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Logistics &

Documentation
Main Clauses-International Commercial
contract
Product Specifications, Quality and Quantity
 Description
 Specifications
 Quantity
 Quantity Tolerances
 Test Certification
 Size-wise Breakup of Quantity
 Chargeable Weight (i.e. Net Weight)
 Penalty and Bonus
 Packing
 Marking
Main Clauses-International Commercial
contract
Price
– Currency
– Unit Price
– Basis of Quotation (FOB, CIF etc.)
– Cost Distribution and Delivery

Terms of Payment
– Letter of credit

Right of Transfer
– Buyer/Seller Right to Assign/Transfer Contract (Generally not
agreed upon, except to the successors)

Modification of the Contract


– Cancellation of Previous negotiation/agreements
– Modification only after agreement in writing by all parties to
the contract.
Main Clauses-International Commercial
contract
Delivery and Shipment
• Period of Delivery (e.g. from the date of
receipt of L.C)
• Validity of L.C for shipment Destination
• Terms and Condition of Delivery
• INCO Terms
• Passing of Risk and Title
INCOTERMS
Incoterms are worldwide accepted commercial terms that defines the
respective roles of the buyer as well as of the seller in arrangement of the
transportation and other responsibilities and it also clarifies when the
ownership of the merchandise takes place.

 Origin Terms
EXW (Ex-Works)

 International Carriage Not Paid by Seller


FCA (Free Carrier)
FAS (Free Alongside Ship)
FOB (Free On Board)

 International Carriage Paid by the Seller


CFR (Cost and Freight)
CIF (Cost, Insurance and Freight
CPT (Carriage Paid To)
CIP (Carriage and Insurance Paid To
 Arrival At Stated Destination
DAF (Delivered at Frontier)
DES (Delivered Ex Ship)
DEQ (Delivered Ex Quay - Duty Paid)
DDU (Delivered Duty Unpaid)
DDP (Delivered Duty Paid)
INCOTERMS

FREE ON BOARD(FOB)
“Free on Board” means that the seller
delivers when the goods pass the ship’s rail at
the named port of shipment. This means that
the buyer has to bear all costs and risks of loss
or damage to the goods from that point.
The FOB term requires the seller to clear
the goods for export. This term can be used
only for sea or inland water way transport.
INCOTERMS

Cost, Insurance and Freight (CIF)


The title and risk passes on to the buyer if
delivered on board the ship by the seller who
paid the transportation and insurance cost to
the destination port. It is used for sea or inland
waterway transportation.
Letter of Credit (LC)
• A letter of credit is a document issued mostly
by a financial institution which provides an
irrevocable payment undertaking to a
beneficiary against complying documents as
stated in the credit.
• The LC is a source of payment for a
transaction, meaning that an exporter will get
paid by redeeming the letter of credit.
• It is the safest mode of payment through bank.
LC- Process Flow Chart
4. Copy of LC
Buyer Seller
1. Mutual agreement on LC terms & conditions

6. BL and other
8.BL and other docs docs
for getting of goods 5. Goods
handed
2. LC Info over to
carrier &
10. Payment Bill of
Lading to
7.BL and other docs for payment
Buyer’s bank Seller’s bank Seller

3. Opening of LC

Carrier
9.BL and other docs for receiving of goods
Types of LC
• Revocable LC- Terms and conditions are
changeable. Changes are made by the
buyer in consent with the seller.
• Irrevocable LC- No changes can be made

Payment modes on basis of LC


• LC at sight
• LC at 30 days
• LC at 60 days
• LC at 90 days
Main Information on LC
• FROM :( NAME & ADDRESS OF OPENING
BANK )
• TO :( NAME & ADDRESS OF ADVISING
BANK )
• TYPE OF L/C
• L/C Number
• DATE OF ISSUE
• DT. & PLACE OF EXPIRY
• NAME & ADDRESS OF THE APPLICANT
• NAME & ADDRESS OF THE BENEFICIARY
Main Information on LC
• PARTIAL SHIPMENT
• TRANSHIPMENT
• SHIPMENT FROM
• SHIPMENT TO
• LATEST SHIPMENT DATE
• DESCRIPTION OF GOODS
– Description of Materials
– Size
– Specification
– Tolerance
– Quantity
– Quantity Tolerance
– Price
• DOCUMENTS REQUIRED
• Additional Conditions
Purchase Order (PO)
A Purchase Order is a commercial document issued
by a buyer to a seller, indicating the type, quantities
and agreed prices for products or services that the
seller will provide to the buyer.
Main Informations on PO-
Buyer Information
Vendor Information
Ship To Information
FOB related Information
Labeling Instruction
Packing Instruction
Types of Commercial Documents

The set of commercial documents, known


variously as Shipping Documents or Principal
Export Documents, is essential for smooth flow
of international trade. The main types are as
follows-
– Commercial Invoice
– Bill of Lading
– Cargo Insurance Policy/ certificate
– Bill of Exchange.
Commercial Invoice
 First basic and the only complete document for a
shipment from among the set of commercial
documents.
 Document is needed at pre-shipment and post-
shipment stages for various purposes like,
 Export Inspection Certificate
 Clearance from excise and customs authorities

 Commercial invoice performs three main functions.


 Document of Content
 Bill by exporter
 packing list.

 It also sets forth the terms of shipment and payment


and can operate as Certificate of Origin.
Bill of Lading
• Bill of Lading is an evidence shipment of goods.
• This document evidences the mode, manner
and date of shipment.
• Bill of Lading, issued by the shipping company
• Bill of Lading enables the lawful holders to
claim goods at the destination.
• Bill of Lading performs three functions-It is an
evidence of the contract of transport, receipt
of goods and document of title.
Insurance Policy /Certificate
• For providing protection to cargo owners, cargo
insurance is provided by the insurance
companies.
• Cargo insurance covers risk to the cargo while
in transit from consignor to consignee.
• The export contract/LC will specify the nature of
the risk coverage as well as the insurable value
Bill of Exchange
• Performs the role of bridging the huge gap between
shipment of goods and receipt of sale amount.

• Prepared by the exporter and given to the bank along


with other commercial documents.

• Bill of Exchange is defined as “an unconditional order


in writing addressed by one person (exporter) to
another (importer), signed by the person giving it,
requiring the person to whom it is addressed to pay.