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Import & Export Practices Description of commodity Quantity Transport Package Price Payment Insurance Inspection Claims & dispute Body all the terms and conditions agreed upon

Import & Export Practices Unit price Amount

Import & Export Practices The price of the goods Unit price and total amount of payment are extremely important in a contract. After several rounds of offer and counter-offer, both parties reach an agreement on the price.

Import & Export Practices The total amount should be written in figure and capital, When writing the total amount in capital, we always add say at the beginning of the sentence, and only at the end. USD38500.00 (in figure) SAY: US DOLLARS THIRTY EIGHT THOUSAND FIVE HUANDRED ONLY. (in capital) The price of the goods

Import & Export Practices The price of the goods the price of goods usually refers to the unit price.

Import & Export Practices Unit price Unit price has four parts: The currency The figure The calculating unit The price term

Import & Export Practices How to mark the price in international trade Feather sofa USD200 per set FOB Dalian E.g. HKD5.00 per dozen net CIF Hong Kong. E.g. USD21 per set FOB Shanghai including your commission 5% on FOB basis.

Import & Export Practices One import and export company exported his goods under the CIF term. The seller delivered the goods on board the vessel on time and prepared all necessary documents. But the vessel stranded( ) and sank in a few hours after departure.

Import & Export Practices The next day, when the seller asked for payment with full set of documents in conformity with the contract, the buyer refused to accept the documents and rejected payment because his goods have been lost. Is it reasonable for the buyer to do so? Why?

Import & Export Practices One problem in international trade is that different countries might have different interpretation of the same contract wording. Thus there is a risk of misunderstanding and subsequent disputes.

Import & Export Practices However, such a problem can be best solved or reduced by creating a set of internationally accepted terms defining the respective roles of the buyer and seller in the arrangement of transportation and other responsibilities and clarifying when the ownership of the merchandise takes place.

Import & Export Practices The trade terms refer to using a brief English concept or abbreviation to indicate the formation of the unit price and determine the responsibilities, expenses and risks borne by two parties as well as the time of the passing of the property in the goods.

Import & Export Practices The formation of the unit price ( ) The time and place of delivery/ risk transfer / Responsibilities and expenses borne by two parties

Import & Export Practices The primary function of the trade terms is to define the responsibilities to be carried out by either the seller or the buyer. In relation to the responsibilities, there are costs and expense. Problem in that regard would often mean loss of good relation and loss of repeat orders.

Import & Export Practices titles to the goods will pass over from the seller to the buyer at different time and places. Seller and buyer need to know when and how they will lose or acquire the title to the goods. Time and place of delivery are crucial factors in defining the point where the responsibilities and the risks pass from the seller to the buyer.

Import & Export Practices It is therefore of vital importance to establish a clearly defined cut- off point to show where the sellers responsibilities and risks ends and where the buyers begin so that the seller can price his goods accurately and the buyer can calculate the full cost of import.

Import & Export Practices In transaction, different trade term used by the buyer an seller decides the price. The price of same goods quoted on FOB basis is lower than that on CIF basis, as the seller need to pay the freight and the insurance on CIF. So, the trade terms can define the formation of the unit price.

Import & Export Practices International customary practices 1)Warsaw--Oxford Rules 1932 2)Revised American Foreign Trade Definitions 1990 3)International Rules For the Interpretation of Trade Terms NameIssued bytime trade terms Revised American Foreign Trade Definitions 1990 In 1919 EXW,FOB, FAS,C&F, CIF, DEQ Warsaw-Oxford Rules Internation al Law Institute In 1928 CIF International Rules for the Interpretation of Trade Terms Internation al Chamber of Commerce In 1936 E F C D 11 Trade terms

Import & Export Practices

Import & Export Practices Warsaw-Oxford Rules 1932 1932 CIF 1928 CIF 1932 CIF

Import & Export Practices Revised American Foreign Trade Definitions 1941 1990 1919 ,1941 National Council of American Importers, Inc. ,1990 FOB INCOTERMS

Import & Export Practices Revised American Foreign Trade Definitions 1990 EX Point of Origin EX Point of Origin Free on board Free on board Free Along Side Free Along Side (Cost and Freight) (Cost and Freight) (Cost, Insurance and Freight) (Cost, Insurance and Freight) (EX Dock) (EX Dock)

Import & Export Practices International Rules for the Interpretation of Trade Terms, commonly referred to as Incoterms, are such a set of commercial terms. It aims to provide such a set of standardized terms which mean exactly the same to both parties to a contract and which will be interpreted in exactly the same way by courts in every country. This set of terms was first published in 1936 and is now in its 7th revision, we call it 2010 INCOTERMS

Import & Export Practices However, Incoterms are not part of national or international law though they can be binding on sellers and buyers as their contractual obligations provided the sales contract specifies that a particular Incoterms will apply. In a word, Incoterms are not a panacea for a sales transaction.

