Professional Documents
Culture Documents
Unit 17 Negotiating Delivery
Unit 17 Negotiating Delivery
Unit 17 Negotiating Delivery
Stipulations in a contract
- Time of delivery
- Place of delivery
- Notification of delivery
- Instructions for delivery
1. Timing
1.1 What is the date of delivery?
Three key dates:
- The date of dispatch from sellers’premises
- The date of loading onto vehicle/vessel
- The date when the goods should arrive at destination
The principle:
- The date of delivery agreed is usually subject to the use of a term in Incoterms 2020
- The date of delivery is the date on which the last precondition is met
- The date of coming into force is usually a number of days
- Cutrevo-off date is a date on which the parties agree to terminate a contract when certain precondition(s) is
not met.
Seller’s favor:
Unless otherwise agreed in writing by the Seller the time stipulated for shipment shall not be of the essence
and may be extended by the Seller for a period not exceeding fourteen (14) days by notice thereof in
writing to the Buyer”
Specimen clause
“If a Force Majeure situation arises, the party concerned undertakes to bring this event to the other party’s
knowledge within 15 days from the beginning of the event and to confirm by registered letter the occurrence
of the aforesaid event confirmed by the related Authority of the of the concerned party’s country, and
suspend the Contract. Further, the party concerned shall spare no endeavors to minimize any loss or
damage caused by Force Majeure. At the end of the event of Force Majeure, the party concerned shall be
granted reasonable time to resume the performance of the contract, on conditions mutually agreed upon by
both parties.”
1.5. Unexcused delay and the Buyer’s remedies (Consequences of Non-Excusable Delay)
The Principle
- Party at fault shall suffer fines;
- Wronged party shall terminate contracts
Types of compensation
(1) Liquidated damages:
- It is most commonly used because the motive is to bring a fair pre – estimated compensation to the Buyer
and to avoid expensive discussion in case of late delivery
- Limited by Anglo-American Law: 5%; Vietnamese law : 8%
(2) Penalties (Buyer’s favor)
- Damages are paid to compensate the buyer for a loss- a real or actual loss
- The motive is to terrorize the other party
- Not allowed by Anglo- American Law
(3) Quasi-indemnity (Seller’s favor)
- A compensation figure is fixed so low that, in effect, it releases a seller from responsibility for late
delivery.
2. Location
- Place of delivery
- Notification of shipment
- Instructions for delivery
2.1. Place of delivery
The Principle: The place of delivery is the point at which the exporter passes responsibility for and risk to
the goods to a Buyer.
Stipulations in a contract
Place of delivery:
- Port of shipment/discharge/ transshipment (if any)/ destination
E.g.:
- Delivery shall be made FOB Saigon port, Vietnam, Incoterms 2020
- Port of shipment: Saigon port, Vietnam
- Port of discharge: Liverpool, U.K
Practice 1. Fill in the gaps with the words given in the box
(1) Coming Into Force
approval, authorities, execution, force, necessary, null
This Contract shall come into 1 force after execution by both parties on the date of the last necessary 2
approval by the competent authorities in the country of the Seller and the Buyer. If the Contract has not
come into force within ninety days of 3 execution, it shall become null and void.
This Contract shall come into force after execution by both parties on the date of the last 4 necessary
approval by the competent5 authorities in the country of the Seller and the Buyer. If the Contract has not
come into force within ninety days of execution, it shall become 6null and void.
If either party is prevented from, or 1delayed in, performing any duty under this Contract by an event
beyond his 2 reasonable control, then this event shall be deemed force majeure, and this party shall not be
considered in 3 default and no remedy, be it under this Contract or 4 otherwise, shall be 5 available to the
other party. Force majeure events include but are not 6 limited to: war (whether war is declared or not),
riots, insurrections, acts of sabotage, or similar 7 occurences; strikes, or other labor 8 unrest; newly
introduced laws or Government 9 regulations; delay due to Government action or 10 inaction; fire,
explosion, or other unavoidable accident; flood, storm, earthquake, or other abnormal natural, event.
If the Seller fails to supply any of the Goods within the period 1 specified in the Contract, the Buyer shall
notify the Seller that, a 2 breach of contract has occurred and shall 3 deduct from the Contract Price per
week of delay, as liquidated damages, not as a 4 penalty, a sum equivalent to one half percent of the
delivered price of the 5 delayed Goods until actual delivery up to a maximum 6 deduction of 8% of the
delivered price of the delayed Goods.
Case 2
The following clause is (lightly) adapted from a contract for the construction of hydroelectric project.
Fine Payable
If the Contractor fails to complete the Work at the fixed day, a fine shall be imposed upon him for the
period of delay until the Work is completed. The fine shall be as follows:
2% for the first week. Or any part of it.
4% for the second week, or any part of it.
6% for the third week, or any part of it.
8% per week for the fourth week, or part of it, and for all succeeding weeks.
The fine shall be calculated on the total contract value.
1. The clause uses the word “fine”. Does that tell you with certainty what kind of clause you are looking at?
(Penalty clause or liquidated damages clause?)
