| [1] Concept |
- When trading, preserve consistency and make General Agreement (General Terms and
Conditions, Master Contract) to prevent claims and to resolve before the initial transaction. |
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[2] Contracting method in trading |
| (1) Master Contract(General Agreement) |
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- If expected to be a continue transaction: Do not make contract per case by case but
make Agreement of Memorandum on General Terms and Conditions of Business and
exchange offer or order to determine contract agreement.
- The General Agreement should include, quality, quantity, price, shipping insurance
payment conditions, Force Majore article and arbitration article as well as for the
claim.
- When doing case by case transaction, a decision method with Offer and Order must be
clearly stated in the General Agreement.
- Principal to Principal contract.
- Regard contract established as Acceptance and Acknowledgement.
- Acceptance name on Offer or signature by Acknowledgement on Order and keep one
copies.
- Sent manifestation by telegram or mail to express acceptance of Seller's confirmed
offer. |
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| (2) Case by Case Contract |
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- Commonly used for the initial transaction or a transaction that will be terminated by just
one time transaction.
- Surface clause: Decide on every contract
- The back clause : A interpretation base of the surface clause, and it is commonly
applicable for the said parties in general.
- If anyone of the contract parties send 2 copies of contract after signing it, the other
party should keep one copy and send one to the sender with a signature.
<1> Prepare by a Seller |
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| - Sales Note, Sales Contract, Confirmation of Order |
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| - Purchase Note, Purchase Contract, Purchase Order(Indent Order) |
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| (3) Contract signing method |
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| <1> In case if the contract party is the corporate CEO |
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- Only President and General Manager are representable.
| Ex - |
ABC Co., Ltd.
(signature)
------------
B.S Kim
president or general manager
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or |
Signature
--------------
B.S Kim
president or general manager ABC Co., Ltd.
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| <2> If a proxy is signing for the contract party |
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1. If a proxy signed by a letter of attorney.
- "P.P (per procuration) or His duly authorized attorney in the presence of" in front of a company's title : Arrange (Witness) and a signatory's name.
If there is no witness, delete "in the presence"
| Ex - |
P.P ABC CO., Ltd.
(signature)
------------------
J.S Kim
export manager |
2. If signed by a person who doesn't have the right of a proxy
- Put "By, For, Per" in front of a company's title and do not record the
signatory's position.
| Ex - |
For ABC Co., Ltd.
(signature)
------------------
J .P Kim |
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[3] Trading contract |
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| - Title is to provide easy understanding of contract details. |
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- In the full text, it usually contains the place where a contract is made, the contract
date, proper law for establishment, address and the initial of the parties. |
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| <3> Recitals, Whereas clause |
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| - Whereas clause in the explanation article is to record a summary of the main
contracted details |
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- As the principle of the contract it refers to the rights, profits, margin for one party
or damage, loss and responsibility by other party which requires consideration.
Ex)
- Now, therefore, in consideration of mutual covenant and promises contained herein, both parties agree as follows. |
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- In order to avoid a long wording to be repeated everytime clauses overlaps, to
make a contract easy to understand, to have logical consistency. They should be all capital lettering.
Ex)
- Unless the context clearly requires otherwise, the following terms in this Agreement shall have the meanings attributed to them below. |
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| <6> Clause for main contract details |
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| - This is the important and center part of the contract to clearly stipulate which
rights should contract parties should acquired and which duties they are responsible to. |
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- If there is not validity period for contract: Either assume parties opinion for a
decision or regard the contract date or the day when it was signed.
- When acknowledged renew: The procedure and renewing period have to be
confirmed.
Ex)
- The term of this Agreement shall be three(3) years from the effective date of this Agreement and shall be automatically extended for further three(3) years provided that PRINCIPAL shall give, at least three months prior to termination, a written notice to Agent. |
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- Generally, they are terminated for the following reasons:
1. Expiration of the contract period
2. Accomplishment of resolutive condition
3. exercise cancellation engagement
4. exercise court cancellation |
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| - In certain cases, the reasonability may be exempt |
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- If there is not assignment stipulated : Assignment is possible.
- To prohibit a contract assignment : Indicate it on the contract.
Ex)
- None of this party of this Agreement may directly or indirectly sell, assign or otherwise of this Agreement to any third party unless it is assigned by the operation of law. |
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| - To resolve a dispute related to the contract parties according to the arbitration
decision |
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- If there is no provision for arbitration, it is good idea to agree upon a Jurisdiction
for a lawsuit in advance between the contract parties except for the scope of
arbitration. |
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| <13> Applicable Law, Proper Law, Governing Law |
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- It is a article to arrange from which country's positive law should be followed to
materialize execute, interpret the contract. The procedure law follows the law of the forum apart from applicable Law.
Ex)
- The formation, validity, construction and the performance of this Agreement are governed by the laws of the xxxxxxx. |
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- As long as the contract is materialized, all the prior agreement made verbally, in
paper and a parley would assimilate to the contract and the wording that described that would become extinct is called a complete contract clause.
Ex)
- This Agreement sets forth the entire agreement and understanding between the parties as to the subject matter of this Agreement and merges and supersedes all prior discussions, agreements and understandings of any every nature between them, and neither party shall be bound by any condition, definition, warranty or representation other than as expressly provided for in this Agreement or as may be on a subsequent date duly set for in writing and signed by a duly authorized officer of the party to be bound. |
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- It is necessary to set up the method and clause for partial changes and
modification in credit details to avoid any possible disputes in the future.
Ex)
- This Agreement is not changed, modified by the parties of this Agreement
except as such change, modification or amendment is in writing and signed by both parties. |
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- If standardizing notice for certain action, it needs the party's name,
address, a method for contact and the valid period in detail.
- Be cautious with Receipt rule and post-mail rule.
Ex)
- Any notice, request, consent or demand required or permitted to be given in this Agreement, must be in writing and must be sufficiently given if delivered in person or sent by registered airmail or by cable confirmed by registered airmailed letter addressed as follow;
| TO : |
(address)
Telex :
Answerback : |
Notice must be deemed to have been given on the date of mailing except the notice of change of address which must be deemed to have been given when received. |
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- If a request to exercise was not made momentary, it shouldn't be regard as a
surrendering to the right to exercise with other similar clause or other conditions later time.
Ex)
-The failure or delay of either party to require performance by the other
party of any provision of this Agreement shall not constitute a waiver of, or shall not affect, its right to require performance of such provision. |
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- If Some parts of clauses excluding the main part of the contract became
practical effect because of arbitration or due to a judgement of court, it doesn't disturb the effectivity of other clause.
Ex)
-If any provision of this Agreement or the application of any such provision
to any person or circumstance shall be determined by any arbitration or court of competent jurisdiction to be invalid or unenforceable to any extent, x company may upon fifteen(15) days notice elect to (1)terminate
this Agreement or (2)continue this Agreement, in which case the reminder
of this Agreement or the application of such provision to such person or of this Agreement or the application of such provision to such person or ircumstance(other than those for which it is so determined to be invalid and unenforceable), shall not be affected thereby and each provision of this Agreement shall be valid and shall be enforced to the fullest extent permitted by law. |
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- It stipulates compensation for a damage of the default by one party or by
third parties.
Ex)
-In the event either party breaches an obligation under this Agreement or toward a third party, or delays or interferes with the other party in the performance of this Agreement, it shall be liable to the other party for any
reasonable direct damages thereby sustained by the other party, but neither party shall be liable to the other party for any consequential damages or incidental damages, such as loss of profit. Each party shall pay all reasonable expenses, including the costs of litigation and attorney's fees, reasonably incurred by the other party in enforcing this Agreement.
In the event a third party commences any proceeding for which a party hereto intends to claim indemnification against the other party, such party shall promptly notify thereof the other party and allow equitable particification in all stages of the proceeding and settlement thereof.
Failure to promptly notify therof or allow equitable particification
by the other party shall reduce the right of indemnification to the extent
of actual resultant prejudice. |
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- When the main body of the contract is completed, the Testimonium Clause will be recorded and materialized.
