| [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) |
|
Trade Helper 
Ex-Import Procedure(to Way of Payment)
Export-Import procedure according to the Irrevocable Documentary Credit method
Trade contract