YES NO
2. After how long a delay does the contractor lose 100% of the contract price?
…………weeks
3. Do you think this clause is a penalty clause or a liquidated damages clause?
PENALTY LIQUIDATED DAMAGES
4. If the applicable law is the law of the State of New York, would the judge enforce this clause?
YES NO
Case 3
Dead on Time
In preliminary talks, Vietnamese Steel Importing Co. agrees with All Metal Co. in Japan to import goods
from Tokyo and the goods should arrive in Vietnam on or before 13th August 20--. When the contract is
drafted, it mentions the date as agreed—13th, August 20--. Because the Vietnamese company asks for a CIF
contract under Incoterms 2020, the delivery terms are accordingly agreed in the contract as follows:
Delivery CIF, Saigon port, Incoterms 2020, on or before 13th August 20--.
Can the goods arrive in Vietnam on or before 13 th, August? Why or why not?
Case 4
Force Majeure
Verbena Jute Makes sacks, sackcloth, and other jute products. Its standard contract includes this definition of
a force majeure event:
If either party is prevented from; or delayed in, performing any duty under this Contract by an event
beyond his reasonable control, then this event shall be deemed force majeure.
Which of the following events are "force majeure" events under this definition?
(Note: the word "control" needs some thought. An event is beyond the control of the exporter if (a) he could
not have foreseen it, (b) if he could not have influenced it, and (c) if he could not have taken reasonable steps
to avoid the problems that were likely to arise.)
1. A Volcanic eruption buries the factory in ash.
YES QUESTIONABLE NO
2. The annual flooding of the River Verb ruins some of the jute intended for use in making sacks.
YES QUESTIONABLE NO
3. A ban is issued on the export of jute products by a newly elected government.
YES QUESTIONABLE NO
4. A ban is issued on the export of jute products by a government that has been preparing legislation on this
subject for five years.
YES QUESTIONABLE NO
5. The workforce at the factory go on strike.
YES QUESTIONABLE NO
6. The dock workers in Port Verbena go on strike.
YES QUESTIONABLE NO
7. A lockout (Background: The workers have been striking for one day a week. The management locks the
workers out of the factory until they agree to end the strikes.)
YES QUESTIONABLE NO
8. Shortage of supplies (Background: The exporter cannot get the raw jute he needs from the supplier
because of a shipping delay.)
YES QUESTIONABLE NO
9. Shortage of Supplies (Background: The exporter cannot get the raw jute he needs from the supplier
because the Central Bank will not give him foreign exchange to pay the supplier.)
YES QUESTIONABLE NO
10. A fire burns down the factory.
YES QUESTIONABLE NO
Bên mua không có quyền chấm dứt Hợp đồng Bán hàng này vì lý do chậm giao trừ khi Bên mua phải thông
báo trước 14 ngày bằng văn bản cho Bên bán về có ý định chấm dứt HĐ và Bên bán không thực hiện việc
giao hàng trong thời gian 14 ngày đó, và khoảng thời gian này sẽ chỉ được tính từ ngày giao hàng đã được
quy định hoặc tính từ ngày cuối cùng của thời gian gia hạn theo điều 7.2 miễn là việc thực hiện HĐ của Bên
bán bị ảnh hưởng bởi Bất khả kháng, thời gian này sẽ không được tính vào thời gian trì hoãn thực hiện
2. In the event of late Delivery for reasons other than Force Majeure as defined in Clause 17 below, the
SELLER shall pay as liquidated damages and not as a penalty the sum of 1% of the value of the undelivered
part per Day of late Delivery up to a maximum of 10% of the Contract Price. Payment of liquidated damages
shall be due without the BUYER having to furnish proof of any loss, damage or injury.
Trong trường hợp chậm giao do nguyên do không phải Bất khả kháng như được định nghĩa ở Điều 17 dưới
đây, Bên bán phải thanh toán một khoản tiền coi như là bồi thường thiệt hại ước tính, không phải là khoản
tiền phạt tổng 1% giá trị phần hàng chưa được giao trên số ngày chậm giao lên đến tối đa là 10% Giá trị Hợp
đồng. Thanh toán bồi thường thiệt hại ước tính phải được thực hiện ngay mà không được yêu cầu Bên mua
đưa ra bằng chứng về mất mát hay tổn thất hay hư hỏng nào của hàng hóa hay tổn thương về người.
2. Trường hợp không có hàng để bốc lên con tàu chỉ định đã sẵn sàng tại cảng xếp, thì cước khống sẽ do
người bán chịu trên cơ sở đòi bồi thường thực tế của người mua và người mua sẽ xuất trình những chứng từ
sau cho ngân hàng Việtcombank để nhận tiền bảo lãnh thực hiện hợp đồng (thời gian được tính là từ 20-25
ngày kể từ ngày mở L/C)
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
3. Trường hợp hàng hóa đã sẵn sàng để xếp lên tàu nhưng người mua không chỉ định được tàu để bốc hàng,
mọi rủi ro, thiệt hại, các chi phí liên quan đến hàng hoá sẽ do người mua chịu trên cơ sở đòi bồi thường thực
tế của người bán.
