Question

1) The 11 Incoterms consist of two groups and are listed below in order of increasing risk/liability to the exporter. Under the revised terms, buyers and sellers are being urged to contract precisely where delivery is made and what charges are covered. Briefly define below rules. (12 points )

a. Rules for Sea and Inland Waterway Transport; FAS, FOB, CFR, CIF

b. Rules for Any Mode or Modes of Transportation; EXW, FCA, CPT, CIP, DAT, DAP, DDP

2)List below the particulars that the consignment note shall contain

Answer 1

Answer:

1) a)i) FAS: It stands for Free Alongside, which is a term used in international trade contracts that indicates that the seller must arrange for the goods purchased to be delivered next to a particular vessel in a particular port in order to be ready for transfer to a waiting ship.

ii) FOB: It stands for Free on Board, means that the supplier retains ownership and responsibility for the goods until they are loaded 'on board' a shipping vessel.In other words, the supplier is “free” of responsibility. ‘On board’ simply means that the goods are on the ship.

iii) CFR: It stands for Cost and Freight that is exclusive to ocean freight shipping. It states that the seller is not only responsible for delivering the goods to the port specified by the buyer, but also bears the transportation costs of the goods to the destination port.

iv) CIF : Under CIF (short for “Cost, Insurance and Freight”), the seller delivers the goods, cleared for export, onboard the vessel at the port of shipment, pays for the transport of the goods to the port of destination, and also obtains and pays for minimum insurance coverage on the goods through their journey to port destination.

1) b)i) EXW : "Ex works" means that the seller fulfils his obligation to deliver when he has made the goods available at his premises (i.e. works, factory, warehouse, etc) to the buyer. The buyer bears all costs and risks involved in taking the goods from the seller's premises to the desired destination.

ii) FCA : "Free Carrier" means that the seller fulfils his obligation to deliver when he has handed over the goods, cleared for export, into the charge of the carrier named by the buyer at the named place or point. If no precise point is indicated by the buyer, the seller may choose within the place or range stipulated where the carrier shall take the goods into his charge

iii) CPT : "Carriage paid to..." means that the seller pays the freight for the carriage of the goods to the named destination. The risk of loss of or damage to the goods, as well as any additional costs due to events occurring after the time the goods have been delivered to the carrier is transferred from the seller to the buyer when the goods have been delivered into the custody of the carrier.

iv) CIP : The Carriage and Insurance Paid To (CIP) rule is similar to CPT with one very important difference. This rule requires the seller to take out maximum insurance cover under Institute Cargo Clauses (A) or (Air) or similar, for the buyer’s risk. The seller must give the buyer any insurance document the buyer will need in case it must claim under that insurance.

v) DAT: Delivery at terminal is where the seller clears goods for export and is fully responsible for the goods until they have arrived at a named terminal at the end destination. The goods must be unloaded at the terminal.

vi) DAP : Delivered at place , the seller is responsible for delivery of the goods, ready for unloading, at the named place of destination. The seller assumes all risks involved up to unloading. Unloading is at the buyer's risk and cost. DAP can apply to any—and more than one—mode of transport.

vii) DDP : Under the Delivered Duty Paid (DDP), the seller assumes all responsibilities and costs for delivering the goods to the named place of destination.The buyer is free of any risk or cost until the goods are unloaded from the vehicle at the named place of destination, usually the buyer's place of business.

2) Consignment note should include below:

(a) The date of the consignment note and the place at which it is made out;

(b) The name and address of the sender;

(c) The name and address of the carrier;

(d) The place and the date of taking over of the goods and the place designated for delivery;

(e) The name and address of the consignee;

(f) The description, regarding common use, of the nature of the goods and the method of packing, and, in the case of dangerous goods, their generally recognized description;

(g) The number of packages and their special marks and numbers;

(h) The gross weight of the goods or their quantity otherwise expressed;

(i) Charges relating to the carriage (carriage charges, supplementary charges, customs duties and other charges incurred between the making of the contract and the time of delivery);

(j) The requisite instructions for customs and other formalities;

(k) A statement that the carriage is subject, notwithstanding any clause to the contrary, to the provisions of this Convention.

The matters which must be mentioned if applicable to the particular case are as follows:

(a) A statement that trans-shipment is not allowed;

(b) The charges which the sender undertakes to pay;

(c) The amount of "cash on delivery" charges;

(d) A declaration of the value of the goods and the amount representing special interest in delivery;

(e) The sender's instructions to the carrier regarding insurance of the goods;

(f) The agreed time limit within which the carriage is to be carried out;

(g) A list of the documents given to the carrier.