Transcript Document

International SellPurchase Contract –
Procedure & Comments
10/05/2006
Procedure - 1
Seller and Buyer conclude a
sales contract, with method
of payment usually by letter of
credit (documentary credit).
Essential Clauses of the Contract
Description of GOODS
Specification + Quality & Quantity
Price
Terms of payment
Terms of delivery
Quality Identification
by inspection
by
types/specifications numbers
referenced to
catalogues, leaf-lets, web-sites, and other
official corporative sources
by personal testing – auctions
by detailed descriptions plans, manuals,
drawings, agendas, etc.
by useful outputs
ETC (agreed by the both Parties)
Methods of Payment in
International Trade - Risk Spectrum
TRADE TERMS
EXPORTER RISK
Open Account
IMPORTER RISK
Documents Against
Acceptance
HIGH
LOW
Documents Against
Payment
Time Letters of Credit
LOW
Sight Letters of Credit
Payment in Advance
HIGH
Procedure - 2
Buyer applies to his issuing
bank, usually in Buyer's
country, for letter of credit in
favor of Seller (beneficiary).
Procedure - 3
1. Issuing bank requests
another bank, usually a
correspondent bank in
Seller's country, to advise,
and usually to confirm, the
credit.
Procedure - 4
Advising bank, usually in
Seller's country, forwards
letter of credit to Seller
informing about the terms and
conditions of credit.
Procedure - 5
If credit terms and conditions
conform to sales contract,
Seller prepares goods and
documentation, and
arranges delivery of goods to
carrier.
Procedure - 6
Seller presents documents
evidencing the shipment and draft
(bill of exchange) to paying,
accepting or negotiating bank
named in the credit (the advising
bank usually), or any bank willing
to negotiate under the terms of
credit.
Procedure - 7
Bank examines the
documents and draft for
compliance with credit terms.
If complied with, bank will pay,
accept or negotiate.GASTRONOM Case
Procedure - 8
Bank, if other than the
issuing bank, sends the
documents and draft to
the issuing bank.
Procedure - 9
Bank examines the
documents and draft for
compliance with credit terms.
If complied with, Seller's draft
is honored.
Procedure - 10
Documents release to
Buyer after payment, or
on other terms agreed
between the bank and
Buyer.
Procedure - 11
Buyer surrenders bill of
lading to carrier (in
case of ocean freight) in
exchange for the
goods or the delivery
order.
Delivery Order
A document from the consignee, shipper, or
owner of freight ordering the release of
freight to another party.
Bank Delivery Order to an Airline -- A letter
addressed to an air carrier from a bank who is
shown as consignee on an airwaybill
instructing the carrier to release a shipment.
Often airlines will accept as a delivery order a
bank's endorsement on the airwaybill,
although an airwaybill is a non-negotiable
document.
Delivered Ex Ship (named port of destination)
" DES" means that the seller
delivers when
the goods are placed at the
disposal of the buyer on board
of the ship
not cleared for import
at the named port of destination.
Delivered Ex Ship - 2
The seller has to bear all the costs and
risks involved in bringing the goods to the
named port of destination before
discharging.
If the parties wish the seller to bear the
costs and risks of discharging the
goods, then the DEQ term should be
used.
SELLER’S COST
BUYER’S RESPONSIBILITY
GOODS HANDLING
BUYER’S RISK
BUYER’S COST
PORT OF DESTINATION
POINT OF DESTINATION
SELLER’S RISK
IMPORTATION CUSTOMS CLEARENCE
GOODS HANDLING
EXPORTATION CUSTOMS CLEARENCE
SELLER’S RESPONSIBILITY
Checklist:
The following points should be kept in mind when
choosing an Incoterm.
What method of transport is to be
used?
What are the terms currently used?
Are there any company policies on
which terms should be used and
how much responsibility should be
taken?
Checklist:
Are there any restrictions on the term to
be used imposed by the country of
importation?
Are there any commercial norms in the
country with which you are dealing?
Discuss the terms to be used with your
trading partner - it is important to take
their point of view into account.
Checklist:
Ensure that both parties understand
and can carry out their obligations.
Ensure that you are able to obtain
enough information to give a quote for a
certain Incoterm.
Read Incoterms 2000. The introduction
gives good advice and can clarify certain
issues and the individual terms
themselves are accurately described.
Checklist:
Ensure all staff (especially those involved in
sales and marketing) are properly trained in
order to understand the basic principles of
Incoterms and in particular the details of the
individual Incoterms.
Incorporate the terms decided into all
relevant commercial paperwork such as
invoices, quotations, terms and conditions of
sale.
Review the terms periodically and change
them if necessary.
INCOTERMS REGULATE:
distributions of documents,
delivery conditions,
distrubution of operation costs
and distributions of operation risks.
INCOTERMS DOES NOT REGULATE:
legislation applicable to points not reflected in
Incoterms,
payment method of the operation.
Goods
Seller
Provide the goods,
commercial invoice or
electronic message,
and other
documentation as
required by the sales
contract.
Buyer
Accepting GOODS
delivered
Payment
Pay for the goods as
provided in the sales
contract.
Licenses and Customs
Formalities
Obtain at own risk and
cost any export
licenses and
authorizations and
carry out all export
formalities and
procedures, including
those associated with
transshipment to the
named port of
destination.
Obtain and pay costs
of all import licenses
and authorizations
and carry out all
import formalities.
Carriage and Insurance
Contract for and pay
all costs of carriage
and transshipment
(if necessary) to the
named place and port
of destination.