“If the Goods are ready but the vessel named by the Buyer fails to arrive on or before the agreed delivery
date, all risks, damages, costs related to the Goods shall be for Buyer’s account on the basis of actual
indemnification of the Seller
1. Packaging
- One primary duty of the exporter is to ship the goods in suitable packaging.
- According to Vienna Convention: Goods must be "adequate packaged". Goods do not conform to the
contract unless they are "contained or packaged in the manner usual for such goods"
Specimen clause:
“Goods are to be packed in new, strong, wooden cases suitable for long-distance ocean transport and are
to be well protected against dampness, shock, rust or rough handling. The Seller shall be liable for any
damage to or loss of the Goods attributable to improper or defective packaging”
- Some national laws require fumigation of all containers entering the country.
Một số luật quốc gia yêu cầu khử trùng tất cả các container nhập vào nước này
- Agriculture-based, developed economies place severe restrictions on packaging materials. Hay, straw and
rice husks are often forbidden; wooden packaging must often be fumigated.
Các nền kinh tế phát triển dựa vào nông nghiệp đặt ra những hạn chế nghiêm trọng đối với vật liệu đóng gói.
Cỏ khô, rơm rạ và trấu thường bị cấm; bao bì bằng gỗ thường phải được hun trùng.
2. Shipping Marks
Standardized colours indicating the nature of the goods:
- Common goods => Black, dark
- Dangerous goods => Red
- Poisonous goods => Orange
Particulars required to be stipulated:
- Package/ Case/ Box Number
- Name of Consigner/Consignee
- Net weight/Gross weight/Tare
- Contract/Order/Bill of Lading/Letter of Credit/ Invoice No
Specimen clause:
On the surface of each package delivered under this Contract the following particulars shall be marked: the
package number, the measurements of the package, gross weight, net weight, the lifting position, the letter of
credit number, the words RIGHT SIDE UP, HANDLE WITH CARE, KEEP DRY, and the mark: DNP/36/Q
3. Shipping documents
The principle:
- Shipping documents must be in ____________ ______________with the conditions of the letter of credit.
Otherwise, payment is denied.
- On Board Shipped B/L: The shipping company certifies that the cargo has been received on board the ship.
( là vận đơn được cấp sau khi hàng hóa đã thực sự được xếp lên tàu tại cảng bốc hàng. Trên vận đơn có ghi
rõ ngày tháng giao hàng và tên tàu chuyên chở hàng hóa.)
Common clauses:
Contents leaking
Packaging soiled by contents
Packaging broken / holed/torn / damaged
Packaging contaminated
Goods damaged/scratched
Goods chafed/torn/deformed
Packaging badly dented
Packaging damaged—contents exposed
Insufficient packaging
Notes: In accordance with UCP600, the following clauses do not make the Bill of Lading unclean:
Second-hand/reconditioned packaging materials used
Packaging repaired/mended/resewn/coopered
Unprotected, Unboxed
- To bearer B/L: the holder of the Original B/L is the consignee. (Là vận đơn không ghi tên người nhận
hàng, bất cứ ai cầm vận đơn này đều là chủ hàng và tất nhiên là có thể NHẬN HÀNG)
- Transshipment or Through B/L: It is used when the journey covers several modes of transport from the
place of starting to the place of destination. (Là vận đơn được sử dụng khi hàng hóa phải chuyển tải qua
một con tàu trung gian khác.
- Direct B/L: for transportation without transshipment. (Là vận đơn được cấp khi hàng hóa được vận chuyển
từ cảng đi đến cảng đích mà không phải chuyển tải)
- House B/L: issued by a freight forwarder. (vận đơn do Forwarder phát hành cho Shipper là người gửi hàng
thực tế (real shipper) và người nhận hàng thực tế (real consignee).
4.3 Insurance
Types of insurance documents:
- Insurance certificate
- Insurance policy
Types of Insurance policy:
- Tailor-made policy: bảo hiểm theo yêu cầu riêng
- Open Policy: bảo hiểm trọn gói
- Floating policy: bảo hiểm bao
- Unvalued policy: bảo hiểm không định giá
- Valued policy: bảo hiểm định giá
- Time policy: bảo hiểm định hạn
- Voyage Policy: bảo hiểm chuyến
Practice 1 Matching
1. Match the types of transportation documents and their definitions
1. Manifests A. It is issued by a trucking company for transporting goods by truck.
(Cargo &
Freight) F
2. Shipping notes B. - It is an evidence of a carriage contract by trains between the sender and the
E carrier.
- It serves as a receipt which is sent along with the consignment to the consignee.
3. Delivery orders C. - It is the receipt issued by the carrier in the acknowledgement of goods received
D on board (export cargo)
- It is subsequently exchanged for B/L.
