Chapter 3

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Trade Terms and Pricing

Objective

  After studying this chapter, you should be able to

  1. explain what trade term is

  2. describe some international trade usages

  3. grasp some important trade terms

Key terms

  Incoterms 2000               trade term

  FOB                          CIF

  CFR                        liner terms

Document transaction Obligations

Import licenseExport license

3.1 Trade terms and international trade usages

3.1.1 The definition and functions of trade terms   

n The two parties in international trade are usually far away from each other and are separated by vast oceans. The cargoes carried from the export country to the import country will usually go through a long distance of transportation and sometimes，need several transshipment during the process of transit of the goods. The seller or the buyer shall handle a series of complicated formalities，which include carrying out customs formalities for the goods，obtaining the export license，chartering a ship or booking shipping space，taking out insurance，asking for inspection，etc，and pay all kinds of charges and expenses，such as freight，loading and unloading expenses，insurance premium，warehouses charges，duties and taxes，and other miscellaneous expenses. Who shall be responsible for the above mentioned duties and bear the relative expenses？ All these problems resulting from international trade shall be solved. Therefore，after a long⁃term process of business practice，a set of special trade terms have taken shape. They are interpreted differently in different countries and their meanings may be modified by the agreement of the parties，by the customs of a particular trade or the usage prevailing at a particular port. When the two parties determine to adopt certain trade terms，all other clauses in the contract shall be in conformity with them. Therefore，in international trade，we usually make use of certain trade terms to define the nature of the contract，such as CIF contract，to determine expenses and risks as well as their rights and obligations accordingly.

n     The trade terms refer to using a brief English concept or abbreviation to indicate the formation of the unit price and determine the responsibilities，expenses and risks borne by two parties as well as the time of the passing of the property in the goods. For example，“USD 500 per M/T CIF London”，in which “CIF London” is a trade term.

n The trade terms have important functions. The use of the trade terms greatly simplifies the contract negotiations and thus saves time and cost.

3.1.1Role of int’l trade terms

Trade terms, also called price terms or delivery terms, are an important component of a unit price in int’l trade, standing for specific obligations of the buyer and the seller. Every commercial transaction is based upon a sales contract, and the trade terms used in the contract have the important function of naming the exact point at which the ownership of the merchandise is transferred from the seller to the buyer. The trade terms also define the responsibilities and expenses of both the seller and the buyer. The use of the trade terms greatly simplifies the contract negotiations, and thus saves time and cost. The price of commodity usually refers to the unit price, which is made up of a name of currency, a unit price, a measuring unit, a trade term, and a name of destination or shipping place. For example,

US$800 per M/T CIF London;

US$45 PER CARTON FOB SHANGHAI.

Trade terms refer to using a brief English concept or abbreviation to indicate the formation of the unit price and determine the responsibilities. Expenses and risks borne by two parties as well as the time of the passing of the property in the goods.

3.1.2International trade usages

Trade terms have been developed in practice over many years to fit different situations. However，as different countries might have different interpretations of the terms，misunderstandings occurred frequently. To clear up the confusion，some international organizations have made quite a few rules to explain trade terms. There are four  international trade practices related to trade terms.

Warsaw⁃Oxford Rules 1932

In 1928，the International Law Association held a meeting in Warsaw，and worked out the Uniform Rules for CIF Sales Contracts，which was called Warsaw 1928，and renamed Warsaw⁃Oxford Rules 1932 at the Oxford Convention. It includes 21 clauses and is mainly used to indicate the nature and characteristics of the CIF contract and also to stipulate the responsibilities of the two parties under CIF term.

Revised American Foreign Trade Definitions 1990

In 1919，nine American commercial groups drew up The U.S. Export Quotation and Abbreviation，which was revised in 1941 and was renamed Revised American Foreign Trade Definitions 1941. It was adopted by the American Chamber of Commerce，the National Importers Association and the American Foreign Trade Association in the same year. In 1990，it was again revised and named Revised American Foreign Trade Definitions 1990.It includes six trade terms，i.e.，EXW，FOB，FAS，CFR，CIF and DEQ. Except EXW and DEQ，the other four trade terms are explained quite differently from those in INCOTERMS. These trade terms are often adopted in the United States of America，Canada and some other countries in America.

