explain various international contract terms

The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination. This proof of delivery could be in the form of a shipping order or the transporter’s delivery note signed by the port, terminal or ships agent when delivery is made. However, if there is any damage to the cargo during that loading process, that risk and cost may still be yours as the buyer. CIF stands for “cost insured freight”. C&F means “cost and freight” which means the seller pays for shipping, but not insurance. If the ship is not available in time for the cargo to be loaded, that risk will pass onto you as the buyer unless you notify the seller in advance of any potential delays. If you are the buyer in an FOB term, it is of utmost importance that you nominate the right type of ship and ensure that the ship arrives in time for the seller to arrange the delivery and loading of the cargo. Its use would be “FOB ” where would be … International contracts typically contain shorthand terms (Incoterms) describing when the risk of loss transfers from a seller to a buyer. The term was coined by the English philosopher Jeremy Bentham (1748–1832). This is the overriding principle that must be taken into account when deciding whether and how to define a term. Each term gives rise to a contractual obligation, breach of which can give rise to litigation. As an indication, Institute Cargo Clauses cover is available in categories A, B, and C of which category C is the minimum cover and this is what the seller may go for. The contents of a contract are known as terms or clauses. As with all Incoterms® it is important that the point of delivery is expressly discussed and agreed between the buyer and the seller. CA Dipesh Aggarwal. Similarly, if there is any pre-shipment inspection required by the buyer or destination, port and customs authorities the charges for same will be for the seller’s account unless otherwise specifically agreed between the buyer and seller. The seller does not need to load the goods on any collecting vehicle, nor does it need to clear the goods for export, where such clearance is applicable. Contract law not only governs what happens when the contract breaks down, but it also establishes what the terms of the contract are, in the event of a dispute. “Ex Works” means that the seller delivers when it places the goods at the disposal of the buyer at the seller’s premises or at another named place (i.e., works, factory, warehouse, etc.). Which means there are 3 carriers involved here. The buyer must also verify that the seller is capable of securing the import clearance directly or indirectly as otherwise there could be delays in the transaction. The seller must ensure that the buyer has paid for the goods either before delivering the goods physically or before issuing the bill of lading and other release documents to the buyer. • Generally, the terms of a contract may be either: – Wholly oral – Wholly written – … which are designed to ensure that the seller completes the activity of loading. The seller should ensure that they have an agent or other arrangements in position to make sure that the unloading at the named place takes place smoothly. In a FAS term shipment, the shipper should: -        Handle the export clearance formalities for shipment, -        Pay for the transportation from his door to the agreed port, terminal, quay or ship, -        Enter into relevant contracts of carriage with the various carriers including any pre-carriages applicable up to the agreed port, terminal, quay or ship. This additional cover would be at the buyer’s expense. All costs have been categorized such that all the costs are listed in one place making it easier to identify, The level of insurance cover has been moved from Clause C to Clause A for both CIF and CIP terms, Seller and buyer can arrange their own means of transport instead of arranging a 3rd party service provider when using FCA, DAP, DPU, and DDP. If you are a buyer buying on the FAS term, it is recommended that you have a very good understanding of the required handling methods and processes at the origin. Another crucial point to be remembered whether you are a seller or buyer is that under DPU, neither the buyer nor the seller is obliged to insure the goods and this insurance requirement is not specifically covered in the Incoterms® rules. “Delivered Duty Paid” means that the seller delivers the goods when the goods are placed at the disposal of the buyer, cleared for import on the arriving means of transport ready for unloading at the named place of destination. The seller, in turn, needs to be confident that they will be able to handle the import clearance at the destination at the best cost for them as well. If the cargo is bulk or breakbulk cargo, the seller needs to understand the free time allowed for the loading and unloading of the cargo failing which demurrage may be applicable. There is a clear difference between a liner trade and tramp trade, and it is important that the seller understand this. This clause makes it clear that all obligations except Service Tax will be that of the seller and the buyer will take care of Service Tax and claim any tax advantages. Or place where the goods already so delivered.The core functions of Incoterms® used in sales contract, and is. And a buyer for the buyer, on the other hand, must take care of, the ’. Into is a specific port or vessel meets the requirements and approval of the sales and. Is not, nor is it intended to be included in a formal.. 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