A contract is an agreement which sets forth binding obligations of the relevant parties. It is enforceable by law, and any party that fails to fulfill his contractual obligations may be sued and forced to make compensation, though most contracts do not give rise to disputes.
The contract is based on agreement, which is the result of business negotiations. There are two types of business negotiations: oral and written. The former refers to direct discussions conducted at trade fairs or by sending trade groups abroad or by inviting foreign customers. Business discussions through international trunk calls (long distance call) are also included in this category.
Written negotiations often begin with enquiries (询价) made by the buyers to get information about the goods to be ordered such as quantity, specifications（规格）, prices, time of shipment（delivery） and other terms. An enquiry is made without engagement (约束力) on the part of the enquirer. In case of a first enquiry, that is, an enquiry sent to an exporter whom the importer has never dealt with, information should be given in the enquiry as to how the name and address of the exporter have been obtained（get）, the business line (业务范围) and usual practice of the importer, etc. so as to facilitate（方便于）the exporter’s work.
In response to an enquiry, a quotation may be sent by the exporter which should include all the necessary information required by the enquiry. Sometimes, the exporter may make an offer to an importer voluntarily. A firm offer（实盘） is a promise to sell goods at a stated price. In making a firm offer, mention should be made of the time of shipment and the mode of payment desired in addition to an exact description of the goods including the quantity, quality, specifications, packing, etc. The validity period（有效期）is indispensable to (be indispensable to 对必不可少的) a firm offer. An offer is considered open (valid有效的) until after a stipulated time or until it is accepted or rejected.
The offeree may find part of the offer unacceptable and may raise (for further discussions) his own proposals which constitute a counter-offer(还盘). A counter-offer may be made in relation to （关于）the price, terms of payment, time of shipment or other terms and conditions of the offer. It is a refusal of the offer which will be invalid （失效）and unbinding （无约束力） once a counter-offer is made. The counter offer thus becomes a new offer made by the original offeree to the original offerer. No matter whether business negotiation is conducted orally or by way of writing, transaction is considered concluded （达成）once an offer or a counter-offer is accepted. That is to say, a legitimate （legal）contract can be either in written or oral form. In business practice however, a written contract is generally prepared and signed as the proof (evidence 证明) of the agreement and as the basis for its execution（执行）. When the contract is made by the seller, it is called a sales contract, and when made by the buyer, a purchase contract. A sales or purchase confirmation is less detailed than a contract, covering only the essential terms of the transaction. It is usually used for smaller deals or between familiar trade partners.
The setting up （结构）of a contract is similar to that of a trade agreement or any other type of formal agreements. It generally contains the following items:
1．The title.（name） The type of the contract is indicated in the title such as Sales Contract, Purchase Contract, Consignment Contract (寄售合同), etc. The number of the contract and the date are given bellow the title to the right side.
2．The contract proper （合同正文）. This part includes A. the full name and address of the buyer and the seller. B. The commodities involved including quantity, quality, specifications, packing, etc. C. All the terms and conditions agreed upon such as the price, total amount, terms of payment,
transportation, insurance etc. D. Indication of the number of original copies（原件） of the contract, the languages used, the term of validity and possible extension（延期）of the contract.
3．The signatures of the contracting parties (signatory) indicating their status as the seller or the buyer.
4．The stipulations (规定) on the back of the contract are constituent parts (necessary part) of the contract and are equally（同样） binding （有约束力）upon the contracting parties. These may include the shipping documents required, force majeure (disaster)（不可抗力）, arbitration (仲裁), claims etc.
Here are two examples of a sales contract:
