Académique Documents
Professionnel Documents
Culture Documents
Unit 4
Representation of Incoterms
Group
Term
EXW
FCA
FAS
FOB
Stand for
Ex Work
Free carrier
Free Alongside Slip
Free on Board
Cost and Freight
CIF
Cost Insurance
Freight
CPT
Carriage paid To
CIP
DAF
Delivered at Frontier
DES
Delivered Ex Ship
DEQ
Delivered Ex Quay
DDU
Delivered Duty
Payments Terms
Introduction
The currency of our country is not a legal tender in
other country & hence it will not be accepted abroad in
discharge of debts & obligations.
All importers faces this problem that their exporter in
other countries require payments in their homeland
currency.so, importer have to arrange for this.
This problem is mainly solved by foreign exchange to
dealers,banks,brokers,etc.
Also the importer faces the problem to transfer the
foreign exchange to their exporter & trading parties in
other countries
Introduction of ECGC
For providing credit n finance & inuring
export credit risk, there are two primary
institutions which are ECGC & EXIM bank.
The Export credit Guarantee Corporation
of India Ltd , is an Indian government
owned company that provides export
credits insurance supports to Indian
exporter.
It works under Ministry of commerce &
industry, department of commerce, GOI
Consignment Sale
Consignment sale is an arrangement in trade in which a
seller or the consignor sends goods to a buyer or consignee
without getting payments for the goods then itself. The
consignee or the buyer pays the amount only when the
goods are sold. It is actually a delivery of goods not
amounting to sale .
The seller retains the ownerships of the goods until the
payments is made in full by the buyer.
When the goods are shipped by exporter on consignment,
the title of the goods remain to lie with the exporter even
after the goods are received by the importer.
The importer remits money only after it sells the goods.
Insurance policy
This is a written contract between the insurer & the insured
containing all terms & conditions of the agreement.
It shows the full details of the risk covered, & is also called
formal insurance documents.
Insurance policy certifies that the goods transported have
been insured under an open policy & is not actionable with
little details about the risk covered.
It is important that the date on which the insurance
becomes effective should be same or earlier then the date
of insurance transport document.
A policy may refer to a single consignment & sent with the
other commercial documents.
Insurance Certificate
Letter of credit
Letter of credit refers to a written undertaking given by the
importers bank, at the request & instructions of the
importer(i.e the applicant), to the exporter that the payments
shall be made to him against stipulated documents provided
that the same appear on their face to be in accordance with
the terms & conditions of the credit.
These terms & condition are indicated by the importer to
the bank issuing the letter of credit. The bank do not deal in
goods, they deal in documents, as such the importer the
importer has to specify to the bank the documents which it
should examine to conclude that the exporter has sent the
shipment in strict compliance with the terms & conditions
of the credit.
Applicant
Beneficiary
Discounting bank
Drawee bank
Drawer
Types of Letter of Credit:
1. Sight letter of credit: A letter of credit is known as sight LC if it involves
payment to the exporter against sight draft.
2. Confirmed letter of credit: An irrevocable LC is confirmed when another
bank add its confirmation to the LC upon the request or authorization of the
issuing bank. Confirmation means definite undertaking of the confirming bank
to honour or negotiate a complying presentation.
3. Negotiable LC: An LC is known as negotiable if it states that the credit shall
be available by negotiation. Negotiation means the purchase by the nominated
bank of drafts or the documents under a complying presentation, by advancing
or agreeing to advance funds to the beneficiary on or before banking day on
which reimbursement is due to the nominated banks
UCPDC Norms
The uniform Customs & Practice for Documentary
credits (UPC) is a set of rules on the issuances & the
use of letter of credit. The UPC is utilized by banker
& commercial parties in more than 175 countries in
trade finance. Some 11-15% of international trade
utilizes letter of credit, totaling over a trillion dollars
each year.
The commercial parties, particularly banks, have
developed the techniques & methods for handling
letters of credit in international trade finance. This
practice has been standardized by ICC by publishing
UCP in 1933 & updating throughout the year.