CHAPTER IV
Organization of business relations in
trade
Chapter outline:
1.
2.
3.
4.
Business relations in trade
Procedure of trade regulations
Conclusion and termination of a contract
Content of necessary documentation
Preface
Every company which leads commercial
activity enters into economic and legal relationships
with their customers, suppliers and partners. In the
economic literature, these relationships are usually
characterized by the term “business relations.“
The concept of business relations - rather broad
and includes a set of economic, institutional,
commercial, legal, administrative, financial and other
relations
developing
between
manufacturers,
consumers and commercial organizations in the
supply of goods on the purchases or sales.
Business relations of trade and industry - the
most important part of the economic mechanism of
the country, which is a set of forms, methods and
instruments of interaction between enterprises,
associations, firms, other sectors of the economy with
consumers.
Rational business relations contribute to the
orderly development of the economy, the balance of
supply and demand, timely delivery of industrial
products and consumer goods to buyers.
Business relations includes, in particular, participation
of trade organizations in the development of industrial
enterprises plans for the production of goods through the
submission of
 applications and orders;
 economic contracts;
 monitoring compliance with contractual obligations;
 the use of economic sanctions;
 participate in the commodity exchanges and
wholesale trade fairs;
 quality control (examination) of the supplied goods;
 the establishment of financial relationships;
 the use of administrative law and others.
The administrative-command system of
commercial companies’ management of business
relations in trade subjected to detailed state
control and regulation. State regulation of business
relations between suppliers and buyers was
introduced from the beginning of the centralized
administrative system of the economy. In the 26th,
(THE CONCEPT and TERMS of CONTRACT) 27th,
(FORMATION of CONTRACT) ,28th (MODIFICATION
and TERMINATION of CONTRACT) and 29th (Buying
and Selling) Chapters of Civil Code of RT has
brought the concept and basic terms of business
relations.
Articles of current Code includes norms and
regulations of all scope of business relations (terms
and conditions of contract, price terms, formation
and termination of contract, trade procedure
regulation, regulation in auction trade etc.)
The legal basis for our businessmen in
transactions of purchase and sale is the Civil Code
of the RT.
Contracts for the sale of goods in the
domestic and international business are
the most common type of business
relations between buyers and sellers.
What is a Contract?
A contract is an agreement between two parties that
creates an obligation to perform (or not perform) a
particular duty. A legally enforceable contract
requires:
 An Offer (I’ll mow your lawn this weekend if you pay
me $30)
 An Acceptance (You’ve got a deal)
 Consideration (the value received and given – the
money and the lawn mowed)
Mutual Assent: A "Meeting of the Minds"
A legally recognized offer and an
acceptance create a "meeting of the
minds", or mutual assent, between the
parties. The law requires the parties to a
contract to demonstrate mutual assent to
the contracts' terms
The Offer
The Offer is the key element that defines the relevant
issues in the contract. To be a legally valid offer, the offer
must be effectively communicated so that the receiving
party has the ability to accept or reject the offer. Whether or
not the receiving party reads the contract has no bearing in
determining the clarity of the offer. The offer must only
provide the recipient with a clear opportunity to accept or
reject the contract. Someone who signs a contract without
reading it does so at his/her own risk.
In addition, a valid offer must contain certain and definite
terms. In determining whether the terms are definite, courts
will review the clarity within four primary elements:
 the parties;
 the length of time for performance (term or service
schedule)
 the price; and
 the subject matter or scope of services;
The Acceptance
For acceptance of an offer to be valid,
the acceptance must be unequivocal
(without any doubt) and unconditional. In
other words, the acceptance must conform to
the exact terms of the offer. If the
acceptance is conditional on another event
or stipulation, it creates a counteroffer and the
roles of the parties become reversed. The
conditional acceptance becomes a new
offer.
Types of commercial contracts:
Types of contracts
Contract of purchase and sale
Rent contract
Lease contract
License contract
Franchise contract
Forms of contracts of purchase and sell
Contract of
purchase
and sell
Contract of
Retail purchase
And sell
Delivery
contract
Agreement in
Government
procurement
Contracting
Procedure of purchase and sale
1.
2.
3.
4.
5.
Quotation
Pro forma Invoice
Contract of purchase and sale
Invoice
Commercial invoice
QUOTATION VS PRO FORMA INVOICE
A quotation is simply that, a written
confirmation of the price of a product or service.
A price quotation prepared in the form of an
invoice, a pro forma invoice, is different from
commercial invoices. It is used to create a sale and
is sent in advance of the commercial invoice. The
content of a pro forma invoice is almost identical to
a commercial invoice and is usually considered a
binding agreement although the price might
change in advance of the final sale.
Contract of purchase and sale
An agreement of sale constitutes the terms and
conditions of sale of a property by the seller to the
buyer. These terms and conditions include the amount
at which it is to be sold and the future date of full
payment.
Being an important document in the sale
transaction, it enables the process of sale to go
through without any hurdles. All the terms and
conditions included in the agreement of sale must be
understood thoroughly by both the parties and
obeyed throughout the sale process till the time the
sale deed is made. Agreement of sale is the base
document on which the sale deed is drafted.
INVOICE
A commercial document that itemizes a
transaction between a buyer and a seller. An
invoice will usually include the quantity of
purchase, price of goods and/or services, date,
parties involved, unique invoice number, and tax
information. If goods or services were purchased
on credit, the invoice will usually specify the terms
of the deal, and provide information on the
available methods of payment.
Commercial invoice
A commercial invoice is a document used in foreign
trade. It is used as a customs declaration provided by
the person or corporation that is exporting an item
across international borders. A commercial invoice
must also include a statement certifying that the
invoice is true, and a signature.
A commercial invoice is used to calculate tariffs,
international commercial terms and is commonly used
for customs purposes.
The definitive invoice for payment usually has only the
words "invoice". This invoice can also be used as a
commercial invoice if additional information is
disclosed.
1. What kind of relations we can engage with business
relations?
2. Definition and nature of a contract and types of
contract?
3. Distinguish the terms quotation with pro-forma
invoice?
4. Full content of the invoice