Why do contracts need explicitly indicated terms and conditions?

Why Explicitly Indicated Terms and Conditions in Contracts Are Absolutley Non-Negotiable—And How That Plays Out in Real Cases

Summary: Clear, explicitly indicated terms and conditions are the backbone of enforceable, effective contracts, especially in international trade. Without them, parties open themselves up to bitter misunderstandings, spiraling disputes, or even expensive lawsuits. This article unpacks the concrete reasons contracts need explicitly spelled-out clauses, walks through what actually happens when things get fuzzy, includes screenshot-style process steps, compares practical “verified trade” standards between countries, and tells the story of cross-border certification headaches—all based on industry experience and hard, checkable data from WTO, OECD, and real regulatory sources.

How Clear Contract Terms Solve Real Problems

Let’s not beat around the bush: anyone who’s actually tried to get paid for an international order, or sort out who’s stuck with defective cargo, knows that “ambiguity kills business.” In my years working with import-export contracts for a major electronics brand, I lost count of the times a $20,000 dispute started with a single missing definition (think: “Is delivery ‘CIF’ Port of Rotterdam or ‘FOB’ Shanghai?”).

What you discover quickly is that contracts aren’t just annoying paperwork. They’re a survival kit for when the honeymoon ends. Once, our team agreed with a German importer on “delivery within reasonable time.” Sounds sensible, right? Nope. Three weeks later, our definition of “reasonable” (after port strikes delayed our shipments) was very different from theirs—and the emails turned nuclear fast.

So, what actually goes wrong without explicitly indicated contract terms?

• Ambiguous or missing terms mean parties can (and do) interpret obligations differently.
• In court or arbitration, the judge will fill holes based on local law—which may favor one side heavily.
• Disputes get longer, more expensive, and riskier.
• Trade certifications or customs clearances can get denied if docs are not clear—real money lost.

Sounds dramatic, but this is backed by data. The International Chamber of Commerce notes that clear contracts reduce trade disputes by 30% (ICC Dispute Resolution 2021 Statistics).

Breaking It Down — How Explicit Indication Actually Works (With Step-by-Step Example)

Let’s walk through a step-by-step “how it could go wrong”—and how to do it right. Let’s say you’re exporting steel parts from China to Italy.

Step 1: Listing the Parties and the Products

First time I drafted a contract, I copied the company names from WeChat chats into the contract. Tiny problem: I used the group’s informal nickname, not their full legal entity. Italian customs sniffed inconsistency in paperwork and held the shipment for “ownership confusion.” Lesson learned: Always use registered legal names—exactly as in corporate records and government registrations.

Step 2: Clearly Indicate Key Terms (Like Delivery, Payment, Quality, Risk Transfer)

One big pain point—everybody thinks they know what FOB, CIF, or DDP means, but customs inspectors don’t care about fuzzy local shortcuts. The WTO’s Trade Facilitation Agreement literally says all essential terms should be “unambiguously communicated and documented” (WTO TFA Article 10).

When I tried to shortcut the contract (“delivery: the goods will be shipped this month” rather than “FOB Shanghai, Incoterms 2020, shipment window June 1-10”), the Italian partner’s bank rejected our documents for the payment. Their compliance team said: “We require explicit shipment terms as per Incoterms 2020.” That’s real life—shortcuts got us nowhere.

Step 3: Clarity About Inspection and Quality Certification

“Quality certificates issued by mutually agreed inspection agencies” sounded fair (we thought). But then: China recognized CIQ, Italy wanted SGS. With no explicit agency listed, the argument dragged for two weeks. Lost time, lost money. Pro tip: Always specify not just the required certificate, but who issues it, following what standard.

Step 4: Governing Law and Dispute Resolution Clauses

I once left this “to be agreed.” Huge mistake. When the dispute hit, their lawyers insisted on Italian court; we assumed we’d arbitrate in Hong Kong. The delay alone cost us the profit margin. Now, I always indicate the jurisdiction and arbitration body in plain words (e.g., “All disputes resolved by SIAC in Singapore under the UNCITRAL Arbitration Rules”).

What Can Go Wrong Without Explicit Terms—A Real-World Case (With a Twist!)

Let me tell you about a friend’s company (call them ACo) in a “verified trade” mess between South Korea and the EU. ACo shipped organic chemicals under a free trade agreement, but listed “specialty chemicals, spec as per order” on the invoice. Korean customs accepted this just fine (local practice), but in Rotterdam, EU importers needed the Harmonized System (HS) code and a precise product name. Result? The EU customs rejected it as unverifiable. Shipment stuck. Buyer furious.

After much groveling, ACo had to fly an agent to Rotterdam just to clarify in person. All because of a six-word fuzziness.

Here’s a snip from a German customs compliance forum, users discussing the same headache:
“If the product description doesn’t match the tariff code, we always run into blocks at customs. Don’t trust what the shipper’s paperwork says—use the explicit code, every time.” (iww.de, German Forum Post)

Industry Expert Chimes In

I once asked a long-serving compliance manager at a Fortune 500 logistics firm how many disputes could have been avoided with clearer contracts. She laughed: “Over half. Most disputes aren’t about intent—they’re about what’s not said plainly. ‘Indicate’ everything, or the gap will swallow you.”

International “Verified Trade” Requirements—Who Expects What? (Table)

Under WTO rules, all members are supposed to move toward “explicitly indicated and verified” contract standards, but enforcement and practice differ. Here’s a quick snapshot for a few major systems:

Details matter. In the EU, for example, “chemicals, as discussed” will get you flagged—and possibly fined. Meanwhile, in the USA, the C-TPAT audit actually reviews invoice line-items for explicitness (see: U.S. CBP C-TPAT Program).

Personal Learnings and (Honest) Reflections

Having butchered more than one cross-border contract, I can say this: explicitly indicated terms and conditions are not academic hair-splitting. They’re the difference between “paid on time, goods released” and “months of angry back-and-forth, with everyone losing.” And harsh as it sounds, just copying samples online is not enough—it has to mean what both sides can evidence, wherever the contract gets called into question.

Sure, it takes more time to spell out every piece, and partners often resist (“come on, we all know what FOB means”), but if your money, goods, or legal reputation is at risk, it’s not negotiable.

Conclusion: What To Do Next

So, here’s the bottom line. Contracts must have explicitly indicated terms and conditions to survive legal, regulatory, and practical scrutiny. It’s painful only if you skip it—because as soon as something goes wrong, everyone is suddenly obsessed with what “indicated” meant in the first place.

My practical suggestion: for every cross-border deal, do three things. First, lock in all the key specifics in writing—even if it makes the contract longer. Second, check (not just ask) what customs and trade standards your counterpart’s authorities require—websites like WTO, OECD, and your destination customs portal will spell it out.
Third, if a dispute or confusion still pops up, push to amend your contract mid-stream, before the paperwork ever gets to a border or a bank reviewer.

And, if anyone tells you “contracts just need basic good faith”—well, you only have to get burned once to never believe that again.

Written by: Alex Tang, 12 years cross-border trade contracts experience
Sources: - International Chamber of Commerce, Dispute Resolution Stats: iccwbo.org - WTO TFA: wto.org