副镇长国际贸易实务

2021年1月20日发(作者：pierce)

国际贸易实务《英文版》


Chapter 1
Introduction to Contracts for International Sales of Goods
CONTRACT













ORIGINAL
THE SELLER: SHANGHAI TEXTILES IMP. & EXP. AI


CONTRACT NO: GL0082













27 ZHONGSHAN ROAD E, AI, CHINA








DATE: Oct.5, 2000













TELEPHONE:86-21-63218467
























PLACE: SHANGHAI
THE BUYER:

SUPERB AIM (HONG KONG) LTD.,












RM.504 FUNGLEE COMM BLDG.

6-8A PRATT A
VE., TSIMSHATSUI,












KOWLOO,HONG KONG
THE BUYER AND SELLER HA
VE AGREE TO CONCLUDE THE FOLLOWING TRANSACTIONS
ACCORDING TO THE TERMS AND CONDITIONS STIPULATED BELOW:
1
．
COMMODITY & SPECIFICATION
PACKING & SHIPPING MARK
2
．
QUANTITY
3. UNIT PRICE
(PCS)
CIF

H.K.


US$$14.25
US$$14.25
US$$14.25

4. AMOUNT


USD8550.00
USD8550.00
USD8550.00
80%
COTTON
20%
POLYESTER
LADIES
KNIT

JACKET

.49394(014428)

.49393(014428)

.55306(014428)
REMARKS:

1)
EACH
IN
PLASTIC
BAGS,24
BAGS
TO
A
CARTON

TOTAL 75 CARTONS

600
600
600
TOTAL: USD 25,650.00





2) SHIPPING MARK :SUPERB




















H.K




















NO.1-75




















MADE IN CHINA
TOTAL V
ALUE: SAY US DOLLARS TWENTY-FIVE THOUSAND SIX HUNDRED AND FIFTY ONLY
.

TIME OF SHIPMENT:
W
ithin
45
days
of
receipt
of
letter
of
credit
and
not
later
than
the
month of Dec.










2000 with partial shipments and transshipment allowed.

PORT OF LOADING & DESTINATION:
FROM SHANGHAI TO HONG KONG

TERMS OF PAYMENT:
By 100% Confirmed Irrevocable Sight Letter of Credit opened by
the buyer to reach the
Seller not later than Oct.31, 2000 and to be
available for negotiation in China until the15th day after the date of

case
of
late
arrival
of
the
LC,
the
Seller
shall
not
be
liable for any delay in shipment and shall have the right to rescind
the contract and or claim for damages.

INSURANCE:






To
be
effected
by
the
seller
for
110%
of
the
CIF
invoice
value
covering
ALL
RISK
AND
W
AR
RISK
as
per
China
Insurance
Clauses.

TERMS
OF
SHIPMENT:

To
be
government
by“INCOTERMS
2000”.
For
transactions
concluded
on
CIF
terms,
all
surcharges
including
port
congestion

surcharges
including
port
congestion
surcharges,
etc.
levied
by
the
shipping
company,
in
addition
to
freight,
shall
be
for
the
Buyer’s
account.
The Buyers:



































The Seller

SUPERB AIM (HONG KONG) LTD.




SHANGHAI TEXTILES IMP.&EXP.

1.

The Concept of Contract
A contract is a promise or set of promise that the law will enforce.
A contract in this law refers to an agreement establishing, modifying and
terminating the civil rights and obligation between subjects of equal footing,
that
is,
between
natural
persons,
legal
persons
or
other
organizations.(China
Contract Law, Article 2)
A contract is an agreement between two or more persons that is legally
enforceable.
All
contracts
are
agreements,
but
not
all
agreements
are
contracts.
The
law will only enforce agreements where the parties intend to be legally bound.
2.


Essential elements required to form a contract
Before
the
law
will
regard
as
agreement
as
a
contract.
A
number
of
essential elements must exist.

The
following
illustrates
the
six
elements
required
to
constitute
a
contract.
a.

Intention to create a legal relationship.
b.

Offer and acceptance
c.

Form and/or consideration
d.

Capacity of parties
e.

Reality of consent
f.

Legality of object
1.

Intention to create a legal relationship

The arties to the contract must
intend their agreement to be legally enforceable.
2.

Offer and acceptance


There must be a meeting of minds. There must
be an offer made by one party and an acceptance of that offer by another.
3.

Form
and/or
consideration


Consideration
must
be
defined
as
mutual
promises.
Both
parties
must
provide
consideration.
A
contact
lacking
consideration may be va lid if it is in the form of a deed.(i.e. a contract under
seal)
4.

Capacity of parties The parties of a contract require capacity or ability to
contract.
Some
people
are
under
a
disability
when
it
comes
to
making
contracts; their capacity to contract is restricted()
5.

Reality
of
consent


It
is
necessary
that
the
parites
to
a
contract
genuinely
consent
to
the
making
of
a
contract.
Their
consent
must
be
genuine and not given because of a misrepresentation
（误会）
duress(
胁迫
)or

undue influence.
6.

Legality of object


The purpose or object of a contract must be legal.
Contracts can be illegal at common law and by statute.
An easy way to remember the six elements of a contract is to remember
the word FROIC. Two legal presumptions are used to determine intention. A.
It is presumed that the parties if involved with a domestic or social agreement,
will
not
create
the
intention
to
be
legally
bound.
B.
It
is
presumed
that
the
parties, if involved with a commercial or business agreement, will intend to be
legally bound.
3.