Import & Export Practices E/ EXWEx Work F FCAFree Carrier FASFree Alongside Ship FOBFree on Board C CFRCost and Freight CIFCost Insurance Freight CPTCarriage Paid To CIPCarriage and Insurance Paid To TRADE TERMS IN INCOTERMS 2010

Import & Export Practices D DATdelivered at terminal DAPdelivered at place DDPDelivered Duty Paid TRADE TERMS IN INCOTERMS 2010

Import & Export Practices The following terms can be used only for sea or inland waterway transport: FAS, FOB, CFR, CIF The following terms can be used for multimodal transport EXW, FCA, CIP, CPT, DAT,DAP, DDP Six main international trade terms FOB, CFR, CIF, FCA, CPT, CIP TRADE TERMS IN INCOTERMS 2010

Import & Export Practices FAS=Free alongside ship.named port of shipment FAS means that the sellers fulfils his obligation to deliver when the goods have been placed alongside the vessel at the named port of shipment. This means that the buyer has to bear all cost and risks of loss of or damage to the goods from that moment.

Import & Export Practices THE SELLERS RESPONSIBILITIES 1. provide appropriate packing and marking 2. deliver the goods at the disposal of the buyer alongside the ship. 3. carry out the export procedures 4. provide the buyer with the document received for the delivery of the goods

Import & Export Practices THE BUYERS RESPONSIBILITIES 1. take delivery of the goods alongside the ship 2. carry out the import procedures and the carriage to the final destination

Import & Export Practices FAS FAS Free Along Side VESSEL FAS FAS

Import & Export Practices FOB=Free on Board (Named port of Shipment) It means that the seller fulfils his obligation to deliver the goods when they have shipped on board at the named port of shipment. This means that the buyer has to bear all expenses and risks of or damage to the goods from that point.

Import & Export Practices THE SELLERS RESPONSIBILITIES 1 deliver the goods at the time stipulated in the contract provides sufficient notice 2 obtains the export licenses and authorizations and carry out all export formalities and procedures 3 assume all risks of loss or damage to the goods until they have shipped on board.

Import & Export Practices THE SELLERS RESPONSIBILITIES 4 provides the buyer with a proof of delivery or a transport document (such as B/L,inspection documents) The most important is deliver the goods on time and notice the buyer. Generally speaking, the seller dispatches the shipping advice within 24hours after shipment.

Import & Export Practices THE BUYERS RESPONSIBILITIES 1 take delivery of the goods on board the ship at the port of shipment 2 carry out the import procedures and the carriage to the final destination 3 assume all risks of loss or damage to the goods after they have shipped on board.

Import & Export Practices THE VARIATION OF FOB In order to indicate who shall bear the loading charges expenses, the most used variation of FOB are: 1 FOB liner terms 2 FOB under tackle 3 FOB stowed 4 FOB trimmed

Import & Export Practices On FOB term basis, Seller A prepared the goods at the stipulated time, meanwhile, Buyer B informed A of the name of vessel and the date of shipment, when the goods is lifted to the ship, it fell down on the deck, so now who shall take responsibility? Seller or Buyer? CASE

Import & Export Practices ANSWER Under FOB terms, the risk separation was the rail of the ship, during the shipment of goods, if they didnt across the ship's rail, and fell to the sea, the seller should bear the risk. When the goods across the ship's rail, fall in the deck, the buyer should bear the corresponding risks.

Import & Export Practices 300 FOB

Import & Export Practices ANSWER In this case, falling into the cargo deck, the buyer can assume the risk is no doubt.