1. A contract without a sealing certificate |
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| Ex)-In witness whereof, the parties have executed this Agreement in duplicate by their duly authorized representatives as of the date first above written. |
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| 2. A contract with a sealing certificate |
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| Ex)-In witness whereof, the parties have executed this Agreement by causing their corporate seals to be hereunto affixed and duly attested and these presents to be signed by their duly authorized representatives, this ~ day of, ~ 1997. |
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| 1. If the contract party is individual |
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| - The contract party should mark the name or other special mark that represent
him/herself. |
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| 2. If a proxy is signing a contract for the contract party |
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a. If a proxy signed by a letter of attorney.
- "P.P (per procuration) or His duly authorized attorney in the presence of" in front of a company's title : Arrange (Witness) and a signatory's name.
If there is no witness, delete "in the presence"
| Ex)- |
P.P ABC CO., Ltd.
(signature)
------------------
J.S Kim
export manager |
b. If signed by a person who doesn't have the right of a proxy
- Put "By, For, Per" in front of a company's title and do not record the
signatory's position.
| Ex)- |
For ABC Co., Ltd.
(signature)
------------------
J .P Kim |
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3. If the contract party is a corporation
- Only President and General Manager are representable.
| Ex)- |
ABC Co., Ltd.
(signature)
------------
B.S Kim
president or general manager |
or |
Signature
------------
B.S Kim
president or general manager ABC Co., Ltd. |
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| Should follow each country's costume and there is no need to proof of date on
the print of a sea. |
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| - Proof common seal, guarantee in front of one director and one secretary and
receive sign. |
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- If comply to the changes of contract or if there are many changes. : Re-type
- Deleting : Write-off the spots to be delete in a parallel line but you will need to
know later what it was and it is common practice for the both party to
insert initial excluding the spot and section that have been deleted.
- If corrected : Insert the words to be correct between the upper line and the bottom
line of where delete was made and it is common to put initial by the both party in
the corrected section.
- To prevent the part of contract from switching, usually the both party put initial on
each pages. |
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| <22> Registering contracts, stamp and notary |
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- If need to register through a government office: Notarization by a notarial or need
to obtain acknowledgement. |
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<1> Avoid long sentences and prefer shorter remarks. If the details are creating confusion
: categorize by a paragraph or by a number as in a list form.
<2> The present tense is used in principle.
<3> Using active is not recommendable.
<4> The way of using shall, will and may |
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1. shall
- Used when forcing the execution
2. will
- Less stronger than using shall in forcing and used when there is no legal force.
- In practice: Note that shall and will are in use while not differentiated strictly.
3. may
- Used when describing the rights, prestige and authority in contract. |
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| <5> Expression for time and period |
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1. on-- Use it to describe a certain period.
Ex)-Seller shall deliver the goods to Buyer on July 30. 1997.
2. by or before--Use it to describe x month x date that has a expiration date.
Ex)-Seller shall deliver the goods to Buyer by(or before) July 30. 1997.
3. until(till)--Only using until isn't clear enough. : including. : not including
4. from, connecting with, after-- These words describe period but they all have
some difference. |
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| a. If calculate from July 31. 1997 |
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- Seller shall deliver the goods to Buyer thirty days from July 30. 1997.
- Seller shall deliver the goods to Buyer at any time after July 30.1997.
Upon the request Buyer.
- If there is no date after "after" which is same as occurrence day, the date
becomes the time. (...at any time after the effective date of this Agreement) |
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| b. If calculate from July 30. 1997 |
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- ...from and including July 30. 1997.
- Seller shall deliver the goods to Buyer within thirty days connecting with July 30. 1997. |
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- Using only "from... to" is not enough wording to describe expiration period
therefore, "both days included", "connecting with...ending with..." are appropriate expressions.
- ...from January 1 to March 31, both days included or ...in the period connecting
with January 1 and ending with March 31. |
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| <6> Indication for provision |
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| - Indication for provision is provided in the operative part. If for "Only...allow in
case" wording : "provided that". "...is not acceptable" case : should be interpreted as "except that" or "unless and until" etc. |
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| (3) General common clause in a contract |
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<1> Title of Agreement
<2> Nonoperative Part |
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- Date
- Parties
- Recitals, whereas clause |
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- Definition--Clause for the key details of a contract
- General Clause |
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o Period of Agreement, duration, term
o Termination
o Force majeure
o Arbitration
o Application law, governing law
o Jurisdiction
o Notice
o Integration(Entire agreement)
o Amendment
o Headings
o Etc |
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| (4) Check points when make a contract |
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<1> Understand the contract party's intention.
<2> Review any possible problem that might arise in the future.
<3> Review related documents that exists.
<4> Whether the intended contract detail of the party is lawful and has a legal binding
force.
<5> Whether the contract party has capacity to follow through the contract.
<6> If there are more than one debtor, check if the responsibility is joint, several or
solidarity
<7> Whether the contract is assignable.
<8> The default period, exemption delay in performance and the relationship of duty in
other party or whether the grace period for the delay in performance is appropriate.
<9> Whether the Contract period and Contract renewing period are appropriate.
<10>Whether the provisions are appropriately written for contract cancellation, procedure
and the interest of rights
<11>Whether the Proper law and dispute procedures are appropriate.
<12>Whether the tax or other expenses related in performing the contract is clear and
not disadvantageous.
<13>Whether the contract is logically consistent.
<14>If the contract requires to refer to other text, is the relation of reference
reasonable?
<15>Whether the terminologies in use lack of unity.
<16>Whether the sentences are clear and simple.
<17>Whether the contract is based on the common law system?
<18>Wouldn't the contract become invalid due to a violation against a law? |
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[4] Things to be cautious when making contract |
- Make sure of the rights and duty of the parties.
- Make a clear contract to prevent any possible disputes due to misinterpretation.
- Review offer condition sufficiently before agreeing the contract.
- Make sure the wordings are clear so there is no mistake in accepting price as a offer.
- Closely review about the intended country's legislation rule for the contract materializing
period.
- Before the contract is made, mare sure to obtain legal advisory from a specialist so that
there is no disadvantageous contents and always prepare the contract in writing.
- The contract parties should input a clause stipulating that when there is a claim, the parties
follow arbitrary award of a special organization for a speedy resolution. |
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[5] Things to be aware for a favorable contract |
- When exchanging a letter, you must clearly make the claims and advocacy.
- You need to show aggressiveness in a meeting.
- Who ever makes the first draft is in a much favorable stand.
- You need to realize that the letter of intent is the prior step of a complete contract. |
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[6] The basic conditions for trading contract |
- Recommended to use Trade Terms of Incoterms because it provides the standard to interpret trading transaction and to prevent trade claims as well as to supplement trading conditions.
(1) Terms of quality |
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- The terms of quality is to mark Items (Commodity Name) more specific way.
<1> Agreement method of products in transaction |
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- A hand over method of samples or the product that is duplicate to the sample
that were offered by the Parties Concerned.
- Just in case for a inquiry or a dispute, the Seller should Keep Sample(Checked
Sample) or a Duplicate Sample which was sent to the Buyer. |
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a. Counter Sample(Buyer's Sample)
- A sample that has been partially or completely changed with color and
the shape to the original sample.
b. Things to be cautious when using sample terms
- Expressions such as "Up to the Sample No.123, Same as the Sample
No.123, Fully Equal to the Sample No.123" : If there is a slight different to the original sample, it could be rejected or possible for a claim.
- Seller's standpoint : As long a product is not a standard or precision
products, using "As Per the Sample No.123, Similar to the Sample No.123, About Equal to the Sample No.123 etc" would be advantageous. |
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| 2. Sales by Trade(Brand) Mark |
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- This is a case where you don't need to send samples because the transaction
is made based on the trade mark of the product for the agreement.
Ex)-CoCa CoLa, YKK Zipper etc |
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| 3. Sales by Specification(Dimensions, Description) |
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- Used when sample offering is impossible. The contract is made by recording the
product's information and with a blue print to specify the product's quality.
