Faculty of International Management and Business

BSc in International Business Economics

International Trade

Seminar
Academic Year 2023/2024.
Autumn semester
 SUMMARY OF SEMINAR LEARNING MATERIALS
DEAR STUDENTS,
THE FOLLOWING SLIDES PROVIDE A SUMMARY OF SEMINAR TASKS AND
IMPORTANT TERMS, DEFINITIONS AND PROCEDURES RELATED TO INTERNATIONAL
TRADE.
THANK YOU FOR YOUR ACTIVE PARTICIPATION AT SEMINAR CLASSES AND
I WISH YOU A SUCCESSFUL EXAM PERIOD!
JUDIT GALAMBOS
COMMERCIAL INTERMEDIARIES
 COMMERCIAL INTERMEDIARIES

PLEASE CHOOSE THE RIGHT ANSWER(S)!

The duty of a sale representative

a. must exploit new export or import market channels in a certain country.

b. must sell or must purchase goods on behalf of and for the account of his own.
c. must organize the transportation, storage of commodities, goods.
d. must do and finance all promotion works.
e. must represent the interest of his principal company.
 COMMERCIAL INTERMEDIARIES

PLEASE CHOOSE THE RIGHT ANSWER(S)!

The duty of a sale representative

a. must exploit new export or import market channels in a certain country.

b. must sell or must purchase goods on behalf of and for the account of his own.
c. must organize the transportation, storage of commodities, goods.
d. must do and finance all promotion works.
e. must represent the interest of his principal company.
 COMMERCIAL INTERMEDIARIES

PLEASE MARK THE RIGHT ANSWER(S)!

Which activity is typical for a distributor?

The distributor
a. must find new export or import markets for his principal.
b. is entitled to sell or to purchase goods on behalf of and for the account of his own.
c. must assume full liability for the quality of the product sold by him.
d. should generally do and finance all promotion work (marketing activity) for the
goods in the host (import) country.
e. gets fee on commission basis for his performance.
 COMMERCIAL INTERMEDIARIES

PLEASE MARK THE RIGHT ANSWER(S)!

Which activity is typical for a distributor?

The distributor
a. must find new export or import markets for his principal.
b. is entitled to sell or to purchase goods on behalf of and for the account of his
own.
c. must assume full liability for the quality of the product sold by him.
d. should generally do and finance all promotion work (marketing activity) for the
goods in the host (import) country.
e. gets fee on commission basis for his performance.
 COMMERCIAL INTERMEDIARIES
PLEASE DEFINE WHICH STATEMENT FITS IN THE
DEFINITION!

The duty of a “del credere” agent:

a. must find new export or import deals for his principal.

b. is entitled to purchase goods on behalf of and for the account of his principal.
c. should take full financial responsibility for his customer if it does not perform.
d. must generally carry out all promotion and advertising activity for the goods at host
country-market.
e. can issue an invoice on a commission fee if the deal has been financially and
commercially finalized.
PLEASE DEFINE WHICH STATEMENT FITS IN THE
DEFINITION!

The duty of a “del credere” agent:

a. must find new export or import deals for its principal.

b. is entitled to purchase goods on behalf of and for the account of its principal.
c. should take full financial responsibility for his customer if it does not perform.
d. must generally carry out all promotion and advertising activity for the goods at host
country-market.
e. can issue an invoice on a commission fee if the deal has been financially and
commercially finalized.
DUTIES AND RIGHTS OF THE
CONTRACTING PARTIES
SEMINAR WORK SHEET 2. – TASK 5-8.
DUTIES OF THE CONTRACTING PARTIES
Work in groups and decide over the parties’ duties from under a contract of international sale!

