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Dunlap International, Inc. 23/Jan/2003. 2. What does your buyer mean when he asks you for TERMS"?. 1. SALES CONTRACT Quantity, quality, and price of goods.Delivery time.Warranties.Acceptance procedures.Limits of Liability.. What is the Governing Law? - The Uniform Commercial Code, the United Nations Convention on Contracts for the International Sale of Goods (CISG), or foreign laws?.

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1. © Dunlap International, Inc. 23/Jan/2003 1 FCA

2. © Dunlap International, Inc. 23/Jan/2003 2 What does your buyer mean when he asks you for “TERMS”? 1. SALES CONTRACT Quantity, quality, and price of goods. Delivery time. Warranties. Acceptance procedures. Limits of Liability.

3. © Dunlap International, Inc. 23/Jan/2003 3 What does your buyer mean when he asks you for “TERMS”? 2. PAYMENT TERMS Cash in Advance Open Account (Net 30, 60, 180 days, etc.) Documentary Collection (Sight/Time Draft) - ICC Uniform Rules for Collections (URC 522)**** Irrevocable Letter of Credit - ICC Uniform Customs and Practices for Documentary Credits, 1993 Revision (UCP500)**** ****Talk to your international banker for more details.

4. © Dunlap International, Inc. 23/Jan/2003 4 What does your buyer mean when he asks you for “TERMS”? 3. TRADE TERMS (TERMS OF SALE) = DELIVERY What will be the method of delivery? How to divide up transportation costs between Buyer and Seller? Who clears goods for export or import? Who pays costs of loading and discharging the goods? How should risk of loss of or damage to goods be divided up? Who should take out insurance against these risks? In international trade “terms of sale” generally refer to the conditions of the sale that stipulate where all the costs and risk change hands from seller to buyer. However there are several more questions that need to be answered. Best if they are spelled out in contract of sale In international trade “terms of sale” generally refer to the conditions of the sale that stipulate where all the costs and risk change hands from seller to buyer. However there are several more questions that need to be answered. Best if they are spelled out in contract of sale

5. © Dunlap International, Inc. 23/Jan/2003 5 Why are Trade Terms important? Trade terms tell parties what to do regarding: carriage of goods from seller to buyer export and import clearance Trade terms explain divisions of costs and risks between parties.

6. © Dunlap International, Inc. 23/Jan/2003 6 TRADE TERMS ARE UNDERSTOOD DIFFERENTLY IN VARIOUS COUNTRIES. WHOSE INTERPRETATION APPLIES??? Uniform Commercial Code or INCOTERMS? Buyer and Seller must “speak” the same language!

7. © Dunlap International, Inc. 23/Jan/2003 7 International Trade Terms US LAW Uniform Commercial Code Revised American Foreign Trade Definitions of 1941 FOB Factory FOB Port of Shipment FOB Inland Point in Country of Importation (In 1941 air freight & containerization didn’t even exist! INCOTERMS International Chamber of Commerce definitions of 13 common trade terms FOB Named Port (on seller’s side)

8. © Dunlap International, Inc. 23/Jan/2003 8 incoterms 2000 Published by the International Chamber of Commerce. Provides a set of international rules for the interpretation of the most commonly used trade terms in international trade. First published in 1936. Revisions made in 1953, 1967, 1976, 1980, 1990 and 2000 to bring rules current with changing international trade practices.

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