Commercial activities and types of contracts

1. Foreign trade comprises three main activities: importing (i.e. buying goods from foreign Sellers), exporting (i.e. selling goods to foreign Buyers) and re-exporting (i.e. buying goods from foreign Sellers and selling them to foreign Buyers without processing in one's own country).

2. All commercial activities in foreign trade may be divided into basic ones associated with the conclusion of foreign trade contracts for the exchange of goods and auxiliary ones ensuring their successful performance, i.e. associated with carriage of goods, their insurance, banking operations (financing the deals, settlement of payments between the Sellers and the Buyers, guaranteeing the strict observance of their mutual liabilities), as well as Customs and other activities. Conclusion of agency agreements, agreements with the Suppliers for export goods and with Importers for the purchase of goods, agreements with advertising agencies and firms dealing with the market research and with other organizations helping to achieve the targets set for for­eign trade also refer to auxiliary activities.

3. There may be about 10 or more auxiliary operations to one basic. In accordance with commercial usage existing in capitalist countries, contracts of sale and other agreements may be concluded either verbally or in writing. The laws of Russian Federation do not recognize the validity of any agree­ment concluded verbally by the Trade Representation of Russian Federation abroad or by export or import organization in this country. According to Russian law contracts must always be made in the form or duly signed documents containing the terms of an agreement between two firms or associations called counterparts (or parties) to supply goods or services as a rule at a fixed price.

4. Agreements and contracts made in this country are to be signed by Director General of the foreign trade association or his deputies (first signature) and by directors of firms or their deputies (second signature). Sometimes senior engineers of the firms are legally authorized to sign these documents.

5. In international trade contracts of sale, contracts for construction work (very often for the delivery, erection and commissioning of the equipment for industrial enterprises) and lease are most frequent among a variety of basic deals. Contracts of sale include turnkey contracts and large-scale contracts on a compensation basis² There may also be barter deals and compensatory deals¹.

6. Licence agreements stand apart from all the above contracts because they do not deal with selling and buying physical goods but with the sale and purchase of ideas, scientific-technical knowledge in the form of licences, patents and know-how. As a rule there are practically no standard licence agreements. Each licence agreement is more or less unique in itself, i.e. has its own specific individual characteristics.

Notes on the text:

1) a compensatory deal – компенсационная сделка

2) a large-scale contract on a compensation basis – крупномасштабный контракт на компенсационной основе

Компенсационная сделка – договор купли-продажи, предусматривающий взаимную поставку товаров на равную стоимость. В отличие от товарообменной (бартерной) сделки – договора мены, при компенсационной сделке покупатель товара уплачивает обусловленную цену товара.