Import & Export Practices FOB 1 (Specialization) . 2010 FOB CFR CIF

Import & Export Practices FOB 2 dead freight

Import & Export Practices FOB 2001 3~4 4 30 FOB 2001 3~4 4 30 1 5 2 2 5 2

Import & Export Practices FOB FOB 1 FOB NEW YORK FOB VESSEL NEW YORK 2

Import & Export Practices 242 FOB Vessel New York 200 48400 50000 242 FOB Vessel New York 200 48400 50000

Import & Export Practices 1990 FOB FOB (named inland carrier at named inland point of departure) FOB (named inland carrier at named inland point of exportation) Freight Paid to (named point of exportation) FOB (named inland carrier at named inland point of departure) Freight Allowed to (named point)

Import & Export Practices 1990 FOB FOB (named inland carrier at named point of exportation) FOB Vessel (named port of shipment) FOB (named inland point in country of importation)

Import & Export Practices CFR (Cost and Freight named port of destination) It means that the seller shall undertake the cost and freight necessary to carry the goods to the named port of destination, C&F

Import & Export Practices but the risks of, losses of, or damage to the goods, as well as any additional costs due to events occurring after the time the goods have been delivered on board the vessel, are transferred from the seller to the buyer when the goods is shipped on board at the port of shipment

Import & Export Practices 1 deliver the goods at the time stipulated in the contract and bear freight from port of loading and discharge, provides sufficient notice 2 obtains the export licenses and authorizations and carry out all export formalities and procedures THE SELLERS RESPONSIBILITIES

Import & Export Practices 3 assume all risks of loss or damage to the goods until they have shipped on board. 4 provides the buyer with a proof of delivery or a transport document (such as B/L, inspection documents) 5 The most important is deliver the goods on time and notice the buyer. THE SELLERS RESPONSIBILITIES

Import & Export Practices 1 Accept delivery of goods at the port of shipment and receive them from the carrier at the port of destination 2 Carry out the import procedures and the carriage to the final destination THE BUYERS RESPONSIBILITIES

Import & Export Practices THE VARIATION OF CFR In order to indicate who shall bear the unloading charges expenses, the most used variation of CFR are: CFR Ex Ships Hold CFR Ex Tackle CFR Landed CFR Liner Terms

Import & Export Practices CFR A 9 1 2 9 1 2 3 2 4

Import & Export Practices A merchant in South America placed an order with a Chinese export company for a certain commodity on CFR Asuncion ( )terms.With a view to develop new markets, the export company immediately made an offer abroad on the basis of CFR Asuncion, and the transaction was soon concluded. CASE

Import & Export Practices When shipping the goods, however, this company came to realize that Asuncion is an inland city. As was the case, if the company had the goods transported to Asuncion, it had to, first of all, have the goods transported by sea to a seaport in Argentina or some other South American neighboring country. CASE

Import & Export Practices After that, the goods might be transport to Asuncion through river transportation or inland transportation. As a result, this company had to pay a considerable sum of freight charges. What can we learn from this case? CASE

Import & Export Practices In this case the loss was caused simply because of the ignorance on the part of the export businessman. What we can learn from this case is that, when offering abroad, we must make exact calculations of the total freight and other relevant charges. Most importantly, it is very beneficial for every export businessman to learn geography. ANSWER

Import & Export Practices CIF (Cost Insurance and Freight named port of destination) It means that the seller has the obligation to procure marine insurance against the risks of, losses of, or damage to the goods during the carriage. Under CIF term, the seller has the same obligations as under CFR, but with the addition that he has to procure marine insurance against the buyers risk of loss of or damage to the goods during the carriage. The seller contracts for insurance and pays the insurance premium.

Import & Export Practices The buyer should note that under the CIF term the seller is only required to obtain insurance on the minimum cover. Should the buyer wish to have the protection of greater cover, he would either need to agree as such expressly with the seller or to make his own extra insurance arrangements. CIF 10%. .

Import & Export Practices THE SELLERS RESPONSIBILITIES 1 deliver the goods at the time stipulated in the contract and bear seafreight and insurance premium from port of loading to discharge. 2 obtains the export licenses and authorizations and carry out all export formalities and procedures

Import & Export Practices THE SELLERS RESPONSIBILITIES 3 assume all risks of loss or damage to the goods until they have been shipped on board. 4 provides the buyer with a proof of delivery or a transport document (such as B/L,inspection documents) and insurance policy

Import & Export Practices In order to indicate who shall bear the unloading charges, the most used variation of CIF are: 1. CIF Liner Terms 2. CIF Ex Ships Hold 3. CIF Ex Tackle 4. CIF Landed THE VARIATION OF CIF