5. Rail E. - It is issued by the shipper to the carrier requesting allocation of ship space. - It
Consignment is a shipper’s commitment to ship the goods and serves as the basis for preparation
Note B of B/L.
2. Received for B - This is usually drawn to the order of the shipper, consignee or bank.
shipment B/L G - It is negotiable as it can be endorsed in favour of another person
- It is commonly used in commercial deals.
3. Clean B/L A C - This means that the cargo is on board the vessel.
- It confirms to the buyer that the goods have actually been shipped.
4. Unclean/ D. It covers transportation on the same vessel from the port of loading to the port of
Claused B/L I destination.
5. Letter O of E. Issued by the forwarder to the shipper to certify the shipper’s obligations to carry
7. Bill of lading to G- This means that the shipping company confirms having received the goods for
order B shipment by the vessel mentioned in the B/L.
- It does not provide as good a guarantee as the "shipped on board B/L" to the
consignee.
9. Direct B/L D I. The carrier has some doubt on the condition of the goods and make reservation
on B/L in order to protect himself from any claim. (người vận chuyển có một số
nghi ngờ về tình trạng của hàng hóa và thực hiện bảo lưu trên B / L để bảo vệ
mình khỏi bất kỳ khiếu nại nào)
10. Through B/L J. Issued by the forwarder to the shipper of LCL used both in airfreight and sea
L
freight
11. Combined K. This is not commonly used in business transactions. A B/L can be to bearer
Transport B/L H if: - it is expressly stated so in the documents
- it is made out “to order” of a beneficiary without any mention of a consignee or
beneficiary.
12. House B/L J L. The separate stages would be performed by different carriers by a process of
trans-shipment,
Characteristics: it contains a clause giving the carrier the right to trans-ship the
cargo. It contains a statement that the cargo will be trans-shipped at a particular
port,
13. Charter Party N. - Name and address of the consignee are given so that the goods can be
B/L F delivered only to the named person.
- It is not commonly used in commercial deals.
14. Forwarder’s O. It is a shipper’s commitment to indemnify the carrier against all consequences
Certificate of arising out of the issue of a "claused bill of lading" in order to obtain a “Clean B/L”
Transport (FCT)
E
Practice 2 Use the words in the box to complete the clauses of a Bill of Lading below
(1) Delivery
authority, demand , disposal, entitled, handed, liability, regulation, store
Goods shall be deemed to be delivered when they have been 1 handed over or placed at the 2 disposal of the
Consignee or his agent in accordance with this FBL, or when the goods have been handed over to any 3
authority or other party to whom, pursuant to the law or 4 regulation applicable at the place of delivery, the
goods muss be handed over, or such other place at which the Freight Forwarder is 5 entitled to call upon the
Merchant to take delivery.
The Freight Forwarder shall also be, entitled to 6 store the goods at the sole risk of the Merchant, and the
Freight Forwarder's 7 liability shall cease, and the cost of such storage shall be paid, upon 8 demand, by the
Merchant to the Freight Forwarder.
Hàng hóa sẽ được coi là đã được giao khi chúng đã được bàn giao hoặc được sắp xếp theo yêu cầu của
Người nhận hàng hoặc đại lý của người đó theo FBL này, hoặc khi hàng hóa đã được giao cho bất kỳ cơ
quan có thẩm quyền hoặc bên nào khác, theo quy định của luật hoặc quy định áp dụng tại địa điểm giao
hàng, hàng hóa phải được bàn giao hoặc nơi khác mà tại đó Người giao nhận hàng hóa có quyền gọi
Người bán đến nhận hàng.
Người giao nhận hàng hóa cũng sẽ có quyền lưu trữ hàng hóa do Người bán chịu rủi ro duy nhất và
trách nhiệm của Người giao nhận hàng hóa sẽ chấm dứt, và chi phí lưu kho đó sẽ được Người bán trả
cho Người giao nhận hàng hóa theo yêu cầu.
(2) Limitation of Freight Forwarder's Liability
accepted, ad valorem , equivalent, gross, inclusive, liable, limit, nature
Subject to the provisions of subclauses 8.4. to 8.9 1 inclusive, the Freight Forwarder shall in no event be or
become 2 liable for any loss of or damage to the goods in an amount exceeding the 3 equivalent of 666.67
SDR per package or unit or 2 SDR per kilogramme of 4 gross weight of the goods lost or damaged,
whichever is the higher, unless the 5 nature and value of the goods shall have been declared by the
Consignor and 6 accepted by the Freight Forwarder before the goods have been taken in his charge, or the 7
ad valorem freight rate paid, and such value is stated in the FBL by him, then such declared value shall be
the 8 limit.
Chiếu theo các quy định của điều 8.4. đến 8.9 bao gồm 1, Người giao nhận vận tải trong mọi trường hợp
sẽ không phải chịu trách nhiệm 2 đối với bất kỳ mất mát hoặc hư hỏng nào đối với hàng hóa với số
lượng vượt quá 3 tương đương 666,67 SDR cho mỗi kiện hàng hoặc đơn vị hoặc 2 SDR cho mỗi kg của
4 tổng trọng lượng của hàng hóa bị mất mát hoặc hư hỏng, tùy theo giá trị nào cao hơn, trừ khi 5 tính
chất và giá trị của hàng hóa do Người gửi hàng khai báo và Người giao nhận vận tải chấp nhận 6 trước
khi hàng hóa được nhận chở, hoặc giá cước vận chuyển theo giá trị đã thanh toán, và giá trị đó được
Ngừi gửi hàng nêu trong FBL, thì giá trị được khai báo đó sẽ là giới hạn.
2. To ensure correct erection of the Contract Equipment, the loose accessories in packages shall be labeled in
English by the Seller, note clearly name of main equipment, accessories, marks and their position in
assembling drawing, enable the Buyer to identify the accessories, on the assembling drawing.
Để đảm bảo lắp dựng chính xác các thiết bị hợp đồng, những phụ kiện rời trong bao kiện sẽ được người
bán dán nhãn bằng Tiếng Anh, ghi rõ tên thiết bị chính, tên phụ kiện chính, mã hiệu và vị trí của chúng trong
bản vẽ lắp ráp để người mua dễ xác định những phụ kiện này trên bản vẽ lắp ráp
3. The responsibility of the Freight Forwarder for the goods under these conditions covers the period from
the time the Freight Forwarder has taken the goods in his charge to the time of their delivery.
Trách nhiệm của Bên Giao nhận hàng hóa theo những điều kiện này giới hạn từ thời gian Bên giao nhận
hàng đến thời gian nhận hàng
4. The Freight Forwarder shall be liable for loss of or damage to the goods as well as for delay in delivery if
the occurrence which caused the loss, damage or delay in delivery took place while the goods were in his
charge as defined in Clause 2.1, unless the Freight Forwarder proves that no fault or neglect of his own has
caused or contributed to such loss, damage or delay.
Bên Giao chịu trách nhiệm đối với tổn thất hay thiệt hại về hàng hóa cũng như việc chậm giao nếu việc
giao nhận gây ra tổn thất, thệt hại hay chậm giao diễn ra trong thời gian thuộc trách nhiệm của bên Guao nhận
như xác định tại điều 2.1, trừ khi bên Giao nhận chứng minh được rằng bản thân bên Giao nhận không có lỗi
hay sao lãng trong việc gây ra những tổn thất, thiệt hại hay chậm giao đó.
5. If the goods have not been delivered within ninety consecutive days following such date of delivery as
determined in Clause 6.3., the Merchant may, in the absence of evidence to the contrary, treat the goods as
lost.
Nếu hàng không được giao trong vòng 90 ngày liên tục kể từ ngày giao hàng như xác định trong điều
6.3, Bên gửi hàng có thể, trong trường hợp không có bằng chứng khác, xem là hàng hóa đã bị mất
2. Hàng hoá sẽ được đóng trong các bao bì tốt dể đảm bảo an toàn khi chuyên chở trên biển và đất liền và
đảm bảo lưu kho một năm tại hiện trường mà không bị han rỉ hay hư hỏng theo khuyến nghị của người bán.
Goods shall be packed in proper packaging to ensure safe transportation on sea and land and
guaranteed in a year storage at the site without rust or damage as recommended by the seller.
3. Trường hợp xảy ra tổn thất hay thiệt hại đối với hàng hóa trong một chặng chuyên chở cụ thể trong quá
trình vận tải đa phương thức, bên Giao nhận được giới hạn trách nhiệm đối với tổn thất hay thiệt hại đó theo
quy định của hiệp ước hay luật quốc gia thẩm quyền.
In the event of loss or damage to the Goods during a particular carriage during the course of
multimodal transport, the Freight Forwarder shall be liable for the limitation of liability for such loss or
damage in accordance with the provisions of this Agreement or law of authority country.
4. Trừ khi Bên Gửi Hàng đã công bố bản chất và trị giá hàng gửi và được qui định trên vận đơn này, và cước
phí đã chi trả, thì trách nhiệm của bên Giao nhận, khi áp dụng, sẽ không vượt quá US$500 một kiện hoặc,
trường hợp hàng không gửi theo kiện, tính theo đơn vị cước phí tập quán.
Unless the nature and value of the consignment shall have been declared by the Shipper and specified in
this bill of lading, and the freight has been paid, the Freight Forwarder's liability, where applicable, shall
not exceed US$500 per parkage or, in the case of goods not sent in packages, in customary freight units.
5. Nếu Bên Giao nhận chịu trách nhiệm về thiệt hại sau khi hàng chậm giao, hoặc về các thiệt hại hay tổn
thất phát sinh, không phải là những tổn thất hay thiệt hại đối với hàng hóa, trách nhiệm của Bên Giao nhận sẽ
giới hạn ở khoản tiền không vượt quá mức gấp hai lần cước phí theo hợp đồng vận chuyển đa phương thức
cho việc vận tải đa phương thức theo vận đơn này.