International Rules for the Interpretation of Trade Terms 2000（Incoterms 2000）

The purpose of Incoterms is to provide a set of international rules for the interpretation of most commonly used trade terms in foreign trade. Thus，the uncertainties of different interpretations of such term in different countries can be avoided or at least reduced to a considerable degree. In 1936，the International Chamber of Commerce drew up a set of revised terms and definitions，which are known as Incoterms 1936. They were revised in 1953，1982，1990 and again 2000 in order to bring the rules in line with current international trade practices. According to Incoterms 2000，there are 13 trade terms and these trade terms are grouped in four categories：E，F，C and D.

u International Rules for the Interpretation of Trade Terms (INCOTERMS 2000), by International Chamber of Commerce (ICC) are now prevailing & adopted by most of the countries in the world.

n International Rules for the Interpretation of Trade Terms 2010（Incoterms® 2010）

n Incoterms® 2010 was published on September 27，2010 by International Chamber of Commerce and implemented on January 1，2011.

n Incoterms® 2010 includes 11 trade terms and these trade terms are arranged into the two distinct groups：

n Any Mode of Transport：

n CIP—Carriage and Insurance Paid to

n CPT—Carriage Paid to

n DAP—Delivered at Place

n DAT—Delivered at Terminal

n DDP—Delivered Duty Paid

n EXW—Ex Works

n FCA—Free Carrier

n Sea and Inland Waterway Transport Only：

n CFR—Cost and Freight

n CIF—Cost Insurance and Freight

n FAS—Free alongside Ship

n FOB—Free on Board

n Incoterms® 2010 deleted four trade terms in Incoterms 2000：DAF，DES，DEQ and DDU；increased two trade terms：DAT（Delivered at Terminal）and DAP（Delivered at Place）. DAP took the place of DAF，DES and DDU；DAT took the place of DEQ，and they are suitable for any mode of transportation.

n International trade practices related to trade terms are not laws and have no force of law，but under the following circumstances ，they legally bind the buyer and seller：

n （1）When two parties agree to use trade practices in their transaction，and clearly stipulate it in their contract.

n （2）When the country law has stipulations，trade practices has force of law.

n （3）According to the United Nations Conventions on Contracts for the International Sale of Goods，the practices not ruled out by the contract，already known and often used by two parties apply to the contract.

n Questions

n 1.What is the trade term？ Please give an example.

n 2. List some international trade usages related to trade terms.

n Terminology Practice

n The following terms appeared in the text. Select one correct term for each of the following statements.

n Trade termsIncotermsDutyNegotiation

n （1）The act or process of negotiating，of bargaining over business.

n （2）A government tax on certain goods and commodities such as a wide range of imports and some exports，called customs duty，import duty，export duty.

n （3）A set of international rules published by the International Chamber of Commerce for the interpretation of the commonly used terms in foreign trade.

n （4）The expressions and abbreviations used in foreign trade contracts，such as DDU.

3.2The commonly used trade terms in Incoterms® 2010

n In Incoterms® 2010, there are 11 trade terms，among which FOB、CFR、CIF、FCA、CPT and CIP are commonly used.

n 3.2.1FOB，Free on Board（Insert Named Port of Shipment）

n  It means that the seller fulfills his obligation to deliver the goods when the goods have been delivered on board the vessel at the named port of shipment[当货物在指定的装运港装上船时卖方完成交货义务。]. This means that the buyer has to bear all expenses and risks of，or damages to the goods from that time.

e.g. FOB London 

n  （1）Mode of transportation

n FOB is used for sea or inland waterway transport.

n （2）The place of delivery and risk transfer

n The seller shall deliver the goods to the buyer at the named port of shipment. The risk transfers from the seller to the buyer on board the vessel at the named port of shipment.

n （3）The formation of the unit price

n Under this term，the unit price only includes cost.

n （4）Responsibilities，expenses and risks borne by two parties

n Under the FOB term，the seller shall bear the following obligations：

n Deliver the goods on board the vessel named by the buyer at the named port of shipment on the date or within the period stipulated in the contract.

n •Give the buyer sufficient notice that the goods have been delivered on board，including necessary insurance information.

