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Eastern Mediterranean University BANK406 Corporate Banking Law and Practice Chp 2 Bilge Oney, Ph.D. Faculty of Business and Economics Department of Banking.

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Presentation on theme: "Eastern Mediterranean University BANK406 Corporate Banking Law and Practice Chp 2 Bilge Oney, Ph.D. Faculty of Business and Economics Department of Banking."— Presentation transcript:

1 Eastern Mediterranean University BANK406 Corporate Banking Law and Practice Chp 2 Bilge Oney, Ph.D. Faculty of Business and Economics Department of Banking and Finance

2 The Sales Contract and the Parties Forms of International Sales Contracts EXW (Ex Works) – A transaction in which the seller's only responsibility is to make the ordered goods available to the buyer at the seller's premises (i.e. factory, warehouse)

3 Ex Works - This term represents the minimum obligation for the seller. - The buyer bears the cost and risk in transporting the goods from the seller's premises to destination. Clearing for export and loading on any collecting vehicle is the responsibility of the buyer.

4 FCA (Free Carrier) The seller delivers the goods, cleared for export, to the carrier nominated by the buyer at the named place. If delivery occures at seller’s premises, the seller is responsible for loading. If delivery occures at any other place, the seller is not responsible for loading. A carrier is any person who, in a contract of carriage, undertakes to perform or to procure the performance of carriage, by rail, road, sea, air, inland waterway or by a combination of such modes.

5 FAS (Free alongside ship) FAS - that means the seller is responsible for the cost of transporting and delivering goods alongside a vessel in a port in his or her country.

6 FAS should be used only for ocean shipments since risk and responsibility shift from seller to buyer when the goods are placed within the reach of the ship's tackle (crane), From thereon, the buyer has to bear all cost and risks of loss or damage to the goods.

7 FOB (Free On Broad) The seller is responsible for the cost of transporting and delivering goods on board of a vessel in a port in his or her country. The seller is responsible up to the point where goods pass ship’s rail. From thereon all the responsibilities pass on to the buyer. Seller is required to clear the goods for export PREPARED BY RUSTAM GURBANOV7

8 CFR or C&F (Cost and Freight) The seller delivers when the goods pass the ship’s rail in the port of shipment. The seller must pay the costs and freight neccesary to bring the goods to the named port of destination. Seller is required to clear the goods for export. This term can only be used for sea and inland waterway transport.

9 CIF (Cost Insurance and Freight) The seller is responsible for the cost and freight of the goods to a named destination. The seller is also responsible for providing cargo insurance at minimum coverage against the buyer's risk of loss or damage to the goods during transport.

10 CPT (Carriage Paid To) Seller is responsible for the payment of freight to carry goods to a named overseas destination (usually the buyer's warehouse). In comparison, C&F terms include transport charges only up to a named port of destination. The risk of loss or damage is transferred from the seller to the buyer when the goods have been delivered into the carrier's custody. This term may be used for any mode of transport.

11 CIP (Carriage and Insurance paid To) Seller is responsible for the payment of freight to carry goods to a named overseas destination. - The seller is also responsible for providing cargo insurance at minimum coverage against the buyer's risk of loss or damage to the goods during transport. - The risk of loss or damage is transferred from the seller to the buyer once the goods are delivered into the carrier's custody. This term may be used for any mode of transport.

12 DAF (Delivered At Frontier) Seller must supply the goods at his or her own risk and expense delivered to a named place, usually a border location, by a specified time. Up to the border, the seller is responsible for all risks and expenses associated with the delivery. The buyer is responsible for the importation. This is normally used with rail, truck, or multi- modal shipments.

13 DES (Delivered Ex Ship) Seller is responsible for delivering the goods aboard a ship at a specified port in the importing country. The seller must bear all costs and risks associated in bringing the goods to the named port of destination. The buyer is responsible for all costs necessary to unload the goods and clear them through customs. Unloading costs are included the ocean freight charged by most ship lines.

14 DEQ (Delivered Ex Quay) The seller must deliver the goods to the wharf at the destination port. The seller has to bear all costs and risks involved in bringing the goods to the named port of destination and discharging the goods on the quay (wharf).

15 DEQ (Delivered Ex Quay) - The buyer responsible to clear the goods for import and to pay all formalities, duties, taxes and other charges upon import. - Delivered ex quay may be noted as having duty paid or unpaid

16 DDU (Delivered Duty Unpaid) Seller is responsible for making a safe delivery of goods to a named destination, paying all transportation expenses – freight, insurance,and other associated charges, but not the duty. - The seller bears the risks and costs associated with supplying the good to the delivery location, where the buyer becomes responsible for paying the duty and other customers clearing expenses.

17 DDP (Delivered Duty Paid) A transaction in which the seller must pay for all of the costs related to transporting the goods and is responsible in full for the goods until they have been received and transfered to the buyer. This includes paying for the shipping, the duties and any other expenses incurred while shipping the goods. - DDP represents the maximum obligation for the seller, while EXW term represents the minimum.


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