Ex)- Vessel, Plant etc |
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- Offering a Standard Type in the abstract and to hand over the similar products
as described.
a. FAQ(Fare Average Quality)Term
- Handing over the quality that are normally average quality.
Ex-Quality to be fair average at the time and the place of shipment
b. GMQ(Good Merchantable Quality) Term
- At the time of the product received, the products have to be merchantable
as in common practice. A claim is impossible even if the products have
hidden defects after receiving.
Ex-Timber(Lumber), Frozen fishes, minerals etc. |
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- According to a country or a official organization's standard, the product's quality
level would be determined. |
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| <2> Quality determining period |
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- The period when to inspect the quality of products has to be specified.
1. Shipped Quality Terms |
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| - It is acceptable if the inspection record by a official inspection organization and the contract term is consistent. |
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| 2. Landed(Arrival) Quality Terms |
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| - It is acceptable if the inspection record at the arrival site and the contract term is consistent. |
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| 3. The condition with grain transaction |
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| - It stand in a trio based on the center of London grain market. |
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| a. TQ(Tale Quale)--Shipped Quality Term |
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| - TQ means As it is and just as they come |
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- It is Landed Quaity Term and the Seller is responsible for all the change in
quality while in transportation. |
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| c. SD(Sea Damaged; Shipping quality terms) |
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- Additional condition to TQ and RT.
- this condition is to reserve the Buyer's right in case there is a claim for the problems arisen while in transit such as Wet(Damaged by wet, that is Wet
by sea water, Wet by Rain, Wet by Fresh Water, Wet by Vapour, Moisture
Damage, decomposition (Mildew(Mould) and fermentation. |
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- Mark as Weight, Length, Measurement, Package, Piece Number, TEU(Twenty Feet
Equivalent Unit), FEU(Forty Feet Equivalent Unit) etc.
- For the Individual Items or Packing Units, specify the quantity in the contract. |
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| <1> Units to be cautious with weight |
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1. A custom of England--L/T(long ton; English Ton, Gross Ton)
2. A custom of America--S/T(short ton; american ton, net ton)
3. A custom of the content of Europe--M/T(metric ton; french ton, kilo ton, middle
ton)
4. Hundred Weight--English CWT, American CWT |
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- 1L/T = 2240Lbs, 1S/T = 2000Lbs, 1M/T = 1000Kgs = 2204Lbs,
1English Ton = 1016Kg, 1American Ton = 907Kg |
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| <2> Units to be cautious with capacity |
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1. SF(Super Foot)
2. M/T(Measurement Ton)--1M/T = 480SF = 40Cubic Feet |
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<3> Units to be cautious with numbers--Gross, Small Gross, Great Gross
<4> Terms of quantity with Bulk Products |
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- With Bulk Products, Loss are unavoidable.
But this is not regarded as breaching the contract and for the excess and
deficiency, payment must be made in late time.
- Specification settlement price |
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a. Day-of-Shipment Price
b. Day-of Arrival Price
c. Contract Price |
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| 1. M/L(More or Less)Clause |
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- If ship within the percentage range stipulated in M/L Clause, the seller can be
exempt from the quantity problem.
Ex)-"5% More or Less at sellers option" or "Seller has the option of delivering 5% more or less on the contracted quantity" |
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| 2. No M/L clause definition |
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- B/L transaction method : Unless there is Tolerance(More or less) prohibited
clause, 5% is tolerable (The Sub-Article 39(b) of UCP )
- D/P, D/A, Non L/C transaction method: 5% Tolerance(More or less) is not
allowed.
- If "interpret in accordance to INCOTERMS" basis provision is on the contract
M/L clause not required. |
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| 3. Approximate Quantity Terms interpretation |
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- If there is no M/L Clause but using just simple ABT(about), Circa, Some,
Approximate and Around terms.
- If transaction is based on credit(B/L) : Interpret as 10% difference is allowable.
(The Sub-Article 39(a) of UCP)
- If there is no specific provision with Non L/C transaction method: There is
dispute probable. |
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| <5> Quantity inspection period |
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1. shipped quantity term
2. landed quantity term |
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(3) Terms of Price
- Based on the trade terms of INCOTERMS, the person responsible for the respective
expense, risk transferred period and reversion of the right of ownership is different. |
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<1> Price determining elements
- Product manufacturing cost + Profit + Incidental Expenses |
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a. packing charges
b. inspection charges
c. inland freight(shipping fees arisen from inland of exported country)
d. Port expense--storage(go-down rent; storage fee), wharfage charge, port dues etc.
e. administration fee--E/L(exporting license), I/L (importing license) expenses etc. f. Shipping expenses--Cost of Export Clearance(Clearing Fees; Charges for Exportation; Customs clear fee), Export Duties, Export Permission, Shipping Charges ,Loading Charges, Stowing Charges
f. freight(carriage) or charterage --ocean freight, air freight etc
h. insurance premium--marine cargo insurance, transport insurance etc.
i. unloading charges(from intended port)
j. wharfage expense at the target port--wharfage charge, port dues ,storage(go-down rent) etc.
k. import duties
l. cost of import clearance(import permission)
m. Inland Freight and Insurance Premium
n. All kinds of commission, interest or cost of exchange
o. All other sales expenses and petties |
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| 2. inboard stevedoring charges |
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a. liner term(berth term)
- Shipping charges, arrival charges are included in transportation fee. FOB term
is by debtor and CIF term is by Seller responsibility.
b. FIO(free in and out)--Shipping, Arrival is not responsible of shipping company.
c. FI(free in)--The shipping company adds arrival fees only to transportation fee .
d. FO(free out)--The shipping company adds only the shipping fees to
transportation fee. |
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| <2> Type of price condition |
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1. shipment contracts
- The right of ownership is shifted from the exporting region to the debtor so if
the goods are hand over to the designated location safely, there is no more
responsibility. |
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a. EXW(EX works) or LoCo
- Reverse expenses for Seller's shoulder are the first cost(manufacturing
cost and expected profit, inspection fee for quality, quantity and customary packing charges etc.
b. On spot, Ex origin, Ex factory, Ex mill, Ex mine, Ex plantation, Ex store, etc.
c. At station
- Seller shoulders transportation fee from the shipping location to the station
to delivery.
d. FOR/FOT(free on rail/ free on truck
- The condition exclusive for only rail road transit.
e. Free~(named port of shipment)
- Incidental expense At station and Inland Freight to named port
(Sometimes shoulder storage fee at the named port).
f. FAS(Free Alongside ship)
- Seller shoulders all the expense from Ship Vessel up to products are
hand over.
g. FOB(Free on Board)
- Seller shoulders all the expense from until products are hand over.
h. CIF(Cost, Insurance and Freight)
- Seller shoulder expense from FOB, stowing charges, ocean freight and Insurance premium(Follow by FPA term).
i. CIFs variation
- C&F(cost and freight)
- C&I(Cost and Insurance)
- CIF&C(Cost, Insurance, Freight and Commission) - CIF&I(cost, Insurance, Freight and Interest)
- CIF&E(cost, Insurance, Freight and cost of exchange)
- CIF Landed
- CIF Duty Paid
- CIF Cleared
j. DAF(Delivered at Frontier--Seller shoulder transportation fee to import
frontier)
k. FOA(FOB Airport)--Inland freight to carrying airport shoulder by the seller
l. FCA(Free Carrier)
- The seller shoulders E/L, E/P(Export Permit), all other tax and service
charges impose to export.
m. CIP(carriage and Insurance paid to ~)
- The Seller shoulders transportation fee, insurance fee follow by final
destination or intended port's combined transport fee.
n. CPT(Carriage Paid to ~)
- The Seller shoulders transportation fee excluding insurance fee follow by
final destination or intended port's combined transport fee. |
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2. Arrival Contracts
- Since the right of ownership of the products is shifted from the importing region
to the debtor so if the goods disappear or get damage, the seller shoulders
all the responsibility.