No obligation to
provide insurance.
No obligation to the
seller for either
carriage or
insurance.
Delivery
Make the goods
available to the
buyer uncleared for
import on board the
vessel at the named
place and port on the
date or within the
time period specified
in the sales contract.
Take delivery of the
goods once they are
made available at
the port.
Risk Transfer
Assume all risks of
loss or damage to the
goods until they
have been made
available to the
buyer at the named
place and port.
Assume all risk of
loss or damage from
the time the goods
have been made
available at the port.
Costs
Pay all costs until
the goods have
been delivered,
including all export
formalities, carriage
and transshipment
(if necessary) to the
named place and
port.
Pay all costs for the
goods once they have
been made available
at the port including
unloading.
Pay all costs
relating to import
formalities including
duties, taxes and
other charges.
Notices
Provide sufficient
notice of dispatch
and projected arrival
that the buyer can
take appropriate
action to arrange
pick-up of the goods.
If, according to the
sales contract, the
buyer is able to
specify a time for
and/or a place of
delivery, to give the
seller sufficient notice.
Proof of Delivery, Transport
Documents
Provide the buyer
with the delivery
order and/or a
transport
document enabling
the buyer to take
delivery of the goods
at the port of
destination.
Accept the seller's
transport document
so long as it is in
conformity with the
sales contract.
Proof of delivery is a method to establish
the fact that the recipient received the
contents sent by the sendor.
Checking, Packing, Marking
SELLER ___Pay all costs associated with
checking the quality and quantity of the goods
to be in conformity with the sales contract.
Provide appropriate packing (unless the
goods are traditionally delivered unpackaged)
as required for the transport of the goods, to
the extent that the buyer has made transport
circumstances known to the seller prior to the
execution of the sales contract.
Provide marking appropriate to the packaging.
Inspection(s)BUYER ___ Pay for the costs of preshipment inspection(s) except inspections
required by the country of export.
Other
Provide the buyer at the
buyer's request, risk
and expense any and
all assistance in securing
documentation
originating in the country
of export or of origin
required for import.
Provide the buyer with
information necessary
to obtain insurance.
Pay all costs associated
with securing
documentation from the
country of origin or
export required for
import.
Reimburse seller for
costs in providing such
documentation or
assistance.
Maritime and Inland Waterway Transport Only
Group F
Group C
FAS
Free Alongside Ship (named
port of shipment)
<
FOB
Free on Board (named port of
shipment)
CFR
Cost and Freight (named port
of destination)
Any Mode of Transport
Group E
EXW
Ex Works (named place
Group F
FCA
Free Carrier (named place)
Group C
CPT
Carriage Paid To (named
place of destination)
CIP
Carriage and Insurance Paid
To (named place of
destination)
DAF
Delivered at Frontier (named
place)
DDU
Delivered Duty Unpaid
(named place of destination)
DDP
Delivered Duty Paid (named
place of destination)
Group D
STRUCTURE of CONTRACT
CONTRACT No
200_,
Moscow
ABC, hereinafter referred to as the
«Buyer», represented by abc, on the one
part, and XYZ, hereinafter referred to as the
«Seller», represented by xyz, on the other part,
have concluded the Contract on the following:
1. SUBJECT OF THE CONTRACT
The Seller has sold and the Buyer has bought
on the basis of CIP as per INCOTERMS 2000
the Equipment indicated in the Attachment No l.
The scope of work to be performed by the
Seller consists of supply of the equipment
and fulfillment of the service, specified in
Attachment No l.
2. CONTRACT PRICE
The total value of the contract amounts to
XXX,XXX.YY USD (write out figures by
words) including:
the equipment price YYY,YYY.yy USD
the service price ZZ,ZZZ.zz USD
and is understood CIP (POD), the cost of packing
and marking included.
The total contract value and prices for each
contract item of the equipment and the service
are specified in Attachment No 1.
3. TERMS OF PAYMENT
3.1. All payments under this contract are made in
US Dollars by T/T remittance.
3.2 Advance payment in the amount of one
hundred percent (100%) of the total value of the
contract USD XXX ( in writing ) shall be paid by
the Buyer to the Seller against the Seller's
invoice within YY (in writing ) days from the
date when the Seller make out an invoice to
the Buyer
4. TERMS OF DELIVERY
4.2. The delivery date of the equipment shall be
considered the date of air waybill and/or
multimodal transportation, to be issued by the
first Seller's forwarder or carrier.
The arrival date of the equipment is the date of
arrival of the equipment at the customs
warehouse in POD
4.3. The Consignee under the contract is
as follows:
Consignee: DATA
4.4. The name of Sellers forwarder or carrier and
transportation route are to be confirmed by the
Seller to the Buyer by fax message not later
than XX days before the shipment date.
4.5. Prior delivery of the equipment is allowed
after the Buyer's consent only.
4.6. Shipping documents of each shipment (lot)
of the equipment shall include:
invoice;
packing List;
waybill;
insurance policy.
4.7. The Seller shall send by fax to the Buyer a shipping
advice on shipment with attached invoice and packing list not
later than XX before the shipment date.
The following data shall be specified in the shipping advice:
contract No;
invoice No;
invoice amount;
description of the
equipment;
port of loading;
port of destination;
consignee name;
shipping date;
AWB No;
Flight No;
B/L No;
Vessel name;
Number of packages;
Gross weight;
Measurements/volume.
Summary: Doing Business in
ANYWHERE…
Remember……
“Experience is the name every one
gives to their mistakes…”
(Oscar Wilde)