1. To finance the costs of documents (such as commercial invoice, CE-Statement, Declaration for
Export, Authorization of Export) to the goods for transportation.
2. To transfer the title to the goods.
3. To commit a bank to issue undertakings of payment such as documentary credit.
4. To finance the costs of documents (such as Declaration for Free Circulation, Authorization of
Import) to the goods for transportation.
5. To act in any phase of the co-operation in good faith.
6. To give a specification regarding to the quality and quantity of goods to be manufactured.
7. To appoint a bank to issue a payment guarantee.
8. To repair the defective goods.
9. To enable repair or replacement of the defective goods.
10. To apply for the export customs clearance.
 SEMINAR WORK SHEET 2. – TASK 5-8.
DUTIES OF THE CONTRACTING PARTIES
1. To finance the costs of documents (such as commercial invoice, CE-Statement, Declaration for Export,
Authorization of Export) to the goods for transportation. S
2. To transfer the title to the goods. S
3. To commit a bank to issue undertakings of payment such as documentary credit. B
4. To finance the costs of documents (such as Declaration for Free Circulation, Authorization of Import)
to the goods for transportation. B
5. To act in any phase of the co-operation in good faith. S,B
6. To give a specification regarding to the quality and quantity of goods to be manufactured. B
7. To appoint a bank to issue a payment guarantee. B
8. To repair the defective goods. S
9. To enable repair or replacement of the defective goods. S
10. To apply for the export customs clearance. S
 SEMINAR WORK SHEET 2. – TASK 5-8.
DUTIES OF THE CONTRACTING PARTIES
11.To apply for the customs clearance procedure to obtain domestic status.
12.To provide evidence on the quality of goods.
13.To take over the goods.
14.To hand over the goods.
15.To check the quantity of goods before loading.
16.To make arrangement to inspect the quantity of goods before discharging.
17.To give special labeling to the goods.
18.To provide information on the national labeling requirements.
19.To render after-sale services.
20.To inspect or let the goods inspect after the arrival.
 SEMINAR WORK SHEET 2. – TASK 5-8.
DUTIES OF THE CONTRACTING PARTIES
11.To apply for the customs clearance procedure to obtain domestic status. B
12.To provide evidence on the quality of goods. S
13.To take over the goods. B
14.To hand over the goods. S
15.To check the quantity of goods before loading. S
16.To make arrangement to inspect the quantity of goods before discharging. S,B
17.To give special labeling to the goods. S, B (if it is the distributor)
18.To provide information on the national labeling requirements. B
19.To render after-sale services. S, B (if it is the distributor)
20.To inspect or let the goods inspect after the arrival. B
 SEMINAR WORK SHEET 2. – TASK 5-8.
DUTIES OF THE CONTRACTING PARTIES
21. To send an aviso (notice) about the time when the goods are ready for shipping.
22. To take all necessary preliminary measures to pay.
23. To take all necessary measure to preserve the good condition of the goods.
24. To ensure additional time for a repeated performance.
25. To mitigate the potential damages.
26. To provide information on the ingredients, components of the goods.
27. To convey information on specific packaging requirements.
28. To provide certificate on the conformity of goods.
29. To send sufficient notices regarding the ETA.
30. To send the notices on the period where the boarding can be carried out.
 SEMINAR WORK SHEET 2. – TASK 5-8.
DUTIES OF THE CONTRACTING PARTIES
21. To send an aviso (notice) about the time when the goods are ready for shipping. S
22. To take all necessary preliminary measures to pay. B
23. To take all necessary measure to preserve the good condition of the goods. S,B
24. To ensure additional time for a repeated performance. S (for the payment) B (for the delivery)
25. To mitigate the potential damages. S,B
26. To provide information on the ingredients, components of the goods. S
27. To convey information on specific packaging requirements. B
28. To provide certificate on the conformity of goods. S
29. To send sufficient notices regarding the ETA. S
30. To send the notices on the period where the boarding can be carried out. B
 SEMINAR WORK SHEET 2. – TASK 5-8.
DUTIES OF THE CONTRACTING PARTIES
31. To send the required notice to enable the other party for taking over the goods.
32. To obtain all documents to ensure the right of disposition upon the goods.
33. To deliver the documents of title.
34. To release the mandatory data of consignments towards the customs authority.
35. To mandate the freight forwarding company.
36. To conclude the contract of insurance relating to the conformity.
37. To constitute the contract of cargo insurance.
38. To prove the non-compliance of goods.
39. To bear the costs of payment.
40. To take the goods in custody in case of non-acceptance.
 SEMINAR WORK SHEET 2. – TASK 5-8.
DUTIES OF THE CONTRACTING PARTIES
31. To send the required notice to enable the other party for taking over the goods. S
32. To obtain all documents to ensure the right of disposition upon the goods. S
33. To deliver the documents of title. S
34. To release the mandatory data of consignments towards the customs authority. S,B
35. To mandate the freight forwarding company. S,B dependent on Incoterms 2020
36. To conclude the contract of insurance relating to the conformity. S
37. To constitute the contract of cargo insurance. S,B dependent on Incoterms 2020
38. To prove the non-compliance of goods. B
39. To bear the costs of payment. B
40. To take the goods in custody in case of non-acceptance. B
INCOTERMS 2020
 INCOTERMS 2020

