Teh Chi Sheng

2072021070069

BIB

1. Describe the terms of international sale contract with suitable examples.

 EXW – Ex Works
‘Ex Works’ signifies that the seller delivers when the customer may pick up the products at
the seller's location or another specified location such as works, factory, warehouse, etc.
When export clearance is necessary, the seller is not required to put the products into any
collection vehicles or to have them approved for export.

 FCA – Free Carrier

‘Free Carrier’ refers to the delivery of the products by the seller to the carrier or another
individual chosen by the customer at the seller or another location. The point inside the
stated delivery region should be specified by the parties as precisely as possible since it is
the point at which the buyer assumes the risk.

 CPT – Carriage Paid to

‘Carriage Paid to’ means that the seller must contract for and cover the costs of carriage
required to bring the goods to the specified place of destination. The seller must deliver the
goods to the carrier or another person designated by the seller at an agreed site if any such
site is agreed upon between the parties.

 CIP – Carriage and Insurance Paid to

‘Carriage and Insurance Paid’ means that the seller must contract for and cover the costs of
carriage necessary to bring the goods to the designated place of destination. The seller must
deliver the goods to the carrier or another person assigned by the seller at an agreed site (if
any such site is agreed upon between the parties). The seller also agrees to insurance
coverage against the risk of the buyer losing or damaging the items during transportation.
The buyer should know that just minimal cover insurance is necessary by CIP for the vendor
to obtain. The buyer must agree with the seller or make alternative insurance arrangements
if they want extra coverage.

 DAT – Delivered at Terminal

When products are ‘delivered at the terminal’, they are placed at the buyer's disposal at a
specified terminal at the specified port or destination after being unloaded from the incoming
transportation. Whether it is protected, a wharf, warehouse, container yard, or a road, rail, or
air freight terminal is considered a terminal. The seller assumes all risks associated with
transporting the products to and unloading them at the airport at the specified port or
destination.

 DAP – Delivered at Place

‘Delivered at Place’ means that the seller delivers when the goods are placed at the buyer's
disposal on the arriving means of transport, ready for unloading at the named destination.
The seller bears all risks in bringing the goods to the designated place.

 DDP – Delivered Duty Paid

‘Delivered Duty Paid’ means that the seller delivers the goods when the goods are placed at
the buyer's disposal, cleared for import on the arriving means of transport ready for
unloading at the named destination. The seller bears all the costs and risks involved in
bringing the goods to the destination and should clear the goods not only for export but also
for import, pay any duty for both export and import, and carry out all customs formalities.

 FAS – Free Alongside Ship

‘Free Alongside Ship’ means that the seller will deliver the products when positioned next to
the ship at the designated shipping port, for example, on a quay. The risk of loss or damage
passes when the items are alongside the ship, and the buyer is responsible for all costs
moving forward.

 FOB – Free On Board

‘Free On Board’ refers to the delivery of the products by the seller to the buyer's designated
vessel at the designated port of shipment or the acquisition of already-delivered items. When
things are on board the ship, the risk of loss or damage passes, and the buyer is responsible
for all costs moving forward.

 CFR – Cost and Freight

‘Cost and Freight’ refer to the seller's delivery of the products to the ship or the acquisition of
already-delivered items. Once the commodities are aboard the ship, the danger of losing or
damaging them passes. The cost and freight to deliver the products to the specified
destination port should be contracted for and paid for by the seller.
  CIF – Cost, Insurance and Freight
‘Cost, Insurance and Freight’ means that the vendor arranges for the products to be
previously delivered or does the deliveries themselves. Once the commodities are aboard
the ship, the danger of losing or damaging them passes. The cost and freight to deliver the
products to the specified destination port should be contracted for and paid for by the seller.
The seller also agrees to insurance coverage against the risk of the buyer losing or
damaging the items during transportation. The buyer should be aware that under CIF, only
minimum cover insurance is required from the supplier. The buyer must agree with the seller
or make alternative insurance arrangements if they want extra coverage.
2. Explain the purpose and application of INCOTERMS in the international sale of
goods.

The goal of INCOTERMS is to offer a set of global guidelines for understanding the most
frequently used trade terms in international trade. As a result, it is possible to eliminate or, at
the very least, significantly decrease the ambiguities associated with different meanings of
these terms in other nations. The many trading parties in each party's country are frequently
unknown to the parties to a transaction. This may lead to miscommunication, disagreements,
and litigation, with all the time and money, lost that this implies. A set of international
guidelines for interpreting commercial terminology was initially established in 1936 by the
world chamber of commerce to address these issues. They were referred to as
"INCOTERMS 1936." INCOTERMS later made amendments and additions in 1953, 1976,
1980, 1990, 2000 and 2010 to align the rules with current international trade parties.

International commercial terminology, or INCOTERMS, have historically been mainly

used when items are sold for delivery across international borders. However, in actuality,
INCOTERMS are occasionally also included in contracts for selling goods in just domestic
markets. The most significant contractual responsibilities and conditions are agreed upon
using INCOTERMS for international commerce. This covers transportation, import, and
export of products. The INCOTERMS provide the terms of the transport contract, insurance
for the transportation of goods, location of delivery and risk transfer, informational
responsibilities, and more.

In other words, INCOTERMS are a solution to the issue in international trade when
parties from various nations may have diverse interpretations of transport agreements. The
INCOTERMS has changed seven times since INCOTERMS initially noted this in 1936. They
are revised or modified every ten years to account for changing conditions. INCOTERMS
2020 are presently the most recent regulations. For instance, Which INCOTERMS you use
is up to you as the vendor. Select your INCOTERMS and list them on your business invoice
along with your HS codes if you are shipping goods outside of the EU. It is crucial to include
them in your terms and conditions as well. If your consumers are in charge of paying
something, such as customs fees, you must let them know. Recognize that average
customers won't understand the meaning of each INCOTERMS. Keep in mind that not all
carriers will accept all of your INCOTERMS. Therefore, be sure to confirm this with the
airline before shipping overseas.