import export terminology

8/8/2019 Import Export Terminology

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Glossary of Import Export Terminology:

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Acceptance: An undertaking by the drawee (who then becomes the "acceptor"), of a bill of exchange to pay tothe person presenting the bill (called the holder in due course) the face value of the bill on the due date.

Acceptance Form: An acceptance is made in the following form

SIGHTED AND ACCEPTED (Date)

PAYABLE (Bank)

FOR AND ON BEHALF OF (Authorized Signatory)

Acceptor: The person who accepts a bill of exchange drawn on him/her. Until he accepts it, he is called the

drawee. By accepting the bill, the acceptor undertakes to pay the person presenting the bill, the face value of the

bill.

Acceptance Credit: A documentary credit which requires, amongst the documents stipulated, provision of a

term bill of exchange. The bill is then generally accepted by the bank on which it is drawn or discounted.

Act of God: An inevitable event occurring without the intervention of man, such as flood, tempest, or death.

operating in case of certain contracts, such as those of insurers or carriers.

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Actual Container Gross Weight: Total weight of a container, i.e. the weight of the payload plus empty container

weight, together with any loose internal fittings.

Actual Pay Load: The difference between the actual gross weight and the gross are weight of a container.

Actual Total Loss: This relates to an insurance policy and can occur in any of four ways:1) The property is completely destroyed:

2) The owner is irretrievably deprived of the property:

3) Goods change their character to such a degree that they can be said to be no longer the thing insured by the

policy:

4) The subject matter of the insurance be it ship or goods on board the ship, is recorded as missing at Lloyd’s.

Ad Valorem (Lat.): According to the value. An ad valorum stamp on deeds or documents is one fixed in

proportion to the amount of rent reserved or other element of value expressed in the deed.

Ad Valorum Duty: A duty assessed as a percentage rate of the value of the imported merchandise.

Advance Note: A draft on a ship owner for wages, given to a seaman on signing Articles of Agreement and

redeemable after the ship has sailed with the seaman on board.

Advance Payment Guarantee/Bond:

A guarantee that advance payments will be returned if the party having received such payments does not

perform the contract.

Advance Clause Credit:

These documentary credits incorporate a clause which authorizes the advising bank to make an immediate

payment to the beneficiary (exporter) of an amount up to the total of the credit, or some lesser nominated

amount. The Advance Clause facility thus authorizes the beneficiary to draw up to the amount specified prior toproducing the relative export shipping documents. In effect, it enable the beneficiary to obtain a loan from the

advising bank, guaranteed by the buyer's bank, and to repay the loan with the proceeds of the drawing(s) made

in terms of the credit.

Advising Bank:

The bank that notifies the exporter of the opening of a documentary credit in their favor. The advising bank,

usually located in the exporter's country, fully informs the exporter of the conditions of the documentary credit

without obligation on its part.

Advice of Fate:A request for advice of status of payment/non-payment (acceptance/ non-acceptance) of a bill of exchange.

Affidavit:

A written declaration on oath.

Affreightment:





A contract to carry goods by ship. Charter-parties and Bills of Lading are contracts of affreightment.

After Date:

Payment of a negotiable instrument, such as a bank draft, becomes due a specified number of days after

presentation of the draft.

Agent: A representative in a foreign market who attempts to sell your good or service through his or her

network. Agents may be exclusive or represent many companies. They usually do not take responsibility for

delivery or servicing of your product and are paid on a commission basis.

Air Waybill/ Air Consignment Note:

Document which acknowledges receipt by an air transport company of goods dispatched by air. Normally

completed in triplicate with a copy each for the Consignor, Consignee and the Carrier. An Air Waybill is not a

document of title to goods in the same manner as a bill of lading.

Bid Bond: When an exporter is bidding on a foreign contract, a bid bond guarantees that the exporter will take

the contract if it is awarded. If the exporter fails to take the contract, it will have to pay a penalty in the amountof the bond. A bid bond is usually requested by a foreign organization to screen out weak contenders. Your

financial institution or the Export Development Corporation can assist in financing and issuing these bonds.