•Obtain at his own risks and expenses any export license or other official authorization.

n Bear all risks of，losses of，or damages to the goods until such time as they have been delivered on board the vessel at the named port of shipment.

n •Provide the buyer at the seller’s expense with the commercial invoice as well as clean shipped on board shipping documents[自付费用向买方提供商业发票以及清洁的已装船运输单据。].

n Under the FOB term，the buyer shall bear the following obligations：

n •Pay the price as provided in the contract.

n •Contract at his own expenses for the carriage of the goods from the named port of shipment.

n •Give the seller sufficient notice of the vessel’s name，loading port and required delivery time.  

n •Obtain at his own expenses and risks any import license or other official authorization and carry out all customs formalities for the importation of the goods.

n •Bear all risks of，losses of，or damages to the goods from the time they have been delivered on board the vessel at the named port of shipment.

•Take delivery of the goods stipulated

n （5）The variation of FOB trade term

n Under the FOB term，in order to indicate who shall bear the loading expenses，especially the stowing expenses and trimming expenses，the variations of FOB are often used. They are：

n FOB Liner Terms，which means that the loading expense is borne by the party who pays the freight，i.e.，the buyer，just as the goods are transported by the liner.

n FOB Under Tackle，which means that the seller delivers the goods to the place which may be reached by the tackle. The buyer shall bear the loading expense from the time the goods are slung up.

n FOB Stowed，which means that the seller shall be responsible for loading the goods into the hold and bear the loading expense，including the stowing expense.

n FOB Trimmed，which means that the seller shall be responsible for loading the goods into the hold and bear the loading expense，including the trimming expense.

n In fact，under FOB in Incoterms® 2010，the seller must deliver the goods on board the vessel ，therefore loading expenses except for the stowing expenses and trimming expenses should be borne by the seller.

n 3.2.2CFR，Cost and Freight（Insert Named Port of Destination）

n  It means that the seller shall pay the cost and freight necessary to carry the goods to the named port of destination，but the risks of，losses of，or damages to the goods，as well as any additional cost due to events occurring after the time the goods have been delivered on board the vessel，are transferred from the seller to the buyer at the named port of shipment.

n Example：CFR SHANGHAI.

n （1）Mode of transportation

n CFR is used for sea or inland waterway transport.

n （2）The place of delivery and risk transfer

n The seller shall deliver the goods to the buyer at the named port of shipment. The risk transfers on board the vessel at the named port of shipment.

n （3）The formation of the unit price

n Under this term，the unit price includes cost and freight.

n （4）Responsibilities，expenses and risks borne by two parties

n Under the CFR term，the seller shall bear the following obligations：

n •Deliver the goods on board the vessel at the named port of shipment on the date or within the period stipulated in the contract.

n •Give the buyer sufficient notice that the goods have been delivered on board，including necessary insurance information.

n •Obtain at his own risks and expenses any export license or other official authorization.

n Bear all risks of，losses of，or damages to the goods until such time as they have been delivered on board the vessel at the named port of shipment.

n •Provide the buyer at the seller’s expense with the commercial invoice as well as clean shipped on board shipping documents.