Which delivery term might have been stipulated if following costs were calculated by the seller in the export
price of the goods?

Place of origin: Budapest

Loading and unloading: seller
Goods: containerized cargo

Ex Works price.
+Costs of packaging.
+Costs of export customs clearance.
+Costs of documents for exporting.
+Costs of freight to Cargo Airport Antwerp.
+ Terminal Handling charges in Cargo Port of Antwerp.
 THE ANSWER IS…

FCA – FREE CARRIER (… NAMED PLACE - SELLER’S PREMISES)

FCA CARGO PORT OF ANTWERP

 INCOTERMS 2020

Which delivery term might have been stipulated if following costs were calculated by the seller in the export
price of the goods?
Place of origin: Budapest
Loading and unloading: seller
Goods: containerized cargo

Ex Works price.
+Costs of packaging.
+Costs of export customs clearance.
+Costs of documents for exporting.
+Costs of freight and other transportation costs to Moscow.
+Costs of freight insurance to Moscow.
+Customs clearance costs and expenses at the import procedure.
+Customs duty and VAT
 THE ANSWER IS…

DDP – DELIVERED DUTY PAID AT NAMED PLACE OF DESTINATION

 INCOTERMS 2020
Which delivery term might have been stipulated if following costs were calculated by the seller in the export
price of the goods?
Place of origin: Budapest
Goods: containerized cargo

Ex Works price.
+Costs of SWP packaging.
+Costs of export customs clearance.
+Costs of documents for exporting.
+Costs of loading.
+Costs of freight as to the contract of carriage of goods by sea.
+ Costs of issuance of ocean Bills of Lading.
+ Costs of unloading of the goods at the port of destination.
+ Costs of insurance cover from the loading port to the port of destination.
 THE ANSWER IS…

CIF – COST, INSURANCE AND FREIGHT NAMED PORT OF DESTINATION

THE RISKS HAVE PASSED OVER TO THE BUYER AT THE LOADING PORT: CIF
DOCUMENTARY CREDIT/SHIPPING DOCUMENTS
 • Ocean/marine bills of Lading:
Legal features:
✓Prima facie evidence of the receipt of
cargo;
✓Conclusive evidence of the contract
of carriage of goods by sea;
✓Negotiable document of title to the
goods;
Due to these features, it is used in
documentary collections and credits as
collaterals.
Actors:
✓Shipper;
✓Carrier or master or agent of the
carrier;
✓Consignee;
 DOCUMENTARY CREDIT/SHIPPING DOCUMENTS

Task No.1.
Which statement is true for clean ocean Bs/L? Please mark the right answer(s)!
The clean Bs/L
a. do not evidence the existence of the contract of transportation.
b. contain positive remarks for the quality of the commodity.
c. must be acquired in full set to have supported property right in the goods.
d. contain positive notations for the packaging of the goods (commodity).
e. must be present and handed over to demand the carrier to discharge the goods.
 DOCUMENTARY CREDIT/SHIPPING DOCUMENTS

Task No.1.
Which statement is true for clean ocean Bs/L? Please mark the right answer(s)!
The clean Bs/L
a. do not evidence the existence of the contract of transportation. False
b. contain positive remarks for the quality of the commodity. False
c. must be acquired in full set to have supported property right in the goods. True
d. contain positive notations for the packaging of the goods (commodity). False
e. must be present and handed over to demand the carrier to discharge the goods. True
 DOCUMENTARY CREDIT/SHIPPING DOCUMENTS
Task No.1.
Explanation:
The clean ocean Bills of Lading states that
• the goods (consignment) were loaded
• in apparently good condition and order.
• Apparently means that captain cannot see any physical damage on the external packaging.
• The bills of lading as document of title must be obtained in full set (3/3) to have the fully
supported title to the goods (property in goods).

