By Gustavo Adolfo Gómez Ferré, Barcelona lawyer with a law degree from the Universitat de Barcelona, diploma in International Procedural Law from Universitat Pompeu Fabra, member of the Il·lustre Col·legi de l’Advocacia de Barcelona, and lawyer, director and founder of Bufet Gómez Ferré.
Spanish exports are growing steadily —according to ICEX, more than 240,000 companies now export regularly—, but that same momentum multiplies cross-border legal disputes: non-payments, quality conflicts, difficulties enforcing judgments abroad and, above all, badly drafted contracts that leave the Spanish company with no tools to react. A good international export contract is not measured by its length but by its capacity to protect the exporter before the problem appears. At BUFET GÓMEZ FERRÉ we are commercial and corporate law specialists and international trade lawyers, and in this article we explain the most common mistakes in export contracts, their legal and economic risks, and the essential clauses to safeguard your operations.
If your current problem is not prevention but recovering an international unpaid invoice, it is worth reading in parallel our guides on handling international late-paying clients, recovering unpaid export invoices and how to recover unpaid debts abroad.
Why exporting is legally riskier
Unlike a domestic sale, in an export operation several layers of complexity converge that the contract must absorb:
- Multiple legal frameworks: law of the exporter’s country, of the importer’s country, EU regulations where applicable, international treaties (CISG, Lugano and Hague Conventions, etc.).
- Cultural and language differences: concepts such as “delivery”, “acceptance” or “defect” are not interpreted the same way in Germany, Morocco or Brazil; and a bilingual contract without a prevailing-language clause may be partially invalidated.
- Enforcement difficulty: winning a favourable judgment in Spain does not mean the buyer will pay. Without a recognition treaty, the judgment may be a worthless piece of paper in the destination country.
- Currency and transfer risk: foreign exchange restrictions, capital controls or international sanctions may block payment even if the buyer is willing to pay.
On top of this, there is a regulatory framework many companies overlook: the 1980 Vienna Convention on Contracts for the International Sale of Goods (CISG) is directly applicable law between businesses from its more than 95 signatory States; if its application is undesired, it must be expressly excluded in the contract, and that omission is one of the most costly mistakes we see at the firm.
The practical consequence is direct: the contract is your only common law with the foreign buyer. Anything not expressly agreed will end up being resolved through the slowest, most expensive and most unpredictable channel —usually in the defendant’s jurisdiction and under foreign law—.
Most frequent mistakes and the consequences they trigger
Every mistake in drafting the contract translates, sooner or later, into a specific economic risk. This is the map of the seven failures we see most often at the firm and what they end up causing:
| Mistake in the contract | Risk / economic consequence |
|---|---|
| Contract subject defined too generically “Supply of industrial machinery” without technical specifications, reference standards or conformity criteria. |
Quality and conformity disputes: the buyer withholds payment alleging minor defects as an excuse to renegotiate the price. |
| Incomplete payment clause Missing currency, receiving account, allocation of bank fees, late-payment interest or consequences of partial non-payment. |
Chronic collection delays: actual payments at 120-270 days and partial non-payments that suffocate the exporter’s cash flow. |
| Missing or wrongly chosen Incoterms Confusion between FCA, CIF, DAP or DDP, or no Incoterm at all. |
Unforeseen costs and risk conflicts: tariffs, customs storage or goods return that nobody wants to assume, and risk shifted to the exporter. |
| Omission of payment guarantees Open-account sale without letter of credit, bank guarantee or credit insurance. |
Total or partial international non-payment: no safety net when the buyer won’t or can’t pay, especially outside the EU. |
| Generic template not adapted to the country Same model for Germany, Algeria or Vietnam, ignoring currency, local formalities or mandatory clauses. |
Unenforceable clauses and administrative blocks: sanctions, capital controls or local formal requirements that prevent collection even if the buyer is willing. |
| No jurisdiction or applicable-law clause Probably the most expensive mistake. Without an agreement, Rome I, the CISG or the law of the defendant’s country applies. |
Practical impossibility of claiming: obligation to litigate in the buyer’s country, with local lawyers, 2-3 year timelines and costs that may exceed the debt. |
| Language without a prevailing-version clause Contract signed in English and in the buyer’s language without indicating which one prevails in case of discrepancy. |
Contradictory interpretations and partial nullities: key clauses that may become ineffective due to translation divergences. |
The size of the losses depends less on the client’s size than on the quality of the contract signed: poorly documented €30,000 operations can lead to lawsuits costing €80,000, while well-secured €200,000 operations are settled by negotiation in a matter of weeks.
