Савчук. Foreign trade

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VOCABULARY

An export order can be a letter, order form or both. Well-known customers will probably use a form. An unknown customer or one placing a single order will probably use a letter. The order shows the terms offered by the customers. If the terms are not acceptable to the suppliers, they can offer fresh terms to the

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customers. Whether the order is by indent or letter, it must have the following information:

1.The name and address of the customers and the address where they want to take delivery of the goods if different.

2.The name and address of the suppliers.

3.An order reference number.

4.The date.

5.An exact description of the goods or services needed, including the quantity, type or model number, size, color, technical specifications and catalogue number, where these things apply.

6.The method of payment and the name of the customers’ bank

7.The details of carriage and kind of packing the customers want. If this is left out the order the suppliers will carry out the packing and shipping which they usually do for the country of the customer.

8.The date by which the customers want to have the goods.

9.The export clause abbreviation. The export clause is part of the contract of sale between the customers and suppliers. It shows how the other contracts are to be made. These are about:

(a) payment through banks;

(b)land transport in both exporting and importing countries;

(c) sea freight (or air carriage);

(d)insurance.

Some of the transport may be arranged by the suppliers and some by the customers, depending on the export clause used.

Find one word in the passage to fill each blank in these sentences so as to complete the sense:

(a)Their _ of payment are cash with order.

(b)She _ a cup of tea in the restaurant for him.

(c)U.S. dollars are _ as payment in shops all over the world.

(d)I didn’t know which train to catch, so I went to the _ desk.

(e)Dictionaries are kept in the _ library.

(f)The electrical_ of her new cassette radio were in a leaflet inside the box.

(g)UNO is an _ for the United Nations Organization.

(h)She _ to meet her friend after lunch.

Supply one suitable word for each space:

Export orders or order forms called _ must give all the information needed _ the suppliers so that they know _ what the customers want. Details like _ numbers,

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technical specifications and order reference _ should be included. The customers also _ what shipping and insurance costs they _ included in the price of the _. They use certain abbreviations called export _ which show this. The method of _ must also be mentioned and the _ of the customers’ bank. The order _ the basis of a contract of _ between the customers and the exporters. _ contract will be made when the _ reply confirming the order and agreeing _ the customers’ terms. These terms are _ by exchange of the letters or order _ and letter in reply. The contract _ all the other contracts in the _. For instance, it is decided who _ going to arrange transport and insurance.

WHAT ARE EXPORT CLAUSES?

Export clauses show what part of the transport and insurance costs will be paid by the suppliers and what part by the customers. So fob. (free on board) means that the suppliers pay transport to the docks and the cost of loading over the ships rails. The customers pay the sea freight, marine insurance, and all the transport costs from the port of discharge to their own address.

Incoterms (definitions according to the International Chamber of Commerce) show exactly what costs should be paid by whom under each export clause. For example, Incoterms fob means that all dock dues charged before the ship sails are paid by the shippers and all dock dues (or port rates) charged after the ship sails are paid by the importers.

Naturally, if an exporter quotes a price fob. the transport costs under fob. are cost into the price of the goods. Export clauses simply show who is responsible for arranging the different stages of the transport.

Match the words on the left with their synonyms on the right:

Choose the best way of completing the sentences:

Find words in the table of export clauses which have opposite meaning of the following:

(a)taken away from;

(b)despatch from;

(c)export.

What export clauses are used when the shippers pay:

(a)All charges to the port of discharge except marine insurance?

(b)Delivery to a railway terminal?

(c)All shipping costs including insurance?

(d)All transport costs and import taxes?

Charges are made when goods enter and when they leave port. A charge for the services of a carrier is called carriage. A charge for the use of a wharf is called wharfage. What are the charges or costs for the following services?

(1)The services of a lighter.

(2)The services of a porter.

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(3)The services of a haulier.

(4)The use of a store or warehouse.

(5)The use of a carter or lorry.

(6)The charge for delay (demur) in the collection of goods.

(7)The post office charge for sending parcels and letters.

(8)The cost of goods getting broken.

(9)The charge or cost of liquids by being spilt.

(10)The loss of goods by pilfering (theft).

TRADE TERMS (INCOTERMS 2000)

Trade terms set out the rights and obligations of the parties to a sales contract with respect to the delivery of goods. They define whether the importer (customer) or the exporter (seller) will be responsible for arranging the transport and insurance necessary for the delivery of goods, and up to what point, and other related matters. The most commonly used terms, accepted by international practice since 1936, are published by the International Chamber of Commerce (ICC) as “Incoterms”. The current edition is Incoterms 2000.

Incoterms are not law and have no direct force of law, but by incorporating them in sales contracts exporters and importers give them legal effect. Thus, if an Incoterm is shown on a pro forma invoice or sales contract, it is absolutely necessary that the exporter understands the term clearly, and also that the importer shares his understanding from the outset. Such shared understanding of the full implications for both cost and risk should prevent later disputes and resultant delays in receiving funds for goods exported.