Bill of Lading: A document prepared by a carrier or freight forwarder that acts as a receipt for the goods, as

evidence of a contract between the carrier and the exporter and as a document of title. A foreign buyer needs

this document to take possession of the goods.

Bonding Company:

An organization that is prepared to undertake an agreement to make good a financial guarantee on behalf of

another responsible for such guarantee. Owners of "arrested" vessels may obtain such a bond to satisfy a court

and to obtain release of the vessel.

C&F (cost and freight): You pay the costs and freight to get your goods to the specified destination, but your

responsibility ends there. The foreign buyer assumes the risk of loss or damage once the goods are loaded at the

port of departure.

CIF (cost, insurance and freight): As an exporter, you pay the cost of freight and insurance to get the goods to a

named port of destination.

Certificate of Origin: This certifies the country or countries where a product is made. Many markets require

this, including Canada, when shipping tariff-free or tariff-reduced goods, such as under the North American

Free Trade Agreement.

Commercial Invoice: Supplied by the exporter, this summarizes the commercial transaction. It includes details

about product, quantity, specifications, price, delivery and payment terms, plus the addresses of all parties

involved.





Consular Invoice: Some foreign governments with controls over what may be imported may require exporters

to obtain consular invoices from their consulate offices within Canada. The foreign consul issues the document

describing the goods and a fee is usually charged.

Container Freight Station (CFS):

Also called a container base or consolidation depot is a depot where parcels of cargo are grouped and packedinto containers.

Container Load (CL):

See FCL. A shipment sufficient in size to 'fill' a container either by cubic measurement or weight, depending

upon governing tariff to meet the provided minimum.

Container Part Load:

See LCL. Consignment which does not occupy the full capacity of a container nor equals the maximum payload

and will, therefore, allow the inclusion of another or other part-loads.

Container Pooling:System whereby ship-owners, manufacturers or operators create a container pool for common use and

maximum utilization.

Container Ship:

Vessel specially fitted out for carrying containers. The hold consists of wells into which the containers can be

lowered and stacked in up to eight layers. Containers may be stowed on deck up to four high on top of any one

hatch.

Container Tanks:

Specially constructed cylindrical container for the carriage of bulk liquids, powders or gases, being supported

within a frame 8ft x 8ft lattice construction and in lengths 20, 30 and 40ft with corner castings and normallyfitted with a bottom pick-up device.

Container Terminal (CT):

An area where large-scale container handling and parking facilities are available. Used for storage and transfer

of containers between at least two different transport media ( road,sea,rail,barge,air ).

Counter Trade: This refers to transactions involving the reciprocal sale or barter of goods of equal value.

Customs Invoice: This helps clear goods through customs points in an importing country by verifying the value

of goods.

Delivered at Frontier: An exporter agrees to safely transport the goods to the "frontier," which is a point before

the actual customs border of the importing country. Commonly used when goods are shipped by road or rail.

Delivered Duty Paid: The exporter has responsibility to not only deliver the goods, but also assumes any risk of

damage, loss and the payment of any duty.





Documentary Collections: A payment method where all the documents, including the bill of lading and bill of

exchange (request for payment) are sent to the exporter's bank. All the documents are checked and sent to the

importer's bank. Once the importer's bank has been paid by the importer, that bank releases the document of

title (usually the bill of lading) to allow the importer to collect the goods.

Document of Title: Evidence of ownership of goods, such as a carrier's bill of lading.

Draft (Bill of Exchange): An unconditional order signed by the exporter requiring the importer to pay, on

demand or at a determined future time, a certain amount of money to a specified individual. A "sight draft," for

instance, requires immediate payment. A "time draft" requires payment over a certain period (from 30 to 180

days).

