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)