•Contract on usual terms at his own expenses for the carriage of the goods to the named port of destination by the usual route in an appropriate vessel[卖方按通常条件订立运输合同,自付费用租用适当船舶将货物按惯常路线运到指定目的港。].

n Under the CFR term，the buyer shall bear the following obligations：

n •Pay the price as provided in the contract.

n •Obtain at his own expenses and risks any import license or other official authorization and carry out all customs formalities for the importation of the goods.

n •Bear all risks of，losses of，or damages to the goods from the time when they have been delivered on board the vessel at the named port of shipment.

n •Take delivery of the goods stipulated in the contract.  

n （5）The variation of CFR trade term

n Under the CFR term，in order to indicate who shall bear the unloading expenses，we may adopt variations of CFR：

n CFR Liner Terms，which means that the unloading expenses are borne by the party who pays freight，i.e. the seller.

n CFR Ex Ship’s⁃Hold，which means that the buyer shall bear the expenses for slinging up the goods from the hold to the dock.

n CFR Landed，which means that the seller shall bear the expenses for unloading the goods from the ship onto the dock at the named port of destination.

n CFR Ex Tackle，which means that the seller delivers the goods to the place which may be reached by the tackle. The buyer shall bear the unloading expenses from the time the goods are slung up.

n （6）Shipping advice under CFR

No matter what trade term is used，the seller must send shipping advice to the buyer. The main purpose is to inform the buyer or his agent to make preparations for taking delivery of goods. However，under CFR，there is another purpose，i.e. to inform the buyer to effect insurance. If the seller fails to send shipping advice in time，and the buyer could’t effect insurance promptly，the seller shall bear the risks of，losses of，or damages to the goods. Therefore，the seller should send shipping advice to the buyer after delivering the goods on board the vessel.

n 3.2.3CIF，Cost Insurance and Freight（Insert Named Port of Destination）

It means that the seller has the same obligation as under CFR but with the addition that he has to procure marine insurance against the buyer’s risks of，losses of，or damages to the goods during the carriage.

e.g.CIF New York

n （1）Mode of transportation

n CIF is also used for sea or inland waterway transport.

n （2）The place of delivery and risk transfer

n The seller shall deliver the goods to the buyer at the named port of shipment. The risk transfers on board the vessel at the named port of shipment.

n （3）The formation of the unit price

Under this term，the unit price includes cost，freight and insurance.

n （4）Responsibilities，expenses and risks borne by two parties

n Under the CIF term，the seller shall bear the following obligations：

n •Deliver the goods on board the vessel at the named port of shipment on the date or within the period stipulated in the contract.

n •Give the buyer sufficient notice that the goods have been delivered on board，including necessary insurance information.

n •Obtain at his own risks and expenses any export license or other official authorization.

n Contract on usual terms at his own expenses for the carriage of the goods to the named port of destination by the usual route in an appropriate vessel.

n •Obtain at his own expenses cargo insurance as agreed in the contract，and provide the buyer with the insurance policy or other evidence of insurance cover.  

n •Bear all risks of，losses of，or damages to the goods until such time as they have been delivered on board the vessel at the named port of shipment.  

n •Provide the buyer at the seller’s expense with the commercial invoice as well as clean shipped on board shipping documents.

n Under the CIF term，the buyer shall bear the following obligations：

n •Accept the documents when submitted by the seller，and if they are in conformity with the contract，pay the price as provided in the contract of sale.

n •Obtain at his own expenses and risks any import license or other official authorization and carry out all customs formalities for the importation of the goods and where necessary，for their transit through another country.

n •Bear all risks of，losses of，or damages to the goods from the time when they have been delivered on board the vessel at the named port of shipment.

n •Take delivery of the goods stipulated in the contract.  

n （5）The variation of CIF trade term

n In order to stipulate clearly the responsibility and cost of unloading，as CFR，CIF also has some variations：CIF Liner Terms，CIF Landed，CIF Ex Ship’s⁃Hold and CIF Ex Tackle.  

n When adopting the CIF term，the following points should be paid attention to：

n •Duty of insurance.Under the CIF term，the seller is responsible for procuring marine insurance according to the stipulation of the contract.

n •Document transaction.The CIF contract is a special type of contract.

n •Division of costs and risks. Under CIF term，the costs and risks are separated. The point for the division of costs refers to the port of destination，while the point for the division of risks is on board the vessel at the named port of shipment

