Professional Documents
Culture Documents
Stipulations in a contract
- Time of delivery
- Place of delivery
- Notification of delivery
- Instructions for delivery
1. Timing
1.1 What is the date of delivery?
Three key dates:
- The date of dispatch from sellers’_________________
- The date of loading onto _________________
- The date when the goods should arrive at _________________
The principle:
- The date of delivery agreed is usually subject to the use of a term in Incoterms 2020
- The date of delivery is the date on which the last _____________is met
- The date of coming into _____________is usually a number of days
- _____________date is a date on which the parties agree to terminate a contract when certain
precondition(s) is not met.
Seller’s favor:
Unless otherwise agreed in writing by the Seller the time stipulated for shipment shall not be of the essence
and may be extended by the Seller for a period not exceeding fourteen (14) days by notice thereof in
writing to the Buyer”
Specimen clause
“If a Force Majeure situation arises, the party concerned undertakes to bring this event to the other party’s
knowledge within 15 days from the beginning of the event and to confirm by registered letter the occurrence
of the aforesaid event confirmed by the related Authority of the of the concerned party’s country, and
suspend the Contract. Further, the party concerned shall spare no endeavors to minimize any loss or
damage caused by Force Majeure. At the end of the event of Force Majeure, the party concerned
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shall be granted reasonable time to resume the performance of the contract, on conditions mutually agreed
upon by both parties.”
1.5. Unexcused delay and the Buyer’s remedies (Consequences of Non-Excusable Delay)
The Principle
- Party at fault shall suffer _____________;
- Wronged party shall _____________contracts
Types of compensation
(1) Liquidated damages:
- It is most commonly used because the motive is to bring a __________________________compensation to
the Buyer and to avoid expensive discussion in case of late delivery
- Limited by Anglo-American Law: _____________; Vietnamese law: _____________
(2) Penalties (Buyer’s favor)
- Damages are paid to compensate the buyer for a loss- a _____________ or _____________ loss
- The motive is to _____________ the other party
- _____________ _____________by Anglo- American Law
(3) Quasi-indemnity (Seller’s favor)
- A compensation figure is fixed so low that, in effect, it releases a seller from responsibility for late
delivery.
2. Location
- Place of delivery
- Notification of shipment
- Instructions for delivery
2.1. Place of delivery
The Principle: The place of delivery is the point at which the exporter passes _____________for and
_____________to the goods to a Buyer.
Stipulations in a contract
Place of delivery:
- Port of shipment/discharge/ transshipment (if any)/ destination
E.g.:
- Delivery shall be made FOB Saigon port, Vietnam, Incoterms 2020
- Port of shipment: Saigon port, Vietnam
- Port of discharge: Liverpool, U.K
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vessel. Upon the completion of loading the Goods, the Seller shall telex/cable the Buyer the shipping
particulars such as: the actual quantity shipped, the value of the actual goods stated on the Invoice, Bill of
Lading No., ETD and ETA.”
Practice 1. Fill in the gaps with the words given in the box
(1) Coming Into Force
approval, authorities, execution, force, necessary, null
This Contract shall come into 1______________ after execution by both parties on the date of the last
necessary 2______________ by the competent authorities in the country of the Seller and the Buyer. If the
Contract has not come into force within ninety days of 3______________, it shall become null and void.
This Contract shall come into force after execution by both parties on the date of the last 4______________
approval by the competent5______________ in the country of the Seller and the Buyer. If the Contract has
not come into force within ninety days of execution, it shall become 6______________ and void.
If the Seller fails to supply any of the Goods within the period 1_____________in the Contract, the Buyer
shall notify the Seller that, a 2_____________of contract has occurred and shall 3_____________from the
Contract Price per week of delay, as liquidated damages, not as a 4_____________, a sum equivalent to one
half percent of the delivered price of the 5_____________Goods until actual delivery up to a maximum
6_____________ of 8% of the delivered price of the delayed Goods.
1. The clause uses the word “fine”. Does that tell you with certainty what kind of clause you are looking at?
(Penalty clause or liquidated damages clause?)
