country and the debtor country in switch trade.
21. All international business transactions are done under Incoterms 2000.
22. Trade terms can be called price terms because they stand for the price component. 23. EXW in Incoterms 2000 is the trade term under which the obligations and costs borne by and risks of the seller are minimum.
24. Under FCA in Incoterms 2000, the risk of loss of or damage to the goods is transferred from the seller to the buyer at the time the buyer accepts the goods. 25. Generally speaking, under FOB in Incoterms 2000, it is the seller’s responsibility to apply for the export license and pay the export duty.
26. Under FOB San Francisco, San Francisco is the port of destination. 27. Under CIF, cargo insurance is to be effected by the buyer.
28. The buyer has more responsibilities, costs and risks when using FOB than using CIF.
29. The “D”-terms mean arrival contracts, while the “C”-terms evidence departure (shipment) contracts.
30. The DDP should not be used if the seller is unable to obtain import license directly or indirectly.
31. Different commodities have different qualities, but the same commodity must have the same quality.
32. A term for defining one particular degree of quality in one country may have quite a different meaning in another country.
33. Whether sale by buyer’s sample or by seller’s sample, the quality of the commodities should be strictly same as sample. Otherwise, it should be stipulated in the contract clearly.
34. The grade of the same product is always the same in different countries.
35. Different ways of measurement such as by weight, by length, by area, by volume and by capacity may be used for different products.
36. In reality, the quantity of goods shipped must be exactly the same with that stipulated in the contract.
37. Packing can only serve as a form of protection.
38. Packing should be designed according to the need of the cargo.
39. Generally speaking, more packing is required for containerized consignments. 40. Bulk cargoes require little packing.
41. Sea transport is the most important mode of transport in international trade now. 42. The freight of liners is relatively fixed, while the freight of tramps is mainly determined by the market.
43. Multimodal transport means the goods are carried by at least two modes of transport under at least two multimodal transport operators.
44. Time of shipment in a contract can only be a fixed period of time.
45. If optional ports of destination are stipulated in the contract, the extra freight due to selecting port of destination must be paid by the importer.
46. The notice of shipment under CFR is very important, because the buyer will take out insurance upon receipt of the notice.
47. Partial shipment means that the goods under one contract are shipped in different
terms or by different lots.
48. In case it was stipulated in the contract that “shipment is made during July and August”, one lot the goods must be shipped in July while another in August.
49. If there is no direct sail to the destination, that “transshipment shall be allowed” shall be stipulated in the contract.
50. Transshipment may increase the cost of shipment and the possibility of delay in delivery of commodities.
51. Cargo transport insurance is to protect the interests of traders from any possible financial losses.
52. The premium charged for the insurance policy is calculated according to the risks involved.
53. Two types of risks are covered by ocean marine insurance under CIC: perils of the sea and extraneous risks.
54. WPA is a wider cover than FPA.
55. In international trade, if All Risks was covered, any loss caused by any reason on the way can be compensated by insurance company. 56. The additional coverage can be taken out separately.
57. The insurance coverage of ICC (A), ICC (B), ICC (C) is roughly the same as that of FPA, WPA, All Risks under CIC respectively.
58. It is the best way to choose a large insurance coverage. 59. Land Transportation Risk is almost equivalent to WPA.
60. When a number of consignments of similar export goods are intended to be covered, open policy is a better method.
61. A unit price consists of four parts: currency unit, unit price figure, measuring unit and price terms.
62. Both money of account and money of payment must be stipulated in the contract clearly.
63. The fluctuations of exchange rates may influence the interests of both exporter and importer.
64. Generally, the price of a foreign exchange is expressed in another currency.
65. Generally speaking, the exporter likes to use hard currency as payment currency. 66. Commission refers to service fees, while discount is a certain percent of price reduction.
67. Commission and discount must be stipulated in the price clause in a contract.
68. According to whether the price includes commission or not, the price can be divided into net price and commission-included price.
69. Discount is usually used as a means of promoting and expanding sales.
70. “USD200 per M/T CIFC2 London” means that the seller will receive 200 US dollars for per metric ton.
71. There are three parties involved in a draft, while two parties in a promissory note. 72. Remittance involves four parties together.