3.2.4FCA，Free carrier（Insert Named Place）

n It means that the seller fulfills his obligations to deliver when he has handed over the goods，cleared for export，to the carrier named by the buyer at the named place or point. “Carrier” refers to any person who，in a contract of carriage，undertakes to deliver the goods by rail，road，air，sea，inland waterway or by a combination of such modes. The chosen place of delivery has an impact on the obligations of loading and unloading the goods at that place. If delivery occurs at the seller’s premises，the seller is responsible for loading. If delivery occurs at any other place，the seller is not responsible for unloading[如果在卖方所在地交货,卖方负责装货;如果在其他地方交货,卖方不负责卸货。].

n e.g.FCA 28 Sihuan Road ,Beijing

n 3.2.5CPT，Carriage Paid to（Insert Named Place of Destination）

n It means that the seller pays the freight for the carriage of the goods to the named place of destination，the risks of，losses of，or damages to the goods，as well as any additional cost due to events occurring after the time the goods have been delivered to the carrier，are transferred from the seller to the buyer when the goods have been delivered into the custody of the carrier. CPT is almost the same as CFR except that CFR is only applied to sea and inland waterway transport，while CPT may be used for any mode of transport including multimodal transport.

n E.g. CPT，Liangyungang Railway Station

n 3.2.6CIP，Carriage and Insurance Paid to（Insert Named Place of Destination）

n  It means that the seller has the same obligations as under CPT but with the addition that the seller has to procure cargo insurance against the buyer’s risks of，losses of，or damages to the goods during the carriage. The seller contracts for insurance and pays the insurance premium. Compared with CIF，CIP is applied to all modes of transport.

n E.g. CIP,Shanghai Pudong Airport

n Questions

n （1）What are similarities and differences among the FOB，CFR and CIF？

n （2）What are similarities and differences between FOB and FAS？     

n （3）What are similarities and differences between CFR and CPT？

n Terminology practice

n The following terms appeared in the text. Select one correct term for each of the following statements.

n ResponsibleRisksExpensesImportLicenseFormality

n （1）A document obtained from the government giving permission to import certain stated goods.

n （2）Something that may happen.

n （3）Sums of money spent in doing something.   

n （4）Legally or morally obliged，e.g. to carry out duty，and liable to be blamed if one fails.

n （5）Something that has to be done because a rule has to be obeyed，e.g. customs formalities/legal formalities.

3.3Other trade terms

n 3.3.1EXW，Ex Works（Insert Named Place）

n It means that the seller’s only responsibility is to deliver the goods to the buyer at the seller’s premises or another named place，e.g. works，factory，warehouse. The seller’s obligations cease when the buyer accepts the goods at the factory or warehouse. The buyer bears the full cost and risks involved in carrying the goods from there to the desired destination，including obtaining the export license. EXW thus represents the minimum obligations undertaken by the seller.

n E.g. EXW 228 Epping Road,Sydney

n 3.3.2FAS，Free alongside Ship（Insert Named Port of Shipment）

n   It means that the seller’s obligations are fulfilled when the goods have been placed alongside the vessel at the named port of shipment. This means that the buyer has to bear all costs and risks of，losses of，or damages to the goods from that moment. It should be noted that the FAS term requires the seller to clear the goods for export.

n E.g. FAS Sydney Botany Port

n 3.3.3DAT，Delivered at Terminal（Insert Named Terminal at Port or Place of Destination）

n DAT replaced the trade term DEQ. It means that the seller shall fulfill his obligation of delivering the goods after discharging the goods and delivering the goods to the buyer at a named terminal at the named place or port of destination. Terminal includes any place，whether covered or not，such as quay，warehouse，container yard or road，rail or air cargo terminal. The seller bears all risks expenses involved in bringing the goods at the terminal at the named place or port of destination（except import expenses）. DAT requires the seller to clear the goods for export. The term is suitable for any mode of transportation or multimodal transportation.

