NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY Chapter Two: International Trade Terms Question: Trade terms are also known as price or delivery terms

NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY

Chapter Two: International Trade Terms

Question: Trade terms are also known as price or delivery terms ？


Definition of trade term Trade terms are standardized

terms used in sales contracts that describe the place and manner for the transfer of goods from the seller to the buyer.

Trade terms are also known as price or delivery terms.


In short, it can be defined as follows: Trade terms are the special terms that which set forth the obligations of the buyers and the sellers.

*Think about the difference between the risk and the responsibility?

*Sometimes we call trade terms “price-delivered terms”, why?


Roles of trade term -It is favorable to the relative partners to neg

otiate the transaction and sign the contract. -It can shorten the process of the business. -It provides the convenience for the buyer an

d the seller to count the price and the cost. -It is favorable to solve the disputes when the

y perform the contract.


《 1932 年华沙—牛津规则》（ Warsaw-Oxford Rules 1932 ）

This rule was drafted by the Association of International Law in 1928.It contains 21 clauses, which only stipulate the nature of CIF.


《 1941 年美国对外贸易定义修订本》（ Revised American Foreign Trade Definitions 1941 ）

This rule was made out by nine American commercial organizations in 1941. It is a set of foreign trade terms which are considered obsolete, but still sometimes used in domestic U. S. trade.


产地交货 Ex (Point of Origin) 运输工具上交货 FOB (Free on Board) 运输工具边交货 FAS (Free Along Side) 成本加运费 C & F(Cost and Freight) 成本加保险费、运费 CIF(Cost, insurance and Freight) 码头交货 Ex Dock(named port of importation)

本规则主要在北美大陆使用，因其 FOB 的定义及 FAS与 INCOTERMS 不同，所以在同该区域客户贸易时应注意贸易术语的定义。

本规则共解释六种贸易条件：


《 2000 年国际贸易术语解释通则》 International Rules for the Interpretation of Trade Terms 2000-INCOTERMS2000

由国际商会为了统一对各种贸易术语的解释而制定的。最早产生与 1936 年，五次修改与补充沿用至今，合同双方可自愿采用。

2000 年通则的产生 ICC——International Chamber of Commer

ce 国际商会是世界性的民间经贸商会组织，成立

于 1919 年，总部在巴黎。


　2 13 种术语分为 E F C D 四组（如下表）

E 组（启运） EXW Ex-Works 工厂交货

F 组（主运费未付）

FCA Free Carrier 货交承运人FOB Free on Board

装运港船上交货

FAS Free Alongside Ship

船边交货

C 组（主运费已付）

CFR Cost and Freight 成本加运费CIF Cost, Insurance and Freight

成本加保险费和运费

CPT Carriage Paid To

运费付至

CIP Carriage and Insurance Paid to

运费，保险费付至


D 组（到达）

DAF Delivered At Frontier

边境交货

DES Delivered Ex Ship

目的港船上交货

DEQ Delivered Ex Quay

目的港码头交货

DDU Delivered Duty Unpaid

未完税交货

DDP Delivered Duty Paid

完税交货

其中： FOB FAS CFR CIF DES DEQ 适用于海上运输；其它适用于各种运输方式。


Characters of Each Group in INCOTERMS 2000;

The difference between 《 Revised American Foreign Trade definition 1941 》 and 《 International Rules for the Interpretation of Trade Terms 2000 》

*What trade terms are the seaworthy terms of the 13 trade terms?


The Seller's Obligations

A1. Provision of goods in conformity with the contract. A2. Licences, authorizations and formalities. A3. Contracts of carriage and insurance. A4. Delivery A5. Transfer of risk A6. Division of costs A7. Notice to the buyer. A8. Proof of delivery, transport documents or equivalent

electronic message. A9. Checking, packaging, marking. A10. Other obligations.


The Buyer's Obligations

B1. Payment of the price. B2. Licences, authorizations and formalities. B3. Contracts of carriage and insurance. B4. Taking delivery B5. Transfer of risk B6. Division of costs B7. Notice to the seller. B8. Proof of delivery, transport documents or equivalent ele

ctronic message. B9. Inspections of goods. B10. Other obligations.