73. An L/C is a conditional bank undertaking of payment, and refers to banker’s credit.
74. An L/C is an irrevocable one if it does not stipulate whether it is irrevocable or
revocable in it according to UCP 600.
75. The seller prefers a confirmed L/C to an unconfirmed L/C.
76. The payee and the drawer of a draft used in international trade must be the same person, that is, exporter.
77. A check can be seen as a special draft.
78. Under the terms of D/A, it is the bank in exporter’s country who makes acceptance to the draft and delivers documents to the importer.
79. As to the seller, the risk of D/A 60 days after sight is greater than D/P 60 days after sight.
80. In the case of D/P, documents will not be released to the importer until payment is made.
81. The agency to inspect the commodities in international trade must be decided by the seller and the buyer.
82. When EXW or DDP is used, the commodity is generally inspected in the exporting country.
83. All export commodities should be inspected by commodity inspection bureaus. 84. Landed quality and weight means that the inspection carried out at the port of destination will be final.
85. For one contract, the same method of inspection should be used for inspection and reinspection to avoid disputes.
86. Once the payment of penalty is made, the contract is no longer to be performed. 87. In international commodity sales contract, penalty and compensation for the losses is the same thing.
88. The seller should bear the loss cause by force majeure.
89. Arbitration is the best way to solve problems in international trade.
90. The arbitral award once made is the final decision and has the force of law.
91. Generally speaking, it is necessary for the buyer to clearly specify a period of validity of the L/C when applying for the opening of L/C.
92. The issuing bank should be located in the importer’s country, while the advising bank should be located in exporter’s country.
93. The buyer will inform the seller the opening of L/C and pass the L/C to the seller. 94. The L/C should arrive at the seller several days before the time of shipment. 95. It is only the exporter that should examine the L/C. 96. All the discrepancies in an L/C should be amended.
97. The L/C can be amended directly by applicant and be transferred to the beneficiary.
98. If the exporter does not return the unacceptable amendment notification to advising bank within 3 says after he receives it, it will be thought that he has agreed with the amendment.
99. When there are more than two changes in L/C amendment, the beneficiary can only accept all or refuse all.
100. The amendments should be announced one by one for several times.
101. Inspection by manufacturer himself and the certificates of inspection issued by him are usually required in the sales contract.
102. Goods shall be first meet the standards stipulated in laws and regulations when the inspection standards are specified by laws or regulations.
103. There is no need to inspect the goods which do not need legal inspection. 104. The export goods shall be inspected after shipment.
105. If the inspection certificates are overdue, the goods need to be reinspected. 106. The commodity inspection authorities shall go through the procedures for inspection and issue a certificate without delaying shipment.
107. Import commodity subject to legal inspection can not be marketed or used before being inspected.
108. Sometimes, the inspection certificates are necessary for claiming compensation.
109. In China, State Administration of Import and Export Commodity Inspection is in charge of the inspection of import and export commodities throughout the country.
110. In practice, for 0.5% of weight difference in inspection results at ports of shipment and destination, inspection result at the port of shipment can be considered final or the difference can be divided between the buyer and the seller. 111. Trading companies can arrange shipment by themselves or through freight forwarding agents.
112. The freight forwarding agent usually levies a service fee based on a percentage of the freight charge for income.
113. Freight rates can be influenced by such factors as mode of transport, origin and destination of the cargo, and nature of good and packing.
114. One weight ton is equal to one cubic meter, while one measurement ton to one metric ton.
115. W/M plus Ad Val means that the highest of them will be collected when freight is calculated.
116. The air freight includes charges such as customs fees and storage fees. 117. Lay time in the contract is the same thing as shipment time.
118. Consignment note is used not only for road or rail transport, but also for multimodal transport.
119. Bill of lading represents the title to the goods and needs to be handled carefully.
120. The consignee can take delivery of the goods by using originals of B/L or copies of B/L signed by the carrier.
121. It should be the exporter’s obligation to take out insurance on minimum cover under CIF or CIP.
122. Although the insurance has been taken out by the exporter, sometimes, the importer still needs to make extra insurance arrangement for a wider cover.
123. The insured amount should be the actual value of the insured goods plus the expected operating expenses and profit.
124. According to the usual practices, the insured amount, if not specified in the sales contract, will be 110% of CIF or CIP price.
125. Generally speaking, the insured amount will not be marked up in an open