YES NO
2. After how long a delay does the contractor lose 100% of the contract price?
…………weeks
3. Do you think this clause is a penalty clause or a liquidated damages clause?
PENALTY LIQUIDATED DAMAGES
4. If the applicable law is the law of the State of New York, would the judge enforce this clause?
YES NO
Case 3
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Dead on Time
In preliminary talks, Vietnamese Steel Importing Co. agrees with All Metal Co. in Japan to import goods
from Tokyo and the goods should arrive in Vietnam on or before 13th August 20--. When the contract is
drafted, it mentions the date as agreed—13th, August 20--. Because the Vietnamese company asks for a CIF
contract under Incoterms 2020, the delivery terms are accordingly agreed in the contract as follows:
Delivery CIF, Saigon port, Incoterms 2020, on or before 13th August 20--.
Can the goods arrive in Vietnam on or before 13 th, August? Why or why not?
Case 4
Force Majeure
Verbena Jute Makes sacks, sackcloth, and other jute products. Its standard contract includes this definition of
a force majeure event:
If either party is prevented from; or delayed in, performing any duty under this Contract by an event
beyond his reasonable control, then this event shall be deemed force majeure.
Which of the following events are "force majeure" events under this definition?
(Note: the word "control" needs some thought. An event is beyond the control of the exporter if (a) he could
not have foreseen it, (b) if he could not have influenced it, and (c) if he could not have taken reasonable steps
to avoid the problems that were likely to arise.)
1. A Volcanic eruption buries the factory in ash.
YES QUESTIONABLE NO
2. The annual flooding of the River Verb ruins some of the jute intended for use in making sacks.
YES QUESTIONABLE NO
3. A ban is issued on the export of jute products by a newly elected government.
YES QUESTIONABLE NO
4. A ban is issued on the export of jute products by a government that has been preparing legislation on this
subject for five years.
YES QUESTIONABLE NO
5. The workforce at the factory go on strike.
YES QUESTIONABLE NO
6. The dock workers in Port Verbena go on strike.
YES QUESTIONABLE NO
7. A lockout (Background: The workers have been striking for one day a week. The management locks the
workers out of the factory until they agree to end the strikes.)
YES QUESTIONABLE NO
8. Shortage of supplies (Background: The exporter cannot get the raw jute he needs from the supplier
because of a shipping delay.)
YES QUESTIONABLE NO
9. Shortage of Supplies (Background: The exporter cannot get the raw jute he needs from the supplier
because the Central Bank will not give him foreign exchange to pay the supplier.)
YES QUESTIONABLE NO
10. A fire burns down the factory.
YES QUESTIONABLE NO
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Practice 3 English-Vietnamese translation
1. The Buyer shall not be entitled to terminate this Sale Contract for reasons of late shipment unless the
Buyer shall first have given the Seller fourteen (14) days written notice of its intention to terminate and the
Seller does not effect shipment before the expiration of that fourteen (14) days period, which period shall not
commence to run until the specified date of shipment or the last day of the extended period under Clause 7.2
provided always that if the Seller’s performance is affected by Force Majeure time shall not run during the
period performance is suspended.
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
2. In the event of late Delivery for reasons other than Force Majeure as defined in Clause 17 below, the
SELLER shall pay as liquidated damages and not as a penalty the sum of 1% of the value of the undelivered
part per Day of late Delivery up to a maximum of 10% of the Contract Price. Payment of liquidated damages
shall be due without the BUYER having to furnish proof of any loss, damage or injury.
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
3. Trường hợp hàng hóa đã sẵn sàng để xếp lên tàu nhưng người mua không chỉ định được tàu để bốc hàng,
mọi rủi ro, thiệt hại, các chi phí liên quan đến hàng hoá sẽ do người mua chịu trên cơ sở đòi bồi thường thực
tế của người bán.
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
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Unit 18 TRANSPORT and INSURANCE
- Packaging
- Shipping marks
- Shipping documents
1. Packaging
- One primary duty of the exporter is to ship the goods in ________________ packaging. - According to
Vienna Convention: Goods must be "________________ packaged". Goods do not conform to the contract
unless they are "contained or packaged in the manner usual for such goods" Specimen clause:
“Goods are to be packed in new, strong, wooden cases suitable for long-distance ocean transport and are
to be well protected against dampness, shock, rust or rough handling. The Seller shall be liable for any
damage to or loss of the Goods attributable to improper or defective packaging”
2. Shipping Marks
Standardized colours indicating the nature of the goods:
- Common goods => ____________
- Dangerous goods => ____________
- Poisonous goods => ____________
Particulars required to be stipulated:
- Package/ Case/ Box Number
- Name of Consigner/Consignee
- Net weight/Gross weight/Tare
- Contract/Order/Bill of Lading/Letter of Credit/ Invoice No
Specimen clause:
On the surface of each package delivered under this Contract the following particulars shall be marked: the
package number, the measurements of the package, gross weight, net weight, the lifting position, the letter of
credit number, the words RIGHT SIDE UP, HANDLE WITH CARE, KEEP DRY, and the mark: DNP/36/Q
3. Shipping documents
The principle:
- Shipping documents must be in ____________ ______________with the conditions of the letter of credit.
Otherwise, payment is denied.
4.3 Insurance
Types of insurance documents:
- Insurance certificate, Insurance policy
Types of Insurance policy:
- Tailor-made policy:
- Open Policy:
- Floating policy:
- Unvalued policy:
- Valued policy:
- Time policy:
- Voyage Policy:
Practice 1 Matching
1. Match the types of transportation documents and their definitions
1. Manifests A. It is issued by a trucking company for transporting goods by truck.
(Cargo &
Freight)
2. Shipping notes B. - It is an evidence of a carriage contract by trains between the sender and the
carrier.
- It serves as a receipt which is sent along with the consignment to the consignee.
3. Delivery orders C. - It is the receipt issued by the carrier in the acknowledgement of goods received
on board (export cargo)
- It is subsequently exchanged for B/L.
5. Rail E. - It is issued by the shipper to the carrier requesting allocation of ship space. - It
Consignment is a shipper’s commitment to ship the goods and serves as the basis for preparation
Note of B/L.
2. Received for B - This is usually drawn to the order of the shipper, consignee or
shipment B/L bank. - It is negotiable as it can be endorsed in favour of another
person - It is commonly used in commercial deals.
3. Clean B/L C - This means that the cargo is on board the vessel.
- It confirms to the buyer that the goods have actually been shipped.
4. Unclean/ D. It covers transportation on the same vessel from the port of loading to the port of
Claused B/L destination.
5. Letter of E. Issued by the forwarder to the shipper to certify the shipper’s obligations to carry
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indemnity the goods to destination nominated by the shipper
7. Bill of lading to G- This means that the shipping company confirms having received the goods for
order shipment by the vessel mentioned in the B/L.
- It does not provide as good a guarantee as the "shipped on board B/L" to the
consignee.
9. Direct B/L I. The carrier has some doubt on the condition of the goods and make reservation
on B/L in order to protect himself from any claim.
10. Through B/L J. Issued by the forwarder to the shipper of LCL used both in airfreight and sea
freight
11. Combined K. This is not commonly used in business transactions. A B/L can be to bearer
Transport B/L if: - it is expressly stated so in the documents
- it is made out “to order” of a beneficiary without any mention of a consignee or
beneficiary.
12. House B/L L. The separate stages would be performed by different carriers by a process of
trans-shipment,
Characteristics: it contains a clause giving the carrier the right to trans-ship the
cargo. It contains a statement that the cargo will be trans-shipped at a particular
port,
13. Charter Party N. - Name and address of the consignee are given so that the goods can be
B/L delivered only to the named person.
- It is not commonly used in commercial deals.
14. Forwarder’s O. It is a shipper’s commitment to indemnify the carrier against all consequences
Certificate of arising out of the issue of a "claused bill of lading" in order to obtain a “Clean B/L”
Transport (FCT)
Practice 2 Use the words in the box to complete the clauses of a Bill of Lading below (1)
Delivery
authority, demand , disposal, entitled, handed, liability, regulation, store
Goods shall be deemed to be delivered when they have been 1______________over or placed at the
2______________of the Consignee or his agent in accordance with this FBL, or when the goods have been
handed over to any 3______________or other party to whom, pursuant to the law or
4______________applicable at the place of delivery, the goods muss be handed over, or such other place at
which the Freight Forwarder is 5______________to call upon the Merchant to take delivery.
