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Meaning of trade terms
Role of international trade terms
International trade usages
A guide to Incoterms
Meaning of international trade terms
Definition: trade terms (price terms/delivery terms) are an important component of a unit price in international trade, standing for specific obligations of the buyer and the seller.
They are abbreviations used 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.
examples:
US$750 per dozen CIF New York
FFR1000 per M/T CFR Marseille
Role of international trade terms
Naming the exact point at which the ownership of the merchandise is transferred from the seller to the buyer.
Defining the responsibilities and expenses of both the seller and the buyer.
Simplifying negotiations
Saving time and cost
Responsibilities and expenses
Responsibilities include:
Carrying out customs formalities for the goods
Obtaining the import or export license
Chartering a ship or booking shipping space
Making insurance
Asking for inspection
Expenses comprise:
Freight
Loading and unloading expenses
Insurance premium
Warehouse charges
Duties and taxes
Miscellaneous expenses
International trade usages
Warsaw-Oxford Rules 1932
Revised American Foreign Trade Definitions 1941
International Rules for the Interpretation of Trade Terms
Warsaw – Oxford Rules 1932
Warsaw Rules 1928
Contains 22 clauses concerning CIF contracts
Warsaw Rules 1932
Based on Warsaw Rules 1928, contains 21 clauses concerning the nature, risks and expenses borne by both the seller and the buyer.
Still in use.
Revised American Foreign Trade Definitions 1941
Originally The US Export Quotations and Abbreviations 1919
Revised and renamed in 1941
Six trade terms: Ex Port of Origin, Ex Dock, Free on Board, Free Along Side, Cost & Freight, Cost, Insurance and Freight.
Applicable in the USA, Canada and other countries in America.
International Rules for the Interpretation of Trade Terms
Also abbreviated as Incoterms
Established by the International Chamber of Commerce (ICC) in 1936, revised in 1953, 1967, 1976, 1980, 1990 and .
Aimed at providing uniform rules for the interpretation of trade terms
Characteristics of Incoterms
Comparative Edition of the obligations of both the buyer and the seller
The seller’s obligations
Provision of goods in conformity with the contract
Licenses, official documents and customs formalities
Contract of carriage and insurance
Delivery
Transfer of risks
Division of costs
Notice to the buyer
Proof of delivery, transport document or equivalent electronic message
Checking-packaging-marking
Other obligations
The buyer’s obligations
Payment for goods
Licenses, official documents and customs formalities
Contract of carriage and insurance
Taking delivery
Transfer of risks
Division of costs
Notice to the seller
Proof of delivery, transport document or equivalent electronic message
Inspection of goods
Other obligations
Structure of Incoterms
Group E (departure):
EXW
Group F (main carriage unpaid) :
FCA; FOB; FAS
Group C (main carriage paid) :
CFR; CIF; CPT; CIP
Group D (arrival):
DAF; DES; DEQ; DDU; DDP