The importance of a written contract
Article11
of
the
United
Nations
Convention
on
Contracts
for
International Sale of Goods reads,
“a contract of sale need not be concluded in
or evidenced by writing and is not subject to any other requirement as to form.
It maybe proved by any means, including witnesses.
According to this provision, a written contract endorsed by both parties
of
the
deal
is
not
required
condition
for
the
formation
of
a
contract.
But
in
practice,
the
parties
usually
sign
a
formal
written
contract
after
they
have
reached
an
agreement
through
negotiation.
This
is
done
because
a
written
contract has the following importance.
1.

A
written
contract
endorsed
by
both
parties
of
the
deal
constitute
the
evidence of the formation of a contract. Contracts need to be evidenced in

case there is any dispute about it, and written evidence will make it easy to
settle
the
disputes.
If
the
business
negotiation
had
done
with
letters
or
telegraphic
means,
evidence
poses
no
problem,
but
if
the
business
negotiation
had
been
done
by
verbal
means,
it
will
be
necessary,
for
the
parties
to
sign
a
written
contract.
While
approving
the
United
Nations
Convention
on
Contracts
for
International
Sale
of
Goods,
our
government
declared that a contract must be in written form. And in the United States,
the Uniform Commercial Code also rules that a contract for the sale of above
US$$500 must be evidenced by writing to make it legally effective.
2.

Written contract is sometimes the necessary condition for the formation
of a contract. In business negotiation, when one party has declared that there
will not be a contract until a written contract has been signed, then even if
the
parties
have
reached
agreement
on
terms
of
the
deal
through
business
negotiation,
a
written
contract
will
have
to
be
signed.
Also,
if
a
contract
needs to be approved by the government authorities, it will have to be signed.
Also,
if
a
contract
needs
to
be
approved
by
the
government
authorities,
it
will have to be in written form.
3.

Written contract forms the foundation upon which the parties concerned
perform their contract. In international trade practice, to perform a contract
will go through many procedures and involve many other parties. Without a
written contract, a verbal offer is almost impossible to be executed. And for
a contract which has been formed with letters or telegraphic means, it is also

necessary
to
sum
up
all
the
terms
of
the
deal
in
a
written
contract
to
convenience the performance.
The written contract must tally with terms of the deal reached

between
the two parties. In case it does not, either party is entitled to refuse to sign it
and
demand
corrections.
In
case
it
is
not
corrected,
the
terms
listed
on
the
sales contract will replace the terms of deal previously agreed upon between
the two parties and become binding on them.

4.


The form of a Sales Contract

Generally,
there
is
not
a
required
form
for
a
sales
contract.
The
most
often used forms in China are entitled “contract”, or “confirmation”.


A
contract
lists
in
detail
all
terms
of
a
deal.
Apart
from
the
name,
specifications,
packing,
unit
price,
loading
port
and
unloading
port,
time
of
delivery, payment methods, shipping marks, insurance, commercial inspection
of
the
consignment,
it
also
provides
clauses,
such
as
claims,
force
majeure,
arbitration
covering
the
rights
and
liabilities
of
the
parties
and
the
dispute
settlement. The contract is usually made in the third person.
A conformation is a contract in a simplified form. A confirmation usually
has all terms of the deal as listed in the contract except the clauses covering
claims,
force
majeure,
and
arbitration.
Confirmation
can
either
be
“sale
confirmation” or “purshase confirmation” depending on whether it is made by

a seller or a buyer. A confirmation is usually made in the third person.
Having
finished
business
negotiation,
the
seller
can
produce
or
sign
a
sales contract or confirmation in duplicate containing all the terms of the sale
agreed upon by the two parties and send them to the buyer. Then usually the
buyer
will
sing
them
and
send
one
of
them
back
to
the
seller.
If
the
buyer
makes
some
alterations
or
amendments
which
the
seller
can
not
accept,
he
should notify the buyer immediately that he cannot accept them, or the deal
will be
executed in accordance
with
the terms
as
listed in the
contract.
The
buyer cannot repudiate the contract by refusing to send a copy of the contract
back.
The written contract can also be produced by the buyer. It can be in the
form
of

“sales
contracts”,

“purchase
confirmation”
，
“
order
”
,
or
“
indent
”
(an order produced by anagent on behalf of his principal). This is also
usually
produced
in
duplicate,
signed
and
sent
to
the
seller.
The
seller
will
then
sign
them
and
send
one
of
them
back.
But
before
the
seller
signs
the
document, he should make sure that the document corresponds with the terms
reached between the two parties. Sometimes
“
order
”
or
“
indent
”
is sent to the
seller
before
the
business
negotiation
takes
place.
It
may
serve
as
either
an
offer or an invitation to making an offer depending on how it is worded.
The formulation of the export sales contract represents the conclusion of
some possibly difficult negotiations and accordingly; particular care should be
taken regarding the preparation of its terms. It must be borne in mind that an

exporter
’
s primary task is to sell his or her products at a profit and, therefore,
the contract should fulfill this objective insofar as his or her obligations are
concerned.
Above
all,
they
should
be
capable
of
being
executed
under
reasonable
circumstances
and
ultimately
produce
a
modest
profit.
It
is,
of
course, realized that in the initial stages of developing a new market overseas
a
loss
may
be
incurred,
but
with
a
long-term
marketing
plan
objective
of
increasing market share, the exporter should ultimately gain a favorable profit
level.
A
further
point
to
remember
is
that
the
export
sales
contract
also
has
regard
to
the
cargo
delivery
terms
reflecting
the
contracts
of
carriage
insurance and finance arrangements.
5.

Details of the typical content of a UK export contract
Details of the typical content of a UK export contract are given below,
but it must be stressed that such contracts differ by individual country;
(1)

The exporter
’
s (seller
’
s) registered name and address.
(2)

The importer
’
s (buyer
’
s) registered name and address.
(3)

A short title of each party quoted in items(1) and (2).
(4)

The
purpose
of
the
contract.

