Chapter 2 International Trade Terms
III. Explain the following terms 1. shipment contract
Shipment contract is a contract using an Incoterm which indicates that the delivery happens at the time or before the time of shipment.
2. symbolic delivery
Symbolic delivery is a delivery situation in which when the seller delivers the buyer does not physically receive the goods. This kind of delivery is proved by the submission of transport document by the seller to the buyer.
3. arrival contract
Arrival contract means a contract using an Incoterm which indicates that the delivery happens when the goods arrive at the destination.
4. actual delivery
Actual delivery refers to a delivery situation in which when the seller delivers the buyer does physically receive the goods.
IV. Short questions
1. Who pays for loading for shipment under FOB ? The seller.
2. Who pays for unloading under CIF? The buyer.
3. Compare and contrast FOB, CFR and CIF?
Similarities: a. The seller's risk will be transferred to the buyer when the goods are loaded on board, b. The seller is responsible for export customs formalities while the buyer is responsible for import customs formalities, c. The buyer is responsible
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for unloading the goods at the port of destination, d. All three terms can only be used for waterway transportation.
Differences: a. FOB requires the buyer to arrange and pay for the ocean transportation; CFR requires the seller to arrange and pay for the ocean transportation; CIF requires the seller to arrange and pay for the ocean transportation and insurance against the buyer's risk.
4. What are the two types of trade terms concerning the transfer of risks? Shipment contract terms vs. arrival contract terms. Under shipment contract terms the seller's risk will be transferred to the buyer before the goods depart from the place/port of shipment. Under arrival contract terms the seller will bear the risk of the goods until the goods arrive at the destination.
5. What are the differences and similarities between CPT and CFR?
Major similarities: a. The seller should contract and pay for the major carriage. b. The seller is not taking the risk of loss of or damage to the goods during the transportation.
Difference: a. CPT is applicable to any kind of transportation mode while CFR is only used for waterway transport, b. Under CPT the seller's risk will be transferred to the buyer when the goods are handed over to the first carrier nominated by the seller. Under CFR the seller's risk will be transferred when the goods are loaded on board the vessel.
6. What are the differences and similarities between CIP and CIF?
Major similarities: a. The seller should contract and pay for the major carriage. b. The seller is not taking the risk of loss of or damage to the goods during the transportation, c. The seller must obtain insurance against the buyer's risk. Difference: a. CPT is applicable to any kind of transportation mode while CFR is only used for seaway or inland waterway transport, b. Under CPT the seller's risk will be transferred to the buyer when the goods are handed over to the first carrier
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nominated by the seller. Under CFR the seller's risk will be transferred when the goods are loaded on board the vessel.
7. If you trade with an American, is the sales contract subject to Incoterms without any doubt? What should you do?
No. The Revised American Foreign Trade Definitions 1941 is still in use,
especially in the North American area. It has different interpretation about some trade terms. The traders should clarify the choice of rules before any further discussion.
FOB, CFR & CIF.
9. Who is responsible for carrying out customs formalities for exports under an FOB contract?
The seller. According to Incoterms 2010, except EXW and DDP these two terms, all the other eleven terms require the seller to handle the export customs formalities, while the buyer the import customs formalities.
10. If a Chinese trader signs an FOB contract, is he exporting or importing? Importing. FOB should be used with a \ is the port of shipment, from the Chinese trader's perspective, he is importing.
V. Case studies
1. An FOB contract stipulated \When the goods were ready on 10 March , the seller contacted the buyer for
shipment details. The buyer faxed \21 March. The vessel will depart on 22 March.\accordingly. However the nominated vessel did not turn up and the goods had to be stored in the warehouse at the port. On the night of 21 March a fire happened in the warehouse area and part of the goods was damaged. When the vessel arrived two days later the seller and the buyer had an argument about the settlement of the loss. The seller required the buyer to bear the loss caused by the fire, but the buyer believed that the vessel arrived within the shipment period and the loss occurred
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before the seller delivered the goods therefore the seller should bear the loss. Please provide your solution.
析：1)首先案例中提到货物发生了损失是由于货物存放在码头仓库期间发生火灾造成的。2)卖方之所以会把货物存放在码头仓库是因为买方指定的船只在约定时间没有出现。3)Incoterms 2010有规定，买方有向卖方提供准确、及时的装船通知的义务，如果买方没有履行该义务而导致了货物受损，即使双方没有完成交货，买方也要承担相关损失。
答案：买方应该承担损失。
答题切入点：1)分析货物受损原因。2)根据《20xx年国际贸易术语解释通则》买方在提供装运通知方面的义务。3)解释提供装运通知与完成交货风险转移之间的关系。
析：1)货物在装运港已经“officially certified as Grade One'’，这就说明货物的质量是合格的，而且是经官方确认的。2)文中提到“due to long voyage\这说明货物变质的原因是由于运输时间长。
答案：No。
答题切入点：a．货物变质的原因．b．CFR术语下风险转移的情况。 3. Under a CIF contract, the goods had been loaded on board the vessel
according to the terms of the contract. Then the vessel departed. An hour later, the vessel struck a rock and sank. The next day the seller's bank presented the shipping documents, insurance policy and invoices to the buyer, and demanded payment.
(1) Knowing that he will not receive the goods, should the buyer pay? (2) Which party would have to take the loss?
析：本题的关键疑问在于买方明知货物已全部损失，不可能再收到货物，是否还应支付货款。这是考察对“symbolic delivery”这个概念的理解。在CIF术语下，卖方交货时买方并没有真正收到货物，卖方的交货是通过货交承运人并获得相关单据(尤其是物权凭证)来实现的。而相应的，买方必须接受交货，也就是买方必须接受卖方提供的相应单据并履行相关支付的义务。
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