A cross-border sales contract: language, law, currency

In substance, a contract for a car stays the same whether buyer and seller live in the same town or in two countries: parties, VIN, mileage, representations, known defects, price, handover. What goes in and how is covered in the guide on the sales contract. The border adds no new content, but it makes four things unclear that are silently settled at home: which language the contract is valid in, which law governs it, which currency is paid, and where and when the car changes hands.

Each of these questions has a legal answer even when nothing is agreed. But that answer sits in rules of private international law that hardly anyone knows, and it does not always come out the way both sides silently assumed. So the answers belong in the contract explicitly. It takes four sentences, and you will find them at the end of this guide.

This guide describes the mechanics in general terms and is no substitute for legal advice. For a car in a higher price bracket, a short consultation with a lawyer, a motoring club or a consumer advice service in your own country is money well spent. Carvexia is not a party to any sales contract; it is made between you and the seller.

A contract that one side cannot read is the weakest point in any later dispute. The usual solution is a bilingual version in two columns, sentence by sentence side by side: the seller's language on the left, the buyer's on the right. If both have a good command of a third language, such as English, a single version in that language works too — but only if both can genuinely read it rather than just nodding politely.

Two versions can contradict each other without anyone intending it. A phrase like “accident-free” or “sold as seen” carries a different connotation in each language and a different legal weight in each legal system. So add a sentence stating which version prevails if they differ. The sensible choice is usually the language of the law that is to apply: a contract under German law with a binding Polish version forces a court to interpret a Polish term by German rules.

Machine translations make a usable draft and a poor final version. Before signing, have the foreign-language version read by a native speaker — especially the sentences on defects, warranty and payment. And think of the authority in the destination country, which may want to read the contract too: some registration and customs offices ask for a translation, occasionally a certified one.

Without an agreement, an ordinary sales contract in Europe is as a rule governed by the law of the country where the seller habitually resides. Within the EU the Rome I Regulation says so, and a Swiss court applies the same principle under the Swiss Federal Act on Private International Law. If you buy privately from a private seller in Italy, Italian law applies unless you agree otherwise — with its own rules on warranty, time limits and exclusions.

Both sides may also choose the applicable law, and one sentence is enough. That is especially worthwhile when the situation is not clear-cut: when the car is not where the seller lives, when the handover takes place in a third country, or when the seller is in the middle of moving. Then the legal answer is less obvious than either side believes.

If you buy from a dealer as a consumer, there is an important exception. If the dealer directs their business at your country — advertising there, or with an offer clearly aimed at buyers from your country — you generally keep the protection of the mandatory consumer rules of your country of residence, even if the contract chooses another law. If, on the other hand, you travel to a dealer abroad on your own initiative and buy there, their law usually applies. When businesses in different countries buy from each other, the UN Convention on the International Sale of Goods may also apply unless the contract excludes it.

Separate from the question of law is the question of where a claim would be brought. There are rules for that too — a regulation of its own within the EU, and the Lugano Convention in relation to Switzerland — and there, too, consumers enjoy special protection against dealers. More important than any clause, though, is a practical insight: a contract that leaves nothing open after the handover never needs a court.

The price goes into the contract with its currency, and in exactly one. That is not a given when the seller advertises in francs and the buyer thinks in euros, or the other way round. If the contract shows a number without a currency, or two amounts in two currencies side by side, it is open which one counts as soon as the rate moves between signing and payment — and it will move.

So write down which currency the price is owed in and what counts as paid. The cleanest wording: the price is deemed paid when the full amount in the contract currency has been credited to the seller's account. That also settles, in passing, that conversion and transfer costs lie with the buyer, because what counts is what arrives, not what was sent. If you want to split that differently, it has to be stated explicitly.

If, exceptionally, payment is to be made in another currency, you need a rate with a source and a reference date, such as the European Central Bank's reference rate on a named day. “At the day's rate” without a source is no agreement, because every bank has its own rate of the day. Add the payment date and what applies if the money has not arrived by then: the handover is postponed, or the seller may withdraw from the contract. What converting money actually costs, and when to fix the rate, is covered in the guide on paying in a foreign currency.

At some point the risk passes: from that moment the buyer bears whatever happens to the car. In many legal systems that point is the handover, but not in all — Swiss contract law, for instance, in principle lets benefit and risk pass as soon as the contract is concluded, unless agreed otherwise. At home this hardly matters, because signing and handover often happen on the same afternoon. Across a border there are frequently days in between, because the buyer is arranging plates, booking transport or still has to travel.

So write down where and when the handover takes place, and that risk passes only on actual handover. Until then the car stays with the seller, on their insurance, and is moved no more than necessary. Recording the mileage at signing, plus a small allowance, as an upper limit avoids the surprise of a sold car that has been on one last holiday.

If a carrier collects the car, a third party joins in. If you buy from a dealer in the EU as a consumer and the dealer arranges transport, the dealer bears the risk until the car reaches you. If you hire a carrier yourself that the dealer did not offer, the risk generally passes to you as soon as the car is handed to that carrier. Between private individuals the applicable law decides — one more reason to write it down. Either way, a condition report with photos taken before loading and signed by the driver belongs in the file.

Across a border, the contract is not just evidence between the parties but a document that authorities read. On import across a customs border, the customs office assesses the import charges on the value shown by the contract and the proof of payment. The registration authority in the destination country wants to see that you are the owner. Which details are needed for that is decided by the country where the document is presented, not the one where it was signed.

Some requirements come up often: full names, addresses and ID numbers of both sides, the registration number for companies, the VIN, the price with currency, place and date, original signatures. In some countries the seller's signature must be officially certified for the change of ownership; others require a form of their own instead of a freely drafted contract. The current list comes from the registration authority in the destination country and, on import, from the customs administration. Ask before signing: a seller who has to sign again for an authority is there at the handover, but not three weeks later in another country.

And put in the price that is actually paid. A lower figure stands out on import, where contract and proof of payment lie side by side, and it weakens your position over any defect. The four sentences a border adds: