7 Things To Consider Before Working With Overseas Suppliers (2025 Updated)

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Are you currently running your own business? Are you looking for the right suppliers? Perhaps local suppliers just don’t have what you’re after.

Don’t worry – it’s common practice in 2025 to engage with overseas suppliers when running your own business. Many entrepreneurs find it’s not only a cost-effective solution but sometimes the quality of goods from international suppliers surpasses what local providers can offer. With global trade becoming even more accessible and reliable, it’s an option worth considering.

Like all business arrangements, you’ll need a contract to set out the specifics of how your relationship with the supplier will operate. However, it’s essential to understand that obligations may differ in an international context, and you need to consider the evolving legal landscape, international trade regulations and any recent updates in consumer law. For more details on contract essentials, check out our What is a Contract? page.

In this article, we’ll go through 7 simple things to consider before you decide to work with overseas suppliers.

1. Supply Agreement

First things first – you’ll need a Supply Agreement with your overseas supplier. If you’ve dealt with local suppliers before, you might be familiar with informal supply agreements, such as having Terms and Conditions printed on an invoice or receipt. However, given the complexities of international trade in 2025, a formal and detailed Supply Agreement is far more appropriate.

This agreement should specify, among other details, the following:

A description of the goods or services – ensuring you receive exactly what you expect.
Payment – outlining how payments between the parties will be processed. For clarity on payment structures, you might want to review our Buyer’s Agent Agreement insights.
Price – it is advisable to include stipulations regarding any potential price increase, preventing undue pressure that might force you to raise your own prices and lose customers.
Delivery – taking into account shipping delays or changes in international logistics and their impact on your business.
Warranties – aligning with current consumer law standards. For comprehensive guidance on consumer rights, see our Consumer Guarantees article.
Liability – clearly defining who is responsible if goods are faulty upon arrival.
COVID-19 or other government restrictions – while the pandemic is now less disruptive in 2025, different countries maintain varying regulations that might still influence shipping and production.
Termination and exclusion clauses – including conditions under which contractual obligations may become unattainable (more on this later).
Confidentiality – as suppliers might have access to sensitive business information or trade secrets, it’s wise to include confidentiality clauses or even a Non-Disclosure Agreement for extra protection.

Do I Need An Import/Export Agreement?

Any business working with suppliers requires a Supply Agreement, but if you’re engaging with an overseas supplier, you’re likely to need an Import/Export Agreement (or even a Distribution Agreement). This contract between you and the exporter should clearly define responsibilities such as:

Payment – detailing how and when the exporter will receive payment.
Duration of the commercial relationship – ensuring both parties are aware of the relationship timeline.
Renewal terms – providing clarity on contract extensions.
Liability – outlining who is accountable if something goes awry during transit.
Delivery standards – specifying acceptable performance levels.
Termination – declaring how, when, and under what circumstances you or your supplier may end the contract.

Simply put, if your business is importing goods to New Zealand, having an Import/Export Agreement in place is a prudent step. For further clarity on international contracts, don’t hesitate to read our guide on Drafting an Internationally Enforceable Contract.

2. Minimum Order Quantity (MOQ)

If you’re accustomed to dealing with local suppliers, you might already be familiar with the concept of Minimum Order Quantity (MOQ). This is the smallest amount of stock that your supplier agrees to provide in an order. Overseas suppliers may have different MOQs due to factors such as production costs and shipping logistics.

In the current global market, MOQs can vary significantly from supplier to supplier. Some international suppliers might offer lower MOQs to attract smaller businesses, while others maintain higher minimums to protect their production lines. Key factors to consider include:

Estimated delivery time to New Zealand – ensuring you have enough stock to meet demand.
Shipping costs – which may be higher for smaller orders.
Supplier reliability – crucial for maintaining consistency in your product supply.
Quality of goods – checking that a lower MOQ does not compromise quality.
Communication barriers – including follow-up and compliance issues that may arise due to time zone differences or language.

These are all factors to keep in mind when choosing the right manufacturer or supplier for your business needs. Additional tips can be found in our Small Business Setup Guide for further insights.

3. What If Your Supplier Can’t Perform Their Obligations?

Working with overseas suppliers means you must account for unforeseen circumstances, including those arising from ongoing global issues and local governmental measures. For instance, the supplier’s country might still be affected by regulatory restrictions or logistical challenges that can impact shipping times.

In recent years, many businesses have encountered situations where external events – what we refer to as Force Majeure events – have hindered the ability to perform contractual obligations.

What Is Force Majeure?

A Force Majeure clause in your contract releases parties from their obligations when external events, beyond their control, prevent them from performing as agreed. In other words, if an event such as a natural disaster, governmental intervention, or a resurgence of a pandemic directly impacts performance, the clause may excuse the affected party’s non-performance.

The effectiveness of this clause relies on its precise wording and, importantly, on how a ‘force majeure event’ is defined within your contract. For example, if increased costs or delayed deliveries are attributed directly to government-imposed restrictions post-COVID, the clause might be enforceable. For more insight on contractual breaches and enforcement, check out our article on What If Someone Breaks a Contract?.

Example

Ashley runs an online clothing store, and her overseas suppliers provide a unique fabric that forms the core of her brand. Following recent government regulations in the supplier’s country in 2025, production costs and shipping fees surged unexpectedly. Despite having placed a substantial order to cover demand for the next six months, Ashley finds these increased costs unsustainable. She attempts to invoke the Force Majeure clause in her contract—specifically, the definition including government acts influenced by COVID-related policies—but the clause does not cover cost increments arising indirectly from the pandemic. If instead, the clause had explicitly mentioned such government-driven cost hikes, she might have been able to enforce relief.

