INCOTERMS

Question 1

What are INCOTERMS?

Answer 1

Standard usages of terms drawn up by the International Chamber of Commerce.
1) Incorporated into the main contract
2) Clarify the rights and duties of the seller and the buyer
3) Key point; Allow you to understand when risk passes
4) Only a part of the main contract, not of the other contracts, eg carriage or insurance.

Question 2

Which documents do you need for INCOTERMS?

Answer 2

1) Bills of Lading: the contract of carriage and the documents of title
2) The Invoice: A document which instructs the buyer what the agreed price of the good is under the contract, and the additional costs incurred. Important that invoice complies with the contract
3) Marine Insurance policy, to insure what is ordinarily current in the trade
4) Maybe more, eg certificates of origins.

Question 3

How many INCOTERMS are there?

Answer 3

11 in total, in different letter groups

Question 4

What does CIF stand for?

Answer 4

Cost, Insurance, Freight

Question 5

Which documents do you need for CIF?

Answer 5

1) One for the cost
2) One for the insurance
3) One for the cost of transportation

Question 6

How are group C contracts different from all other contracts?

Answer 6

The seller’s obligations are fulfilled when they produce to the buyer or buyer’s agent, the documents to prove that they have done what they have to do.

Question 7

What are the duties of the seller under CIF?

Answer 7

1) To ship at the port of shipment, the goods of the description contained in the contract
2) arrange a contract of carriage by sea, under which the goods will be delivered at the destination specified in the contract
3) To arrange for an insurance upon the terms current in the trade which will be available for the benefit of the buyer
4) To invoice for the goods
5) To tender within a reasonable time the bills of lading, invoice and insurance policy or certificate.

Question 8

What are the rights of the seller under CIF?

Answer 8

Even if the seller knows the goods have been lost at the time the documents are tendered he is still entitled to payment

Question 9

What are the duties of the buyer in CIF?

Answer 9

1) To pay the price, less the freight on delivery of the documents
2) To pay the cost of lighterage, landing and unloading at the port of destination in accordance with the Bill of Lading
3) To pay import duties and wharfage charges where applicable

Question 10

What are the rights of the buyer?

Answer 10

They have two rights of rejection
1) If the goods do not conform with the contract
2) If the documents do not conform with the contract
3) The buyer can sue on the contract of carriage and insurance