We are often approached by several clients from across the world, from Companies to business individuals, who have paid Indian Companies/ persons for the purpose of purchasing their products or use services or engage in any business, without any agreement or contract. In such situations, the only agreement is the acceptance of terms of contract via E-mail or Whatsapp or phone. These International businessmen neither engage into a properly signed business contract nor verify the genuineness of the exporter or service provider. Hence, exposing themselves to a major cyber fraud. We are going to provide few basic tips before engaging into any business with a Company/ Business located in India :-
- Verify Details of the Company from Ministry Records – In India there are One Person Companies, Limited Liability Partnerships, Private Limited Companies and Public limited Companies which have to be registered. These details can be procured from mca.gov.in . India also permits Sole proprietors and Partnerships registered under Indian Partnership Act to do business. These businesses are not registered on the aforesaid portal. Further, every person in India has been issued an AADHAAR card, an unique identification number which can be retained as a precautionary measure.
- Check for PAN and TAN Number – PAN and TAN are Tax identification Numbers which would help you to verify that such a business is registered with the Tax authorities in India.
- Call for the Import Export License – It is essential for any business dealing with exports to have an Import Export License and an Import Export Code (IEC) is provided by the Indian Authorities to such Companies and Businesses who are permitted to do business. Hence, you must demand for the IEC
- Engage into an Agreement – The biggest drawback, a business person or entity would face is if it does not possess a contract penning all the terms and conditions of the contract. It is foolish of a business to engage into an international trade without a contract since these businesses are discovered on websites and one cannot be certain that they are doing business with a genuine business or a cyber fraudster. Ultimately, when you have to approach the Courts to sue the defaulter, these businesses are put in a tough spot because most of their Agreement is based on E-mail correspondences, Whatsapp messages/ calls, Zoom calls, SMS, etc with no cancellation policies, no compensation for delay policy, no refund policies, etc. Hence, obtaining a relief from the Courts in these situations is time consuming to provide evidence.
- Quality and Quantity Check – Before shipment of the goods, a quality and quantity check can be done by engaging agents in the country of dispatch of shipment. Further such an quality check agent must be made liable for any defects and a separate Agreement must be entered with strict liability. This Pre-shipment check ensures that the goods meet the specific criteria as required by the Consignee.
- Demand for Shipping Documents – Shipment details such as Bill of Lading, Commercial Invoice, Packing list, Airway Bill, Certificate of Origin, QC check certificate, etc must be demanded by the Consignee and verify the same to ensure that the goods are actually shipped.
- Using Escrow Services – It is best to use escrow services in International Trade as the payment will not be released until and unless the goods or services are to the satisfaction of both the parties.
We provide assistance in verification and escrow services, escrow agreements, drafting of international trade agreements and International Service Agreements to ensure that the rights are protected and in case of a dispute a proper remedy is available to you. Our Legal Team can ensure that the trade risks are minimised so that you can do business in peace. Contact us for more details.