Contractual oversights can cost importers and exporters millions. Whether you're sourcing materials overseas or distributing products across borders, the fine print in trade-related agreements can shape your entire business operation.

Understanding what your legal team prioritizes helps you avoid customs violations and financial risk. A US Customs Lawyer typically looks for five essential clauses that secure compliance, protect against liability, and help you sleep better at night.

Why Contract Clauses Matter in International Trade

Legal contracts serve as the framework for all trade dealings. From suppliers to freight forwarders, every party in a supply chain brings unique obligations—and risks. Customs authorities in the US are strict about documentation, origin, classification, and compliance. A poorly drafted contract can trigger audits, delays, or worse—fines and penalties.

Contracts tailored for customs compliance ensure you're not left exposed when enforcement or inspections occur. Legal teams don’t just look at general business terms; they zero in on trade-related risks and build clauses to minimize them.

1. Country of Origin Declaration

What It Means

This clause requires the seller to clearly specify the country where goods are manufactured, assembled, or substantially transformed. It’s foundational in determining the duties, taxes, and trade program eligibility.

Why It’s Essential

• Errors can lead to penalties or reclassification
  An incorrect origin declaration can result in CBP denying preferential tariff treatment or imposing additional duties.
  
  
• Critical for applying for preferential duty programs (e.g., USMCA, GSP)
  If the origin is inaccurate, the goods may lose eligibility for trade benefits, leading to unexpected costs and legal exposure.
  
  
• Customs audits often begin with origin misstatements
  Origin disputes are a red flag for regulators, triggering deeper audits and inspections of your shipping history.
  
  

What to Include

• A requirement for documentation verifying origin (e.g., certificates)
  This protects you with proof during customs audits or disputes.
  
  
• Terms allowing for contract termination if origin fraud is discovered
  Such clauses give you an exit if your partner falsifies information.
  
  
• Language that aligns with CBP (Customs and Border Protection) rules
  Referencing the correct statutes reduces room for legal gray areas.
  
  

2. HS Code Classification Clause

What It Means

The Harmonized System (HS) Code is a global numerical classification system used by customs authorities. It determines tariffs, import restrictions, and inspection levels.

Why It’s Essential

• Misclassification may cause overpayment or underpayment of duties
  Overpayments waste money, while underpayments may trigger future penalties or cargo holds.
  
  
• Reclassification by CBP can trigger retroactive fines
  CBP can reassess previous entries and charge penalties going back five years.
  
  
• Impacts admissibility of the goods and applicable import regulations
  Certain HS codes are linked to product-specific rules, like FDA or EPA clearance.
  
  

What to Include

• Responsibility for determining HS codes—importer or supplier
  Clarify who bears liability in the event of a misclassification.
  
  
• Agreement on dispute resolution in case of misclassification
  This avoids costly legal action if the parties disagree over which code applies.
  
  
• Inclusion of backup documentation (e.g., prior rulings, CBP advice)
  Supporting documents provide defense during customs reviews or audits.
  
  

3. Indemnity Clause for Customs Penalties

What It Means

An indemnity clause assigns financial responsibility if a party’s mistake results in customs violations or penalties. This typically protects the importer from third-party errors.

Why It’s Essential

• Addresses liability for misdeclared values or incorrect documentation
  Without this clause, importers may be stuck paying for others' mistakes.
  
  
• Offers financial protection from CBP seizures or penalty actions
  These clauses safeguard your budget and avoid disruptions in cash flow.
  
  
• Helps importers recover costs resulting from third-party mistakes
  Think of it as insurance when working with overseas partners or brokers.
  
  

What to Include

• Clear scenarios for indemnification (e.g., false invoices)
  Spell out when and how the clause is triggered to avoid interpretation disputes.
  
  
• Timelines and processes for reimbursement
  Define when reimbursement must be made and how disputes will be resolved.
  
  
• Survival of the clause post-contract termination
  Even after the business relationship ends, liability should still apply.
  
  

4. Recordkeeping and Audit Cooperation

What It Means

Importers are required by law to retain trade documents, including invoices, shipping records, and classification proofs, for up to five years. Both parties should be contractually bound to cooperate in audits.

Why It’s Essential

• Missing records can result in penalties or denial of entry for future shipments
  CBP expects timely access to documents during audits or enforcement checks.
  
  
• Audits are common for companies claiming duty drawbacks or free trade benefits
  You’ll need airtight records to defend your eligibility for tariff refunds or exemptions.
  
  
• Proper documentation supports claims and compliance certifications
  Records prove that your supply chain is clean, compliant, and audit-ready.
  
  

What to Include

• Obligations for both parties to maintain and share trade documents
  This ensures you’re never left scrambling for paperwork under pressure.
  
  
• Language requiring digital backups and document retention policies
  Modern records must be both accessible and secure for legal defense.
  
  
• Provisions for audit support if one party is targeted by enforcement
  Include a clause obligating partners to assist in case you get audited.
  
  

5. Force Majeure with Customs-Specific Language

What It Means

Force majeure protects businesses from being held liable for contract breaches due to extraordinary events. In trade contracts, it should account for customs-related disruptions.

Why It’s Essential

• CBP delays or port closures can halt delivery without warning
  Weather, strikes, or geopolitical tension can freeze your supply chain overnight.
  
  
• Helps avoid breach claims when the issue is out of your control
  You won’t be penalized for events that no party could have predicted.
  
  
• Addresses pandemic-related shutdowns or embargoes
  COVID-19 proved that border policies can change rapidly, often without notice.
  
  

What to Include

• Customs-specific triggers (e.g., CBP strike, embargo enforcement)
  General language isn’t enough—address border-related delays specifically.
  
  
• Clauses allowing for contract extension or suspension
  Give both parties room to renegotiate or pause obligations legally.
  
  
• Notification requirements to the other party within a set timeframe
  Require prompt updates if one party invokes force majeure.
  
  

Pro Tips for Drafting Customs-Ready Contracts

Even if you're not a legal expert, getting contract support from someone who understands customs law is essential. Consider these practical additions:

• Use plain language where possible so all stakeholders—legal and operational—understand the obligations. This minimizes confusion and reduces implementation errors.
  
  
• Stay updated on customs regulations as trade laws and free trade agreements change frequently. What works today may be non-compliant tomorrow.
  
  
• Define roles clearly to avoid ambiguity over who files declarations, who pays duties, and who manages post-entry corrections.
  
  
• Localize contracts when possible. Certain ports of entry may have procedural differences that can influence performance expectations.
  
  

When to Call in a Customs Attorney

Standard legal support isn't always enough. You’ll want a trade-specific attorney when:

• You’re working with new trade partners in unfamiliar jurisdictions
  
  
• Your supply chain involves high-value or regulated goods
  
  
• You plan to enroll in CBP programs like duty drawback or C-TPAT
  
  
• You’ve recently been audited or fined and want to avoid repeat issues
  
  

A customs lawyer understands the technical rules and strategic frameworks that prevent costly missteps. Early legal intervention can often eliminate future problems.

Conclusion

International trade contracts do more than protect relationships—they protect your business from risk. Understanding and applying these five clauses offers protection against legal exposure, supply chain disruptions, and regulatory enforcement. Whether you’re importing toys or electronics, contracts should be reviewed by professionals who understand trade nuance. A seasoned customs law firm ensures that your deals stay compliant—and enforceable—across borders.