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  • 2) Name the items indicating functions of successful distribution:

a) delivers products to customers,

b) provides place and time utility of the product,

c) is a very important tool for cost savings,

d) explains how small business operates,

e) makes the product available to the customers,

f) maximizes the company’s chance to sell the product,

g) strengthens the company’s competitive position,

h) determines the customer service level,

i) criticizes the general approach to business.

4.12 Basic terms of delivery

  • 1) Read the heading and the subheadings and say what the article is about.

(CIF) Cost, insurance, freight is one of the basic terms of delivery of export contracts in accordance with which the seller pays for transportation to the port of destination, costs of loading and arranges marine insurance of the goods for the time of transportation. According to c.i.f. terms, the seller sends the buyer (through the bank) the documents entitling the buyer to the goods. The documents transferred are: a bill of lading, insurance policy, a pay-bill, sometimes such documents as a Certificate of Origin, a Certificate of Quality and an Export License. To accept the goods the buyer undertakes to effect payment as soon as he receives the documents. Sometimes it is considered that according to c.i.f. terms of the contract the buyer pays for the documents but not for the goods: as long as the documents received are in order, the buyer should pay no matter whether the goods were lost or damaged in transit. In that case the buyer holding the Insurance Policy can claim for compensation for the goods damaged or lost in transit.

(FOB) Free on board, free on rail (FOR), free on car (FOC), free on truck (FOT) are terms of delivery according to which the seller pays for transportation of goods to the point of loading and their consequent shipment on board a ship, a plane or a car. The seller also pays the insurance of the goods to the place of loading. Afterwards transportation and insurance costs are borne by a consignee. Besides, there is one more term of delivery called “free on board and trimmed” which in itself is a condition of sale used in trade with coal, according to which the seller pays for the delivery and the loading of coal onto a vessel, and guarantees its correct placing.

(C&F) Cost and freight is a condition of sale for goods carried by sea where the seller pays for loading and transporting goods but the buyer pays the insurance costs once the goods have been loaded. The buyer orders the goods on a cost and freight basis, preferring to make insurance arrangements personally.

(CICI) Cost, insurance, freight, commission, interest; according to c.i.c.i. terms of the contract, the seller apart from paying the cost of the goods, insurance and freight pays the buyer additionally a commission fee and an interest charged by the seller’s bank for documents transfer.

(FAS) Free alongside ship is a condition of sale where the seller pays for transportation and insurance of the goods until they arrive at the ship. The buyer is then responsible for the actual loading of the goods.

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