n E.g. DAT, Hangzhou Xiaoshan, International Airport

n 3.3.4DAP，Delivered at Place（Insert Named Place of Destination）  

n DAP replaced the trade terms DAF，DES and DDU. It means that the seller delivers when the goods are placed at the disposal of the buyer on the arriving means of carriage ready for unloading at the named place of destination. The seller bears all risks involved in bringing the goods to the named place（except import expenses）. DAP requires the seller to clear the goods for export. The term is suitable for any mode of transportation or multimodal transportation.

n E.g. DAP  68 Wall Street New York

n 2.3.5DDP，Delivered Duty Paid（Insert Named Place of Destination）

n It means that the seller fulfills his obligation to deliver when the goods have been made available at the named place in the country of importation. The seller has to bear all the risks and costs including duties，taxes and other charges for delivering the goods，clearing for importation. It represents the maximum obligation borne by the seller. This term should not be used if the seller is unable to obtain directly or indirectly the import license. If parties wish the importer to bear all risks and costs of import，the DDU term should be used.

n E.g. DDP35 Wulin Road Hangzhou

n 2.3.6Shipment contracts and arrival contracts

n The “C” terms（CFR and CPT）require the seller to contract for the carriage of the goods on usual terms at his own expenses. Under the CIF and CIP terms，the seller also has to take out insurance and bear the insurance cost. Since the point for the division of costs is at a point in import country，these terms are frequently mistakenly believed to be arrival contracts. However，it must be stressed that these terms are of the same nature as the  terms of FOB，FCA，FAS. Under these terms，the seller fulfills the contract in the place of shipment or dispatch，and the seller need’t guarantee the arrival of the goods. Thus，the contracts of sale under these terms，fall within the category of shipment contracts.  

n The“D” terms（DAT，DAP and DDP）are different in nature from the above⁃mentioned  terms. Under these terms，the seller is responsible for the arrival of the goods at the agreed place or point of destination at the border or within the country of import. The seller must bear all risks and costs in bringing the goods there. Hence，they are arrival contracts.

n Questions

n （1）What are the similarities and differences between the group of FCA，CPT

CIP and the group of FOB，CFR，and CIF？

（2）What do the trade terms DAT and DAP mean？

（3）How many trade terms does Incoterms® 2010 include？

Terminology practice

The following terms appeared in the text. Select one correct term for each of the following statements.

FrontierQuayDisposal Tax

（1）A place in a port，harbor，river or dock basin where ships can tie up

 to the shore to load and unload cargo.  

（2）The act of getting rid of something.   

（3）The part of a country that borders another country.  

（4）A payment of money legally demanded by a government authority to

 meet.

3.4The choice of trade terms in practice

n Under different trade terms，the responsibilities，risks and expenses borne by two parties are different. At present，symbolic delivery trade terms are widely used. Chinese foreign trade corporations are traditionally inclined to arrange shipment and effect insurance by themselves. The purpose is to develop both Chinese ocean transport industry and insurance industry. In their import business，they usually adopt FOB or FCA；in their export business，they adopt CIF or CIP. Sometimes they also adopt CFR or CPT when the other party requires them to cover insurance with their own insurance companies. When choosing trade terms，the following two points should be paid attention to:

Adapting to the modes of transportation

Since FOB，CFR，CIF are suitable for sea or inland waterway transport，it is necessary to use FCA，CPT，and CIP when the goods are carried by rail or air. Even by ocean transport，when containers are used，it is better to use FCA，CPT，and CIP，because risks will transfer from the seller to the buyer after cargoes are delivered to the carrier.

n Avoiding risks

n When importing bulk cargoes by charter，basically，FOB should be adopted. In this case，the importer shall charter the ship or book shipping space and effect insurance，thus avoiding risks of ganging up of the seller and the carrier. They may take advantages of the charter B/L to deceive the buyer into making payment.

n Questions

n When choosing trade terms in practice，what should be paid attention to？

n Terminology Practice

     The following terms appeared in the text. Select one correct term for each of the following statements.