For
example,
it
should
confirm
that
the
specified
merchandise
is
sold
by
the
party
detailed
in
item
(1)
to
the
address quoted in item (2), and what the latter has bought according to
the terms and conditions laid down in the contract.
(5)

The number and quantity of goods, precisely and fully described to avoid

any
later
misunderstanding
or
dispute.
In
particular,
the
contract
must
mention
details
of
any
batches
ad
reconcile
goods
descriptions
with
custom tariff specifications.
(6)

The
prices.

This
may
be
quoted
in
sterling
depending
on
its
general
stability
on
some
other
currency
which
not
likely
to
vary
in
value
significantly throughout the life of the contract, such as American dollars
or
Euro.
Goods
sold
in
the
seller
’
s
currency
ensures
the
exporter
maintains
his
or
her
profit
margin
and
any
currency
exchange
risk
is
experienced by the buyer who is compelled to convert sterling into his or
her
local
currency,
which
may
not
be
stable.
Conversely,
the
seller
quoting
in
the
buyer
’
s
currency
ensures
the
importer
can
compare
the
quotation with other suppliers and is assured there will be no currency
risk. The seller runs the risk of the buyer
’
s

currency being unstable and
consequently
this
may
erode
the
seller
’
s
profit
margin
unless
adequate
provision can be made. The euro, currently the national currency in 11
countries
within
the
European
Union,
eliminates
any
risk
between
the
seller
and
buyer
in
export
contracts
undertaken
within
the
eruo-zone
states.
To
counter
inflation,
particularly
in
a
long-term
contract,
it
is
usual
to
incorporate
an
escalation
clause,
and
to
reduce
the
risk
of
sterling
fluctuations
implications,
the
tendency
is
to
invoice
in
foreign
currencies.
(7)

Terms
of
delivery.

It
is
important
that
the
correct
Incoterm
2000
is

selected.
(8)

Terms of payment.

For example, open account ,cash with order,letter of
credit, open account or documents against payment or acceptance. Again
this requires careful consideration.
(9)

Delivery date and shipment date or period.

The exporter should check
with his o r her production department that the delivery date quoted is
realistic and that the shipping or air freight space will be available on the
date or period specified.
The exporter
’
s obligations regarding the latter
will depend on the terms of delivery.
(10)

Methods of shipment, for example, container, cargo wagon, Ro-Ro or
air
freight,
an
increasing
volume
of
trade
is
now
conveyed
under
combined transport operation arrangements.

(11)

Method of packing. It is desirable that both parties be fully aware and
agree
on
the
packing
specification
to
ensure
no
dispute
arises
later
regarding packing or any variation to it.

(12)

Cargo insurance policy or certificate terms.
(13)

Import
or
export
license
details
or
other
instructions.
The
period
of
their validity must be reconciled with the terms of payment and delivery
date or shipment date or period.
(14)

Shipping,
freight
and
documentary
requirements
and/or
instructions.
This includes marking of cargo.
(15)

Contract conditions, for example, sale, delivery, performance (quality)

of goods, arbitration, etc. with regard to arbitration, this tends to speed
the settlement of any disputes without costly litigation.
(16)

Signature.
Both
parties
must
ensure
the
contract
is
signed
by
a
responsible person at director or managerial level, and the date should be
redorded.
Obviously
the
terms
of
the
export
sales
contract
will
vary
by
circumstance but other areas which may feature include agency involvement,
after-sales
activities
such
as
the
availability
and
supply
of
spares,
product
servicing, training, advertising and promotion cost and so on. Additionally, it
must
be
reconciled
with
any
logistics
driven
strategy
and
outsourcing
of
components
and
third
country
assembly
as
found
in
the
NIKE
case
study.
Moreover,
any
risk
areas
must
be
evaluated
and
miimized
such
as
currency
fluctuation, liquidation of the buyer ad political developments.

A
copy
of
the
contract
should
be
retained
by
each
party.
It
must
be
recognized that an increasing volume of business is concluded on the basis of
the export invoice containing the contractual terms. Again one must stress that
such
a
document
must
be
carefully
compiled
to
reflect
the
terms
of
the
original quotation to the buyer and the importer
’
s acceptance.


Case1. See P10





Article 11 of CISG


A contract of sale need not be concluded in or evidenced by writing and is

not
subject
to
any
other
requirement
as
to
form.
It
may
be
proved
by
any
means, including witnesses.
A dispute arising from an oral contract
In August 2004, a technological development company in Singapore signed a
purchase contract for 10 computers with a computer company in Hong Kong.
However, the Singapore company found the first two computers supplied by
the Hong Kong company were inferior in quality a wanted to return the goods
but
the
payment
of
USD100,000
for
the
two
computers
had
already
been
made.
Knowing
that
it
was
unable
to
supply
the
goods
according
to
the
requirement
of
the
Singapore
Company,
the
Hong
Kong
company
recommended
a
company
from
the
mainland
as
the
supplier.
Three
months
later, the mainland company duly supplied the 8 computers to the
Singapore
company who confirmed the quality of the delivery. However, when remitting
the payment to the account of the mainland company, the Singapore Company
deducted
USD100
000
from
it
as
a
compensation
for
the
two
inferior
computers
supplied
by
the
Hong
Kong
company.
Therefore
the
mainland
company went to a count in Singapore to claim the deducted amount.
“
since
the
Singapore
company
does not have
a
contractual
relation
with
the
Chinese mainland company
,”
the Singapore company
’
s lawyer argued during
the
trial,
“
the
sales
contract
was
concluded
between
the
Chinese
mainland
company and the Hong Kong company, the Singapore company merely acted
as the payment agent of the latter, thus is entitled to deduct the amount paid

