Question

Research paper on Trade documentation and International Commercial Terms. Five pages maximum. You are to write about the trade documentation (may refer to a myriad of documents) that countries and firms use to engage in international trade. You are to also write about international commercial terms and explain them.

Answer 1

Trade Documentation that Countries and firms use to engage in International Trade :-

1)  Bill of Exchange

2) Letter Of Credit -LOC

3) Insurance Documents

4) Bill Of Lading

5) Consular Invoice

6) Inspection Certificate

7) Origin of Good Certificate

8) Packing Weight List

Detailed Explanation of above Documents:-

1) Bill of Exchange:-

It is an agreement signed by buyer of goods to pay certain amount of invoice on specified date of future to seller. Bill of Exchange is drawn by Exporter and Sent to Importer, Importer accepts the bill of Exchange and return to exporter, importer legally obliged to make payment. Bill of Exchange is a legal Evidence of contractual obligation for payment. Bill of Exchange is a negotiable instrument. Exporter also transfer the document to another party through endorsement.

2) Letter of Credit:-

Undertaking given by the issuing bank acting upon request of Importer, that will make payment to a beneficiary i.e. Exporter. Protect Exporter from non payment risk. An Letter Of Credit involves Four Parties - Importer, Importer's Bank, Exporter and Exporter's Bank.  

3) Insurance Documents:-

To Protect goods in  transit from loss or damage. Insurance cover must specify value insured i.e. CIF- Customer Information File,risks covered, effective date of insurance cover, currency in which insurance document is expressed.

4) Bill Of Lading:-

Contract between Transporter ( carrier) and the exporter to deliver goods to designated party ( Importer) at a specified place of Importer's country. It is a document of title of goods being transported, holder of Bill Of Lading has title of goods.

5) Consular Invoice:-

Consular Invoice that Describes the goods being transported, Exporter authenticates accuracy of invoice by appearing before Importer Country's Consul who is stationed in exporter's country.

6) Inspection Certificate:-

Inspection Certificate issued by an independent inspection agency or supplier of goods stating that goods being inspected and confirm to the quality and other terms and conditions.

7) Origin of Goods Certificate:-

Origin of Goods Certificate establishes the origin of goods imported into a country, Origin of Goods Certificate is a proof that goods are eligible for this tariff reduction, since they have been imported from one of the specified countries which is not in the " Banned List Of Countries"

8) Packing Weight List:-

Packing List give details of the goods in each package.

International Commercial Terms and their Explanation:-

1) CIP- Carriage and Insurance Paid :-

Seller pays for transport of goods to destination, seller pays insurance charges of cargo

2) DAP- Delivered at place:-

Seller places the goods at buyer's disposal on the arriving means of transport where goods are ready to be unloaded at the named place of destination.

3) CPT- Carriage paid To :-

Seller pays for moving goods to destination , transferred to first carrier, at that time buyer's bears the risk or loss.

4) DAT- Delivered at Terminal:-

Seller deliver goods when they have been unloaded from arriving means of transport and placed at the disposal of the buyer at a named terminal at he named place of destination.

5) DDP - Delivered Duty Paid:-

Seller pays all custom duties and taxes

6) ExW- Ex Works:-

Seller has the goods ready for collection at his premises.

7) FCA - Free Carrier:-

Seller delivers the goods cleared for export to the carrier selected by the buyer.