- Ocean freight or Carriage by inland waterway
- DES, DEQ - DAF, DDU, DDP |
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a. DES(Delivered Ex Ship)--Seller shoulders all the expenses up to intended port.
b. Ex Lighter
- For unloading from intended port, the Seller shoulders expenses of transship
from on board to Light(Craft, Barge) to be completed.
c. DEQ(Delivered Ex Quay )
- Lighter range, other stevedorage fees for landing ship at the intended port
are shoulder by the seller.
Ref-DEQ duty paid(DEQ duties an seller's account)
-DEQ duty unpaid(DEQ duties on Buyer's account)
d. In Bond
- Carrying in fee to Bonded Area of a intended quay is shoulder by the seller.
e. Duty Paid and Ex Customs Compounds
- The seller shoulders all the expense for the import customs clearing.
f.DDP (Delivered Duty Paid)
- Until shipment is completed to the final destination of inland of importing
country, all the expenses are shoulder by the seller. |
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(4) Terms of Packing
- A process to distinguish externally that the products are the object for shipping by protecting the product's contents and exterior parts as well as preserving the value while shipping, keeping and distributing. |
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| <1> Selecting packing materials |
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1. case, bale--It is a unit in individual packing for retail.
2. unitary packing--Individual packing to minimize the units such as dozen
and gross.
3. interior packing(inner protection)
- Unitary packing is to help convenient cargo dealing or shipping by combining
several internal packing.
4. outer packing
- In each internal packing or combine several internal packing to make packing
into a bigger packaging. |
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| <2> Selecting packing units |
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| - You must stipulate product's character, transporting method and distance as well
as transshipment, packing fee and freight, weather condition, the concerned country's packing Specification and customs however, you must carefully consider not to over pack. |
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| <3> shipping mark(cargo mark) |
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- This is to help the buyer or the shipper to easily distinguish the said transacting
products and to distinguish transporting destination of cargo or cargo handling by
marking a symbol or special word on the outer packing.
- You should stipulate this as a packing condition.
1. main mark |
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- To make easy distinguishing from other cargo by marking a special symbol and
input the debtor's company name or initial.
- symbols
| - triangle, double triangles, crossed triangles square(box), rectangle, diamond, upright diamond, circle, concentric circles, crossed circles,
zoned circles, triangle in circles, crossed in circle, oval, hexagon, star, cross, heart, spade, diamond with crossed ends, three diamonds,
diamond with looped ends, hourglass(touching triangles), etc |
|
|
|
- When distinguishing with other cargo with only main mark is difficult, mark
manufacturer or supplier's initial at the bottom of main mark. |
|
|
- A serial number on the cover to distinguish, confirm with invoice, manifest (MF
; loading list) or other transport document. |
|
|
- To clarify loading and unloading(discharge) of cargo and mark target port,
destination to prevent mis-delivery.
- Double transport indicating method
Ex)-New York via panama, New York overland via seattle, etc |
|
|
- Mark gross weight and net weight for easy compute freight, customs clear, and
stevedoring. |
|
| 6. origin mark--Mark at the lowest part of outer packing. |
|
| 9. care mark(side mark, caution mark) |
|
- Is is to mark general things to be cautious for cargo dealing (cargo handling)
and it is usually market at the front of outer packing.
Ex)-this side up, stand on end, do not turn over, keep flat, keep dry,keep cool, no hooks, fragile, perishable goods, liquid, inflammable, explosive, etc |
|
|
- Order number per buyer's request. attention mark, grade and quality mark, etc.
| Ex- |
main mark
counter mark
port mark
case number
weight mark
original mark |
----
----
----
----
----
----- |
YP
New Tork Via
panama
C/N8-20
GRS; 120kgs
NET; 100kgs
made in xxxxx
|
A |
----
----
|
quality mark
care mark
|
|
|
|
- main mark, port mark, case number, original mark etc : A must mark
- Cargos without port mark and case number: It is called NM(no mark cargo) but
sometimes it causes tremendous damage as non-delivery.
- Contents and style of mark: Usually marked on sales note or on purchase note. |
|
(5) Terms of shipment
- The meaning of Shipment is not just "ship(vessel)" but it also refers to air or train of all kinds of loading. |
|
| <1> Provision for Shipping period |
|
1. Special condition
- It is general to propose specific terms as month and date when stipulating the
time of shipment. |
|
| 2 Interpreting Time terms and date terms |
|
| a. Single month and Year month condition |
|
Ex)-september shipment
-shipment shall be made during september, 1995
-september / October shipment
-shipment shall be made from september to october, 1995 |
|
| b. Shipping condition before specified date |
|
Ex)-latest shipping date; september 15, 1995
-shipment shall be made by september 15, 1995 |
|
| c. Shipping condition after specified date on regular basis |
|
| Ex)-shipment should be made within three month after seller's receipt of L/C |
|
| - Cautious (Refer to The Sub-Article 50(b) and 51, 53 of UCP) |
|
- from, till(until), to---Include the said date
- after---Exclude the said date
- on or about---5 days before/after from specified date, include both the
last day before/after
- first half, second half of any month---1day~15 day, 16~the last day
- beginning, middle, end of any month---1day~10day, 11day~20day, 21day
~the last day |
|
- The expiry date(E/D) and shipping date(S/D) of credit
(The Sub-Article 48(a,b) of UCP) |
|
- E/D is specified with L/C but the latest S/D is not specified:
With L/C, E/D is considered the latest S/D.
- When E/D falls in Sunday, national holiday, bank closed day rather than force
majeure (E/D automatically extend to the next business day but S/D won't
be extend. |
|
|
- A type of immediate shipping request not specified by month or date.
- When the general terms were selected from credit transaction, UCP regards this
as there is no provision for shipping period. (The Sub-Article 46(b) of UCP)
Ex)-as soon as possible(ASPA), promptly, immediately, soonest quickly, at once, without delay, as early as possible, ready shipment, near delivery, etc |
|
| <2> Provision for shipping method |
|
| 1. Partial shipment and shipment by installments (The article 41 and 44 of UCP) |
|
- Depends on the transacting quality or amount and sales plan of buyer as
well as market situation, the products would be partially shipped.
- Things to be cautious |
|
- With credit transaction, if a partial a shipment is not made as contracted, the
opening bank has the right to cancellation for the said unpaid remaining
contracted portion.
- Interpret a partial shipment is allowed if there is not provision or prohibition
for partial shipment.
Ex)-September and October Shipment Equally Divided
-Half in September and the Balance Two Months After
-Shipment; 20C/S During September, and 30C/S During October,1995. |
|
|
- Unload the boarded products and reload the products to the other means of
transportation.
- If there is a provision for Direct shipment(or steamer) by customary
route: Consider Transship is prohibited.
- If there is a provision for a direct shipment: Stop at a port of refuge due to a shipwreck or to furnish necessary products on vessel is permitted.
- Reshipping due to a special condition : This is not act of transshipment. |
|
|
- Force majeure that is, any causes beyond seller's control: The seller is exempt
from seller accountability and the shipping period would be extended for 3 weeks~1month as a practical custom.
- Shipping period extension for Force majeure : A seller should obtain a document
for confirmation from a authorized organization and notify the buyer immediately.
- If the Force majeure continues in long term even after a extension was given:
The rights to continue the contract is with buyer totally. |
|
|
1 shipped B/L
- The B/L issuing date should be earlier than the shipping date of the credit
invoice.
2 received for shipment B/L
- The on board notation of B/L has to be earlier than the credit shipping date.
Ex-The date of bill of lading shall be taken as conclusive proof of the
day of shipment |
|
|
<1> Payment method
- Letter of credit method: A debtor should open a credit within the stipulated date.
- Non credit method : Settle wether D/P, D/A, CAD or COD. |
|
| 1. Advanced payment--Advance payment method before products are shipped
or hand over. |
|
a CWO(cash with order)Basis
b Remittance Basis
c Red Clause L/C(packing L/C) Basis |
|
2. Concurrent Payment--Payment method in exchange with Spot goods or with B/L.
- At sight basis method |
|
a D/P Basis
b COD Basis
c CAD Basis |
|
3. Deferred payment--Payment method after certain period or after products are shipped, had over or after a bill inspection.
