Question

A copper export trading firm has regular shipments from mozambique to kuwait. Goods are loaded at terminal onto bulk carriers at the port of beira, mozambique. Answer the following questions 1) terms of sale; 2) mode of transport; 3) insurance obligations 4) export/ import country obligations; 5) seller's risk/costs.

Answer 1

1.Terms of Sale:-

The first important term to be included should be regarding the mode of payment. Since the export trading firm regularly exports the shipments, thus relying on Monthly Credit Sales is safe on account of long term relationship established with other part due to recurring business. However it us important to ensure that the risk of damages is transferred to the Purchaser once the shipment is made from the Mozambique to protect firm from any claims. Moreover the payment should ve agreed upon in currency of the hone country i.e Mozambique which will avoid the exposure to exchange fluctuation.

2. Mode of Transport :

Since the business is of recurring nature and also requires loading into bulk carriers at the port of beira,thus Sea Transport should be better preferred and will act as best mode of transport in terms of protection from damages and at the same is cheap , smooth and efficient.

3.insurance obligations :-

As the risk obligations will be transferred to the Purchaser once the goods leave Mozambique, the Insurance Obligations such as the General Insurance for goods and loss if business insurance, should thus also be taken on the behalf of the purchaser to protect his interest from any losses or damages that he might face! Insurance obligation needs to be borne by the purchaser for the goods which have been successfully loaded in best conditions at the port.

5. Seller risk/Cost :-

The seller risk or cost which will be borne by the copper export trading firm will be the transport costs to take the products to the port base. Along with transport risks, the risk associated with loading, transfer, shipment etc will also be borne by the seller. Thus all risks and costs until the goods reach port will be borne by the seller.

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.thanks dear student.. Hope this will help you in your understanding.. Good luck and God bless :)