How to safeguard the contract: essential clauses and operational best practices
Effective protection combines two layers: the clauses written into the contract and the operational measures surrounding the deal.
Clauses that should never be missing
- Applicable law. Expressly designate the law governing the contract (usually Spanish law) and consciously decide whether to apply or exclude the CISG. Without an agreement, the Rome I Regulation applies, with hardly predictable outcomes.
- Jurisdiction or arbitration. Choose between courts (which city and country) or international arbitration (ICC Paris, CIAM-CIAR Madrid, LCIA London). In exports, arbitration is usually preferable because the award is enforceable in more than 170 countries thanks to the 1958 New York Convention, while enforcement of a Spanish judgment depends on a bilateral treaty with the buyer’s country.
- Incoterm 2020. Specify the exact Incoterm (e.g., CIF Hamburg, Incoterms 2020) and, if necessary, complement it with details about insurance, transport and customs documentation.
- Payment conditions and guarantees. Currency, deadlines, receiving account, fees, late-payment interest (Law 3/2004) and guarantee mechanism: prepayment, payment on delivery, irrevocable confirmed documentary letter of credit or bank guarantee.
- Inspection and acceptance. Timeframe and procedure for the buyer to inspect the goods and, where appropriate, report defects. Without this clause, a late notification can be used to withhold payment indefinitely.
- Penalties and indemnification. Liquidated damages for delay or defect, maximum liability cap for the exporter and exclusion of indirect damages and loss of profits.
- Force majeure and hardship. Covered events, notification, suspension period and early termination if the cause persists. The ICC 2020 model clause is the standard reference.
- Confidentiality and intellectual property. Especially in machinery, technology or software exports: ban on reverse engineering, trademark and know-how reservation.
- Contract language. A single language or, if bilingual, a prevailing-language clause indicating which version prevails in case of interpretive discrepancy.
Operational best practices (outside the contract text)
Clauses are a necessary but not sufficient condition. These four practices make the difference between a paper contract and a contract truly protected:
What happens in case of breach of an export contract
When the foreign buyer stops paying, withholds the goods or alleges defects to renegotiate, the exporter usually goes through these stages in this order:
- 1. Direct negotiation
Formal written communication (preferably certified letter with sworn translation or local equivalent) and proposal of a payment schedule or technical solution. It is the fastest and cheapest route. If the amount justifies it, it is worth supporting it with a well-drafted debt claim letter.
- 2. International mediation
With a mediator accredited at an international institution (ICC Mediation Centre, CEDR London, etc.). No court costs, confidential and fast. Useful when preserving the commercial relationship is a priority.
- 3. International arbitration
Alternative judicial route with an enforceable award in more than 170 countries thanks to the 1958 New York Convention. It is the usual option when the arbitration clause is well drafted.
- 4. Court litigation
Before Spanish courts, if jurisdiction was so agreed. Within the EU, enforcement benefits from the Brussels I bis Regulation. Outside the EU, the applicable recognition treaty must be studied case by case.
- 5. Enforcement and collection
Even after winning, collection depends on locating enforceable assets of the debtor, usually in their country. Cross-border attachments, exequatur and, where appropriate, recourse to local correspondents come into play here.