If the Forwarder is liable for damage due to delay in delivery, or for any consequential damage or loss,
other than loss or damage to the Goods, the Forwarder's liability shall be limited in an amount not to
exceed twice the freight under the multimodal transport contract for the multimodal transport under this
bill of lading.
Unit 19 INCOTERMS 2020
1. Transfer of risk and cost
Term Transfer of risk Transfer of cost Method of Type of Notes
type transport cargo
EXW When goods are When goods are Any/ multi – any Domestic use, when
placed at seller’s placed at seller’s modals seller is unfamiliar to
premises or at premises or at export
another named another named place
place
FCA When goods are When goods are Any/ multi - Containeri
deliver to first deliver to first modals zed
carrier carrier
CIP When goods are At named place of Any/ multi - Containeri When buyer wants
deliver to first destination modals zed seller to obtain
carrier insurance
DAP When goods are When goods are Any/ multi - Any
placed on the placed on the modals
arriving means of arriving means of
transport of transport of
destination destination
DPU When goods are When goods are Any/ multi - Containeri
placed at disposal placed at disposal of modals zed
of buyer at a buyer at a named
named terminal of terminal of
destination. destination.
UNLOADED UNLOADED
DDP When goods are When goods are Any/ multi - any Seller is liable for
placed on the placed on the modals import Clearance
arriving means of arriving means of
transport of transport of
destination destination
FOB When goods are When goods are Sea inland Bulk
placed on board at placed on board at water way Cargo
named port of named port of
shipment shipment
10. CFR When goods are At named port of Sea inland Bulk Points of transfer of
placed on board at destination water way Cargo risk and cost are
named port of different
shipment
11. CIF When goods are At named port of Sea inland Bulk Points of transfer of
placed on board at destination water way Cargo risk and cost are
named port of different, when buyer
shipment wants seller to obtain
insurance
17
2. Allocation of costs
Term Carriage Loading Main Unloading Insurance Export Import
type contract cost carriag cost at clearance clearance
at origin e/ destination
freight
+Buyer: if
named is not
seller’s
premises
18
3. The uses of each group
Notification of delivery:
- The buyer should notify the seller of the time and place of delivery, the weight or quantity (in case of
tolerance at buyer’s option) in a timely manner in order to facilitate the process of delivery by the seller.
- If tolerance is at the seller’s option, notification of weight or quantity to the buyer is essential so that the
buyer can arrange proper insurance in a timely manner.
- Người mua nên thông báo cho người bán về thời gian và địa điểm giao hàng, trọng lượng hoặc số
lượng (trong trường hợp dung sai theo lựa chọn của người mua) một cách kịp thời để tạo điều kiện thuận
lợi cho quá trình giao hàng của người bán.
- Nếu dung sai là tùy chọn của người bán, thông báo về trọng lượng hoặc số lượng cho người mua là cần
thiết để người mua có thể thu xếp bảo hiểm thích hợp một cách kịp thời.
Practice 1. Complete the table below by inserting the party (Seller or Buyer)
GROUP Pre Terminal Export Main Terminal Import On
carriage handling clearance Carriage handling clearance carriage
charge charge
(THC) at (THC) at
origin destination
Practice 2. Read the followings and choose the best answer in accordance with Incoterms 2020
1. Incoterms 2020 is _____________issued by ICC for interpretation of most commonly used trade
terms in foreign trade.
A. legal stipulations, which must be applied in a sale contract.
B. a set of rules, which is an optional use by parties to a sale contract.
C. a set of legal standard stipulations.
D. all are wrong
2. The purpose of Incoterms is to __________________
A. make clear about the responsibilities of sellers and buyers, transfer of risk and cost of the goods from
sellers to buyers.
B. help the parties to a sale contract to avoid unnecessary conflicts, disputes, litigations during their contract
performance.
C. A&B are wrong.
D. A&B are correct.
3. Incoterms can be applied in_________________
A. international contracts only
B. domestic contracts only
C. both international and domestic contracts
D. all are wrong
4. Incoterms does not cover the transaction of…
A. invisible goods
B. software
C. technology transfer
D. All of these
5. Incoterms does not refer to the obligations of the parties in_________________
A. making delivery of the goods.
B. packing and marking
C. transfer of ownership
D. obtaining insurance
6. In terms of means of transportation, Incoterms is divided into_____________
A. 5 groups
B. 4 groups
C. 3 groups
D. 2 groups
7. In terms of liabilities for risks and costs, Incoterms 2020 is divided
into___________
A. 5 groups
B. 4 groups
C. 3 groups
D. 2 groups
8. If the seller supplies the goods under D group, he should stipulate the clauses of Force Majeure or
total liabilities to exempt him from liabilities for damage, loss or compensation caused by the events
beyond his control.
A. True
B. False
9. If a buyer purchases the goods under EXW, he should incorporate the clause of termination of
contract in case he cannot clear the goods for export in the seller’s country.
A. True
B. False
10. In the event of buying the goods under E, F groups, in order to make the goods safe in transit, a
buyer should add more obligations of the seller in packing and marking for the goods in conformity
with the types of the vehicles or vessels he arranges.