Import & Export Practices A Chinese import and export company concluded a Sale Contract with a Holland firm on August 5, 2000, selling a batch of certain commodity. The contract was based on CIF Rotterdam at USD 2500 per metric ton. CASE

Import & Export Practices The Chinese company delivered the goods in compliance with the contract and obtained a clean on board Bill of Lading. During transportation, however, 100 metric tons of goods got lost because of rough sea. CASE

Import & Export Practices Upon arrival of the good, the price of the contracted goods went down quickly. The buyer refused to take delivery of the goods and effect payment and claimed damages from the seller. How would you deal with the case? CASE

Import & Export Practices It was not right for the buyer not to take delivery of the goods. In this case, the contract concluded between the seller and the buyer was on CIF terms, according to which, the sellers responsibilities ended when he loaded the goods on board the ship and paid the freight and insurance premium; ANSWER

Import & Export Practices the risks were transferred to the buyer or the other parties concerned after the seller put the goods on board the ship. Since the documents presented by the seller were right and proper, the seller could directly get paid form the Issuing Bank of the L/C. ANSWER

Import & Export Practices However, part of the goods got lost because of rough sea. Does this mean that the buyer suffered loss? It is definitely not the case because there are other two sub-contracts existing on CIF terms-I/P (insurance policy) and Bill of Lading. ANSWER

Import & Export Practices In this case the buyer could claim damages with the insurance company, but he had to take delivery of the goods. Obviously, the actual reason for the buyers refusal to accept the goods in this case was that the prices of the goods were going down. This is, certainly, unjustified. ANSWER

Import & Export Practices 80 CIF 80 CIF

Import & Export Practices 1.The expenses and risks are separated 2.CIF term is document transaction (Symbolic delivery) The seller fulfills his duty of delivering goods against the documents The buyer shall pay the price against the documents (Physical Delivery)

Import & Export Practices FOB\CFR\CIF symbolic delivery

Import & Export Practices CIF 9 12 2 12 2

Import & Export Practices FOB CFR CIF

Import & Export Practices The seller The buyer FOB Deliver the goods on board the vessel Contract for the carriage of the goods Obtain export license Obtain import license Cover cargo insurance Provide documents for the buyer and ask for payment Pay the price and take delivery of the goods Clearance for export

Import & Export Practices CFR Contract for the carriage of the goods at his own expenses On usual term By the usual route In the proper vessel Usual freight Additional Freight The seller The buyer

Import & Export Practices CIF Contract for the carriage of the goods Cover cargo insurance on behalf of the buyer Minimum insurance (F.P.A) additional insurance premium The seller The buyer

Import & Export Practices Suitable for sea or inland waterway transport. The formation of the unit price FOB: Cost CFR: Cost and Freight CIF: Cost, Insurance and Freight Summary:

Import & Export Practices FOB CFR CIF FOB BUYE R CFR SELLE R BUYE R SELLE R BUYE R CIF SELLE R

Import & Export Practices : contracting carrier) MTD CY contracting carrier) MTD CY

Import & Export Practices TRADE TERMS IN INCOTERMS 2010 The following terms can be used for multimodal The following terms can be used for multimodal transport EXW, FCA, CIP, CPT, DAT,DAP, DDP

Import & Export Practices EXW=EX Works named place This term means that seller fulfils his obligation to deliver when he has made the goods available at his premises (i.e., work, factory, warehouse, etc) to the buyer.

Import & Export Practices In particular, he is not responsible for clearing the goods for export and/or loading the goods on the vehicle provided by the buyer or for clearing the goods for export, unless otherwise agreed.

Import & Export Practices The buyer bears all costs and risks involved in taking the goods from the sellers premises to the desired destination. This term thus represents the minimum obligation for the seller This term should not be used when the buyer cannot carry out directly or indirectly the export formalities.

Import & Export Practices FCA=Free Carrier,named place The term means that The seller delivers the goods, cleared for exports, to the carrier nominated by the buyer at the named place It should be noted that the chosen place of delivery has an impact on the obligations of loading the goods at that place. If delivery occurs at the sellers premises, the seller is responsible for loading. If delivery occurs at any other places, the seller is not responsible for unloading.

Import & Export Practices Carrier means any person who, in a contract of carriage, undertakes to perform (performing carrier) or to procure (contracting carrier) the performance of carriage by rail road, sea, air, inland waterway, or by a combination of such modes. If the buyer nominates a person other than a carrier to receive the goods, the seller is deemed to have fulfilled his obligation to deliver the goods when they are delivered to that person.