Case study: export of machinery to Latin America
| Stage | Detail |
|---|---|
| 📋 Situation | A Spanish company exports an industrial machinery line to a Latin American buyer for €185,000. The contract, drafted on a reused generic template, does not fix an Incoterm, includes no jurisdiction or applicable-law clause, and provides for final payment of 40% at 60 days from delivery “against acceptance”. |
| 🔍 Problem | After delivery, the buyer alleges minor defects and withholds the final €74,000. With no deemed-acceptance clause, no inspection protocol and no agreed forum, the Spanish company finds that it would have to sue in the buyer’s country, with local lawyers, 2-3 year timelines and an initial litigation budget exceeding €35,000 with no guarantee of collection. |
| ⚡ Action | Bufet Gómez Ferré takes legal direction and acts on three simultaneous fronts: technical expert report documenting compliance with delivery, formal demand translated and served in the buyer’s country, and direct negotiation with credible threat of coordinated action with local correspondents and blocking of future operations. |
| ✅ Result | Out-of-court settlement for €68,000 paid in three instalments guaranteed by an international promissory note, closed in less than three months. Effective recovery of 92% of the debt, avoiding litigation of disproportionate cost and duration. |
| 🔑 Lesson learned | The problem was not the breach, but the contract. An ICC arbitration clause seated in Madrid, an DAP Incoterm and an inspection protocol with deemed acceptance would have resolved the conflict in weeks, not months, and at a much lower cost. |
Conclusion from the case: in exports, prevention costs hours; reaction costs months and tens of thousands of euros. Legal review of the contract is always the most profitable investment in any export project.
Frequently asked questions
The golden rule is: the one the parties agree on. The Rome I Regulation (EU) and the CISG itself recognise the principle of party autonomy. Without an agreement, the law of the country most closely connected to the contract applies —usually the seller’s country in a sale of goods—. For a Spanish exporting company, the recommendation is to expressly designate Spanish law and consciously decide whether to apply or exclude the CISG (which operates as uniform substantive law among signatory States and, absent express exclusion, prevails over the Civil Code and the Commercial Code).
In exports, international arbitration is usually preferable for three reasons: (1) enforceability: the award is recognised in more than 170 countries under the 1958 New York Convention; (2) specialisation: arbitrators know international trade and the institution is chosen (ICC, CIAM-CIAR, LCIA) by sector; (3) confidentiality. In return, arbitration is more expensive in initial costs and offers no ordinary appeal. For small-value operations or between EU companies, ordinary courts (supported by the European order for payment or the Brussels I bis Regulation) can be more efficient.
Yes. In addition to the principal and late-payment interest (in Spain, Law 3/2004 on commercial late payments), you can claim direct damages (transport, storage, return of goods costs) and loss of profits (operations lost due to the non-payment), provided they are causally linked and reasonably foreseeable. The CISG (arts. 74-77) and Spanish law allow this claim, but the quantification must be very well documented to succeed.
The main ones, from strongest to weakest: (1) prepayment in full or in part, ideal when the negotiating position allows; (2) irrevocable confirmed documentary letter of credit (ICC UCP 600), the standard banking guarantee in international trade; (3) on-demand bank guarantee; (4) export credit insurance (CESCE, Crédito y Caución, Coface, Atradius), covering commercial non-payment and, depending on the policy, political risks; (5) export factoring with or without recourse. The choice is not theoretical: it depends on the destination country, the amount, the client’s history and the urgency of collection. An operation to a medium-to-high risk country without any of these guarantees is, in practice, a speculative sale.
This is one of the most common tactics. A well-drafted contract must provide for: (1) inspection period and form of notifying defects; (2) deemed-acceptance protocol (positive silence after a deadline); (3) technical expert report in case of disagreement. Without these clauses, the buyer can keep the dispute open indefinitely. For the claim stage, our guides on claim for breach of a sales contract and, if the breach is on the foreign supplier’s side, what to do if a supplier breaches a contract are useful.
Free legal consultation – Lawyer specialising in international export contracts in Barcelona
As commercial and corporate law specialists and international non-payment recovery lawyers in Barcelona, we have been supporting exporting companies for years in operations with the EU, the United Kingdom, the United States, Latin America, Morocco and Asia. We know which clauses work in each market and where the risks lie. Send us your free initial consultation and we will tell you without obligation how to safeguard your next export operation:
Don’t sign your next export contract without legal review. A well-designed contract is worth, on average, tens of thousands of euros in avoided losses. Contact us and we will explain transparently how to protect your international operations.