A. True
B. False
11. If contracts are concluded under CFR or CPT terms, sellers should stipulate expressly the types of
the means of transportation to avoid any damage or loss of the goods in transit.
A. True
B. False
12. If contracts are concluded under CIP or CIF terms, unless otherwise stated by buyers, seller’s
obligation is to obtain insurance for the goods under ____________
A. clause A
B. clause B
C. clause C
D. clause D
13. If contracts are concluded under CIP or CIF terms, buyers should stipulate expressly the insurance
clause, such as name of insurer, types of cover… to protect his rights.
A. True
B. False
14. If a contract is concluded under C terms, it is considered as _____________
A. a shipment contract
B. an arrival contract
C. a destination contract
D. None of these
15. Which of the following stipulations is (are) incorrect?
A. Delivery shall be made C&F Incoterms 2020
B. Price is understood CIF landed, Incoterms 2020.
C. Delivery shall be made FOB under the tackle, Incoterms 2020.
D. All of these.
16. Which of the following stipulations is correct?
A. Delivery shall be made FOB stowed, Incoterms 2020.
B. Delivery shall be made DAT Hongkong port, subject to Incoterms 2020.
C. Delivery shall be made FOB, Khanh Hoi port, subject to Incoterms.
D. Delivery shall be made CNF, Thu Duc Terminal, Hochiminh City, Incoterms.
Practice 3. Read the usage of 11 Rules in Incoterms 2020 and decide if the following statements are
True or False
EXW
1) It is more suitable for domestic use. T
2) Under EXW rule, the Seller’s liability is the maximum. F
3) Seller is responsible for loading goods onto a collecting vehicle. F
4) Export Clearance fees are for Seller’s account F
5) If Seller is unfamiliar to exporting business, it is advisable not to use EXW Rule. F
6) Risk to and cost of the goods will pass from seller to buyer when goods are placed at the disposal of the
Buyer at the agreed point. T
7) Under this rule, goods can be transported by any mode. T
FCA
1) Loading cost at origin is for seller’s liability and account. T/F
2) Export clearance is for Buyer’s account F
3) Buyer is responsible for main carriage T
4) In any case, delivery is deemed to have been complete when goods are loaded onto the arriving vehicle. T
5. Seller is obliged to give notice to the buyer when delivery is completed. T
6) If the carrier does not take delivery, the Buyer bears all risks of loss of or damage to the goods. T
7) This rule can be used for all modes of transport. T
CPT
1) Under this rule, the seller fulfils its obligation to deliver when when the goods reach the place of
destination. F
2) Under this rule, risk passes and costs are transferred at the same place. F
3) CPT requires the Seller to arrange transportation. T
4) This rule is used irrespective of modes of transport. T
5. The cost of loading at origin is for the Buyer’s account. F
6. The cost of unloading at destination is for the Seller’s account F/T
7. CPT is often used with Combined Bill of Lading. T
CIP
1) CIP is the same as CPT in nature except under CIP, the Seller has an obligation to obtain insurance for the
Buyer. T
2) Under this rule, if the buyer does not wish to have more insurance protection, seller is required to obtain
insurance only on minimum cover, i.e Clause A T
3) The insurance shall cover the price provided in the contract plus 10% (i.e., 110%) and shall be in the
currency of the contract. T
4. The Seller is advised to supply the goods under this rule because he will find no risk of the carrier’s failure
to take delivery of the goods. T
DPU
1) "Terminal" includes any place, whether covered or not, such as a quay, warehouse, container yard or road,
rail or air cargo terminal. T
2) Unloading cost at terminal is for the Seller’s account. T
3. Delivery is completed only when the goods have been unloaded from the arriving means of transport and
have been placed the disposal of the buyer at the named terminal. T
4. DAT is used for transportation by sea only. F
DAP
1) Unloading cost at the named place of destination is for seller’s account. F
2) If a contract of carriage requires the seller to bear unloading cost at destination, the seller is not entitled to
recover such costs from the buyer unless otherwise agreed between the parties. T
3) DAP requires the Seller to pay import duties. F
4) Under this rule, the seller is responsible for contracting for the carriage of the goods to the named place of
destination. T
DDP
1) DDP represents the maximum obligation for the seller. T
2) DDP is the only rule in Incoterms 2020 which requires the Seller to make import clearance for the goods. T
3) If the parties wish the buyer to bear all risks and costs of import clearance, the DAP rule should be used. F
4) The Seller is obliged to the Buyer to make an insurance contract. F
5. This rule is used only when the buyer is unfamiliar to import business. T
FAS
1) FAS means that the seller delivers when the goods are placed alongside any mode of transportation. F
2) This rule should be used only for bulk commodity, not for containerized goods. T
3) Under this rule, the Buyer is obliged to contract for carriage of the goods F
4) The cost of loading at origin is for the Seller’s account. F
5. The buyer must give the seller sufficient notice of the particulars of the vessel within the agreed time. T
FOB
1) Under this rule, delivery is complete when the seller has delivered the goods by placing them on board the
vessel nominated by the buyer at the loading point. T
2) FOB should be used only for containerized goods only. F
