Get your trade deal in writing - the lawyer’s kind

In international trade, contracts aren’t paperwork; they’re protection. Get them right, and goods, money and relationships move smoothly. Get them wrong, and you open the door to losses, delays, disputes and reputational damage that can sink a deal before the ship even leaves port.

I recently had a discussion with global trade specialist Dirk van Rooyen, who put it perfectly: most problems in global trade are created the day the contract is drafted, not the day the goods are shipped. It’s true. The real platform for a successful export or import transaction is built long before logistics kick in. It begins with the documents.

But the moment you trade across borders, things get complicated. Take a simple example: a South African exporter signs a deal with a Nigerian importer. Both are excited. The product is ready, the market is promising. But behind the scenes, there’s a quiet tug-of-war: which country’s law governs the deal?

The exporter prefers South African law. The importer prefers Nigerian law. Neither fully understands the other’s legal system. And so, in an attempt to be “neutral” they sometimes settle on UK law. That often sounds fair, but it brings in a third legal framework with its own complexity and cost. Suddenly, your relatively straightforward sale now involves specialised lawyers, different interpretations and unfamiliar rules.

Cross-border trade is challenging enough; mismatched jurisdictions make it harder. To trade successfully, exporters and importers rely on a set of documents that must work in harmony. If even one document contradicts another, you create risk. And risk in trade is expensive.

Cross-border trade is challenging enough; mismatched jurisdictions make it harder. To trade successfully, exporters and importers rely on a set of documents that must work in harmony

These components form the backbone of most transactions:

1. The sales contract is the master agreement — the foundation of the deal. It must clearly spell out the product, price, quantity, delivery terms, payment terms and governing law. If the sales contract is vague, every other document becomes a potential point of dispute.

2. A proforma invoice is often treated casually, yet it’s one of the most important documents. A proforma invoice isn’t simply a quotation. It becomes the basis for:

Payment arrangements;
Letters of credit;
Insurance;
Customs valuation; and
Exchange control applications.

In many cases, this document is the sole contract between the importer and exporter. If there is no contract, it is essential to ensure that all terms and conditions of the transaction are clearly and comprehensively incorporated into the invoice.

3. Trade terms (Incoterms® 2020) define the rules of the journey: who pays for transport? Who arranges insurance? Where does risk transfer? Used correctly, Incoterms create clarity. Used incorrectly, they create confusion. A wrong Incoterm, or even a correct one used loosely, can expose you to avoidable cost and risk.

4. Marine insurance covers loss or damage during transport. But the key is alignment. If the sales contract places the responsibility for insurance on the buyer, but the seller arranges the policy, insurers may reject a claim. This is one of the most common and preventable contradictions in trade.

5. Credit insurance guards the exporter against non-payment due to default, insolvency or political risk. But it’s just one tool among many. Depending on the risk profile, exporters may use:

Letters of credit;
Advance payments or deposits;
Documentary collections;
Escrow services; and/or
Bank payment undertakings and supply-chain finance tools.

The payment method should always match the risk profile of the buyer and the country. Using the wrong mitigant, or none at all, can turn a profitable deal into a costly lesson.

6. Contracts of carriage determine liability, claims procedures, delivery obligations, and the conditions under which goods move. If the carrier’s contract conflicts with the sales contract or insurance wording, you can almost guarantee complications when something goes wrong. Van Rooyen made this point repeatedly, and it’s the most important takeaway: all trade documents must reinforce each other.

Your sales contract, proforma invoice, Incoterms, marine insurance, credit insurance and contract of carriage must be aligned. One contradictory clause can trigger chaos.

In global trade, contradictions cost money. Consistency creates certainty. As South African businesses increasingly serve clients across Africa, Europe and Asia, the quality and consistency of their documentation becomes a competitive advantage.

International trade doesn’t reward the fastest movers or the cheapest suppliers. It rewards the best prepared. Behind every successful shipment sits a suite of well-aligned contracts, each one reinforcing the other, reducing risk, and increasing trust.

In trade, contracts are not red tape. They are your first line of defence, and sometimes your last.