How to Write a Sales & Purchase Agreement (SPA)

Step-by-step

1. 1. Parties & recitals
   State legal names, incorporation numbers and registered addresses. The recitals should describe the trade in one sentence.
2. 2. Product & specification
   Attach the specification annex - ASTM/ISO/GAFTA/FOSFA references, moisture, sulphur, ash, calorific value as applicable.
3. 3. Quantity & tolerance
   State contract quantity, trial quantity if any, and MOLOO or +/-5% tolerance at seller/vessel option.
4. 4. Price & payment
   Fix price mechanism (flat or index-linked). Payment: MT700 sight or usance LC under UCP 600, or SBLC under URDG 758.
5. 5. Delivery Incoterms
   Cite Incoterms 2020 rule and named port. Include laycan window, laytime, demurrage rate per running day pro rata.
6. 6. Inspection & title
   Name the independent inspector (SGS, Intertek, SAYBOLT). Define title/risk transfer at Incoterms delivery point.
7. 7. Force majeure, law & arbitration
   Include ICC force majeure catalogue, governing law and the seat and rules of arbitration (ICC, LCIA or SIAC).

Common pitfalls to avoid

• Leaving placeholder text like [ ] or {seller name} in the executed copy.
• Missing signature date, or signing outside the validity window quoted on the document.
• Referencing Incoterms without the year - always cite 'Incoterms 2020'.
• Omitting the arbitration seat and governing law - defaults vary by country.

FAQ