Import & Export Practices 1. provide appropriate packing and marking 2. load the goods on the means of transport 3. Nominated by the buyer (delivery at sellers premises) or place the goods at the disposal of The carrier nominated by the buyer, not unloaded In the sellers means of transport (delivery at the Depot or elsewhere) THE SELLERS RESPONSIBILITIES

Import & Export Practices 4. carry out the export procedures and provide the Buyer with the document received for the delivery Of the goods. THE SELLERS RESPONSIBILITIES

Import & Export Practices CPT=Carriage Paid Tonamed place of destination CPT means that seller delivers the goods to the carrier nominated by him, but he must in addition pay the freight for the carriage of the goods to the named destination.

Import & Export Practices The risk of loss of or damage to the goods, as well as any additional costs due to the events occurring after the time the goods have been delivered to the carrier, are transferred from the seller to the buyer when the goods have been delivered into the custody of the carrier. If subsequent carriers are used for the carriage to the agreed destination, the risk passes when the goods have been delivered to the first carrier.

Import & Export Practices THE SELLERS RESPONSIBILITIES 1. provide appropriate packing and marking 2. contract for the carriage and pay the freight to the place of destination. 3. deliver the goods to the carriers

Import & Export Practices THE SELLERS RESPONSIBILITIES 4. carry out the export procedures 5. provides the buyers with the transport document without delay.

Import & Export Practices CIP=Carriage And Insurance Paid To named place of destination CIP means that the seller has the same obligation as under CPT but with the addition that the seller has to procure cargo insurance against the buyers risk of loss of or damage to the goods during the carriage. The seller contracts for insurance and pays the insurance premium.

Import & Export Practices The buyer should note that under CIP the seller is only required to obtain insurance on a minimum coverage. Should the buyer wish to have the protection of greater cover, he would either need to agree as such expressly with the seller or to make his own extra insurance arrangements.

Import & Export Practices 1. provide appropriate packing and marking 2. contract for the carriage and pay the freight to the place of destination 3. deliver the goods to the carrier 4. carry out the export procedures THE SELLERS RESPONSIBILITIES

Import & Export Practices 5. contract and pay for agreed cargo insurance in favor of the buyer 6. provide the buyer with the transport document and cargo insurance document without delay THE SELLERS RESPONSIBILITIES

Import & Export Practices FOB CFR CIFFCA CPT CIP

Import & Export Practices FCA CPT CIP

Import & Export Practices DAF=Delivered At Frontiernamed place DAF means that the seller fulfils his obligation to deliver when the goods have been made available, cleared for export, at the named point and place at the frontier, but before the Customs border of the adjoining country. The term frontier may be used for any frontier including that of the country of export. Therefore, it is of vital importance that frontier in question be defined precisely by always naming the point and place in the term.

Import & Export Practices The term is primarily intended to be used when goods are to be carried by rail or road, but it may be used for any mode of transport.

Import & Export Practices DAP=delivered at place ++named place of destination It means that the sellers fulfill his obligation to deliver the goods the buyer at the named place of destination with the seller bearing all the costs (other than those related to import clearance, where applicable) and risks involved in.

Import & Export Practices 1. In DAP, delivery occurs at the buyers disposal, but ready for unloading from arriving vehicle at a named destination. 2. the arriving vehicle under DAP may well be a ship and the named place of destination may well be a port.

Import & Export Practices DAT=delivered at terminal ++named place of destination DAT means that the sellers fulfill his obligation just same as DAP, the seller will bear all the costs (other than those related to import clearance, where applicable) and risks involved in delivering the goods.

Import & Export Practices But under DAP term, delivery occurs at the buyers disposal unloaded from arriving vehicle at a named destination. It is suit for multimodal transport

Import & Export Practices DDP=Delivered Duty Paid named place of destination DDP means that the sellers fulfill his obligation to deliver when the goods have been made available at the named place in the country of importation.

Import & Export Practices the seller has to bear the risks and costs, including duties, taxes, and other charges of delivering the goods thereto, cleared for import. this term represents the maximum obligation.

Import & Export Practices considerations for choosing terms of delivery 1 Transport capacity 2) Customers location 3) Freight rate 4) Loading / Unloading facilities and local port custom 5) Risks in transit

主讲教师：夏夕美. import & export practices description of commodity quantity transport...

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