23/4/19 NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY 目录

FOB 是离岸价格？

思考题


FOB

FOB---Free On Board （ ---named port of shipment ）

装运港船上交货术语


The buyer and the seller‘s 　obligations

The seller's obligations: （ 1 ） Provide and deliver the goods. （ 2 ） Bear all risks before the ship's rail. （ 3 ） Obtain export license and carry out customs

formalities. （ 4 ） Provide the commercial invoice and the tran

sport documents.


The buyer's obligations （ 1 ） Sign the carriage contract an

d advise the seller. （ 2 ） Take delivery of the goods an

d pay the price. （ 3 ） Bear all risks after the ship's r

ail. （ 4 ） Obtain import license and ca

rry out customs formalities


Derived terms of FOB

FOB Liner Terms （ FOB 班轮条件） FOB Under Tackle （ FOB 吊钩下交货） FOB Stowed （ FOB 理舱费在内） FOB Trimmed （ FOB 平舱费在内）


《 Revised American Foreign Trade definition 1941 》 and 《 INCOTERMS 2000 》 on FOB

The scopes of the two conventions are different: the former is much larger than the later.

Linking-ups are different: one is the vessel’s side; the other is ship’s hold.

Undertake the different charges.


CFR （ Cost and Freight ） Under the CFR term, the seller

must pay the costs and freight necessary to bring the goods to the named port of destination.

The CFR is the same as the FOB term except that the seller instead of the buyer is responsible for making arrangement of the ship.


Duties of Sellers

Sign the shipping contract, arrange the shipment and pay the freight;

Prepare and submit the relative documents according to the claim of the contract;

Apply for the export customs and obtain the export license;

Undertake the charges and the risks before crossing the ship’s rail.


Duties of Buyers

Receive and accept the goods in the fixed port of destination;

Undertake the extra freight and apply for the import customs;

Undertake the charges and the risks after crossing the ship’s rail;

Pay the money and draw the documents.


Changes of CFR

*CFR 的变形，只改变了装船费用的承担问题，而不改变风险和责任的承担？（ T or F ）

-CFR Liner Terms -CFR Landed 卖方承担货物卸到码头上的各项费用，包括驳船费和码头捐税。 -CFR Ex Tackle 在轮船不能靠岸的的情况下，驳船及货物从驳船卸到岸上的费用，

由买方负担。 -CFR EX Ship’s Hold 货物抵达目的港后，自船舱底起一切费用由买方负担。

23/4/19 NORTH CHINA INSTITUTE OF SCIENCE AND TECHNOLOGY 目录

CIF 是到岸价格？

思考题


CIF

Carriage and Insurance Paid to （… named port of destination ）

*CIF 又称“到岸价格”？


Duties of Sellers

Sign the shipping contract, arrange the shipment and pay the freight;

Arrange the Insurance and pay the tuition of Insurance;


Apply for the export customs and obtain the export license and so on;

Undertake the charges and the risks before crossing the ship’s rail.


Duties of Buyers


Undertake the extra freight and apply for the import customs;

Undertake the charges, the risks and the extra freight after crossing the ship’s rail;



※Insurance

The seller should cover the Insurance of “all risks” according to the conventions of commerce, but it is not necessary for him to cover “War risks” in 《 Warsaw-Oxford rules 1932 》 ;

The seller may cover the lowest Insurance in 《 International Rules for the Interpretation of Trade Terms 2000 》 .


FCA（货交承运人） Free Carrier （… named place ） Carrier: is a legal entity that is the busi

ness of transporting goods for hire. 承运人是指运输合同中，承诺通过铁路、

公路、空运、海运、内河运输或上述运输的联合运输方式履行运输或其他方式履行运输的任何人。

It belongs to the physical delivery.