for the previous unqualified goods.
”
The Chinese company
’
s lawyer made the
following
statement:
since
there
was
a
three-party
contract
which
arranged
that
the
Chinese
company
should
supply
the
8
computer,
the
debt
occurred
between the Singapore company an the Hong Kong company had nothing to
do
with
the
Chinese
mainland
company,
therefore,
it
was
illegal
for
the
Singapore
company
to
deduct
the
USD100
000
without
authorization.
After
hearing
the
statements
of
both
parties,
the
court
reached
the
following
conclusion: the contract between the Singapore company and the Hong Kong
company
is
a
basic
contract.
Later,
because
of
the
Hong
Kong
company
’
s
difficulties in fulfilling the contract, both parties agreed to invite the mainland
company
to
join
to
join
in
as
the
supplier
which
was
also
a
legal
practice.
Therefore,
the
oral
agreement
of
the
three
parties
was
valid
and
should
be
considered
as
an
amendment
and
supplement
fo
the
contract
between
the
Singapore Company and the Hong Kong company.
The new contract among
the three companies has replaced the original one. Although established orally,
The contract was valid according to the spirit of CISG; hence, the Singapore
Company should have deducted the amount of the 2 substandard computers
supplied
by
the
Hong
Kong
Company.
The
court
adjudged that
the
Chinese
company
won
the
case,
and
that
the
dispute
over
obligation
between
the
Singapore Company and the Hong Kong company was to be tried in another
law case.
Analysis:

This is a dispute over cotract fo international sales of goods. The critical point
of the case was the validity of the oral agreement among the three companies.
CISG Article 11 provides that
“
A contract of sale need not be concluded in or
evidence by writing and is not subject to any other requirement as to form. It
may
be
proved
by
any
means,
including
witnesses.
”

Morever,
considering
some countries provide that a contract of sale must be concluded in writing,;
CISG
allows
the
contracting
parties
to
make
declaration
about
Article
11.
according to CISG Article 12,
“
Any provision of article 11, article 29: or Part

Ⅱ

of
this
Convention
that
allows
a
contract
of
sale
or
its
modification
or
termination
by
agreement
or
any
offer,
acceptance
or
other
indication
of
intention
to
be
made
in
any
form
other
than
in
writing
does
not
apply
where
any
party
has
his
place
of
business
in a Contracting State which has made a declaration under article
96
of
this
Convention.
”

Thus,
when
there
is
no
special
declaration,
the
contract
of
sale
is
not
subject
to
any
other
requirement
as
to
form.
In
the
case,
the
contract
among
the
three
parties
agreed
with
CISG
provisions.
It
was
not
subject
to
any
other
requirement
as
to
form
and
fully
valid.
The
Chinese
company
’
s
adequate
performance
according
to
the
oral
contract
served
as
the
basis
by
which
it
won
the case.



International Trade Terms
When quoting prices to his overseas buyer, an exporter will naturally take into
account payment of the various expernses involved in getting the goods from
the
factory
or
warehouse
in
his
own
country
to
the
buyer
’
s
promises.
In
international
trade,
terms
and
conditions of
quality,
quantity,
packing,
price,
delivery, insurance, terms of payment, inspection, claim and arbitration should
be clearly and reasonably stated in the contract so as to clarify the duties and
obligations
of
the
Seller
and
the
Buyer.
These
are
the
basic
terms
and
conditions of the contract, among which the price term is the most important
one. For example, an exporter, in calculating his export price, works out dock
charges, clearing and forwarding charges, freight and insurance, and certainly
also their profit margin, and adds them to the price paid to the manufacture to
make it , say, USD2000 per metric ton CIF London including 4% commission.
What is
“
USD2000 per metric ton CIF London including 4% commission
”
?

it is one of the trade terms, or delivery terms as we usually call them.
Introduction to trade terms
Trade ter
ms
are
also
referred to
as
“
price
terms
”

or
“
delivery
terms
”
.
Trade
terms
are
a
set
of
uniform
rules
codifying
the
interpretation
of
trade
terms
defining the price composition and the rights and obligations of the buyer and
the seller in international transaction.
Trade terms are key elements of international contracts of sales, since they tell
the parties what to do with respect to:

Delivery terms ( carriage of the goods from the seller to the buyer and division
of costs and risks between the parties);
Price terms (stipulating what are included in
the price the buyer paid to
the
seller, e.g. cost, freight, insurance, export and import clearance fees, etc.);
Delivery
obligations
(what
documents
should
the
seller
provide,
e.g.
bill
of
lading, insurance policy, etc.).
Important definitions of rade terms in history
The most important international practice covering trade terms in history are:
Warsaw-Oxford Rules made by International Law Association in 1932, it only
defines CIF contracts.
Revised American Foreign Trade Definition made by nine American groups in
1941.
it
is
the
revised
form
for
six
price
terms
defined
in
1919.
thess
price
terms are Ex Point of Origin. Free on Board, Free Alongside, Cost & Freight,
Cost, Insurance and Freight and Ex Dock.
Incoterms, developed and issued by the International Chamber of Commerce
(ICC)
in
Paris.
ICC
introduced
the
first
version
of
Incoterms---short
for
“
International Commercial Terms
”
- in 1936. Since then, ICC expert lawyers
and
trade
practitioners
have
updated
them
six
times
to
keep
pace
with
the
development of international trade.
Understanding incoterms
Why we need incoterms?
To establish clear and binding rules for:

