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Sales contract
The core document setting out the parties’ rights and obligations in an international raw material sale. It should cover the product and specification, quantity and tolerance, price and currency, Incoterm and named place, shipment period, payment method, quality and quantity determination (inspection), insurance, force majeure, remedies for breach, governing law and dispute resolution. Where the parties’ countries allow it, the UN Convention on Contracts for the International Sale of Goods (CISG) applies unless expressly excluded.
Spot purchase vs. term contract
A spot purchase is a one-off deal at the current market price for prompt delivery: flexible, but exposed to price and supply swings. A term contract secures regular shipments over a period (a quarter, a year) at a fixed or formula-linked price, giving security of supply but often with a minimum off-take (take-or-pay) obligation. Manufacturers usually balance risk by covering part of their needs on term and buying the rest spot.