Duties of Sellers

Carry the goods to the carrier or the fixed person in the fixed date and place according to the contract and advise the buyer;


Apply for the export customs and obtain the export license and so on;

Undertake the charges, duties and the risks before carrying the goods to the first carrier.


Duties of Buyers

Receive and accept the goods in the fixed date delivery;

Sign the shipping contract, tell the seller the name of the carrier, the date and place of delivery;

Apply for the import customs and obtain some other authority certificates;

Undertake the charges and the risks after carrying the goods to the first carrier;



CPT

Carriage Paid To （… named place of destination ）

*CPT= FCA+ F? *The difference between CFR and

CPT. It belongs to the physical delivery. It can be shipped by all kinds of s

hipment.


Duties of Sellers

Carry the goods to the first carrier or the fixed person in the fixed date and place;


Apply for the export customs, pay the customs tax and obtain the export license and so on;

Sign the shipping contract and in charge of the freight;

Undertake the charges, duties and the risks before the delivery.


Duties of Buyers

Receive and accept the goods in the fixed date delivery at the destination;


Undertake the charges and the risks after carrying the goods to the carrier, if necessary, he should undertake the extra expenses;

Pay the money and draw the documents that the seller offered.


Notice

Linking-up of the risks; As for the term of CPT, the seller undertakes t

he freight to the destination, he can not guarantee that the goods reach the destination in a safe way, because the risks of the goods transferred when the goods were carried to the first carrier, so the carrier should take the responsibility of the goods when they are shipped.


Linking-up of the duties and the charges

…The seller has the duty to choose the carrier;

…The buyer should advise the seller in advance so that he can arrange the delivery;

…The seller carries the goods to the carrier, he has the responsibility to tell the buyer so that the buyer cover the insurance in time.

…The seller is in charge of the common freight, while the extra expenses would be paid by the buyer.


CIP

Carriage and Insurance Paid to （… named place of destination ）

It can be shipped by all kinds of shipment.


Duties of Sellers

Carry the goods to the first carrier or the fixed person in the fixed date and place according to the contract;

Prepare and submit the relative documents including the insurance policy according to the claim of the contract;

Apply for the export customs, pay the customs tax and obtain the export license and so on;

Sign the shipping contract and in charge of the freight; cover the lowest insurance;

Undertake the charges, duties and the risks before the delivery.


Duties of Buyers

Receive and accept the goods in the fixed date delivery at the destination;


Undertake the charges and the risks after carrying the goods to the carrier, if necessary, he should undertake the extra expenses;

Pay the money and draw the documents that the seller offered.


Other Trade Terms

I. EXW Ex Works （… named place ） The EXW is similar to the internal trade. The price of EXW is the lowest. The seller undertakes the smallest risks,

while the buyer bears the largest risks.


Duties of Sellers

Carry the goods to the place according to the contract;

Prepare and submit commercial invoice or the relative electronic documents according to the claim of the contract;


Duties of Buyers

Receive and accept the goods in the fixed date at the destination;

Apply for the import and export customs, pay the customs tax and obtain some other authority certificates;

Undertake the charges and the risks after control the goods; Sign the shipping contract and in charge of the freight; Undertake the charges, duties and the risks after the deliver

y. Pay the money and draw the documents that the seller offer

ed.


Notice

Procedure of export The procedure of export customs is undertaken by the buyer.

If he can not apply for the export customs, he'd better to choose FCA as the trade term. Linking-up of the goods

The seller has the duty to inform the buyer the detailed place of the goods.

The buyer ought to receive the goods in time. Question of packing expenses

The seller provides the ordinary packing.


FAS

Free Alongside Ship （… named port of shipment ）

It belongs to the symbolic delivery.


Duties of Sellers

Prepare the goods and carry them to the vessel’s side at the pot of shipment in the fixed time;

Apply for the export customs and pay the export tax; Undertake the charges and the risks before crossing

the vessel’s side; Prepare and submit the relative documents.


