Learning Objectives

1. Chapter 7 Trade Terms Learning Objectives The students should master the concepts of Incoterms 2000;trade terms; FOB;CIF; CFR [Important and Difficult Points] the differences among FOB; CIF; CFR; obligation of the seller and the buyer.

2. Chapter 7 Trade Terms A price term consists of type of currency, price per unit, measurement unit and trade terms. e.g $ 100 per dozen CIF New York. Part A Components of trade terms and Incoterms 2000

3. Chapter 7 Trade Terms $----type of currency: quoted in the buyer’s , the seller’s and the third currency; hard currency should be chosen for exports and soft currency for imports. Part A Components of trade terms and Incoterms 2000

4. Chapter 7 Trade Terms 100---- price per unit: various costs getting the goods from the warehouse in his own country to the buyer’s premises include purchasing cost of goods, packing expenses, warehousing, commodity inspection fee, export tariffs and entry fees, agent’s commissions. In some cases, ocean freight and insurance premiums should be taken into account. Part A Components of trade terms and Incoterms 2000

5. Chapter 7 Trade Terms Per dozen---measurement unit should be taken into account. mentioned because many countries use different systems of measures & weight (page.93). Part A Components of trade terms and Incoterms 2000

6. Chapter 7 Trade Terms CIF New York---- trade terms: are short terms and abbreviations which are used to explain the price composition, to define the methods of delivery of the goods sold, to indicate which Part A Components of trade terms and Incoterms 2000

7. Chapter 7 Trade Terms party bear the freight, insurance and other relevant, and assume the liability in case damage or loss of the goods occurs. Part A Components of trade terms and Incoterms 2000

8. Chapter 7 Trade Terms Incoterms 2000: (International Rules for the Interpretation of Trade Terms) to provide a set of international rules for the interpretation of the most commonly used trade terms in foreign trade to eliminate the uncertainties of different interpretations of such terms in different countries; In order to remedy misunderstandings, disputes and litigation, Components of trade terms and Incoterms 2000

9. Chapter 7 Trade Terms the international Charmer of Commerce first published in 1936. Amendments and additions were later made in 1953, 1967, 1976, 1980 and presently 1990 in order to bring the rules in line with current international trade practices; In Incoterms 1990, 2000,the terms have been grouped into E.F.C.D(see page.117). Part A Components of trade terms and Incoterms 2000

10. Chapter 7 Trade Terms Under all terms, the respective obligations of the parties have been grouped under 10 heading where each heading on the seller’s side “mirrors” the position of the buyer with respect to the same subject matter. Part A Components of trade terms and Incoterms 2000

11. Chapter 7 Trade Terms 1. FOB Free on Board (……named port of shipment)means the seller deliver the goods on board the vessel at the named port of shipment; has to bear all costs and risks of loss or damage to goods before the ship’s rail; clear the goods for export; the term can only be used for sea or inland waterway transport.

12. Chapter 7 Trade Terms 1. FOB: the obligation of the seller and the buyer Delivery: Seller: delivery the goods on board the vessel at the named port of shipment on the date or within the period stipulated and notice the buyer in time①.

13. Chapter 7 Trade Terms 1.FOB: Buyer: charter and book space and notice the seller the ship’s name and so on in time②; pay the freight Risk: Seller: bear all costs and risks of loss or damage to goods before the ship’s rail③. Buyer: after

14. Chapter 7 Trade Terms 1.FOB: Customs’ formalities Seller: obtain at his own risk and expense any export license or other official authorization and carry out all customs formalities. Buyer: import

15. Chapter 7 Trade Terms 1. FOB: Documents: Seller: provide the commercial invoice; proof of delivery; transport document or equivalent electronic message Buyer: accept the documents line with the contract and pay the price

16. Chapter 7 Trade Terms 2. CIF cost, insurance and freight(… named port of destination) the seller must pay the freight to bring the goods to the named port of destination and obtain cargo insurance.

17. Chapter 7 Trade Terms 2. CIF the obligation of the seller and the buyer Delivery S; risk; customs’ formalities and documents: the same above; except the freight and insurance: see above

18. Chapter 7 Trade Terms cost and freight(… named port of destination)the same of CIF except insurance 3.CFR

19. Chapter 7 Trade Terms Exercises Translate the following Trade Terms in contracts ①每公吨100美元CIF 上海包括2%佣金； ②每箱人民币25元FOB新加坡，减1%折扣； ③在信用证规定的交货期内，提交规定的装船单据后，信用证允许支付CIF价格的100%; ④在FOB合同条件下，货物装运后由买方负责投保；在CIF合同条件下，卖方应负责按发票值的110%投“一切险”。

20. Chapter7 Trade Terms This is the last slide in Chapter 7.