Gang upBulk cargoBook

（1）Reserve or buy in advance.

（2）Act together with one person against the other.

（3）Cargo consisting entirely of one kind of loose substance that does not need any packing，such as coal.

Key words，phrases and special terms

n Adoptv.通过，采纳

n Adjoinv.邻近，接近

n Arrival contract到达合同

n CFR（Cost and Freight） 成本加运费

n CFR Ex Ship�s⁃Hold CFR 舱底交货

n CFR Ex TackleCFR 吊钩下交货

n CFR LandedCFR 卸到岸上

n CIF（Cost Insurance and Freight）成本、保险费加运费

n CIP（Carriage and Insurance Paid to） 运费和保险费付至……

n Clear up消除，清除

n Commercial invoice 商业发票

n Confusionn.混乱，混淆

n Contractn.，v.合同，签订合同

n CPT（Carriage Paid to） 运费付至……

n Customaryadj.习惯上的

n Customs formalities   海关手续

n DDP（Delivered Duty Paid）完税后交货

n DAT（Delivered at Terminal）运输终端交货

n DAP（Delivered at Place）目的地交货

n Document transaction单据交易

n EXW（Ex Works）工厂交货

n Export licence 出口许可证

n FAS（Free alongside Ship）装运港船边交货

n FCA（Free Carrier）货交承运人

n FOB（Free on Board） 装运港船上交货

n FOB Liner TermsFOB 班轮条件

n FOB StowedFOB 理舱费在内

n FOB Trimmed FOB 平舱费在内

n FOB Under TackleFOB 吊钩下交货

n Functionn. 功能，作用

n In conformity with与……一致

n Incoterms 2000 《2000通则》

n Incoterms® 2010《2010通则》

n Insurance premium 保险费

n International Chamber of Commerce 国际商会

n International trade usages国际贸易惯例

n Interpretationn. 解释

n Miscellaneous expenses 杂费，其他各项费用

n Multimodal transport 多式联运

n Premisesn.房屋或其他建筑物

n Simplifyv.使简单化

n Shipment contract装运合同

n Take shape形成

Trade terms 贸易术语

3.5 Basic Skill Training

3. 2The price clause in a sales contract

3.2.1Principle of Pricing

On the basis of equality and mutual benefit;

According to the international market level;

According to the stipulations of different countries and the marketing goals.

3.2.2 Currency Selection

Employing soft currency in import and employing hard currency in export.

Stipulating exchange clause in an export contract.

To employ the same soft currency for account and payment.

Account with soft currency and payment with hard currency

Using soft currency for account and payment.

3.2.3Ways of Pricing

Fixed Price

US$ 800 M/T CIF New York

    No price adjustment shall be allowed after conclusion of this contract.

No specific price is set.

The price will be determined according to the international market price on the date shown on the B/L.

A temporary price is set.

HK $ 5000 per bale CIF Hong Kong

   Remarks: The above is a provisional price, which shall be determined through negotiation between the buyer and seller.

Adjustable Price

The initial price is US$ 5.00 per piece CIF Humbug. If the price of raw materials and the salary of works change, the seller reserves the right to adjust the price accordingly.

3.2.4 Trade Terms Selection 

3.3 Cost Calculation, Commission and Discount     
                

1.Calculating the cost of export goods.

2.Commission and Discount

Commission refers to the money received by an agent for his intermediary service.

Discount is a certain percent of price reduction, a special favor given by the exporter to the importer.

Ways of stipulating commission or discount in a contract

US$ 335 per metric ton CIF New York including 2% commission

US$ 335 per metric ton CIFC2% New York

US$ 300 per metric ton FOB Shanghai less 2% discount

US$ 300 per metric ton FOB Shanghai net

Calculation of commission and discount

If the price does not include commission or discount, it is the “net price”.

Payment of Commission or Discount

3.4 Basic Skill Training