- Classify as Deferred Payment on Short term and on Long or Mid-term Basis. |
|
a. usance basis ; D/S, D/D
b. D/A Basis
c. Deferred payment on long or mid term basis
e. Open account and Escorw mode |
|
4 Mixture method --More than two payment methods in Advance payment,
concurrent payment, deferred payment.
- progressive payment basis |
|
| - The most representative mixture method which is used with Deferred payment
on long or mid-term basis and with large transaction. |
|
<2> Payment method
- There are cash, bill(draft) and transfer payment method but usually documentary bill (draft) is used. |
|
| 1. Bill settlement(documentary bill) |
|
a. documentary bill(draft)
- documentary bill with L/C---sight bill, usance bill(time draft)
- There are documentary bill without L/C---D/P bill and D/A bill, and if thee is
no D/P, D/A with bill, it is regarded as D/P bill
b. clean bill(draft)--red clause L/C, repayment L/C |
|
|
a. COD, CAD, CWO
b. payment on receipt L/C |
|
|
- Remittance basis
- Used when making advance payment in Deferred payment on Long or Mid-term
Basis or progressive payment or making down payment
- T/T(telegraphic transfer), M/T(mail transfer) |
|
| 4. Check payment --T/C(traveller's cheque) |
|
|
| - Select a currency that is not fluctuated by exchange risk or rate of foreign
exchange which is stabilized currency that has high international popularity and
public trust. The kind of designated currency allows stability, convertibility and
circulativeness. |
|
| <4> Security with payment terms |
|
- The most risky payment method in the standpoint of a seller::In the order of
remittance method, collection method and letter of credit method.
- Reason why remittance method is risky : When there is a payment dispute, the
dispute is based on the contract only so problem solving is not easy.
- Secondary apparatus for safety in reclaiming payments: Exporting insurance or
confirmation of a highly reliable bank.
- In order to come out from recourse risk of a Nego bank and to reduce exchange
commission, you may using forfeiting.
1. Safety order for a seller when reclaiming payment: |
|
a. Advance payment,
b. CAD
c. D/P,
d. COD,
e. D/A,
f. open account (a kind of deferred payment but difficult to use this method if the transaction is not with a fixed party) |
|
| 2. Safety order for a debtor when reclaiming payment: |
|
a. open account,
b. COD,
c. D/A,
d. D/P,
e. CAD,
f. advance payment |
|
|
- There could be loss of or damage to the goods while transporting the goods so in
order to eliminate the risk, buy insurance.
- For a ocean fright, buy cargo insurance, for a ground freight, buy transport insurance),
for air freight buy air transport insurance or aviation insurance and for the multimodal
freight, buy through insurance.
- For a marine cargo insurance there is an exemplar provision which is ICC(institute
cargo clause) by the institute of London under/writers for the insurance risk and the
ranges for preserve designated loss.
<1> Cargo insurance range per transaction (Refer to Trade Terms by INCOTERMS 2000) |
|
1. EXW(Refer to the {6} [8] (4))
2. FAS( " )
3. FOB( " )
4. CFR( " )
5. CIF ( " )
6. FCA, CPT, CIP( " ) |
|
|
- In the standard ICC provision, the FPA, WA, AR and amended ICC(A), ICC(B),
ICC(C) are used in combination
- ICC(C) for FPA, ICC(B) for WA and A/R is similar to ICC(A).
1. Former Institute Cargo Clause |
|
| a. FPA(free from particular average) and ICC(C) |
|
1. List risks in Positive List
2. a provision which the insurer will not preserve a particular average for the
specified shipper. This kind of insurance is the lowest insurance premium.
3. Security from FPA for a range of maritime losses |
|
- Total loss --Actual total loss and entire constructive total loss.
- G/A (general average) and justifiable sue and labour expenses
- S.P.A.(specified particular average)--Product loss due to a vessel's
SSBC(major casualties) and total loss per package while stevedoring
process. |
|
| 4. Range of maritime losses in ICC(C) |
|
- Fire or explosion, a vessel or a craft's stranding, Grounded and
capsize
- Overturning or derailment with land conveyance
- Collision or contact with intended vessel and a craft or conveyance with
other object outer than water
- From the port of distress, discharging of cargo, the subject-mattered
insured's extinction or damage or in related with the said party.
- Due to general average sacrifice and jettison's extinction or damage to
the subject-mattered insured. |
|
|
| - Within the marine insurance, those exclusion that is, general exclusions
clause, unseaworthiness and unfitness exclusion clause, war exclusion
clause, strikes exclusion clause are not secured risk from ICC(C), ICC(B)
and ICC(A). |
|
| b. WA(with average) and ICC(B) |
|
1. A provision that preserves total loss, general average and up to particular
average.
2. For a small petty claim, mark as WA~% and apply a franchise system.
The ~% is franchise, and to preserve 'without franchise', the contract has to be cover with WAIOP(With Average Irrespective of percentage) as a
provision.
3. Preserve range in ICC(B) |
|
- Security, risk and loss that would be preserve in ICC(C)
- Damage or extinction subject-mattered insured in relations with the subject
party or earthquake, element of volcano and lightening.
- Washing overboard
- Risk with Intended vessel, a craft, hold, conveyance , container, lift van or
seawater at the storage area, lake water or rainfall.
- Product extinction or damage called total loss of any package while
shipping to a intended vessel or a craft during a unloading process. |
|
|
| - Within the marine insurance, those exclusion that is, general exclusions
clause, unseaworthiness and unfitness exclusion clause, war exclusion
clause, strikes exclusion clause are not secured risk from ICC(C), ICC(B)
and ICC(A). |
|
| c. A/R(all risks), AAR (against all risks) and ICC(A) |
|
1. List all the Non-security in Negative List.
2. Excluding common risk-exclusion risk, petty claim, total loss, general
average, particular average are accepted as risks in the cargo insurance.
3. Exclusion clauses |
|
- Sailing delay- nature's particular with subject-mattered insured or a vice.
- Unlawful action of a insured - unseaworthine of a vessel - FW/SRCC(war, strike, riot, disturbance) - FC & S(seizure, capture) |
|
|
| - Within the marine insurance, those exclusion that is, general exclusions clause, unseaworthiness and unfitness exclusion clause, war exclusion clause, strikes exclusion clause are not secured risk from ICC(C), ICC(B) and ICC(A). |
|
| d. TLO(total loss only; total loss risks provision) |
|
| - It is a insurance that would pay the subject-mattered insured in total loss which is not in used with marine cargo insurance at all. |
|
| 2. New Institute Cargo Clause |
|
a. ICC(A) : ICC(A/R),
b. ICC(B) : ICC(WA),
c. ICC(C) : ICC(FPA) |
|
| 3. A extraneous clauses to secure Memorandum clauses additionally |
|
- If cover as ICC(A) or A/R, there is no need to cover additional risks but if cover
as ICC(B), ICC(C), W.A abd F.P.A or ICC(A) and A/R, additional premium fee has to be made if intended to cover additionally according to the cargo's
characteristics. |
|
- TPND(Theft, Pilferage and Non-Delivery)
- Breakage
- Sweat and Heating Damage
- Leakage/Shortage
- JWOB(Jettison and Washing Over Board)
- Denting and/or Bending
- Spontaneous Combustion
- Mould and Mildew
- ROD(Rust, Oxidation, Discolouration)
- Hook and Holo
- Contamination
- RFWD(Rain and/or Fresh Water Damage) |
|
| (8) Terms of Claim, Arbitration & Governing Law |
|
- Related to the parties performing against the contract, the specific accompanying request such as compensation to Trade Dispute is called Claim.
- It is wise to indicate arbitrary organization, the place for arbitration, overning Law on a Sales contract.