The Freight Forwarder shall also be, entitled to 6______________the goods at the sole risk of the Merchant,
and the Freight Forwarder's 7______________shall cease, and the cost of such storage shall be paid, upon
8______________, by the Merchant to the Freight Forwarder.
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Subject to the provisions of subclauses 8.4. to 8.9 1______________, the Freight Forwarder shall in no event
be or become 2______________for any loss of or damage to the goods in an amount exceeding the
3______________ of 666.67 SDR per package or unit or 2 SDR per kilogramme of
4______________weight of the goods lost or damaged, whichever is the higher, unless the
5______________ and value of the goods shall have been declared by the Consignor and 6______________
by the Freight Forwarder before the goods have been taken in his charge, or the 7______________freight
rate paid, and such value is stated in the FBL by him, then such declared value shall be the 8_____________.
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3. The responsibility of the Freight Forwarder for the goods under these conditions covers the period from
the time the Freight Forwarder has taken the goods in his charge to the time of their delivery.
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
4. The Freight Forwarder shall be liable for loss of or damage to the goods as well as for delay in delivery if
the occurrence which caused the loss, damage or delay in delivery took place while the goods were in his
charge as defined in Clause 2.1, unless the Freight Forwarder proves that no fault or neglect of his own has
caused or contributed to such loss, damage or delay.
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
5. If the goods have not been delivered within ninety consecutive days following such date of delivery as
determined in Clause 6.3., the Merchant may, in the absence of evidence to the contrary, treat the goods as
lost.
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
EXW When goods are When goods are Any/ multi – any Domestic use, when
placed at seller’s placed at seller’s modals seller is unfamiliar to
premises or at premises or at export
another named another named place
place
FCA When goods are When goods are Any/ multi - Contaneri
deliver to first deliver to first modals zed
carrier carrier
CIP When goods are At named place of Any/ multi - Contaneri When buyer wants
deliver to first destination modals zed seller to obtain
carrier insurance
DAP When goods are When goods are Any/ multi - Any
placed on the placed on the modals
arriving means of arriving means of
transport of transport of
destination destination
DPU When goods are When goods are Any/ multi - Contaneri
placed at disposal placed at disposal of modals zed
of buyer at a buyer at a named
named terminal of terminal of
destination. destination.
UNLOADED UNLOADED
DDP When goods are When goods are Any/ multi - any Seller is liable for
placed on the placed on the modals import Clearance
arriving means of arriving means of
transport of transport of
destination destination
FOB When goods are When goods are Sea inland Bulk
placed on board at placed on board at water way Cargo
named port of named port of
shipment shipment
10. CFR When goods are At named port of Sea inland Bulk Points of transfer of
placed on board at destination water way Cargo risk and cost are
named port of different
shipment
11. CIF When goods are At named port of Sea inland Bulk Points of transfer of
placed on board at destination water way Cargo risk and cost are
named port of different, when buyer
shipment wants seller to obtain
insurance
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2. Allocation of costs
Term Carriage Loading Main Unloading Insurance Export Import
type contract cost carriag cost at clearance clearance
at origin e/ destination
freight
+Buyer: if
named is not
seller’s
premises
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3. The uses of each group
Notification of delivery:
- The buyer should notify the seller of the time and place of delivery, the weight or quantity (in case of
tolerance at buyer’s option) in a timely manner in order to facilitate the process of delivery by the seller.
- If tolerance is at the seller’s option, notification of weight or quantity to the buyer is essential so that the
buyer can arrange proper insurance in a timely manner.
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- Except “DDP”, the seller does not have to clear for import in the country of destination. - D-terms are
used if the buyer does not wish to bear risks and costs associated with the goods in the process of bringing
the goods to destination.