Ex Works: This is the minimum level of responsibility for an exporter. You agree only to make the goods

available to the buyer at your plant or office. The buyer may even be responsible for loading the goods on a

vehicle. The buyer bears all responsibility for taking the goods from that point.

Export License: Required under Canadian law to sell certain products abroad, such as protected birds or militaryequipment.

FAS (free along side): The exporter agrees to place goods on the dock, alongside a vessel. At this point, a

seller's obligations are met.

FOB (free on board): The exporter agrees to place goods on board a vessel at the port of shipment specified in

the sales contract. At this point, the risk of damage is transferred to the buyer at precisely the moment the goods

pass over the ship's rail.

Free Carrier (Port): With multi-modal transport taking the same goods by sea, air and other modes, FOB

principles (as above) again come into play. This time though, an exporter's obligations are met when the goodsare handed over to the carrier named by the buyer and cleared for export at the specified place or port.

Freight Forwarder: A company handling all aspects of export shipping, including customs and export

documentation. Sometimes, they can save you money by combining your shipment with others or using pre-

booked carrier space.

Import Tariff: A tax on imported goods by foreign governments.

INCO Terms: The International Chamber of Commerce sets out the international rules for the interpretation of

common trade terms, such as FOB.

Insurance Certificate: Supplied by an exporter or freight forwarder to prove the goods to be exported are insured

for transport.

Invoice:

A document setting out in detail the goods consigned, marks and numbers, cost, any charges, and name of

consignee.





Landed Cost: The cost of the exported good at the foreign market's port or point of entry, excluding foreign

tariffs, taxes and other local costs.

Letter of Credit: A common document in exporting. An instrument issued by a bank on behalf of an importer

that guarantees an exporter payment for goods or services, provided the terms of the credit are met.

Letter of Credit (Confirmed): In cases where the financial strength of the issuing bank or country is in doubt, the

exporter may ask their own bank in Canada to provide an undertaking (i.e. to confirm) that the credit will be

paid. The exporter is assured that the letter of credit will be paid by the confirming bank, even if the issuing

bank cannot pay, provided the terms and conditions of the credit have been met.

Letter of Credit (Irrevocable): A financial institution agrees to pay an exporter once all terms and conditions of

the transaction are met. Since it is irrevocable, no terms or conditions can be modified without consent of all

parties, including the exporter. Revocable letters of credit are not common and should not be accepted by an

exporter.

Open Account: Goods are shipped to a buyer before the Canadian exporter receives payment. This is most

common for Canadian exporters selling into the U.S. To reduce the risk in this, some banks will buy accounts

receivable from exporters.

Packing List: An important document in exporting, which shows the quantity and type of merchandise being

shipped.

Performance Bond: If a foreign contract is awarded, a performance bond may be required of an exporter. Your

financial institution or the Export Development Corporation can often assist in financing these bonds.

Power of Attorney:A document which empowers one person to act for another.

Pro Forma Invoice: An advance invoice prepared by an exporter before shipping, setting out the goods to be

sent, their value and other details.

Promissory Note:

A note promising to pay a certain person a stated sum on a specified date.

Received Bill:

A Bill of Lading marked to indicate that goods have been received for shipment, but does not indicate that they

have been shipped in fact.

Trading House: A company specializing in exporting and importing goods of other companies. A trading house

can act as an agent to find foreign buyers on a commission basis or can act as a reseller.

Warehouse:

Any building or structure used for the storage of goods.





Warehouseman:

The person responsible for the care of goods while they are in store.

Warehouse Receipt: Document identifying goods shipped to a warehouse. A "non-negotiable warehouse

receipt" sets out specifically who may take the goods, while a "negotiable receipt" allows goods to be releasedto the bearer of the document.

Warranty:

An undertaking by one party to a contract agreeing to abide by certain conditions required by the other party in

relation to performance of the contract (eg. warranty of seaworthiness whereby the ship owner agrees to provide

a seaworthy vessel to carry the goods specified in a contract of affreightment).