The division of transport cost;
The division fo transport risks;
The handling liabilities.
Incoterms
are
international
rules
that
are
accepted
by
governments,
legal
autorities
and
practitioners
worldwide
for
the
interpretation
of
the
most
commonly
used
terms
in
international
trade.
They
either
reduce
or
remove
altogether uncertainties arising from differing interpretations of such terms in
different
countries.
The
goal
of
the
Incoterms
is
to
alleviate
or
reduce
confusion over interpretations of shipping terms, by outlining exactly who is
obliges
to
take
control
of
and
/or
insure
goods
at
a
particular
point
in
the
shipping
process.
Further
,
the
terms
will
outline
the
obligations
for
the
clearance of the

goods for export or import, and requirements on the packing
of items.
What do they cover?
The
scope
of
Incoterms
is
limited
to
matters
relating
to
the
rights
and
obligations of the parties to the contract of sale with respect to the delivery of
goods sold, but excluding
“
intangibles
”
like computer software.
What do they not deal with?
“
Incoterms
”
do not deal with the following aspects:
Transfer of property/legaltitle;
Breach of contract/deficiency in the merchandise
Terms of payent;

Place of jurisdiction
Although the Incoterms are widely used and exceedingly handy, they are not
meant for every type of contract. Specially, the terms used in a contract state
exactly when the shipper unloads and relinquishes obligation, and, when the
buyer takes over for carriage and insurance.
The Incoterms are not meant to
replace statements in a contract of sale that outline transfers of ownership or
title
to
goods.
Therefore,
the
Incoterms
may
not
be
of
use
when
looking
to
resolve disputes that may arise regarding payment or ownership of goods.
Incoterms 2000
The
Incoterms
are
used
quite
frequently
in
international
contracts,
and
a
specific version of the Incoterms should be referred in the text of the contract.
Most contracts
made
after
1
January,
2000
will
refer
to the
latest
edition of
Incoterms,
which
came
into
forc
on
that
date.
The
correct
reference
is
to
“
Incoterms
2000
”
.
Unless
the
parties
decide
otherwise,
earlier
versins
of
Incoterms
—
like Incoterms 1990
—
are still binding if incorporated
in
contracts
that
are
unfulfilled
and
date
from
before
1
st
January,
2000.
Versions of Incoterms preceding the 2000 edition may still be
incorporated
into
future
contracts
if
the
parties
agree
so.
However,
this of course is not recommended because the latest version is
designed
to
bring
Incoterms
into
line
with
the
latest
developments
in
commercial
t
use
of
Incoterms
goes
a
long
way
to

providing
the
legal
certainty
upon
which
mutual
confidence
between
business partners must be based.
In this work, we will mainly discuss the Incoterms 2000.
Incoterms 2000 include thirteen trade terms that are classified into four groups
–
E,F,C and D
–
according to the relative responsibilities of each party and to
the point at which the risk of loss passes from seller to buyer. Incoterms apply
to a contact of international sale of goods only if the parties have incorporated
them into their contract.
The present edition of Incoterms lists the following trade terms.

1.E Terms
E terms refers EXW term (Ex Works; works, mill, factory, mine warehouse,
etc.).
Under
this
term,
the
seller
need
only
make
the
goods
available
at
its
factory (or mill, farm, warehouse, or other place of business) and present the
buyer with an invoice for payment. The buyer must arrange all transportation
and
bear
all
risks
and
expenses
of
the
journey
from
that
point.
The
buyer
would
also
have
to
clear
the
goods
for
export
by
obtaining
export
licenses
from his government, this term is most often used when the buyer will pick up
the goods by truck or rail. Therefore, for international shipments, EXW terms
are
common
in
Europe
where
goods
frequently
move
across
national
boundaries by ground transportation.
2. F Terms

F terms include FCA(free carriers), FAS(free alongside ship), and FOB (free
on
board).
Generally,
under
Fterms
the
buyer
pays
the
cost
of
the
main
international
carriage.
The
seller
places
the
goods
in
the
hands
of
a
carrier
named by the buyer and at a time and place named in the contract. The risks of
loss
passes
from
seller
to
buyer
at
that
time.
The
buyer
arranges
the
transportation
and
pay
all
freight
costs,
however,
if
it
is
convenient
and
the
parties agree, the seller may pay the freight and add that amount to the invoice
price already quoted. F terms are often used when the buyer has contracted for
a
complete
shipload
of
materials
or
commodities
and
thus
has
reason
to
assume the responsibilities for arranging carriage. F terms may also be used
because
the
buyer
feels
that
it
can
obain
better
freight
rates
than
the
seller.
Some F terms are for ocean shipment only. Other can be used for all modes of
transport.
Assume that the buyer in china wants to arrange its own ocean transportation.
The seller in Albany would like to deliver the goods to a carrier near it, for
transportation
to
the
Port
of
New
York,
so
different
forms
of
transportation
will be required. For instance, the seller might deliver the goods to a hauler fo
a
trip
down
the
Hudson,
or
to
a
railroad
or
trucking
company
or
trucking
company.
The
seller
may
want
to
hand
over
the
goods
to
a
multimodal
terminal operator near it and let it handle goods from there. This inland carrier
will
then
transport
the
goods
to
the
Port
of
New
York
for
shipment
to
the
foreign
destination.
If
the
inland
carrier
is
in
Albany,
then
the
seller
should

quote price FCA, Albany. Here, for the contract price, the seller bear the costs
and
assumes
all
risks
of
getting
the
goods
from
its
factory
to
the
carrier
or
terminal
in
Albany.
The
seller
then
has
the
responsibility
to
obtain
any
government export licenses that are required. This term could be also used for
air freight.