3) The trimming and stowage costs on the vessel at the port of shipment are for the Seller’s account. F
4) If the vessel nominated by the buyer fails to arrive on time and is unable to take the goods, any additional
costs arising therefrom shall be for the Buyer’s account. T
5. The buyer must give the seller sufficient notice of the vessel name, loading point and, where necessary,
the selected delivery time within the agreed period. T
CFR
1) The point of delivery under CFR is the same as FOB. T
2) Under this rule, Risk and costs are transferred from the seller to the buyer at destination. F
3) If the goods are containerized, it is not advisable for the parties to use this rule. T
CIF
1) CIF and CFR are of the same nature except that under CIF rule, the Seller is obliged to the buyer to make
an insurance contract. T
2) Under this rule, the Buyer should demand that insurance shall be contracted with underwriters or an
insurance company of good repute. T
Differences:
FOB FCA
2 Point of cost When goods are placed on When goods are loaded onto the
transfer board the vessel at the port of vehicle nominated by a buyer
shipment
3 Point of risk When goods are placed on When goods are delivered onto the
transfer board the vessel at the port of first carrier
shipment
Practice 5. Write down the correct rules for the definitions below, subject to Incoterms 2020
1. The seller is responsible for all costs associated with delivering the goods, excluding import duties, to the
named point or place of destination at the country of importation. Risks transfer from the seller to the buyer
when goods are placed on the arriving means of transport at the buyer’s country. DAP
2. The seller delivers the goods, export cleared, close to the side a vessel, and does not bear risk or costs once
the goods have been handed over. FAS
3. The seller is responsible for contracting and paying for main carriage, insurance excluded, and risk of loss
or damage to the goods once will pass to the buyer when the goods are shipped to the first carrier. CPT
4. The seller is responsible for all costs and risks associated with delivering the goods to the wharf at the
named port of destination. DDP
5. The seller is responsible for main carriage by sea, insurance excluded, but not responsible for additional
costs or risk of loss or damage to the goods once they have been delivered on board the vessel at the port of
shipment. CFR
6. A seller is responsible for export clearance, obtaining insurance for his buyer, contracting for main
carriage and paying associated costs for bringing the goods to a named place at buyer’s country. Risk
transfers to the buyer when goods are delivered to the first carrier. CIP
7. A seller is responsible to make export and import clearance, contract for main carriage and pay all
associated costs for bringing the goods to a named placed at the buyer’s country. DDP
8. A buyer is responsible contract for main carriage, make import and export clearance, bear all risks once
the goods are available for loading onto a vehicle at his seller’s premises. EXW
9. A seller is responsible to make delivery at a named container yard in his country. Risks and costs transfer
from the seller to his buyer when the goods are delivered to the first carrier nominated by the buyer. FCA
10. A seller is responsible to deliver the bulk goods on board the vessel at the port of shipment, pay
insurance and main carriage for bringing the goods to the port of discharge. CIF
Practice 6. Specify the obligations of the party (Seller/Buyer or No party) under Incoterms 2020 to pay
for the costs of the rules below: (The first row has been done as example)
Obligations \ RULE FCA CIP DAP FOB
Practice7. Choose the appropriate rule under Incoterms 2020 used in the following transactions
- Exporter: in HCM City, Vietnam
- Importer: in Osaka, Japan
- Commodity: Rice
- Quantity: 10,000 MT
- Destination: Osaka, Japan.
Select the most suitable term under Incoterms 2020 in the following cases:
Case 1:
- Seller is responsible for export clearance, arranging transportation methods, payment for main carriage,
insurance.
- Point of delivery: when the goods are delivered to the first carrier in Vietnam.
Your answer: CIP Osaka, Japan
Case 2:
- Seller is responsible for export clearance, arranging transportation methods, payment for main carriage,
insurance.
- Point of delivery: when the goods are available on the arriving means of transport at destination.
Your answer: DAP Osaka, Japan
Case 3:
- Seller is responsible for export clearance, arranging the vessel on behalf of the buyer.
- Buyer pays main carriage at destination, and insurance.
- Point of delivery: when the goods are placed on board the vessel at Saigon port.
Your answer: FOB Saigon port
3. When the goods are delivered to the carrier at the port of Saigon, is the title (onwership) to the goods
transferred from the seller to the buyer at this point? Why or why not?
Your answer: not yet. It is transferred to the buyer when the buyer receives the shipping documents from the
bank
1. What is the point of risk transfer from the seller to the buyer?
Your answer: when the goods are placed on board the vessel of South Lusiana, USA
3. Which party is responsible for obtaining insurance? And under which clause?
Your answer: the seller, under Clause A (unless otherwise stipulated in the contract
4. Who is insured?
Your answer: the buyer
5. Which party is responsible for claiming for insurance if loss or damage to the goods arises in transit?
Your answer: the buyer