• The Bills of lading are contracts of affreightment (=ocean transportation) including the general
terms and condition of the carriage of goods by sea.
 DOCUMENTARY CREDIT/SHIPPING DOCUMENTS
Task No.2.
The Marine/ocean Bill of Lading - which is clean, and blank endorsed - is deemed
Please mark the right answer(s)!
a. prima facie evidence of the receipt of cargo in apparently good order and condition.
b. not to be a document of title authorizing a holder in due course.
c. to be conclusive evidence on the contract of transportation.
d. to have been signed by the forwarding agent.
e. to contain positive notation for the goods (e.g., the goods are in good condition).
f. to be negotiable by a pure delivery.
 DOCUMENTARY CREDIT/SHIPPING DOCUMENTS
Task No.2.
The Marine/ocean Bill of Lading - which is clean, and blank endorsed - is deemed
Please mark the right answer(s)!
a. prima facie evidence of the receipt of cargo in apparently good order and condition. True
b. not to be a document of title authorizing a holder in due course. False
c. to be conclusive evidence on the contract of transportation. True
d. to have been signed by the forwarding agent. False
e. to contain positive notation for the goods (e.g., the goods are in good condition). False
f. to be negotiable by a pure delivery. True
 Types of ocean Bills of Lading 6.
The ocean bills of lading can be:
clean which means that the consignment has been taken over by the carrier
in „apparently good order and condition.”
The seller can submit only clean ocean bills of lading in the documentary
credit to demand the bank to pay. The seller can submit a blank endorsed
ocean bills of lading to the bank. What is the blank endorsement?
The seller puts his name onto the back side of the ocean bills of lading but
does not name anyone. Why? Because the bank is an intermediary.
unclean which means that the carrier has made positive notation into the
paper, because he saw sign(s) of injury of the consignment, and wants to
disclose its liability for any damage attributable to the injury.
Documents of marine transportation: Booking note; Mate’s receipt;
 Negotiable Documents
Ocean Bills of Lading, a Promissory Note, or a Bill of Exchange
has the effect of transferring all the rights represented by the instrument
to another individual.
Negotiation has ipso iure (=by virtue of law) effect in change of ownership
(or title to the goods, or claims).
The ordinary manner in which an individual endorses a negotiable document
is by placing his or her signature on the back of it.

The endorsement can be full or blank. Actors: Endorser and endorsee.

The formal of the endorsement:
To the order of…..XY or named= Holder in due course;
To the order of…..(not named)= Bearer or Holder that is the bank in a
documentary credit.
 DOCUMENTARY COLLECTION

https://www.ubs.com/ch/en/corporates/international/trade-
exportfinance/documentary-collection.html
 Documents & Actors Documentary collection
Documents:
"Financial documents" means bills of exchange, promissory notes, cheques, or other similar
instruments used for obtaining the payment of money;
"Commercial documents" means invoices, transport documents, documents of title or other
similar documents, or any other documents whatsoever, not being financial documents.
Actors:
Principal = Exporter → has to bear all costs of the process; contract of agency.
Remitting bank= seller’s bank: the bank to which the principal has entrusted the handling of a
collection;
Presenting and/or Collecting bank: Buyer’s bank; contract of agency between the remitting
bank and the involved banks; They have custody-keeper’s liability.
Drawee is the one to whom presentation is to be made in accordance with the collection
instruction.
 TYPEs of Documentary Collections
As to the type of documents to be collected
▪ Only financial documents, such as bill of exchange, promissory note or cheque will be collected:
clean collection
▪ The price of goods will be collected against discharge of commercial documents (with or without
financial documents): documentary collection;
As to the time of payment
▪ At sight payment=documents against payment (D/P);
▪ Deferred payment without security;
▪ Deferred payment with security=documents against acceptance of bill of exchange drawn upon the
buyer; (D/A);
As to the channels of goods and their documents
▪ 1st channel: the goods and the respective documents move together: Direct or bank-collection;
▪ 2nd channels: the goods and the respective documents move separately from each other: Indirect (or
freight forwarding) Documentary Collection;
 DOCUMENTARY COLLECTION

