Price Terms In Foreign Trade Business

In the long-term international trade, since the buyers and sellers come from all over the world, it is difficult for us to pay for the goods at the same place and deliver them at the same place as in daily shopping. Therefore, in the course of trade practice, we generally agree with the customer on the place of delivery and the responsibilities, risks and costs that both parties must bear. The special terms that define these transaction prices and delivery conditions are the price terms to be mentioned below. Price term In international trade, there are 13 kinds of price terms, the following three are common: FOB (Free on Board), Delivery on board at the port of shipment (.... designated port of shipment). C & F (Cost and Freight), cost plus freight. CIF (Cost, Insurance and Freight), cost plus insurance and freight. We take FOB price as an example: Under the FOB price terminology, all the seller has to do is to deliver the goods to the designated port, the designated vessel, and notify the buyer that the delivery has been made according to the time agreed with the buyer.(There will usually be a shipping notice) There is often a problem here. When the container cargo is transported from the port terminal to the ocean liner, if the cargo is decoupled and dropped, who should bear the losses and liabilities in this case? At this time, the first thing to look at is where the goods fell? There are three situations. The first situation is that it fell to the dock and the seller did not complete the delivery under the FOB item, and the seller is responsible. The second situation is that it fell on the ship, and the buyer should be responsible for the loss and responsibility. Both of the above are relatively good judgments. The third situation is that it fell into the sea. At this time, there will often be some differences. Which party is responsible for this? For the third case, how should the responsibilities and risks of buyers and sellers be defined? Definition of the risk We all know that under the FOB, its delivery point is bounded by the “side of the ship”, which means that the goods are delivered at the designated port of shipment and over the side of the ship. So what is the reason for the disagreement? On the one hand, it lies in the two words "ship side". As is known to all, most ocean-going ships have irregular three-dimensional structure and complex structure, and their edge lines, whether transverse or longitudinal, are curved to a certain degree, so it is difficult to define the scope of the ship's delivery point. So now the default definition of "ship side" is the maximum edge limit of the vertical projection shape of the ship on the sea surface, or the area covered by the vertical line of the ship's edge in the vertical direction. On the other hand, when the container is unhooked and falls into the sea, it can be understood that the cargo has not crossed the ship's rail, so it is considered that the seller should be responsible. However, if the cargo has passed over the ship's side / deck and then unhooked, it will be considered the buyer's responsibility. Because of this difference, in the 2010 edition of the Interpretation of International Trade Terms, the concept of "ship side" was revised to only use the ship as the boundary. At this time, it is relatively easy to define, whether the goods are dropped on the dock or dropped into the sea, it is obvious that the delivery has not been completed, and the seller should bear all the risks until the goods are loaded on board. One thing to note here is that if the cargo falls on the ship's deck like the second case mentioned above, is it counted on the ship? Is the buyer responsible for the loss and responsibility? In fact, this is not the case. After the general cargo is loaded on the ship, the shipper checks that everything is normal, confirms the receipt of the goods, and issues a cargo status bill of lading (clean bill of lading / pollution bill of lading). Therefore, in the second case, the responsibility is still on the seller, and the risk responsibility is transferred to the buyer only after the ship is shipped. That is to say, the risk division point of FOB is on the side of the ship, so where is the risk division point of C & F and CIF? In fact, under these two price terms, the risk division point is the same as FOB, with the port of departure crossing the ship's rail, or loaded on the ship. After the goods are loaded on the ship, the seller's responsibility has been completed.

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