger conditions); Delivery Time: Time to complete order preparation (15–30 days, excluding sea freight and customs clearance); Liquidated Damages: 0.05% per day or 0.5–1% per week for delays (failure to pay by the due date constitutes a breach); Termination: Right to terminate and claim compensation in cases of severe delay—Payment and delivery terms represent the core of risk allocation between the parties.
IV.
Warranty and Acceptance Terms
Warranty: 12 months (covering material/workmanship defects; repair or replacement); Exclusions: Wear-and-tear parts, improper operation, overloading, corrosion; FAT: Factory Acceptance Test prior to shipment (machine testing with actual materials); SAT: Site Acceptance Test after installation at the buyer’s facility; Acceptance Deadline: Acceptance within N days of arrival (deemed accepted if overdue)—Specify “written acceptance document + deadline” in acceptance terms to prevent disputes.
V.
Documentation and Dispute Resolution Terms
Documentation: Invoice, packing list, Bill of Lading, Certificate of Origin (CO), certifications (list requirements based on L/C or customs clearance needs); Force Majeure: Exemption from liability for natural disasters, policy changes, war, etc.; Dispute Resolution: Arbitration (CIETAC or ICC) + Governing Law (Chinese law); Jurisdiction: Specify the seat of arbitration—Dispute resolution clauses (arbitration + governing law) in export contracts serve as the final line of defense for cross-border contract performance.
When drafting machinery export contracts, overseas buyers and sellers should focus on ten key clauses: contracting parties, specifications of the subject matter, price terms, payment, delivery and liquidated damages, packaging, warranty, acceptance, force majeure, and arbitration.
The four core elements are verifiable specifications, payment linked to milestones, a 12-month warranty, and the arbitration clause.