3. C Terms

C
terms
include
CFR
(cost
and
freight),
CIF(cost
,
insurance
and
freight),
CPT(carriage paid to ), and CIP(Carriage and insurance paid to). C terms are
also
shipment
contracts.
Under
CFR
terms
the
seller
should
contract
for
transport and pay freight charges to the named port of destination; arrange for
loading
goods
on
board
ship,
usually
of
seller’s
choice,
and
pay
costs
of
loading; obtain export license; notify buyer of shipment, etc. the buyer should
purchase document of title and take delivery from ocean carrier; pay import
duties,
etc.
if
the
seller
intends
to
arrange
ocean
transportation,
but
will
be
delivering
the
goods
to
a
road
or
rail
carrier,
inland
waterway
or
to
amultimodal terminal operator for transit to the seaport, the seller may wish to
quote CPT. CIP terms are the same as under CPT, with the added requirement
that the seller procure insurance to cover the buyer’s risks of loss.


D Terms
D
terms
include
DAF(delivered
at
frontier),
DES(delivered
ex
ship),
DEQ(delivered
ex
quay),DDU(
delivered
duty
unpaid),
and
DDP(delivered
duty paid). Contract with D terms of sale are destination contracts. If the seller

in China is willing to enter into a destination contract, then he must be willing
to accept far greater responsibility than under any other terms. For the price
stated in the contract, the seller must not only deliver the goods at the port of
destination terms used for ocean cargo.
Today , destination contracts are actually becoming increasingly popluar due
to
an
increasingly
competitive
and
globalized
marketplace.
Many
manufactures and other shippers find they must do more and more to win and
keep customers. In other words, shippers often have to provide credit terms to
their customers by shipping on open account and giving the customer time to
pay.
Shippers
are
also
being
forced to take
greater
responsibility
for
getting
the goods
into
customer’s
hands.
For
these
reason,
more
and
more
shippers
are quoting prices on D terms than ever before.
Ⅰ
. Description of Incoterms 2000
EXW(Ex-works)

This
term
means
maximum
involvement
by
the
buyer
in
arrangements
for
the conveyance of the consignment to the specified destination. The exporter
merely makes the goods available by an agreed date at his or her factory or
warehouse.
The
seller
minimizes
his
or
her
obligations
whilst
the
buyer
obtains the goods at the lowest possible price, by arranging to use his or her
national shipping line or airline and by securing insurance cover in his or her
own
country.
This
eliminates
the
need
to
fund
such
provisions
using
hard

currency and thereby improves the importer’s trade balance. This practice is
on the increase nowadays, particularly in Third World and Eastern European
markets. The seller’s obligations cease wh
en the buyer accepts the goods at
the factory or warehouse. It is usual fo the buyer to appoint an agent in the
seller’s country to look after all the collection, transportation, insurance and
documentation
arrangements,
possibly
in
consultation
with
the
national
shipping line or airline.

The term provides two options. Ex-works cleared for export, and ex-works
uncleared
for
export.
The
following
is
based
on
uncleared
for
export.
The
principal obligations of the seller include:
Supplying the goods in accord with the contract of sale;
Making available the goods to the buyer at the customary, delivery point, or as
specified
in
the
contract
of
sale
to
enable
the
goods
to
be
conveyed
on
the
transport unit arranged by the buyer,

Providing at his or her expense the necessary packing(if any) to enable buyer
to convey the goods on the specified transport;
Giving
the
buyer
prompt
notice
when
the
goods
will
be
available
for
collection;
Bearing all risk and expense of the goods until they have been placed at the
disposal of the buyer as specified in the contract of sale;
Rendering the buyer on request every assistance to provide , in the country of
delivery
or
of
cargo
origin,
all
the
relevant
documentation
required
in
the

process of exportation.
Obviously the responsibilities of the buyer are more extensive. These include:
Taking
delivery
of
the
cargo
and
paying
for
the
goods
inaccord
with
the
contract of sale terms;
Funding any pre-shipment inspection expense;
Bearing all the cost and risk of the goods from the time they have been placed
at his or her disposal by the seller inaccord with sales contract terms;
Funding any customs duties and taxes arising through exportation;
Bearing additional costs incurred and related risks inherent through the failure
of
the
buyer
to
give
instructiosn
about
the
place
of
delivery
within
the
prescribed period;
Funding
all
costs
in
obtaining
the
documents
required
for
the
purpose
of
importation and for passing through the countries of transit.
The
EXW
term
should
not
be
used
where,
according
to
regulations
of
the
country
of
export,
the
buyer
cannot
directly
or
idirectly
obtain
the
export
license. In such a situation, the FCA term should be sued.
CASE STUDY: damage caused by a fire accident
In
April
1197,
an
export
company
in
Shantou(herafter
called
company
B)signed a contract with an importer in Hong Kong(hereafter called company
A)
selling
3000
dozen
of
nylon
upper
garments.
The
contract
stipulated
:USD15/dozen
EXW
Shantou,
packing
in
cartons,
five
dozen
per
carton,
shipment
before
June
15
,
payment
by
T/T
after
company
A’s

examining the goods.
On
June 9,
company
B
informed
company
A
that the
goods were
ready
for
inspection.
On
June
10,
accompanied
by
a
member
from
company
B
,
company
A’s
representative
went
to
the
manufacture

in
Shangtou(hereafter
called company C) for inspection. On June 11, all of the goods went through
acceptance inspection and were packed and marked under the supervision of
the
representative,
who
then
telexed
company
A
that
the
goods
had
been
inspected and accepted and
company B would provide commercial invoice
and
other
documents
as
soon
as
the
payment
was
received.
On
June
12,
company
B
received
USD45,000
remitted
by
company
A
and
delivered
th
documents to the representative who wished to temporarily deposit the goods
in party C’s warehouse before he contracted some shipping agent in Shantou
for renting containers and export clearance. Company B communicated this
to party C who said that the goods had been stored separately for delivery at
any time. On the afternoon of
June 13, company A’s representative called to
tell that the shipping agent would not be able to pick up the goods until the
morning
of
June
14,due
to
an
unexpected
explosion
in
the
adjoining
chemical
plant,
party