Duties of Buyers

Receive and accept the goods in the fixed time;

Arrange the shipment and advise the seller the name and date of the vessel;

Undertake the charges and the risks after crossing the vessel’s side;



DAF

Delivered At Frontier （… named place ）

i. Scope of the Frontier It is suitable to the international trade o

f neighboring countries; The frontier can be in the import countr

y or the export country; It can be shipped by all kinds of shipme

nt.


Duties of Sellers

Carry the goods to named frontier; Sign the shipping contract; Prepare and submit the relative

documents according to the claim of the contract;

Apply for the export customs ; Undertake the charges, duties and

the risks before the delivery.


Duties of Buyers

Receive and accept the goods in the fixed frontier;


Undertake the charges and the risks after the delivery;

Pay the money and receive the documents.


DES

Delivered Ex Ship （… named port of destination ）

It is the seaworthy trade term. * 在轮船能够靠岸的情况下， DES 是真

正的“到岸价”？


Duties of Sellers

Sign the shipping contract, arrange the shipment and pay the freight, carry the goods to the named port of destination;


Apply for the export customs and obtain the export license;

Undertake the charges and the risks before the delivery.


Duties of Buyers


Accept the seller’s documents and apply for the import customs;

Undertake the charges and the risks after the delivery on the boat in the port of destination;

Pay the money according to the contract.


DEQDelivered Ex Quay （… named port of destination ）

Duties of Sellers Sign the shipping contract, arrange the

shipment and pay the freight, carry the goods to the named quay of destination;

Prepare and submit the relative documents;

Apply for the export customs; Undertake all the charges and risks

before the delivery.


Duties of Buyers

Receive and accept the goods in the fixed quay of import country;

Accept the seller’s documents and apply for the import customs;

Undertake the charges and the risks after accepting the goods;



DDUDelivered Duty Unpaid （… named place of destination ）

Duties of Sellers Sign the shipping contract, arrange the

shipment and pay the freight, carry the goods to the named place of destination;


Apply for the export customs; Undertake all the charges and risks

before making the delivery.


Duties of Buyers

Receive and accept the goods in the fixed place of import country;

Accept the seller’s documents and apply for the import customs, pay the import tax;

Undertake the charges and the risks after accepting the goods;



DDP

Delivered Duty Paid （… named place of destination ）

If we adopt DDP as the trade term, the seller would undertake the largest obligations and risks. On the contrary, the price is the highest.


Duties of Sellers

Sign the shipping contract, arrange the shipment and pay the freight, carry the goods to the named place of destination;


Apply for both the export customs and the import customs;

Undertake all the charges and risks before the buyer controls the goods.


Duties of Buyers

Receive and accept the goods in the fixed place of import country;

Accept the seller’s documents; Undertake the charges and the

risks after accepting the goods; Pay the money according to the

contract.


2Incoterms® 2010 are arranged into the two distinct groups: Any Mode of Transport CIP – Carriage and Insurance Paid CPT – Carriage Paid To DAP – Delivered At Place DAT – Delivered At Terminal DDP – Delivered Duty Paid EXW – Ex Works FCA – Free Carrier


The first class includes the seven Incoterms® 2010 rules that can be used irrespective of the mode of transport selected and irrespective of whether one or more than one mode of transport is employed. EXW, FCA, CPT, CIP, DAT, DAP and DDP belong to this class. They can be used even when there is no maritime transport at all. It is important to remember, however, that these rules can be used in cases where a ship is used for part of the carriage.


Sea and Inland Waterway Transport Only

CFR – Cost and Freight CIF – Cost, Insurance and Freight FAS – Free Alongside Ship FOB – Free On Board


In the second class of Incoterms® 2010 rules, the point of delivery and the place to which the goods are carried to the buyer are both ports, hence the label “sea and inland waterway” rules. FAS, FOB, CFR and CIF belong to this class. Under the last three Incoterms rules, all mention of the ship’s rail as the point of delivery has been omitted in preference for the goods being delivered when they are “on board” the vessel.


