giving quotations. definition of quotation the quoting of current prices and bids for securities and...

Giving Quotations

Definition of Quotation

The quoting of current prices and bids for securities and goods.

INCOTERM Incoterms or international

commerce terms is a series of international sales terms that is widely used throughout the world, divides transaction costs and responsibilities between buyer and seller, reflects state of the art transportation practices and closely corresponds to the U.N. Convention on Contracts for the International Sale of Goods.

Groups• Group C:

The seller covers only all the costs listed to get the goods to a named destination, ex. Freight and import duties, but not insurance.

• Group D:

The sellers carries all the costs and risks to get the goods to a named destination.

• Group E:

The buyer pays all costs once the goods have left the seller’s premises.

• Group F:

The seller delivers the goods to a carrier who is appointed by the buyer.

Group C - Main Carriage Paid

• Cost and Freight

• Cost, Insurance and Freight

• Carriage Paid To

• Carriage and Insurance Paid to

Cost and Freight (CFR)

The seller pays for:1. transportation to the port of

shipment 2. loading 3. Freight

The buyer pays for:1. The insurance and transportation

of the goods from the port of destination to his factory.

Cost, Insurance and Freight (CIF)

• CIF is a common term in a sales contract that may be encountered in international trading when ocean transport is used.

• When a price is quoted CIF, it means that the selling price includes the cost of the goods, the freight or transport costs and also the cost of marine insurance.

Carriage Paid To (CPT)

It can be used for all modes of transport including multimodal transport.

The seller pays for:1. All delivery costs to a named

destination2. Freight

The buyer pays for:1. Any additional costs after the

goods have been delivered to a nominated carrier, including insurance.

Carriage and Insurance Paid to

(CIP) It can be used for all modes of transport including multimodal

transport.

The seller pays for:

1. Transportation

2. Insurance

3. But no import duty

Group D - Arrival • Delivered At Frontier

• Delivered Ex-Ship

• Delivered Ex-Quay

• Delivered Duty Unpaid

• Delivered Duty Paid

Delivered At Frontier (DAF)

It can be used when the goods are

transported by rail and road.

The seller pays for:• Transportation to the named place

of delivery at the frontier.

The buyer pays for:• Transportation from the frontier to

his factory.• Import duty

Delivered Ex-Ship (DES)

The seller pays for:

• Freight

• Insurance

• But no import duty

Delivered Ex-Quay (DEQ)

The seller pays for:

• Freight

• Insurance

• But no import duty

QUAY

A quay, pronounced "key", is a wharf or bank where ships and other vessels are loaded.

Delivered Duty Paid (DDP)

The seller pays for:

• All transportation costs and bears all risk until the goods have been delivered and pays the duty.

Delivered Duty Unpaid (DDU)

The seller pays for: • All transportation costs

and bears all risk until the goods have been delivered, but does not pay for the duty.

Group E - Departure

• Ex-Works

Ex-Works (EXW)

The buyer pays for:

• All transportation costs and also bears the risks for bringing the goods to their final destination.

Group F - Main Carriage Unpaid

• Free Carrier

• Free Alongside Ship

• Free On Board

Free Carrier (FCA)

It can be used for all modes of transportation

including multimodal transport. The seller pays for:• All delivery cost to the

buyer’s carrier and this is where the passing of risk occurs.

The buyer pays for:• Transportation

Free Alongside Ship (FAS)

The seller pays for:

1. Transportation of the goods to the port of shipment.

The buyer pays for:

1. Loading costs

2. Freight

3. Insurance

4. Unloading costs

5. Transportation from the port of destination to his factory.

Free On Board (FOB)

The seller pays for:

• Loading cost

• All delivery costs

The buyer pays for:

• All other costs

Examples

$30,000 cfr Hong Kong (the price includes all delivery

cost to Hong Kong, except for insurance)

$35,000 FOB Rotterdam (the price includes delivery

costs to when the goods are on board ship at Rotterdam)

Terms that are used in UK

• Carriage Paid (C/P)

• Carriage Forward (C/F)

Carriage Paid (C/P)

Charge will be paid by the sender

Ex; We will send replacements for the damaged goods C/P.

Carriage Forward (C/F)

Charges will be paid by the receiver

Ex; As you are responsible for the damage, we will send replacements C/F.

Prices

•Net Prices

•Gross Prices

Net Prices

It is the current price the item can be purchased for, taking into consideration discounts and special pricing set up per item, per customer.

Gross Prices

Prices which include these extra costs such as transportation, insurance and purchase tax.

Points to remember

• When giving a customer a quotation, in addition to the price quote transport and insurance costs, any discounts, method of payment and delivery date.

• Do not promise a delivery date that you cannot keep.

Exercise• You are Assistant Sales

Director of R.G. Electronics.

• You are going to reply to a letter of enquiry from Music Max in Taiwan.

• You are replying this letter on behalf of Sales Director, Mrs. Sandra Jones.

Address

• Music Max: Kaohsiung, Zo Ying District, Fukuo Road, Taiwan, #12

• R.G. Electronics: Broad street, Bridgeport, USA, CT, 327

Additional information

• CDs are high quality• Suitable for recording in

Taiwan• CDs brand name: Kolby• No trade discount for this

product, due to the low profit margin

• In separate box, samples of advertised CDs and other brands are included

• Also the price list that gives the details of trade, quantity and cash discounts is included

Method of Payment

• You agree to pay for freight and insurance, but not import duty.

• Total cost: $4,000 USD

• The port of destination: “Keelung”