Practice 1. Complete the table below by inserting the party (Seller or Buyer)
GROUP Pre Terminal Export Main Terminal Import On
carriage handling clearance Carriage handling clearance carriage
charge charge
(THC) at (THC) at
origin destination
Practice 3. Read the usage of 11 Rules in Incoterms 2020 and decide if the following statements are
True or False
EXW
1) It is more suitable for domestic use. T
2) Under EXW rule, the Seller’s liability is the maximum. F
3) Seller is responsible for loading goods onto a collecting vehicle. T
4) Export Clearance fees are for Seller’s account F
5) If Seller is unfamiliar to exporting business, it is advisable not to use EXW Rule. F
6) Risk to and cost of the goods will pass from seller to buyer when goods are placed at the disposal of the
Buyer at the agreed point.
7) Under this rule, goods can be transported by any mode. T
FCA
1) Loading cost at origin is for seller’s liability and account.
2) Export clearance is for Buyer’s account F
3) Buyer is responsible for main carriage T/F
4) In any case, delivery is deemed to have been complete when goods are loaded onto the arriving vehicle.
5. Seller is obliged to give notice to the buyer when delivery is completed.
6) If the carrier does not take delivery, the Buyer bears all risks of loss of or damage to the goods.
7) This rule can be used for all modes of transport.
CPT
1) Under this rule, the seller fulfils its obligation to deliver when when the goods reach the place of
destination.
2) Under this rule, risk passes and costs are transferred at the same place.
3) CPT requires the Seller to arrange transportation.
4) This rule is used irrespective of modes of transport.
5. The cost of loading at origin is for the Buyer’s account.
6. The cost of unloading at destination is for the Seller’s account
7. CPT is often used with Combined Bill of Lading.
CIP
1) CIP is the same as CPT in nature except under CIP, the Seller has an obligation to obtain insurance for the
Buyer.
2) Under this rule, if the buyer does not wish to have more insurance protection, seller is required to obtain
insurance only on minimum cover, i.e Clause C
3) The insurance shall cover the price provided in the contract plus 10% (i.e., 110%) and shall be in the
currency of the contract.
4. The Seller is advised to supply the goods under this rule because he will find no risk of the carrier’s failure
to take delivery of the goods.
DAT
1) "Terminal" includes any place, whether covered or not, such as a quay, warehouse, container yard or road,
rail or air cargo terminal.
2) Unloading cost at terminal is for the Seller’s account.
3. Delivery is completed only when the goods have been unloaded from the arriving means of transport and
have been placed the disposal of the buyer at the named terminal.
4. DAT is used for transportation by sea only.
DAP
1) Unloading cost at the named place of destination is for seller’s account.
2) If a contract of carriage requires the seller to bear unloading cost at destination, the seller is not entitled to
recover such costs from the buyer unless otherwise agreed between the parties.
3) DAP requires the Seller to pay import duties.
4) Under this rule, the seller is responsible for contracting for the carriage of the goods to the named place of
destination.
DDP
1) DDP represents the maximum obligation for the seller.
2) DDP is the only rule in Incoterms 2020 which requires the Seller to make import clearance for the goods.
3) If the parties wish the buyer to bear all risks and costs of import clearance, the DAP rule should be used.
4) The Seller is obliged to the Buyer to make an insurance contract.
5. This rule is used only when the buyer is unfamiliar to import business.
FAS
1) FAS means that the seller delivers when the goods are placed alongside any mode of transportation.
2) This rule should be used only for bulk commodity, not for containerized goods. 3) Under this rule,
the Buyer is obliged to contract for carriage of the goods
4) The cost of loading at origin is for the Seller’s account.
5. The buyer must give the seller sufficient notice of the particulars of the vessel within the agreed time.
FOB
1) Under this rule, delivery is complete when the seller has delivered the goods by placing them on board the
vessel nominated by the buyer at the loading point.
2) FOB should be used only for containerized goods only.
3) The trimming and stowage costs on the vessel at the port of shipment are for the Seller’s account. 4) If the
vessel nominated by the buyer fails to arrive on time and is unable to take the goods, any additional costs
arising therefrom shall be for the Buyer’s account.
5. The buyer must give the seller sufficient notice of the vessel name, loading point and, where necessary,
the selected delivery time within the agreed period.