C
caught
fire
and all
the
premises
and
materials
of
party
C
were
consumed.
Hearing
his,
company
A
immediately
demanded
company B to refund the payment, claiming that damage of the goods should
be borne by party because they had not yet picked up the goods. Company C
refused
to
refund
the
payment
for
the
reason
that
fire
was
a
kind
of
force

majeure
and
that
they
had
fulfilled
the
formality
of
delivering
the
goods.
They
held
that
the
damage
should
be
borne
by
company
A.
however,
company A thought that company still had ownership of the goods because
party C had not issued the certificate certifying that the goods had left the
factory.
Each
side
struck
to
his
argument.
In
the
end,
company
A
accused
company
of
not
having
fulfilled
delivery
duties.
After
hearing,
the
court
made the following award.
Company B the seller has delivered the goods to Company A the buyer at the
time and place stipulated I the contract, which is evidence by the telex sent to
company A by its representative.
According to the explanation to EXW in INCOTERMS2000, the buyer should
bear all risks of loss of or damage to the goods from the time the goods have
been
delivered
at
the
factory.
Moreover,
the
goods
have
been
packed
and
marked
under
the
buyer’s
supervision
and
deposited
separately,
all
these
actually prove that the goods have been placed at the dispose of the buyer.
The factory has not provided the certificate certifying that the goods had left
the
factory,
but
that
is
just
a
formality
of
inner
management
and
not
concerned with the transfer of ownership of the goods.
Company B is not liable for refund of the payment.
Company A’s damage and party C’s fire accident have nothing to do with this
case and are to be dealt with in a different case.”




FOT(free on board) (sea transport)
Under such terms the goods are placed in the ship by the seller at the specified
port of shipment detailed in the sale s contract. The risk of loss of, or damage
to, the goods is transferred from the seller to the buyer when the goods pass
over the ship’s rail. Under such terms the seller bears all the c
ost and the risk
of conveyance up to the ship’s rail and the buyer accepts the residue of the
transit cost, including sea freight and insurance. This term is used frequently
in international trade and is to the advantage of the buyer because the cargo
can be conveyed on his or her national shipping line, thereby ensuring it is
funded
by
the
national
currency.
Insurance
provision
can
likewise
be
arranged in his or her own country, with similar nenefit. It is usual for the
buyer
to
appoint
an
agent
in
the
sel
ler’s
country
to
look
after
the
pre-shipment,
documentation,
insurance,
etc,
arrangements
in
consultation
with the shipping company.
The principal seller’s obligations found in a FOB sales contract include:

Supplying the goods in accord with the contract of sale;
Delivering
th
cargo
on
the
named
vessel
at
the
specified
port
of
within
the
agreed period or on the agreed date in so doing informing the buyer;
Providing at his or her expense any export license authorization necessary for
the export of goods;
Bearing
all
cost
s
and
risks
of
the
goods
until
such
time
effectively
passed

over the ship’s rail at the named port;

Providing at his or her expense the customary packing of the goods unless it is
the custom of the trade to ship the cargo unpacked;
Paying the cost of any cargo scrutiny prior to delivery of the cargo;
Supplying
at
the
seller’s
expense
the
requisite
documentation
as
proof
of
delivery of the goods alongside the named vessel;
Providing the buyer on request and at the buyer’s expense any assistance
to
obtain
a
bill
of
lading,
sea
waybill
and
other
documentation
issued
in
the
country of shipment or origin necessary for the importation process both in
transit countries and the destination country.

The buyer’s responsibilities are extensive these incl
ude:
Arranging
at
his
or
her
own
expense
and
risk
the
pre-shipment
cargo
inspection
Bearing all cost and risk of the cargo from the time it has passed the ship’s rail
at port of Shipment and paying the price as specified in the sale contract;
Bearing
all
the
cost
and
risk
emerging
from
the
failure
of
the
shipowner
to
fulfill the contracted pre-shipment arrangements(such as the cargo being shut
out)his is subject to the seller making the cargo available at the loading berth
in accord with the sales contract, and in the event of the buyer failing to give
pre- shipment
details
to
the
seller
within
the
prescribed,
all
additional
cost
and risk to be borne by the buyer;

Paying
all
cost
to
the
seller
to
obtain
bills
of
lading,
certificate
of
origin,
cosular
documents
and
any
other
documentation
required
to
process
the
cargo
through
important
both
in
transit
countries
and
in
the
country
of
destination.
The
FOB
term
may
only
be
used
for
water
transport,
when
the
ship’s
rail
serves no practical purpose, such as Ro-Ro or container traffic, the FCA term
should be used.
Case Study: The buyer delays to send the vessel under FOB.
Company A in China signed a contract on FOB basis to export wheat to
Company B in Africa. It was contracted that shipment to be made in four lots.
The shipping clause ran as following:

“
The vessel nominated by the
buyer should reach the port of shipment within eight days
before the date of shipment. Otherwise, any of the seller’s
loss or damage thus incurred shall be borne by the buyer.
”
the contract also specified that
“
The buyer must give the
seller
a
notice
of
vessel
name
and
the
estimated
date
of
arrival
by
telecommunication
five
days
before
the
vessel
arrive
at
the
port
of
shipment.
”
during
the
course
of
fulfillment,
the
first
three lots were effected smoothly according to the contract.
However, the buyer was slow to send the vessel for the last
shipment. In reply to Company A’s repeated urges, company B
said that they
were unable to
book shipping
space
because
of

shipping company’s busy schedule a
nd asked for postponing
delivery
for
two
months.
Company
A
replied
as
follows:
“
According
to
the
contract,
you
are
bound
to
send
the
vessel.
In case of any difficulties in this aspect, we may allow you
to
delay
the
shipment
on
condition
that
you
make
a
compensation
which
amounts
to
USD200,000.
”
finally
the
bargain
of
compensation
was
settled
at
USD150,000
and
company
B
was
allowed to delay vessel sending for two months.

