CH 5 LSB
bill of lading purposes (3)
(1) it is a receipt of goods from the carrier indicating any damage to the goods that was visible at the time of loading, (2) it is the contract of carriage between shipper and carrier(transport document), (3) it is the document of title to the goods described in it
International Rules for the Interpretation of Trade Terms
INCOTERM ; include 13 trade terms plus variations on them; groups E, F, C, and D
DDU risk of loss
When goods are delivered at location specified; seller should insure for own protection
CIF risk of loss
When goods cross ship's rail at port of shipment; if damage or loss, buyer files claim for insurance
document of title
a document that evidences the ownership of goods it represents. negotiable or nonnegotiable
clean bill of lading
a receipt that contains no notations by the carrier that indicate any visible damage to the goods, package, drums, or other containers being loaded; all buyers should insist this be apart of the contract
Other transport documents
air waybills, forwarder's bill of lading, multimodal transport documents, electronic data interchange
forwarder's receipts
are different than the bill; only acknowledgements that the forwarder has received the goods for shipment; nonnegotiable and usually will not be accepted for payment under a draft unless allowed
DES buyer
arrange and pay cost of unloading goods from ship and land transport; enter through customs
DES: seller
arrange transport; pay freight to port of foreign destination; notify buyer of expected arrival date; place goods at disposal of buyer aboard ship within time called for in contract
consignee of straight bill of lading
can be the foreign buyer (as in the case of a sale on open account terms); can be the buyer's bank or customs agent; not required to produce the actual bill in order to receive delivery
FAS Buyer
choose ocean carrier, arrange transportation pay freight charges, enter goods through customs
FOB buyer
choose ocean carrier; pay freight; enter goods through customs
types of bills of lading
clean, onboard, received for shipment, straight
Shipment(departure) Contrat
contract calls for seller to ship goods by carrier but not deliver to a named place; risk of loss passes to the buyer when goods are first given to the carrier; common in international trade bc sellers prefer not to be responsible for goods at sea
CFR seller
contract for transport; pay freight charges to the named port of destination; arrange for loading goods on board ship, usually seller's choice; pay costs of loading; obtain export license; notify buyer of shipment; documentary sale is assumed; tender documents to buyer
CIF seller
contract for transport; pay freight charges to the named port of destination; arrange for loading goods on board ship, usually seller's choice; pay costs of loading; obtain export license; notify buyer of shipment; documentary sale is assumed; tender documents to buyer; purchase marine insurance in amount of invoice price plus 10%; insurance policy is assigned to buyer; documentary sale is assumed
DDP seller
contract transport and pay freight charged to put goods by the mode of transportation; notify buyer of arrival fate; may be used for documentary sale; seller usually contracts for carriage to inland port of; entry in importing country; seller obtains import license; pays import duties; clears goods through customs; place of destination specified is usually buyer's place of business
DDU seller
contract transport and pay freight charged to put goods by the mode of transportation; notify buyer of arrival fate; may be used for; documentary sale; seller usually contracts for carriage to inland port of; entry in importing country
CISG
convention on contracts for the international sale of goods - contains provisions that assign the risk of loss in Articles 66-70.
Marine insurance policy
covers risk of the ocean voyage
commercial invoice
describing the goods and showing the price to be paid is always required
D terms
destination (arrival) contracts, seller has huge amount of responsibility and must deliver goods at port of destination and bear risk throughout the journey
important about straight bill of lading
do not represent transferable title to the goods and cannot be used as the sole collateral for a loan; the use of straight bill of lading is when there is not financing involved
bill of lading
document issued by the carrier to a shipper upon receiving goods for transport
warehouse receipt
document of title issued by warehouse owner (the bailee) when a bailor places goods in the warehouse for storage
Trade Terms (shipping terms)
expressed as abbreviation; shorthand method that permits the parties to express their agreement quickly, with little confusion and few language problems; must define the contract after chosen
freight forwarders
federally licensed; act as custom brokers for importers; handle foreign shipment, book transportation, prepare docs and custom forms; packing and transporting cargo, evaluating alt. ship option, obtain freight weights; issue straight or order BoL
multimodal(combined) transport operators
firms that arrange for cargo to the sent via several different carriers in one journey; after operators contract with each carrier he or she is responsible for the shipment of goods throughout the time of their transport
forwarder's bill of lading
freight forwarders act as agents for seller; only certain forms of forwarder's bills are acceptable in a documentary sale; allow claims only against the forwarder itself, not the carrier; carrier only liable to the forwarder who holds carrier's BoL
advantage of onboard bill of lading
gives assurance that the goods described in the bill of lading have actually been loaded and are under way to the buyer; insulates the exporter from loss of goods before loading
EXW: Seller responsibilities
have goods ready for pick up at location on the contract, usually place of seller's business
Destination(arrival) Contract
if contract calls for seller to deliver the goods to a particular destination, such a buyer's city or place of business; the risk of loss passes to the buyer when the goods are tendered to the buyer at the point of destination
CISG Article 67
if contract calls for the goods to be handed over to carrier at particular place, then risk of loss passes to buyer at place; HOWEVER if seller only needs to ship and no place is mentioned, risk passes to buyer when goods handed over to 1st carrier
Air Waybills
issued by air cargo carriers; carrier delivers to consignee named on bill; can name a foreign bank as a consignee and specify that the goods be held at the pt of destination until payment is guaranteed by bank or until bank approves release to buyer
received for shipment bill of lading
issued by carrier only upon having received goods for transport; limited use in cases of delay between delivery to carrier and being loaded; can turn into an onboard bill of lading if the carrier notes the vessel name and date of loading on the bill
disadvantage of clean bill of lading
it only inspects obvious damages when goods were loaded, not during the voyage
advantage of EDI
lets buyer & seller track goods that in transit & lets parties make adjustments when the goods are delayed; faster transmission of BoL & other docs lets seller get faster payment, translates into improved cash flow, eliminates need to prepare extra copies
FOB seller
load goods on board the ship specified by the buyer within the time called for in the contract; pay costs of loading; obtain export license
Step 2 of DC also includes
marine insurance policy, certificate of origin, commercial invoice, documentary draft, certificate inspection, weight analysis, government export license
certificate of origin
may be required by customs regulations in the buyer's country
CIF: Cost, Insurance and Freight
named port of destination; ocean or water
CFR: Cost and Freight
named port of destination; ocean or water only
DES : Delivered Ex Ship
named port of destination; ocean or water; often used when ship is chartered by seller
DDP : Delivery Duty Paid
named port of destination; ocean, air, truck, rail, multimodal
DDU : Delivery Duty Unpaid
named port of destination; ocean, air, truck, rail, multimodal
FAS: Free Along Ship
named port of ship; Ocean or water only
FOB: Free on Board
named port of shipment; ocean or water only
documentary draft
needed to expedite the exchange of money; negotiable instrument used to make payment for the invoice and for the bill of lading; tells how much each party will pay when purchasing the bill of lading
difference from air and ocean bills
negotiability in air transport is not as important as ocean transport because the goods are not out of the control of the parties for long periods; even though the sale its not documentary sale, the seller can guarantee payment in air waybills
bearer documents
negotiated by a signed endorsement and delivery
order documents
negotiated by delivery
FAS: seller
place goods alongside the ship specified by the buyer (on dock or barge) within the time called for in the contract, ready for loading; obtain export license
E Terms
place lowest responsibility on seller; seller need only make goods available at its factory and present buyer with invoice payment; used when buyer will be the one picking up the goods by truck or rail more common in Europe or btwn Canada, US, Mexico
documentary collections
process by which banking institutions serve as intermediaries between seller and buyer to handle exchange of the bill of lading for payment.
EWX buyer responsibilities
provide vehicle or rail car and load goods, obtain export licenses, enter goods through customs
CFR buyer
purchase document of title and take delivery from ocean carrier; no date of delivery at buyer's port is implied; pay import duties; enter through customs
CIF buyer
purchase document of title and take delivery from ocean carrier; no date of delivery at buyer's port is implied; pay import duties; enter through customs; may ask for additional insurance coverage at own expense
DDU buyer
purchase document of title if required; take delivery at specified location; enter goods through customs; pay import duties
DDP buyer
purchase document of title if required; take delivery of goods at specified location
Bailment
relationship involving the separation of ownership and possession of personal property
Advantages of documentary collections
safer alternative for payment than either cash in advance or sale on open market
issues of EDI
security ; bills are signed electronically, but could be done by anyone, infrastructure ; not all regions have reliable telecommunication networks, lack of standardization ; countries could have different formats but all global formats need to be the same
Step 2 of DC
seller endorses the bill of lading and presents it to the bank for collections
shipping terms
seller offers shipping terms; terms show cost and responsibility for costs in the transaction; buyer may request certain shipping terms, esp. if buyer is regular importer, might have buying agents in seller's country, or can charter own ships
Step 1 of documentary collections
seller places the goods in the hands of a carrier and in return receives bill of lading
C Terms
shipment contracts, seller is responsible for certain costs after goods have been delivered to the carrier
F Terms
shipment contracts, seller required to deliver goods to, designated pt of departure, buyer arranges transportation and pays all, freight costs(unless sellers pay freight & add costs to invoice) used if, buyer can get cheap fright, ocean ship(maybe other)
electronic data interchange (EDI)
shipping data is transferred over internet using one of several standards; bills of lading, letters of credit, certificate of origin may be filed electronically
onboard bill of lading
signed by the shipper's master or other agent of the carrier, states that the goods have actually been loaded abroad a certain vessel; importer(buyer) has an approximate idea of when the goods will arrive
document of titles are created out of....
special "bailment", bailor(owner of personal property) and bailee(one whom its possession is entrusted)
negotiable document of title
stating that the goods will be delivered "to the order of" a named person or "to the bearer."
carrier in straight bill of lading
the carrier must deliver the goods to the name on the bill, if the carrier delivers to the wrong person, he or she may be liable for mis-delivery
Multimodal Transport Document
transporting using more than 1 mode of transportation; multimodal transport operators; multimodal(combined) transport document is a contract btwn shipper and operator, who in turn contracts with each carrier involved
CISG Article 66
unless parties agree otherwise, any loss of damage to the goods occurring after the risk of loss has passed from seller to buyer does not relieve buyer of his or her obligation to pay for goods, unless loss of damage is the fault of the seller
straight bill of lading
used by ocean carriers only if seller intends that good be delivered directly to the consignee; used when exporters shipping to own agent, expectations that agent will make direct arrangements with the buyer for payment b4 the goods are turned over
FAS risk of loss
when goods are delivered alongside the ship specified by buyer
CFR risk of loss
when goods cross the ship's rail as port of shipment; buyer must purchase insurance or else use CIF
DDP risk of loss
when the goods are delivered to buyer at specified location;seller should insure for own protection
EWX risk of loss
when the goods are made available by seller at named location
DES risk of loss
when the goods are ready for unloading by the buyer at port of destination
FOB risk of loss
when the goods cross the ships rail at port of shipment
EXW: Ex Works
works, mill, factory, mine, warehouse; transportation: up to buyer (all modes)