To successfully rely on a force majeure clause, you must establish that:

A Force Majeure event has occurred.
A party’s performance was prevented as a direct result of this event.
The event was beyond the control of either party.
No reasonable alternative actions could have been taken to mitigate the impact.

This issue leads us to consider what happens when only part of an order is completed, otherwise known as part performance, a situation that may require renegotiation or dispute resolution.

Part Performance

In many business relationships, one party may complete part of their obligations before issues arise. For example, if Ashley’s supplier had already commenced production but then couldn’t complete the order due to increased costs, the dispute may be resolved either through renegotiation or, if needed, by invoking the doctrine of part performance whereby compensation is negotiated for the completed work.

If an agreement cannot be reached between both parties, the contract should clearly define the dispute resolution process. To better understand these mechanisms, you might find our international contract drafting guide a useful resource.

4. Liability – Who Is Responsible When Things Go Wrong?

Every Supply Agreement must allocate responsibility for when products are found to be faulty or do not meet the agreed standards. This brings us to the subject of Product Liability.

Under current consumer regulations, consumers retain the right to take legal action against suppliers, manufacturers, or both if defective goods cause issues. When importing, the importer (that’s you) generally assumes product liability. As a protective measure, besides negotiating limitation of liability clauses with your supplier, you should also secure Product Liability Insurance.

To minimise the risk of product liability, consider implementing measures such as:

Testing all products upon arrival to ensure they meet quality standards.
Providing comprehensive warnings on products that may present risks.
Regularly reviewing your overseas supplier’s production standards and procedures.

You might also consider including a clause that requires your supplier to indemnify you for any damages arising from faulty goods. For more guidance on contractual indemnity clauses, visit our Contract Review page.

Other Responsibilities With Imported Goods

Depending on the type of goods you are importing, additional legal requirements may be relevant — for instance, certain items must pass New Zealand customs or undergo quarantine upon arrival. Staying updated with the latest import regulations is crucial to avoid unexpected delays or seizures at the border. For further advice on import laws, explore our Legal Requirements for Starting a Business guide.

5. Enforcing An International Agreement – How Will Disputes Be Handled?

When formalising agreements with overseas suppliers, it’s best to stipulate that the contract is governed by New Zealand law. However, you must also be alert to any local laws your supplier is subject to, which might affect how documents are executed and disputes settled.

Before you draft an internationally enforceable contract, consider two important questions:

What is the governing law of the contract?
Which court or arbitration panel has jurisdiction over disputes?

The governing law determines which country’s legislation applies to the contract, while jurisdiction dictates where disputes will be resolved. In cases where a bilateral agreement on these points cannot be reached, an internationally recognised rule – such as the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards – may be used to provide a framework for resolving disputes.

Example

A New Zealand business enters a contract with a supplier based in Japan. Initially, New Zealand law was chosen to govern the agreement, but the Japanese supplier later disputes this arrangement. Fortunately, both nations are signatories of the New York Convention, meaning that any arbitration decision will be enforceable in both countries.

An important tip when engaging with overseas suppliers is to retain all correspondence records, as these might prove invaluable if a dispute arises. For more dispute resolution strategies, see our Negotiation Support guide.

6. Do I Have Tax Obligations?

Goods and Services Tax (GST) is generally payable on imported goods arriving in New Zealand unless an exemption applies. While it may be possible for your overseas supplier not to charge GST, you might be required to provide:

Your New Zealand Business Number (NZBN).
A statement confirming that you are registered for GST.

As of 2025, businesses with a turnover exceeding NZD 60,000 must register for GST, so it’s essential to stay compliant. For more detailed advice on tax and regulatory compliance, check out our Legislation Affecting Business Operations page.

Additionally, explore any available concessions under Free Trade Agreements, which can lower import costs and benefit your bottom line.

7. Should I Consider Dropshipping?

If managing all the complexities of overseas supplier relationships feels overwhelming, consider adopting a dropshipping model. Dropshipping remains a popular, cost-effective alternative for many e-commerce businesses in 2025, allowing you to only purchase stock as it is ordered by customers.

In a dropshipping setup, when a customer places an order, the manufacturer ships the goods directly to the customer, meaning you never have to physically handle the stock. This model can reduce warehousing costs and simplify your supply chain, while also reducing your exposure to inventory risks. For further details on dropshipping terms and contracts, refer to our guide on Dropshipping Agreements.

Given the increasing popularity of direct-to-consumer strategies, integrating a dropshipping option might offer a valuable alternative for maintaining competitive margins amid global supply chain challenges.

Next Steps

Finding the right supplier is a critical process, but once you begin engaging with overseas businesses, ensuring that your legal arrangements are robust and up-to-date is just as important. In 2025, international trade and compliance requirements have evolved, so regularly reviewing your agreements is key.

What obligations do I have with imported goods?
How can I enforce my contract in another jurisdiction?
Who is liable for faulty imported goods?
What if my supplier doesn’t fulfil their obligations?
Do I need to review my Supply Agreement?

If you would like a consultation on your options moving forward, please contact us at 0800 002 184 or [email protected] for a free, no-obligations chat. For more insights on maintaining compliance and optimising your business contracts, visit our guides and all services pages.

Rowan Gardoce

Rowan is the Marketing Coordinator at Sprintlaw. She is studying law and psychology with a background in insurtech and brand experience, and now helps Sprintlaw help small businesses

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