Please mark the right answer(s)! In case of a documentary collection:

a. The principal is the payer who entrusts the bank to handle a collection order.

b. All shipping documents must be accompanied by a collection order (instruction) issued by the seller/exporter.

c. The collecting bank can make a protest in lieu of the principal in case of non-payment of the obliger (payer).

d. If goods will directly be dispatched to or to the order of banks, they have the duty to take the delivery of them.

e. If the principal instructs banks to organize the storage of the goods, the concerned bank must follow this

instruction.
 DOCUMENTARY COLLECTION

Please mark the right answer(s)! In case of a documentary collection:

a. The principal is the payer who entrusts the bank to handle a collection order.
b. All shipping documents must be accompanied by a collection order (instruction) issued by the
seller/exporter.
c. The collecting bank can make a protest in lieu of the principal in case of non-payment of the obliger
(payer).
d. If goods will directly be dispatched to or to the order of banks, they have the duty to take the delivery
of them. F
e. If the principal instructs banks to organize the storage of the goods, the concerned bank must follow
this instruction.
 DOCUMENTARY COLLECTION

Please mark the right answer(s)! In case of 90 days D/A documentary collection:

a. The remitting bank is the drawee of the B/E.

b. The collecting bank issues a promissory note.
c. The presenting bank issues the B/E which will be presented for acceptance to the obligor/buyer.
d. The drawer is the payee, and the B/E will be drawn upon and accepted by the obligor.
e. The presenting bank must send back the draft free of charge to the drawer.
 DOCUMENTARY COLLECTION

Please mark the right answer(s)! In case of 90 days D/A documentary collection:

a. The remitting bank is the drawee of the B/E.

b. The collecting bank issues a promissory note.
c. The presenting bank issues the B/E which will be presented for acceptance to the obligor/buyer.
d. The drawer is the payee, and the B/E will be drawn upon and accepted by the obligor.
e. The presenting bank must send back the draft free of charge to the drawer.
 DOCUMENTARY COLLECTION

In case of a D/P freight forwarder (or indirect) documentary collection please mark “T” if you find the
statement true or mark “F” if you find it false.

F/T The goods will be transported to the address and the disposal of the freight forwarder.
F/T The goods will be transported to the address and the disposal of the collecting bank.
F/T The buyer can demand the freight forwarder to give him a sample from the shipment.
F/T The seller will pay for the storage of goods in the warehouse of the freight forwarder.
F/T The buyer must hand over a promissory note to the freight forwarder to get the goods.
F/T The buyer can get the goods if the seller has instructed the freight forwarder to release the goods to him.
F/T The freight forwarder acts as appointed person of the seller.
F/T If the buyer does not appear for the documents held by the presenting bank, the seller can sell it to another
person, because he continuously keeps the goods under control.
 DOCUMENTARY COLLECTION

In case of a D/P freight forwarder (or indirect) documentary collection please mark “T” if you find the
statement true or mark “F” if you find it false.