CFR
1) The point of delivery under CFR is the same as FOB. T
2) Under this rule, Risk and costs are transferred from the seller to the buyer at destination. F
3) If the goods are containerized, it is not advisable for the parties to use this rule. T
CIF
1) CIF and CFR are of the same nature except that under CIF rule, the Seller is obliged to the buyer to make
an insurance contract. T
2) Under this rule, the Buyer should demand that insurance shall be contracted with underwriters or an
insurance company of good repute.
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Differences:
FOB FCA
1 Mean of
transportatio
n
2 Point of cost
transfer
3 Point of risk
transfer
4 Type of cargo
Practice 5. Write down the correct rules for the definitions below, subject to Incoterms 2020
1. The seller is responsible for all costs associated with delivering the goods, excluding import duties, to the
named point or place of destination at the country of importation. Risks transfer from the seller to the buyer
when goods are placed on the arriving means of transport at the buyer’s country. _________________ 2. The
seller delivers the goods, export cleared, close to the side a vessel, and does not bear risk or costs once the
goods have been handed over._________________
3. The seller is responsible for contracting and paying for main carriage, insurance excluded, and risk of loss
or damage to the goods once will pass to the buyer when the goods are shipped to the first carrier.
_________________
4. The seller is responsible for all costs and risks associated with delivering the goods to the wharf at the
named port of destination. _________________
5. The seller is responsible for main carriage by sea, insurance excluded, but not responsible for additional
costs or risk of loss or damage to the goods once they have been delivered on board the vessel at the port of
shipment. _________________
6. A seller is responsible for export clearance, obtaining insurance for his buyer, contracting for main
carriage and paying associated costs for bringing the goods to a named place at buyer’s country. Risk
transfers to the buyer when goods are delivered to the first carrier. _________________ 7. A seller is
responsible to make export and import clearance, contract for main carriage and pay all associated costs for
bringing the goods to a named placed at the buyer’s country. _______________ 8. A buyer is responsible
contract for main carriage, make import and export clearance, bear all risks once the goods are available for
loading onto a vehicle at his seller’s premises. _______________ 9. A seller is responsible to make delivery
at a named container yard in his country. Risks and costs transfer from the seller to his buyer when the goods
are delivered to the first carrier nominated by the buyer . ________________
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10. A seller is responsible to deliver the bulk goods on board the vessel at the port of shipment, pay
insurance and main carriage for bringing the goods to the port of discharge.
________________
Practice 6. Specify the obligations of the party (Seller/Buyer or No party) under Incoterms 2020 to pay for
the costs of the rules below: (The first row has been done as example)
Obligations \ RULE FCA CIP DAP FOB
Freight Forwarder 1 6 11 16
Documentation Fees
Insurance 5 10 15 20
Practice7. Choose the appropriate rule under Incoterms 2020 used in the following transactions -
Exporter: in HCM City, Vietnam
- Importer: in Osaka, Japan
- Commodity: Rice
- Quantity: 10,000 MT
- Destination: Osaka, Japan.
Select the most suitable term under Incoterms 2020 in the following cases:
Case 1:
- Seller is responsible for export clearance, arranging transportation methods, payment for main carriage,
insurance.
- Point of delivery: when the goods are delivered to the first carrier in Vietnam.
Your answer: _____________________________________________
Case 2:
- Seller is responsible for export clearance, arranging transportation methods, payment for main carriage,
insurance.
- Point of delivery: when the goods are available on the arriving means of transport at destination.
Your answer: _____________________________________________
Case 3:
- Seller is responsible for export clearance, arranging the vessel on behalf of the buyer.
- Buyer pays main carriage at destination, and insurance.
- Point of delivery: when the goods are placed on board the vessel at Saigon port.
Your answer: _____________________________________________
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Your answer: _______________________________________________________________
2. Who is responsible for obtaining insurance for the goods?
Your answer: __________________________________________
3. When the goods are delivered to the carrier at the port of Saigon, is the title (onwership) to the goods
transferred from the seller to the buyer at this point? Why or why not?
Your answer: _______________________________________________________________
___________________________________________________________________________