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AL
COMMERCIAL
TERMS
PRESENTED BY
LETTER OF CREDIT
A Letter of Credit is just a guarantee given by one
bank to third party i.e, exporter. The guarantee
ensured that he ill receive payment of his good
provided. It also ensure to the importer that
payment to the exporter ill only be made when
goods have been received.
Irrevocable LC.
Such type of LC that cannot be cancelled or
modified by the opening bank.
Revocable LC.
Such type of LC can be modified and cancelled by
the opening bank without the notice.
Confirmed LC.
Under such LC the exporter bank give absolute
undertaking that exporter will be paid even if LC
issuing bank fail to make payment.
Un-Confirmed LC.
Under such LC, there is no any guarantee
involved for the payment.
BEST TYPE OF LC
These are different type of LCs but we can see
that for an exporter point of view the best form of
Letter of Credit is confirmed & irrevocable LC.
LC OPENING PROCESS.
Proforma Invoice.
Application of Letter of Credit.
LC Opening Letter.
Additional Conditions Letter.
Insurance Arrangement.
For All
Mode
EXW
FCA
CPT
CIP
DAP
DAT
DDP
11 INCOMTERMS
E Group
EXW -EX WORKS
C Group
CFR - COST AND FREIGHT
CPT - CARRIAGE PAID TO
CIF - COST, INSURANCE &
FREIGHT
CIP - COST, INSURANCE
PAID TO
F Group
FAS - FREE ALONGSIDE SHIP
FOB - FREE ON BOARD
FCA - FREE CARRIER AT..
D Group
DAT - DELIVERED AT TERMINAL
DAP DELIVERED AT PLACE
DDP - DELIVERED DUTY PAID
EXW - Ex Works
The seller makes the goods available, packed and ready
for collection at the place of receipt (factory). The buyer
must bear all the risks and charges in taking the goods to
the required destination. This term carries the minimum
obligation for the seller.
Under this term, it is the sellers responsibility to deliver the goods alongside
the ship on the quay in the port of loading, having cleared the goods through
Customs in the country of export. The buyer must bear all the costs and risks
from that point onwards
This term is the same as CFR, except the seller has to procure, and pay
for, marine insurance for the goods during their carriage.
This term is the same as CPT but the seller also has to procure, and pay for,
marine insurance for the goods. Similar to CIF, CIP is suitable for multimodal
transportation.
The seller pays for transport to a specified terminal at the agreed destination.
The buyer is responsible for the cost of importing the goods. The buyer takes
responsibility once the goods are unloaded at the terminal.
DAP..DELIVERED AT PLACE
The seller pays for transport to the specified destination, but the buyer pays
the cost of importing the goods. The seller takes responsibility for the
goods until they are ready to be unloaded by the buyer.
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