TERMS OF SALE

The point at which sellers have fulfilled their obligations so the goods in a legal sense could be said to have been delivered to the buyer. They are shorthand expressions that set out the rights and obligations of each party when it comes to transporting the goods. Following, are the thirteen terms of sale in international trade as Terms of Sale reflected in the recent amendment to the International chamber of Commerce Terms of Trade (INCOTERMS), effective July 1990: exw, fca, fas, fob, cfr, cif, cpt, cip, daf, des, deq, ddu and ddp.

- EXW (Ex Works) (...Named Place): A Term of Sale which means that the seller fulfills the obligation to deliver when he or she has made the goods available at his/her premises (i.e., works, factory, warehouse, etc.) to the buyer. In particular, the seller is not responsible for loading the goods in the vehicle provided by the buyer or for clearing the goods for export, unless otherwise agreed. The buyer bears all costs and risks involved in taking the goods from the seller©s premises to

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the desired destination. This term thus represents the minimum obligation for the seller.

-FCA (Free Carrier) (... Named Place): A Term of Sale which means the seller fulfills their obligation when he or she has handed over the goods, cleared for export, into the charge of the carrier named by the buyer at the named place or point. If no precise point is indicated by the buyer, the seller may choose, within the place or range stipulated, where the carrier should take the goods into their charge.

-FAS (Free Alongside Ship) (...Named Port of Shipment): A Term of Sale

which means the seller fulfills his obligation to deliver when the goods have been placed alongside the vessel on the quay or in lighters at the named port of shipment. This means that the buyer has to bear all costs and risks of loss of or damage to the goods from that moment.

-FOB (Free On Board) (...Named Port of Shipment): An International Term of Sale that means the seller fulfills his or her obligation to deliver when the goods have passed over the ship©s rail at the named port of shipment. This means that the buyer has to bear all costs and risks to loss of or damage to the goods from that point. The FOB term requires the seller to clear the goods for export.

-CFR (Cost and Freight) (...Named Port of Destination): A Term of Sale

where the seller pays the costs and freight necessary to bring the goods to the named port of destination, Terms of Sale but the risk of loss of or damage to the goods, as (continued) well as any additional costs due to events occurring after the time the goods have been delivered on board the vessel, is transferred from the seller to the buyer when the goods pass the ship©s rail in the port of shipment. The CFR term requires the seller to clear the goods for export.

-CIF (Cost, Insurance and Freight) (...Named Place of Destination): A Term of Sale where the seller has the same obligations as under the CFR but also has to procure marine insurance against the buyer©s risk of loss or damage to the goods during the carriage. The seller contracts for insurance and pays the insurance premium. The CIF term requires the seller to clear the goods for export.

-CPT (Carriage Paid To) (...Named Place of Destination): A Term of Sale

which means the seller pays the freight for the carriage of the goods to the named destination. The risk of loss of or damage to the goods, as well as any additional costs due to events occurring after the time the goods have been delivered to the carrier, is 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 upon destination, the risk passes when the goods have been delivered to the first carrier. The CPT term requires the seller to clear the goods for export.

- CIP (Carriage and Insurance Paid To) (...Named Place of Destination): A Term of Sale which means the seller has the same obligations as under CPT, but

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with the addition that the seller has to procure cargo insurance against the buyer©s risk of loss of or damage to the goods during the carriage. The seller contracts for insurance and pays the insurance premium. The buyer should note that under the CIP term the seller is required to obtain insurance only on minimum coverage. The CIP term requires the seller to clear the goods for export.

-DAF (Delivered At Frontier) (...Named Place): A Term of Sale which means the sellers fulfill their obligation to deliver when the goods have been made available, cleared for export, at the named point and placed at the frontier, but before the customs Terms of Sale border of the adjoining country.

-DDU (Delivered Duty Unpaid) (...Named Port of Destination): A Term of

Sale where the seller fulfills his obligation to deliver when the goods have been made available at the named place in the country of importation. The seller has to bear the costs and risks involved in bringing the goods thereto (excluding duties, taxes and other official charges payable upon importation) as well as the costs and risks of carrying out customs formalities. The buyer has to pay any additional costs and to bear any risks caused by failure to clear the goods for in time.

-DDP (Delivered Duty paid) (...Named Port of Destination): "Delivered Duty Paid" means that the seller fulfills his obligation to deliver when the goods have been made available at the named place in the country of importation. The seller has to bear the risks and costs, including duties, taxes and other charges of delivering the goods thereto, clear for importation. While the EXW term represents the minimum obligation for the seller, DDP represents the maximum.

-DES (Delivered Ex Ship) (...Named Port of Destination): A Term of Sale

where the seller fulfills his/her obligation to deliver when the goods have been made available to the buyer on board the ship, uncleared for import at the named port of destination. The seller has to bear all the costs and risks involved in bringing the goods to the named port destination.

- DEQ (Delivered Ex Quay, [Duty Paid]) (...Named Port of Destination): A Term of Sale which means the DDU term has been fulfilled when the goods have been available to the buyer on the quay (wharf) at the named port of destination, cleared for importation. The seller has to bear all risks and costs including duties, taxes and other charges of delivering the goods thereto.

FCA – FREE CARRIER '" (…' ' ")