1、1Homework of Chapter 3 -Term of Intl. TradeI. True or False. For the false statement, please state the specific reasons. 1) Price terms are mainly applied to determining the prices of commodities in international trade. ( F Price term is used to indicate the international trade import and export com
2、modity price structure, both parties shall bear their respective responsibilities, the share of the cost borne and risk transfer of ownership and term.) 2) As an exporter, you concluded a deal with an American on basis of EXW; then your transaction risk is reduced the minimum degree. ( T ) 3) On CIP
3、 terms, the seller must pay the freight rate and insurance premium as well as bear all the risks until the goods have arrived at the destination. ( F This term obliges the seller to contract for insurance and pay the insurance premium for the carriage of the goods in addition to whatever should be c
4、overed under CPT. The transfer of risk happens when the seller delivers the goods to the carrier he chooses at the place of shipment.) 4) DES means that the seller must deliver the goods to the buyer at the destination on his own charges and at his own risks. ( T ) 5) If you have signed a contract w
5、ith a Japanese buyer on the basis of FOBST, you must be responsible for stowing and trimming the goods at your own expense. ( T ) 6) CFR Landed in indicate that the seller must guarantee the arrival of the goods at the destination without any damage. (F The seller is only responsible for covering th
6、e transport charges under the contract of carriage, the ocean freight and any other handling charges due to contingencies or not included in the contract of carriage would fall upon the buyer.) 7) The main difference between a CIF contract and a DES contract lies in the fact that former is a symboli
7、c delivery of goods, whereas the latter is a physical delivery of goods. (T ) 8) The common feature of an FOB contract and an FAS contract is that the seller must load the goods on a named ship. (F The common feature of FOB and FAS contract is that the seller is called upon to deliver the goods to a
8、 carrier appointed by the buyer. But on FAS terms the seller needs only to put the goods within the reach of the ships tackle. It is not responsible for loading the goods on board.) 9）Both DAT and DAP should be followed by named place of destination. ( T )10) According to Incoterms 2010 under DAP th
9、e buyer is not responsible for unloading the goods from the arriving vehicle at the place of destination. (F Under DAP at the time of delivery the risk and cost related to unloading the goods are for the account of the buyer.)2II. Suppose you are an exporter and your business place is in China; you
10、judge if the following statements are correct or not and give your reasons. 1) Offer 1,000 bales of Cotton Price Goods at USD 150 per bale FOB New York.Incorrect. On FOB terms the sellers responsibilities end when he delivers the goods at the port of shipment, that is, at one of the ports of China.
11、2) We accept your offer for 500 paper cases of Chinese Black Tea at USD 400 per case CIF Shanghai. Incorrect. On CIF terms the seller pays for transportation and insurance till the goods reach the destination; the terms should be followed by the port of destination.3) Your order for Bitter Apricot K
12、ernels at USD 15 per kilo CPT Liverpool has already been delivered. Correct. According to CPT terms we can know it.4) We appreciate your quotation for DD Raincoats at USD 100 per dozen CIP Guangzhou, but the price is rather on the high side.Incorrect. On CIP terms the seller pays for transportation
13、and insurance till the goods reach the destination; the terms should be followed by the port of destination. 5) Your counter-offer for Fairy Brand Leather Shoes at CAND 50 per pair CFR Vancouver has been well received. Correct.6) We shall execute as soon as possible your order for 1,000 sets of Flyi
14、ng Fish Typewriters at USD 30 per set FCA Beijing. Correct.7) We confirm having sold to you 2,000 dozen Pillow Cases at French Francs 50 per dozen FOB Marserlles. Incorrect. On FOB terms the sellers responsibilities end when he delivers the goods at the port of shipment, that is, at one of the ports
15、 in China.8) Referring to your enquiry of July 15, we quote as follows: Sharp Vacuum Cleaner 500 sets USD 120 per set. Incorrect. On DES terms the seller must put the goods under the actual control of the buyer at the port destination; a port of destination should be attached to DES. 9) We offer Chi
16、nese Tin Plate DDP Shanghai Reply here July 10 . Incorrect. On DDP terms the seller must physically deliver the goods to the buyer at a named place in the import country, that is, a named place of destination should be added to DDP terms. 10) Our Sales Confirmation No. 9405 for 1,000 Sewing Machines
17、 at USD 45 CIF Hong Kong is being airmailed today. Correct.3III. Case study 1) A Chinese import and export company concluded a Sales Contract with a Holland firm on August 5, 2000, selling a batch of certain commodity. The contract was based on CIF Rotterdam at USD 2500 per metric ton. The Chinese c
18、ompany delivered the goods in compliance with the contract and obtained a clean-on-board Bill of Lading. During transportation, however, 100 metric tons of the goods got lost because of rough sea. Upon arrival of the goods, the price of the contracted goods went down quickly. The buyer refused to ta
19、ke delivery of the goods and effect payment and claimed damages from the seller. How would you deal with this case? In this case, the contract between the seller and buyer was on CIF terms, so it was not right for the buyer not to take delivery of the goods. According to CIF terms, the sellers respo
20、nsibilities ended when he loaded the goods on board of the ship and paid the freight and insurance premium; the risk separation was the side of the ship; the risks were transferred to buyer or other parties concerned after the seller put the goods on board. Since the documents presented by seller we
21、re right and proper, the seller could directly get paid from the Issuing Bank of the L/C.However, part of the goods got lost due to rough sea, it is not the case because there are other two sub-contracts existing on CIF terms-I/P and Bill of Lading. In this case the buyer could claim damages with th
22、e insurance company, but he had to take delivery of goods. The actual reason for the buyers refusal to accept the goods in this case was that the prices of goods were going down. This is unjustified. 2) A Chinese trading company E concluded a transaction in steel with a Hong Kong company W on the ba
23、sis of FOB China Port. Company W immediately resold the steel to Company H in Libya on the terms of CFR Liberia. The L/C form W required the price terms to be FOB China Port and the goods to be directly delivered to Liberia. The L/C also required “Freight Prepaid” to be indicated on Bill of Lading.
24、Why did Company W perform so? What should we do about it?In this case the contract was concluded between Company E and Company W on FOB term, according to which the seller (Company E) ended his responsibilities when he delivered the goods on board the ship at the port of shipment. He did not need to
25、 pay for transportation of the goods or the insurance premium. Therefore, it was not right for W to ask E to pay the freight and indicate “Freight Repaid” on the Bill of Lading. The reason why W asked E to do that might be that he wanted to transfer the freight charges to E. However, in practical dealings, foreign trade companies often come across such situations, especially when a contract is concluded with an agent, who wants to resells the goods. In this case, E might comply with Ws request, but he had to indicated that the freight should be borne by W.