CFR(cost and freight-named port of destination)

Under this term the seller must pay the costs necessary
to bring the goods to the named port of shipment, the risk of
loss or damage to the goods, as well as of any additional
expenses,
is
transferred
from
the
seller
to
the
buyer
when
the
goods pass over the ship’s raft. This is identical to CI
F
except
that
the
buyer
is
responsible
for
funding
and
arranging
the cargo insurance.
The seller’s obligations I CFR include:

Supplying the goods in accord with the contract of sale
terms,
Arranging and paying for the conveyance of the goods to

the specified port of destination by the customary route and
funding any unloading charges at the destination port;
Providing
and
paying
for
any
export
license
or
other
governmental authorization necessary to export the cargo;
Arranging and paying for, on a specified date or in a
specified period, the cargo loading at the agreed port(if no
such
loading
date
or
period
is
quoted,
such
a
task
to
be
undertaken within a reasonable period);
Bearing all the cargo risk until such time as it passes
over the ship’s rail at the
port of shipment;
Supplying
promptly
and
paying
for
the
clean
shipped
negotiable bill of lading for the agreed destination port,
together with any invoice of the goods shipped;
Providing
and
paying
for
the
customary
packing
of
the
goods
unless it custom of the trade to ship the cargo unpacked;
Funding any cargo scrutiny prior to loading the cargo;
Paying
any
cost
of
dues
and
taxes
incurred
relative
to
the
process
of
exportation
in
respect
of
the
cargo
prior
to
shipment;
Providing
the
buyer
on
request
and
a
t
the
buyer’s
expense
and risk everyassistance to obtain any documents required in
the country of shipment and transit countries necessary for

the conveyance of the cargo to its destination.
A point for the seller to note especially with the CFR
term
is
the
need
to
supply
a
full
set
of
clean
onboard
or
shipped
bills of lading. If the bill of lading contrains a reference
to the Charter Party, the seller must also provide a copy of
the
latter.
The
buyer
must
ensure
these
provisions
are
complied
with by the seller.
The factors relevant to the buyer include:
Acceptance of the documents as tendered by the seller
(subject
to
their
conformity
with
the
terms
of
the
contract)and
payment of the goods, etc., as specified in the contract of
sale;
Receiving the goods at the port of destination and, with
the exception of the sea freight, all the costs and charges
incurred during the voyage(s);
Funding all unloading expenses at the destination port
including lighterage, wharfage,etc. unlesss such costs have
been included in the freight or collected by the shipowner at
the time freight was paid;
Funding any pre-shipment cargo inspection arrangements;
Undertaking all the risk when the cargo has passed the
ship’s rail at the departure port, in the event of the buyer

failing
to
give instructions
(by
the
specified
date or within
agreed period)
Relative
to
destination
port,
all
additional
cost
and
risk
will be borne by the buyer subject to the goods being duly
appropriated to the contract;
Paying all the costs to obtain the Certificate of origin
and consular documents;
Meeting all charges to provide any other documentation
specified
relative
to
processing
the
consignment
in
the
country of shipment or transit countries;
Paying all customs duties and other taxes raised at the
time of importation;
Obtaining and paying for any import license or related
documentation required at the time of importation.l
In the CFR contract sale the buyer can arrange the cargo
insurance in his or her own country thereby saving foreign
currency.
Many
importers
are
tending
to
favor
this
arrangement.
The CFR terms should be used only for sea an inland water
transport. When the ship’s rail serves no practical purpose
as in the case of Ro-Ro or contrainer traffic, the CPT term
should be used.
Case Study: CFR & Shipping Notice

An import and export company in china singed an export
contract
with
an
importer
in
Marseilles,
France
on
drawn-work
tablecloth
with
an
amount
of
USD80,
000
payment
by
D/P
at
sight.
On
the
morning
of
January
8,
1997,
the
goods
were
all
loaded
onto
the
named
vessel.
The
export
salesperson
who
was
in
charge
of this contract got so busy
that he didn’t remember to sen
d
the
buyer
the
shipping
advice
until
the
next
morning.
Unexpectedly,
when
the
French
importer
went
to
the
local
insurance
company
to
insure the
goods,
the latter
had
already
learned
that
the
ship
suffered
a
wreck
in
January
9
and
refused
to underwrite. The French importer immediately sent a telex
saying
“
owing to
your
delayed
shipping advice, we
are unable
to insure the goods. Since the vessel has been destroyed in
a wreck, the loss of goods should be for your account. At the
same
time,
you
should
compensate
our
profit
and
expense
losses
which
amount
to
USD8
000.
”
soon
all
the
shipping
documents
sent
through
the
collecting
bank
were
returned
to
the
export
company,
for
the
reasons
that
the
importer
refused
to
take
up
the
documents. Being a regular client of the exporter
’
s, the
French
importer
did
not
insist
on
claim
for
compensation
after
the
exporter
explained
his
difficult
situation
and
apologized
for the whole thing. However, the exporter should learn his