F/T The goods will be transported to the address and the disposal of the freight forwarder.
F/T The goods will be transported to the address and the disposal of the collecting bank.
F/T The buyer can demand the freight forwarder to give him a sample from the shipment.
F/T The seller will pay for the storage of goods in the warehouse of the freight forwarder.
F/T The buyer must hand over a promissory note to the freight forwarder to get the goods.
F/T The buyer can get the goods if the seller has instructed the freight forwarder to release the goods to him.
F/T The freight forwarder acts as appointed person of the seller.
F/T If the buyer does not appear for the documents held by the presenting bank, the seller can sell it to another
person, because he continuously keeps the goods under control.
INSURANCES IN INTERNATIONAL TRADE
PLEASE EXPLAIN THE FOLLOWING DEFINITIONS!
✓Applicant: the person applying for an insurance policy
✓Broker: an intermediary who sells, solicits, or negotiates insurance on behalf of a client for compensation.
✓Underwriter/underwriting: professionals who evaluate and analyze the risks involved in insuring people and assets. Insurance
underwriters establish pricing for accepted insurable risks. The term underwriting means receiving remuneration for the
willingness to pay a potential risk.
✓ „Slip”: the document used by a broker to set out details of a risk
✓Indemnity: is the sum that the insurance company pays to the insured that equals to the value of the damage – not a
compensation!
✓ Jettison: to push part of the delivered goods into the water or to drop out of the aircraft in order to lighten a vessel or aircraft
or to improve its stability in an emergency.
✓ICC A, ICC B and ICC C : Institute Cargo Clauses
✓Exclusions: damages which insurance does not cover (from ordinary leakage to war and civil commotions…)
SEMINAR WORK SHEET 9. – TASK NO. 4.

Which risks are generally disclosed (cannot be covered) in Marine Cargo Insurance?

a. The damages caused by the inadequate packing.

b. General Average.
c. The risks due to war, civil commotions.
d. The damages caused by the loss of weight due to drying.
e. The damages caused by the rainwater.
f. Pilferage, theft; These risks can be covered by an additional insurance TPND=Theft, Pilferage and Non-delivery.)
SEMINAR WORK SHEET 9. – TASK NO. 4.

Which risks are generally disclosed (cannot be covered) in Marine Cargo Insurance?

a. The damages caused by the inadequate packing.

b. General Average.
c. The risks due to war, civil commotions.
d. The damages caused by the loss of weight due to drying.
e. The damages caused by the rainwater.
f. Pilferage, theft; These risks can be covered by an additional insurance TPND=Theft, Pilferage and Non-delivery.)
SEMINAR WORK SHEET 9. – TASK NO. 4.
Please mark the “T” if you find this statement TRUE and “F” if you find it False!
If there is a loss, damage or expense that can be ascribed to (attributed to)
F/T the insolvency of the shipowner then the insurance company will indemnify the assured person.
F/T salvage acts, then these costs will be paid by the insurance company.
F/T a seize or an arrest made by the customs authority, then the concerned losses will be identified by the insurance
company.
F/T a fire turned out in the vessel, was due to the unseaworthiness of the vessel, so the insurance company will pay
a compensation to the assured person.
F/T collusion of the vessel with containers then the insurance company will pay indemnification to the assured
person.
F/T The subrogation means that the insurance company can claim a compensation from the person who is liable for
the damage.
F/T The principle of utmost good faith refers the obligation of a contractor before the conclusion of the insurance.
F/T The ICC C (FPA in the old terms) clause means that the insurance company must pay if there is total loss.
 SEMINAR WORK SHEET 9. – TASK NO. 4.

Please mark the “T” if you find this statement TRUE and “F” if you find it False!

If there is a loss, damage or expense that can be ascribed to (attributed to)

F/T the insolvency of the shipowner then the insurance company will indemnify the assured person.
F/T salvage acts, then these costs will be paid by the insurance company.
F/T a seize or an arrest made by the customs authority, then the concerned losses will be identified by the insurance
company.
F/T a fire turned out in the vessel, was due to the unseaworthiness of the vessel, so the insurance company will pay
a compensation to the assured person.
F/T collusion of the vessel with containers then the insurance company will pay indemnification to the assured
person.
F/T The subrogation means that the insurance company can claim a compensation from the person who is liable for
the damage.
F/T The principle of utmost good faith refers the obligation of a contractor before the conclusion of the insurance.
F/T The ICC C (FPA in the old terms) clause means that the insurance company must pay if there is total loss.
THANK YOU FOR YOUR KIND ATTENTION!