<1> Claims resolving method |
|
- There are Amicable settlement, Conciliation, Arbitration ,Litigation but the rbitration is more generalized for the following reasons.
a. Voluntary reference |
|
| - The essence of arbitration and the strong point of the system is that without pecial restriction, all the procedure can be decided between the party's greement. |
|
|
| - Progress non-formal procedure in a peaceful atmosphere. |
|
c. speediness or single trial system (arbitration law the sub-article 11 (5))
d. closed proceedings (Procedure not open to the public)
e. expertness of arbitrators
f. low costs (Economical) |
|
| - Since single trial system, expertness of arbitrators and selecting in proxy is recognized without restriction, cost is relatively low. |
|
| g. Effects of Arbitral Award internationalism |
|
| - There are internal effect and international effect with the arbitral award. |
|
|
1. Check for the each country's weight and measures difference.
2. State insurance coverage for transpiration risks--Be cautious for the risks that are
unable to cover by insurance per insurance condition.
3. Specific force majeure lists
4. Lists of Infringement
5. State governing law |
|
- State revision year, the title of international provision which standardizes
interpretation of the trading terminologies in the contract.
- State which legal regulations for a special issue should be accepted from the
host country of seller/debtor.
Ex)-This contract shall be governed in all respects by the law of China
-This credit is issued subject to Uniform and Practice for Documentary Credit,
1993 revision, ICC Publication No.500 |
|
| 6. State arbitration lists |
|
- State in the contract which commercial arbitration committee's rule you choose
to follow by to resolve problems.
Ex)-All disputes, controversies, or differences which may arise between the parties, out of or in relation to or in connection with this contract or for the breach thereof, shall be settled by arbitration in Seoul, Korea in accordance with the Commercial Arbitration Rules of the Korea Commercial Arbitration Board and the Law of Korea.
-The award rendered by arbitrator(s) shall be final and bind upon parties concerned |
|
|
Ex)-Any claim by buyer must be made in writing 14 days receipt the goods at destination stated on the face hereof, and no claim will be recognised if they are used
-Any claim or complaint by buyer of whatever arising under this contract, shall be made in cable within one week after arrival of cargo in destination port.
-Full particulars of such claim shall be made in writing and forward by airmail to seller within 15days after cable.
-Buyer must submit with such particulars as Suwon Public Survey's report, when must the quality and/or quantity of merchandise is in dispute. |
|
| (9) Other conditions for a contract |
|
<1> Contract materializing date and its validity period
<2> Contract number
<3> Confirming statement for a contract materializing
<4> Cautious and notice
<5> Contract parties' signature |
|
[7] Frustration of contract and breach |
| (1) frustration of contract |
|
|
| - The frustration of contract is referred to a case where after a contract is made, if a contract is unable to perform or no need to perform the contract. When it occurs, the contract party is exempt from the further duty and the contract will be canceled. |
|
|
- When a frustration is formed with a individual transaction: Destroying of the
contract subjected product, outbreak of a war, export prohibition and lawbreaking, the changes with a basic condition, export/import approval and import quota etc.
- Prepare for force majeure clause of the contract parties' sales contract
(open contract or individual contract's back clause). |
|
|
|
- The sales contract parties' duty to perform : Unless a provision is stated with a basic contract, it is followed by the adopted trade term.
- The required elements for a contract and breach or remedies of the other party: There is no international standard for trade term interpretations therefore, the governing law of a contract is to be follow by. |
|
|
- In general, the Vienna Convention selected by UN is favorable rather than a local
law of a specific country, |
|
|
- A remedy method when a buyer breach the duty: The person remedy is the rights for the Seller for the hand over products such as the right to cancel, right to request payment and right to request compensation and right to custody as well as the right to payment return against products.
- A remedy method when a seller breach the duty : If the products are inconsistent to the contract, the buyer has right to refuse, right to request compensation and the right to request payment return. |
|
| (3) Problem solving method |
|
- Claims in trading : For a continues business, a resolve according to the independent agreement of the parties is most favorable.
- If necessary to ask a favor to third parties for a problem solving: Intermediation or adjustment are the good methods. |
|
[8] INCOTERMS (International Rules for the Interpretation of Trade Terms) |
| (1) Definition and purpose |
|
- The trade terms are different from each country due to the trading practice. The kind of unclear interpretation may bring a misunderstanding and a lawsuit. In order
prevent or to minimize the damage, the ICC is established.
- The International trade contract law which unified the seller and buyer's rights-obligation relationship internationally is generalized. |
|
| (2) The structure of Incoterms 2000 |
|
<1> 'E' requirement group is departure term. The Seller delivery products to the buyer in the premises.
<2> 'F' requirement group is main carriage unpaid term. The seller delivery the products to the shipment contracted shipper but the fright fee is not burden by the seller
which as a pont of sameness.
<3> 'C' requirement group is main carriage paid term. The Seller will basically burden the freight to the destination and establish a insurance contract but the risk after
shipment and additional expenses are not burden by the seller.
<4> 'D' requirement group is arrival term. The Seller pays all the expenses necessary for transportation. |
|
| (3) The trait of INCOTERMS 2000 |
|
<1> Made sure of the definition of delivery on the preamble of each terms.
<2> FCA terms delivery method: Either delivery form the seller's premises or other location but the statement is clear and simple.
<3> Delivery method : State the provision whether the (i)Seller is making a delivery, loaded specified by the seller using specified means of transportations or delivering
using specified menas of transportation by a shipper or a buyer or (iii) by carried in to a specified location in loaded or (iv) by carried in and unloaded at a specified location etc.
<4> As EU or customs free regions are expanding, by inserting 'where applicable" words on each condition's customs duty regulation, it made possible to be used without a
confusion even when a Customs Clearance is not necessary.
<5> Customs Clearance duty of FAS terms: Seller shoulder burden. Import clearance duty in DEQ terms : Regulated as a Buyer to shoulder the burden.
<6> Even on a Buyer's duty it regulates a) a duty to contract transportation b)a duty to contract insurance and it also regulates that when a Buyer doesn't have a
responsibility for the insurance it should stipulate (no obligation) for consistency.
<7> If used terminologies are unclear or not corresponding to the commercial custom, it has been changed to appropriate terminologies.
<8> It stipulates that it prepares for electronic commerce by stating BOLERO service (1999) from revised preface, CMI regulation for Electronic Bill of Lading, CMI regulation for electronic marine cargo invoice, UNCITRAL Model Law for electronic commerce. |
|
| (4) Trade Terms for INCOTERMS 2000 |
|
|
| <1> EXW ; Ex Works...(named place) |
|
- Seller premises, working place, factory, warehouse etc can be named as a delivery place.
- If adding a vehicle carrying duty to the Seller: Only possible if written in the contract. (EWX preamble)
- A buyer take over products from the Seller's premises but not able to execute export clearance: To change this as FCA term, the seller must agree to burden vehicle carrying expenses and risk in order to make it possible. (EWX preamble)
- If a name place is not yet agreed upon or if the place is not located in a accessible place : The Seller may choose an appropriate place. (The article 4)
- The expense that occurs when passing third countries while importing products: Buyer is exempt from expense burden. Because these expense occurs to his/her own interest. |
|
| 2. Group F (marine carriage unpaid) |
|
| <1> FCA ; Free Carrier...(named place) |
|
|
- FCA term: Seller clearance exported products and products are delivered to a shipper appointed by the buyer from the named place.
- If the pont of delivery is not appointed by the Buyer: The Seller has a right to select an appropriate location that fits to his/her purpose within the named place.
- These terms are applicable to all the transportation method. |
|
|
- All the risk and the critical point regarding goods: When the Seller delivered goods to the carrier at the agreed period at the named place.
- When the Seller contracts transportation contract by a Buyer's request and according to a customer of a trade and the Buyer takes risk and burden.
- If in Seller's premises: From the point when the good are loaded on the means of transportation provided by the carrier in the Seller's premisses, the buyer takes all the risk and critical point.
- All other named places: If the goods are not loaded within the seller's means of transportation in the named place, and the time when the goods were piled up at the proxy's desecration, the risk and critical point is shift to the buyer. |
|
| 3. The main duty of the parties |
|
|
a. The contracted goods are to be delivery to the carrier appointed by the buyer at the named place.
b. Export permit and export clearance is executed with the Seller burden
c. provide commercial invoice, export permit that proof the consistency of the contract and the delivery certificate that the good are delivered to the custom carrier. If the documents are not the proof of transportation contract, the Seller contracts transportation contract with Buyer burden and provide transport document. |
|
- The meaning to "transportation documents" are, negotiable bill of lading, non-negotiable sea waybills, inland waterway document, air waybills, railway consignment note, road consignment note and multimodal transport document and such documents can be replaced with a electronic message.