This more closely reflects modern commercial reality and avoids the rather dated image of the risk swinging to and fro （来回摇摆） across an imaginary perpendicular line.( 虚拟垂线 )


3. Rules for domestic and international trade

Incoterms rules have traditionally been used in international sale contracts where goods pass across national boarders. In various areas of the world, however, trade blocs, like the European Union, have made border formalities between different countries less significant.


Consequently, the subtitle of the Incoterms® 2010 rules formally recognize that they are available for application to both international and domestic sale contracts. As a result, the Incoterms® 2010 rules clearly state in a number of places that the obligation to comply with export/import formalities exists only where applicable.


Two developments have persuaded ICC that a movement in this direction is timely. Firstly, traders commonly use Incoterms rules for purely domestic sale contract. The second reason is the greater willingness in the Unites States to use Incoterm rules in domestic trade rather than the former Uniform Commercial Code shipment and delivery terms.


4. Electronic communication

Previous versions of Incoterms rules have specified those documents that could be replaced by EDI messages. Articles A1/B1 of the Incoterms® 2010 rules, however, now give electronic means of communication the same effect as paper communication, as long as the parties so agree or where customary. This formulation facilitates the evolution of new electronic procedures throughout the lifetime of the Incoterms® 2010 rules.


5. Insurance cover The Incoterms® 2010 rules are the first versio

n of the Incoterms rules since the version of the Institute Cargo Clauses and take account of alterations made to those clauses. The Incoterms® 2010 rules place information duties relating to insurance in articles A3/B3, which deal with contracts of carriage and insurance.


These provisions have been moved from the more generic found in article A10/B10 of the Incoterms 2000 rules. The language in articles A2/B3 relating to insurance has also been altered with a view to clarifying the parties’ obligations in this regard.


6. Security-related Clearances and information required for such clearances

There is heightened concern nowadays about security in the movement of goods, requiring verification that the goods do not pose a threat to life or property for reasons other than their inherent nature.


7. Terminal handling charges

Under Incoterms rules CPT, CIP, CFR, CIF, DAT, DAP, and DDP, the seller must make arrangements for the carriage of the goods to the agreed destination. While the freight is paid by the seller, it is actually paid for by the buyer as freight costs are normally included by the seller in the total selling price.


The carriage costs will sometimes include the costs of handling and moving the goods within port or container terminal facilities and the carrier or terminal operator may well charge these costs to the buyer who receives the goods. In these circumstances, the buyer will want to avoid paying for the same service twice:


once to the seller as part of the total selling price and once independently to the carrier or the terminal operator. The Incoterms® 2010 rules seek to avoid this happening by clearly allocating such costs in articles A6/B6 of the relevant Incoterms rules.


8. String sales

In the sale of commodities, as opposed to the sale of manufactured goods, cargo is frequently sold several times during transit “down a string” when this happens, a seller in the middle of the string don’t have to ship the goods because these have already been shipped by the first seller in the string.


The seller in the middle of the string therefore performs its obligations towards its buyer not by shipping the goods, but by “procuring” goods that have been shipped. For clarification purposes, Incoterms® 2010 rules include the obligation to “procure goods shipped” as an alternative to the obligation to ship goods in the relevant Incoterms rules.


2010 通则主要是以下方面的区别： 1 、加入两个新的贸易术语 DAT 和 DAP ，取

消了 4 个： DAF 、 DES 、 DEQ 和 DDU ； 2 、所以 2010 术语分类为 11 种； 3 、加入了术语的使用范围，强调也适用与国

内贸易； 4 、加入电子交易的内容； 5 、保险的险别引入了 ICC2009版本； 6 、加入与反恐有关系的内容； 7 、加入终端处理费用的归属，以保证不出现

真空； 8 、加入连环贸易（或称销售）条款，对 2000

通则的不足之处进行补充。


Term translation FOB liner terms Custom clearance FOB under tackle FOB trimmed Multi-

modal transport Ship’s rail Inland waterway transportation FOB stowed Unloading expense/charge Insure against…/have sth. insured CFR landed Liner Documents negotiation CFR ex-ship’s hold CFR liner terms Symbolic delivery