In a sale and purchase contract, the payment clause plays a crucial role, as it directly affects cash flow and the level of risk borne by the parties. In practice, contracts commonly provide for payment immediately upon execution or payment after delivery of goods.

Under the payment-upon-signing arrangement, the seller benefits from early cash flow and reduced risk of bad debts. However, the buyer should carefully review safeguards ensuring the seller’s performance, such as delivery timelines, quality standards, and penalties for breach.

Conversely, payment after delivery allows the buyer to inspect the goods before making payment, but it increases the seller’s exposure to non-payment risks. In such cases, the contract should clearly define when delivery is deemed completed, the acceptance and inspection procedures, and default interest or penalties for late payment.

Regarding payment methods, payment may be made directly between the parties or through a third party, such as a bank. Bank-mediated payments enhance transparency of cash flows and provide important documentary evidence in the event of disputes, particularly for high-value transactions.