- Buyer : |
|
1. Name the carrier to deliver the Seller's good and transportation method, delivery date and notify the location
2. As long as a special transportation contract is not requested to the Seller, make transportation expense by contracting transportation agreement for goods shipment at the name place. |
|
| <2> FAS ; Free Alongside Ship...(named port of shipment) |
|
1. FCA: Delivering goods to alongside the ship of intended vessel from the port of shipment that modifies the seller who resides in the export country to execute customs clearance (FCA preamble ).
2. Additional duty have been added for Seller to pay all the customs duty for export clearance, rates and a levy of the exporting country (Article A6).
3. A craft of the intended vessel is a place where the loading equipments such as winch and tackle could arrive.
4. This term can be only used with marine or local transport. It is usually used by lumber, grains and mineral transportation where the loading charge is much needed. |
|
| <3> FOB ; Free on Board...(named port of shipment) |
|
|
- FOB term : A transaction term when the Seller delivers goods through ship's rail from the intended vessel in the port of shipment.
- Only used with marine or local transport.
- Irreverent terms to Roll on-roll off transport or container transport which has no meaning of ship's rail. |
|
|
- Goods delivery, risk and critical point for goods, the right to posses goods are to shift so it belongs to the Shipped sales contract.
- Since it pre-conditions only the marine transport it is regarded as a marine sales contract, and especially since it loads goods on the board of the intended vessel it is regarded as a intended vessel delivery contract.
- Since the goods of Seller are actual delivery it is regarded as a delivery sales contract. |
|
|
a. In England the "classical FOB" is when a Seller load products on the intended vessel by a buyer, all the expenses thereafter is burden by the buyer.
b. In England "FOB with additional duties" exists to prevent in case if a buyer is unable to contract transport contract and export procedure by the buyer.
c. America has adopted the FOB of England in 1990 on Revised American Foreign Trade Definitions to be used for a vast inland transport and with marine shipment and there are the following 6 FOB provisions. |
|
- FOB(named inland carrier at named inland point of departure) - FOB(named inland carrier at named inland point of departure) Freight prepaid to(named point if exportation)
- FOB(named inland carrier at named inland point of departure) Freight allowed to(named point of exportation)
- FOB(named inland carrier at named inland point of exportation) - FOB Vessel(named port of shipment)
- FOB(named inland point in country of importation)
- These are not accurately consistent to INCOTERMS so when contracting FOB trading with these region, a cautious is required. |
|
|
- Risk and critical point in payment : When products passed the ship's rail.
- Seller : Export permit and customs clearance expense of the goods.
Expense burden by FAS terms, Products shipped inspection (PSI)
expenses and responsible for loading costs.
- Buyer : Goods stowage and trimming charge on the intended vessel. Insurance and shipping fee to the target port, all the expenses related to import. |
|
| 5. Main duty for the sales party |
|
| - Seller : |
1. Delivering goods consistent to the sales contract from on board of intended vessel in named port.
2. Export permit and export clearance is executed with the Seller burden
3. provide commercial invoice and clean on board receipt or mate's receipt which proof the consistency of the contract. If the documents are not the proof of transportation contract, the Seller contracts transportation contract with Buyer burden and provide transport document. The meaning to "transportation documents" are, negotiable bill of lading, non-negotiable sea waybills, inland waterway document, air waybills, railway consignment note, road consignment note and multimodal transport document and such documents can be replaced with a electronic message.
4. Pay on board expenses according to the port's custom if the loading costs are not included in shipping fee. |
| - Buyer : |
1. Buyer burden transport contract til intented port and notify
seller the name of vessel, loading place and its period to the Seller
2. if loading costs are including in shipping fee, pay on board expense and unloading costs at intended port
3. Not notifying to Seller, intended vessel's delay in arrival or acceptance discrepancy and all other risks are pay by the buyer. |
|
| 3. Group C (marine carriage paid) |
|
| <1> CFR ; Cost and Freight...(named port of destination) |
|
|
- Seller pays freight fee to the intended port.
- Seller requests customs clearance and able to use with only marine shipment
or local shipment.
- Irreverent terms to Roll on-roll off transport or container transport which
has no meaning of ship's rail. |
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- As one of Shipped contract, when the Seller delivery goods on intended
vessel's on board the duty is fulfilled but under this term, there are
inconsistency with a risk and critical point.
a. Seller : From the point the goods passed the ship's rail all the risk and
critical points and additional expenses are burden by the buyer.
b. Seller : Until the goods are delivery to intended vessel's on board all the
expenses are additionally burden to the Seller.
c. Buyer : Excluding freight charge to the intended port, the buyer is burden
for all the additional expenses from the goods are on board on the intended vessel from the intended port.
d. Seller : Entire export costs until the goods are loaded on the intended
vessel, stowage and trimming charge, costs related to freight contract from shipped port to the intended port, ocean freight, in case with liner, the unloading costs that are levy from intended port. |
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| 3. Main duty for the sales party |
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| - Seller : |
a. Seller burden with his/her own expense to contract transportation
contract for the normal vessel and sea route to the intended port of the goods
b. delivery goods that are consistent to the sales contract to the
shipped intended vessel.
c. Export permit and export clearance is executed with the Seller burden
d. immediately provide clean shipping documents and the commercial invoice that provides the consistency to the contract. Such documents can be replaced with a electronic message.
e. Not only the loading costs for goods but also the unloading costs from intended port that could be added for liner when contracting a freight contract. |
| - Buyer : |
a. Upon receiving the commercial invoice and the shipping
documents, consent on board delivery from shipped port and accept goods from the carrier at the intended port.
b. if unloading costs are not included from intended port, pay the fee
c. pay all the risk and additional expenses that occurred from not notifying the seller. |
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| <2> CIF ; Cost, Insurance and Freight(named port of destination) |
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- Seller pays necessary freight and insurance premium to delivery goods to
intended port.
- All the risk for goods and additional expenses are shift to the buyer when
the goods passed ship's rail from shipped port.
- Unless there is a Seller's opposing wording, it should be covered by
insurance with (ICC) or (FPA or C).
- Seller execute goods customs clearance
- Use only with marine transport or Carriage by inland waterway
- Irreverent terms to Roll on-roll off transport or container transport which
has no meaning of ship's rail. |
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- Because it prerequisite with only FOB and CFR term, it belongs to the contract of marine sales.
- Seller only pays freight and insurance til the intended port, but the additional expenses and risk are shift to the buyer from the point where the goods are delivered at shipped port, this term belongs to the contract of shipped sales.
- It has a special feature that the seller's delivery method for payment request is based on the symbolic delivery instead of actual delivery.
- Sales term that is constructed in multi price together with Seller's cost horizon which is time of ship and Buyer's cost horizon till intended port. |
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- Seller is completed with the duty when delivery the goods from ship port to on board of intended vessel.
- Seller : From the point the goods passed the ship's rail all the risk and critical points and additional expenses are burden by the buyer.
- Seller : Until the goods are delivery to intended vessel's on board all the expenses are additionally burden to the Seller.
