Trade Terms

Despite wide differences among national laws, there is a high degree of uniformity in con­tract practices for the export and import of goods. The universality of trade practices, includ­ing terms of sale, is due to the development of the law merchant by international mercantile custom. The law merchant refers to the body of commercial

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Incoterms rules history

The Incoterms or International Commercial Terms are a series of pre-defined commercial terms published by the International Chamber of Commerce (ICC) relating to international commercial law. They are widely used in international commercial transactions or procurement processes and their use is encouraged by trade councils, courts and international lawyers. A series of three-letter trade terms related to common contractual sales practices, the Incoterms rules are intended

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Introduction to Incoterms 2020

Incoterms are universally recognised rules. They guide buyers and sellers when formulating and fulfilling a contract for the shipment of goods. A careful study of Incoterms 2020 will repay the effort by enabling more favourable trade terms. It allows the manufacturer and buyer to open the doors to more effective trade finance. The latest version of

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Harmonization of Export Sales Contract Law

Export sales contracts are central to international commercial transactions, and around them revolve a series of connected but distinct relationships, including cargo insurance, transportation, and payment arrangements. The rules and practices governing such con­tracts vary from one export transaction to another, based on the agreement of the parties as well as the legal system.

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CISG: Essential Elements

1. Oral Contracts/Statements A contract need not be concluded in or evidenced in writing. Import companies that negoti­ate contracts by phone may be under the impression that the agreement will not be enforce­able since it is not made in writing. However, they could be held liable under CISG if they verbally accept an offer

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Pertinent Clauses in Export Contracts

An export contract is an agreement between a seller and an overseas customer for the performance, financing, and other aspects of an export transaction. An export transaction is not just limited to the sale of final products in overseas markets but extends to supply contracts for manufacture or production of the product within a

China National Products versus Apex Digital, Inc

China National is a Beijing-based corporation organized under the laws of China with specific foreign trading rights. It facilitates the import and export of goods between Chinese and foreign companies. Apex is a company incorporated in Ontario, California, which engaged in the import and distribution of consumer electronic goods. In 2000, China National entered

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Documentation in Export-Import Trade

A number of documents are used in export-import trade. The completion and submission of required documents is critical to the successful shipment, transportation, and discharge of cargo at the port of destination. The documents used depend on the requirements of both the exporting and the importing countries. Much of the documentation is routine for

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Transportation for International Trade

Three modes of transportation are available for exporting products overseas: air, water (ocean and inland), and land (rail and truck). Whereas inland water, rail, and truck are suitable for domestic transportation and movement of goods between neighboring countries (e.g., the United States to Canada, France to Germany), air and ocean transport are appropriate for

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Air Transportation for International Trade

Airfreight accounts for less than 3 percent of world trade by weight and approximately 40 percent of world trade by volume. Demand for airfreight is correlated with world eco­nomic growth, fuel prices, and availability/competitiveness of surface transport options. (See Table 9.1 for advantages and disadvantages of this transportation type.) Air cargo traffic has shown

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Ocean Freight for International Trade

Ocean shipping is the least expensive and the dominant mode of transportation in foreign trade. It is especially suitable for moving bulk freight such as commodities and other raw ma­terials. Today, an increasing part of ocean freight travels by containers, which results in minimal handling at ports. In terms of value, containerized cargo accounts

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Land Transportation for International Trade

Land transportation carriers (trucks, trains) are used mainly to transport exports to neigh­boring countries as well as to move goods to and from an airport or seaport. A substantial volume of U.S. exports to Canada and Mexico is moved by rail and/or trucks. Compared to rail transport, trucking has the advantage of flexibility, faster

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What Constitutes a Package Under COGSA?

In 1936, Congress enacted the Carriage of Goods by Sea Act (COGSA) in order to implement the Hague Rules, which the United States signed in 1924. The lan­guage in COGSA is almost identical to that in the Hague Rules except with regard to the carrier’s limitation of liability. The Hague Rules limit a carrier’s

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The Container Revolution

Until the 1960s, nearly all international cargo was delivered to the dockside in small packages and shipped on break-bulk ships. They came in boxes, crates, barrels, and drums and loaded on board ship, stowed, and, at the end of the voy­age, unloaded individually. This process was complicated and time consuming and exposed cargo to

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Foreign Exchange Transactions

An exchange rate is the number of units of a given currency that can be purchased for one unit of another currency. It is a common practice in world currency markets to use the indirect quotation, which is quoting all exchange rates (except for the British pound) per U.S. dollar. The Financial Times foreign

Protection Against Exchange Rate Risks

There are several ways in which export-import companies can protect themselves against unanticipated changes in exchange rates. The risk associated with such transactions is that the exchange rate might change between the date the export contract was made and the date of payment (the settlement date), which is often sixty to ninety days after

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Currency Wars

Many countries (particularly advanced economies such as those in the United States and Europe) are finding economic growth difficult to achieve because of a lack of domestic demand: consumers and businesses are not spending. One way in which governments can try to drive economic growth is by adopting policies that increase their country’s exports.

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Consignment Sales in International Trade

In a consignment sale, the exporter sends the product to an importer on a deferred-payment basis; that is, the importer does not pay for the merchandise until it is sold to a third party. Title to the merchandise passes to the importer only when payment is made to the exporter (Shapiro, 2006). Consignment is

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Open Account in International Trade

An open account is a contractual relationship between an exporter and an importer in which a trade credit is extended by the former to the latter whereby payment is to be made to the exporter within an agreed period of time. The seller ships the merchandise to the buyer and separately mails the relevant

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Documentary Collection (Documentary Draft) in International Trade

The documentary collection or documentary draft is one of the most common methods of making payments in international trade. To facilitate the transaction, two banks are usually involved, one in the exporter’s country and one in the buyer’s country. The banks may be independent banks or branches of the same bank. A draft can

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