Actividad de proyecto 10

1. Why did some of the lecturers say that understanding the way Incoterms
work could be a quite confusing area?

Because quite often people see the incoterms like it was the entire
agreement but its cover just some aspects that help to stablish in a universal
way responsibility as example customs, freight, and assurances.

2. How are Incoterms useful to avoid misunderstanding when talking bot

international trade?

The use of Incoterms eliminates inconsistencies in language by giving all

parties the same definition of specific terms within a trade agreement. As a
result, the risk and costs disputes are reduced since all parties clearly
understand their responsibilities on all the aspects related with shipment,
documentation, customs, and assurances expenses.

3. Why do many people see the incoterm ex-works (EXW) as the simplest way
to understand how the incoterms work?

It is considered the simplest way to export because the whole responsibility

and logistics costs is on the buyer, the seller just needs to have all the
goods ready on the date agreed with the buyer for the colleting in the own
seller's place.

4. Why could you use a wrong incoterm for your business if there is not right or
wrong when using an Incoterm?

There is not a wrong or right incoterm when you have a previous knowledge
about the costs and expenses and how it impacts your gain in every
transaction, the mean inconvenience pops up when you negotiate an
incoterm being unclear about the increasing cost related with every term
because it might crop dramatically your profit.

5. How many Incoterms should you use to stablish a good contract for your
international trade?

It’s necessary only one INCOTERM into the contract, the term depends on
company capabilities, experience and risks willing to assume.
6. What are some of the operations that generate costs and must be paid either
by the buyer or the seller?

Some of the operations which generate costs are:

 Packing
 Store
 Handling transit
 Costs
 International freight
 Assurances

7. What are the three basic elements that Incoterms cover? Briefly explain how
they work all together in a contract of sale.

The incoterms define the role between seller and buyer at an international
transaction. Who must do what and at what time? In the contract between
the seller and the buyer, the following is determined:

 The duties of the buyer and the seller.

 Who takes care of the insurances, licenses, permissions, and all
other formalities?
 Who arranges the transport until which point and who is responsible
for this?
 He points where the costs and risks pass on from the seller to the
buyer.

8. Why is it important to do a market research before establishing what the

best incoterm(s) should be taken into account for your sales contract or
agreement?

Market research its necessary mostly because it gives you a better

understanding about what is the most common incoterm used in a
destination country or other competitors in additional it shows the costs and
increases that will directly affect the final gain.

9. What aspects should be taken into account to establish the best incoterm(s)
to define the shipment of services?

It’s necessary to consider firstly the additional cost that entails the several
incoterms, another important point is being aware about the existing
restrictions and facilities because it can cause some situations like an
additional or unexpected costs.
10. Why would it be necessary to add extra words or explanation in your sales
contract when using incoterms?

Because the incoterm it’s not a contract it means that all the aspects related
with method of payment, guarantees, quality and legal disputes resolutions
are not covered issues by an incoterm therefore it’s an imperative being
accurate and clear about as much as possible for avoiding
misunderstanding on these subjects.