- Seller : Entire export costs until the goods are loaded on the intended vessel, stowage and trimming charge, costs related to freight contract from shipped port to the intended port, ocean freight, in case with liner, the unloading costs that are levy from intended port, and responsible for insurance premium of marine cargo insurance till intended port. |
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| 4. Main duty for the sales party |
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| - Seller : |
a Seller burden with his/her own expense to contract transportation contract for the normal vessel and sea route to the intended port of the goods
b. delivery goods that are consistent to the sales contract to the shipped intended vessel.
c. Export permit and export clearance is executed with the Seller burden
d. Pay insurance premium with own expense till intended port for transportation. The insurance must be with the currency unit within the contract up to 110% of the goods amount using minimal risk condition similar to ICC or other similar provision.
e. should provide a transferable insurance documents, clean shipping documents and the commercial invoice that provides the consistency to the contract. All these documents can be replaced by the electronic message as per the party's agreement
f. Not only the loading costs for goods but also the unloading costs from intended port that could be added for liner when contracting a freight contract. |
| - Buyer : |
a. Upon receiving the commercial invoice and the shipping documents, consent on board delivery from shipped port and accept goods from the carrier at the intended port.
b. if unloading costs are not included from intended port, pay the fee
c. pay all the risk and additional expenses that occurred from not notifying the seller. |
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| <3> CPT ; Carriage Paid to...(named place of destination) |
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- If included with freight contract, the passing fee to third countries should be burden by the Seller. (The Article A6)
- Pay the freight to carrier til the named place of destination chosen by the Seller and delivery the goods.
- Buyer burden damages and all other risks after the good are delivery to the carrier.
- Seller should clear customs for goods and this method can be used with all freight method. |
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| <4> CIP ; Carriage and Insurance paid to...(named place of destination) |
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- Seller pays carriage and insurance premium to the named place of destination.
- All the risk and additional costs for goods: Term that shift to buyer when the goods are delivered to the carrier from the ship port.
- Seller : minimal risk condition similar to ICC or other similar provision of London insurance market, execute goods customs clearance.
- This term can be used with all the transport method including multimodal transport. |
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- As Seller delivery the goods to the carrier he/she chose the duty is over, but some risk and critical points are not consistent.
- When the goods are delivered to the carrie the risk of goods are shift to the buyer.
- Seller : All the export costs until the goods are delivered to the carrier, loading costs, cost for named destination and carriage, unloading costs that are levy from the named destination when contracting transportation, insurance premium to the final destination are burden by the Seller. |
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| 3. Main duty for the sales party |
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| - Seller : |
a. Seller burden with his/her own expense to contract transportation contract for the normal vessel and sea route to the intended port of the goods
b. The goods that are consistent to the contract has to be delivery to the carrier or the initial carrier
c. Export permit and export clearance is executed with the Seller burden
d. Pay insurance premium with own expense till intended port for transportation. The insurance must be with the currency unit within the contract up to 110% of the goods amount using minimal risk condition similar to ICC or other similar provision.
e. In case if there is a Buyer request: If possible purchase insurance premium on a possible war, strike and a risk with strike.
f. commercial insurance, the normal shipping documents and the transferable insurance documents that proof consistency to the contract. All these documents can be replaced by the electronic message as per the party's agreement
g. Non only the loading costs but the unloading costs at the intended destination that might be included when making shipping agreement. |
| - Buyer : |
1. When goods are delivered to the carrier and in case of a customary case when the shipping documents are delivered to the said person, approve the goods when the goods are delivered to the carrier and receive the goods from the carrier.
2. When the unloading costs are not included in the shipping cost at the intended destination, pay the unloading cost
3. pay all the risk and additional expenses that occurred from not notifying the seller. |
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| <1> DAF ; Delivered at Frontier...(named place) |
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- A term that allows the buyer to process the goods as per the buyer's discretions when the goods are not unloaded from the means of transportation after the goods have been through customs clearance, and not processing import process at the intended boarder and the location.
- It can be used regardless of transportation method at the boarder of land but in case if delivery on board by sea and a wharf, there is DES or DEQ recommendation clause. (DAF preamble).
- Per modified regulation, a Seller may agree on a Inter-modal Transportation contract upon a Buyer's request, expense burden and risk taking over by the buyer beyond a boarder's delivery destination to the buyer has appointed for the final destination. |
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| <2> DES ; Delivered Ex ship...(named port of destination) |
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- The goods are not cleared from named port of shipment and under the discretion of the buyer the goods are delivered.
- Seller : Delivering the goods to the named port of shipment and take over all the expenses and the risk until unloading point.
- Buyer : Take over unloading expense and customs duty clearance expense. - When a Seller request to take over the unloading expense and risks: Use DEQ terms.
- This term can be used only with ocean freight, Carriage by inland waterway or multi-modal transportation to delivery the goods on the vessel at the intended port.
- Seller is to take over customer clearance expense to third countries. All the cost after importing process and the processing fee for transportation is responsible by a Buyer. |
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| <3> DEQ ; Delivered Ex Quay...(duty paid)...(named port of destination) |
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- DEQ term is to delivery goods at a wharf of intended port however, it has been remodified that a Seller take over unloading expense from intended port and a buyer take over import duty expense (DEQ preamble ).
- If a Seller take over expense for import process: It made to clarify the meaning on the contract.
- Seller : Pay only the through expense of third countries and export customs clearance expense Buyer : Transportation or any other stevedoring charges including stacking to
terminal followed by a harbor. Contents revised to pay customs clearance expense that develops after importing goods followed by transportation. (Article B6)
- Since importing clearance is for a Buyer to handle, the buyer has no responsibility to make payment for the Seller to obtain necessary documents for import clearance from the dispatching country or the country of origin. But the buyer must support for the other party to acquire all the necessary documents and the buyer is to make payment for any expense that arise from supporting the seller. (The Article A10 and Article WPB10). |
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| <4> DDU ; Delivered Duty Unpaid. |
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- DDU term is to delivery goods to the intended destination excluding import customs expense and duty. As the means of transportation, the goods are not necessary to be unloaded at the destination (DDU preamble )
- Duty with this term is referring to a payment responsibility in customs clearance procedure, duty, taxes and a levy (DDU preamble ).
- If a Seller is to take expenses for import clearance procedure and risks : It made to clarify the meaning on the contract. (DDU preamble ).
- This term can be used with all kinds of transportation method.
- This is a distinctive clause which added that a party appointed by a Seller or a Buyer may delivery goods so that a buyer or the appointee may take the responsibility to unload which is distinctive. (The article A4). |
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| <5> DDP ; Delivered Duty Paid...(named place of destination) |
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- A term that lets a Seller to clear goods and delivery the goods to a buyer without unloading the goods from the means of transportation at the destination.
- Seller : Take all the responsibility and risks from the intended country for customs clearance expense, duty and the transportation fee to the destination.
- This term can not be used when a Seller can not execute import license and customs clearance directly or indirectly. If a Buyer wants to take over import customs clearance and the risks, DDU term is a better use.
- This term can be used with all kinds of transportation method. |
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| (6) INCOTERMS preamble (Refer to international trade rules) |
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[9] International Rules for the International Trade Contract(Refer to international trade rules) |
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| - It contains standard trade terms of 13 countries. |
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| (2) Warsaw- Oxford Rules for C.I.F Contract, 1932 |
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| - The parties right in CIF contract, A special law of CIF that shows contents of duty and the execution method. |
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| (3) Revised American Foreign Trade Definitions, 1990 |
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- It stressed on 6 types of FOB condition applied with the U.S. regulation in trade.
- The modified Definitions of Export Quotations (India House Rules for F. O. B) in 1941 that was adopted by National Foreign Trade Convention of National Foreign Trade Council, Inc in 1919 was re-modified in 1990.
- The Trade terms regulated in main clause included 6 types of FOB are as the following 11 items. |
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a. Ex~(point of origin)
b. F.O.B.~(named inland carrier at named inland point of departure)
c. F.O.B.~(named inland carrier at named inland point of departure)
Freight prepaid to~(named point of exportation)
d. F.O.B.~(named inland carrier at named inland point of departure)
Freight allowed to~(named point of exportation)
e. F.O.B.~(named inland carrier at named point of exportation)
f. F.O.B. vessel~(named port of shipment)
g. F.O.B~(named inland point in country of importation)
h. F.A.S. vessel~(named port of shipment)
i. C.&.F.~(named point of destination)
j. C.I.F.~(named point of destination)
k. Ex Dock~(named port of importation) |
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| (4) Vienna Convention, 1980 (United Convention on Contract for the International Sale of Goods, 1980 ; CISG) |
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| - ECOSOC subsidiary of UN UNCITRAL (United Nations Commission on International Trade Law) modified in 1980.
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