Import Export Contract Terms on Sales Contract/Purchase Contract Import Export Contract Terms on Sales Contract/Purchase Contract A contract

is an agreement that creates an obligation that is a binding, legally enforceable agreement between two or more competent parties. A contract can be worked out either by the seller or the buyer, and it is called a sales contract or a purchase contract respectively. The formal contract consists of the following main terms: The name of commodity The quality of commodity The quantity of commodity The packing of commodity The price of commodity Payment Insurance Inspection Cargo claims Force majesties

Import Export Contract Terms on Price Methods FOB -Free on Board Free on Board means that the seller fulfills his obligation to deliver when the goods have passed over the ship's rail at the named port of shipment. The buyer has to bear all costs and risks of loss of or damage to the goods from that point. FOB terms require the seller to clear the goods for export. This term can only be used for sea or inland waterway transport. CFR or C&F - Cost and Freight Cost and Freight means that the seller must pay the cost and freight necessary to bring the goods to the named port of destination but the risk of loss or damage to the goods, as well as any additional costs due to events occurring after the time the goods have been delivered onboard 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 CIF means that the seller has the same obligations as under CFR but with the addition that he has to procure marine 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. DAF - Delivered at Frontier (...named place)DAF means that the seller fulfills his obligation to deliver when the goods have been made available, cleared for export, at the named point and place at the frontier, but before the customs border of the adjoining country. The term is primarily intended to be used when goods are to be carried by rail or road, but it may be used for any other mode of transport. Import Export Contract Terms on Payment Methods Irrevocable L/C(Letter of Credit) Irrevocable L/C is the one that cannot be withdrawn or amended by the opening bank without the agreement of the beneficiary. This kind of L/C is more secure and hence is most often used. It claims our attention that, according to Uniform Customs and Practice of Commercial Documentary Credits 500, if a L/C is not marked as being irrevocable or not, it should be taken as irrevocable. Remittance - Import Export Contract Terms Remittance is of three types: Mail Transfer (M/T), Telegraphic Transfer (T/T), and Demand Draft (D/D). By Mail Transfer, the buyer will hand over the payment of the goods to the remitting bank that will authorize its branch bank or correspondent bank in the country of the beneficiary by mail to make the payment to him. By Telegraphic Transfer, the buyer will hand over the payment of the goods to the remitting bank which will authorize its branch bank or correspondent bank in the country of the beneficiary by telegraphic means to make the payment to him. Mail transfer is less expensive, but it costs more time, while telegraphic transfer is more expensive but it is much sooner.

By Demand Draft, the buyer will come to the local bank to buy a banker's bill and then deliver it to the seller or beneficiary by mail. When the seller or beneficiary has received it, he will come to the bank designated by the banker's bill for cash. Apart from banker's bill, promissory notes or checks can also be used in this way. Documentary Collection - Import Export Contract Terms D/P at sight Under D/P at sight, the seller might either draw or not draw a draft on the buyer. He hand over the shipping documents together with (or without) the draft, and the shipping documents and the draft (or without draft) will be transferred to the collecting bank which will present them to the buyer and ask him to make the payment at sight. The buyer, upon sight, should then make the payment and get the shipping documents. When the collecting has thus finished the collection, it should immediately notify the remitting bank which will then make the payment to the seller. D/P at _ days after sight (date) The buyer shall duly accept the documentary draft drawn by the seller at _ days sight upon first presentation and make payment on its maturity. The shipping documents are to be delivered against payment only. Documents Against Acceptance (D/A) Under D/A, the buyer can get the shipping documents from the collecting bank after he has duly accepted the draft. This is only applicable to time draft. These will greatly convenience the buyer, but it means much more risk for the seller, for once he has delivered the shipping documents, he will have lost his title over the goods. D/A means more risks for the seller, for the buyer might refuse to pay after he has accepted the draft and taken the delivery of the goods. Certainly the seller might sue him, but as is often the case, the buyer claims bankruptcy and then the seller can do nothing to remedy the situation. Import Export Contract Terms on Documentation There are roughly five kinds of commonly used international trade documents are list here. They are categorized according to the document source. Government Control Documents Commercial (invoice) Documents Banking Documents Shipping Documents Insurance Documents

Export Documents Used For Government Control Export Documents - Government Control Documents International trade involves complex flows of goods and services between many countries. Therefore, a set of documents are used by countries to monitor and control these flows. These usually include: Import License and Foreign Exchange Authorization Many countries use import license and foreign exchange authorization system to restrict imports. Importers have to present pro-forma invoices to their licensing authorities or to their central banks, or sometimes to both to apply for the license. If the planned importation is legal and meets current requirements, the license will be issued. Therefore, exporters should not shipto importers who need licenses until the licenses are actually in hand. Export License - Export Documents At the present time, usually there are very few obstacles placed in the exporter's path by his own government. On the contrary, many governments are assisting and encouraging the export of goods and extension of overseas market. Nevertheless, there are some occasions when a particular restriction might be encountered due to the nature of the product, the market to which the goods are being exported or some other reasons. Certificate of Origin - Export Document A document that stating the country of origin of the goods being made. It is usually required by countries that do not use Customs Invoice or Consular Invoice to set the appropriate duties for the importers. It contains the nature, quantity, value of goods shipped and the place of manufacture. It enables the buyer not only to process the importation of the goods, but also permits preferential import duties where appropriate.