LEGAL ASPECTS OF INTERNATIONAL TRADE

TOPIC NAME- INCOTERMS

Presented By Marut shah (000337279)

• kartik Patel (000336655)

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• Submit to – prof: Fernando Montero

PRECAP/INDEX

--- ESTABLISHMENT OF INCOTERMS --- INCOTERMS AND ITS ASPECTS--- SUMMARY OF INCOTERMS RESPONSIBILITIES---WHY WE NEED IT INTERNATIONAL TRADE CONTRACTS--- CONCLUSION/RECAP

• Hello class, • Today this presentation will highlight the

significant prospect of international trade and the issues which should be negotiated within exporter and importer to know who is responsible for each specific aspect of trade transaction.

• This topic is linked with chapter 3 (international contracts). Which gives us the overview of all the elements which should be discussed while finalizing any contract. • In any business the mediators decide the cost of the

finished product. - mediators- I mean the supply chain mechanism.

We will talk about incoterms who shows us the clarity with issues such as - cost, responsibility, liability

INCOTERMSALMOST EVERY ASPECT OF INTERNATIONAL TRADE AND TRANSACTION AND COST ASSOCIATED WITH IT ARE UP FOR NEGOTIATION WHICH INCLUDES

-PRICING

-EXPENSES

-CUSTOM DUTIES

-TRANSPORTATION

-INSURANCE

INCOTERMS PLAYS A CRUCIAL ROLE IN IMPROVISING COMMUNICATION AND MITIGATING THE RISK OF MISUNDERSTANDING, THE ICC{INTERNATIONAL CHAMBER OF COMMERCE} DEVELOPED INCOTERMS TO SERVE UNIVERSAL TRADE DEFINITIONS.

GUESS WHAT THIS PICTURE SAYS?

ESTABLISHMENT OF INCOTERMS

• Definition Inco terms are standard trade definitions most commonly used in international sales contracts which are devised and published by the International Chamber of Commerce.

• ICC introduced the first version of Incoterms - short for "International Commercial Terms" - in 1936

• Most contracts made after 1 January 2000 will refer to the latest edition of Incoterms, which came into force on that date. The correct reference is to "Incoterms 2000".

• Unless the parties decide otherwise, earlier versions of Incoterms - like Incoterms 1990 - are still binding if incorporated in contracts that are unfulfilled and date from before 1 January 2000.

EXPANSION IN INCOTERMS

• Since the adoption in 1936, the number of incoterms has grown from {6} to {13}.

• All the 13 incoterms emphasis on specific aspects of the international movement of goods.

• This are classified in to four categories.

- departure

-main carriage unpaid

-main carriage paid

-arrival

SUMMARY OF INCOTERMS The term which begins with E- ex works – once the goods are been presented to the carrier selected by the importer, exporter no more is responsible. The term which begin with F- (FCA,FAS,FOB) – THE EXPORTER IS NOT

RESPONSIBLE FOR THE PRIMARY COST OF SHIPPING. THE TERM THAT BEGINS WITH C- (CFR,CIF,CPT,CIP) – THE EXPORTER IS

PAYING FOR PAYING A PORTION OF SHIPPING COSTS. THE TERM THAT BEGINS WITH D – (DAF,DES,DEQ,DDU,DDP) – THE EXPORTER

BEARS MOST OF THE COSTS AND RISK ASSOCIATED WITH BRINGING GOODS TO THEIR DESTINATION. WHEN THE GOODS ARRIVE AT A PREVIOUSLY ESTABLISHED POINT THE SHIPPER OR EXPORTERS RESPONSIBILITY ENDS.

DESCRIPTION OF RESPONSIBILITY

• EX-WORKS –THE EXPORTER MINIMUM RESPONSIBILITY IS TO SEND GOODS TO SPECIFIED LOCATION.

• FCA (FREE CARRIER) –THE EXPORTER ENSURES THE GOODS ARE MADE AVAILABLE FOR THE IMPORTER’S CARRIER AT THE SPECIFIC LOCATION.

• FAS (FREE ALONGSIDE SHIP) – THE GOODS ARE BEEN PLACED ALONGSIDE THE PRINCIPAL SHIP AT THE DOCK OR SPECIFIED PORT AND THEN EXPORTER IS FREE FROM ALL THE RISK.

• FOB(FREE ON BOARD) – THE EXPORTERS OBLIGATIONS ARE FULFILLED WHEN THE GOODS ARE PLACED ON BOARD THE SHIP BY THE EXPORTER.

• CFR (COST AND FREIGHT) –THE EXPORTER PAYS ALL THE COST NECCESARY TO TRANSPORT THE GOODS TO THE NAMED DESTINATION.

• CIF (COST INSURANCE FRIEGHT) – THE EXPORTER MUST ALSO PROVIDE MARINE INSURANCE.

CONTINUED……. • CPT(CARRIAGE PAID TO) – THE EXPORTER PAYS THE FREIGHT TO A NAMED DESTINATION.

• CIP (CARRAIGE AND INSURANCE PAID TO) – THE EXPORTER MUST ALSO PROVIDE INSURANCE.

• DAF(DELIVERED AT FRONTIER) –THE EXPORTER OBLIGATIONS GETS OVER WHEN THE GOODS ARE DELIVERED TO THE SPECIFIED FRONTIER.

• DES(DELIEVERED EX SHIP) – THE EXPORTER PAYS ALL THE TRANSPORTATION COST BUT DOES NOT CLEAR THE GOODS THROUGH CUSTOMS.

• DEQ (DELIEVERED EX QUAY) – THE EXPORTER PAYS ALL COST TO THE QUAY INCLUDING CUSTOM CLEARANCE COSTS.

• DDU (DELIEVERED DUTY UNPAID) – THE EXPORTER PAYS ALL THE COSTS TO NAMED ADDRESS, EXCLUDING CUSTOMS CLEARANCE AND ASSOCIATED DUTIES AND ASSOCIATED DUTIES AND TAXES.

• DDP(DELIVERED DUTY PAID) –THE EXPORTER PAYS ALL COSTS, INCLUDING CUSTOMS CLEARANCE ,ASSOCIATED DUTY/TAXES AND DELIVERY COSTS, TO IMPORTERS NAMED DELIVERY ADDRESS.

WHY WE NEED INCOTERMS IN INTERNATIONAL CONTRACT

• INCOTERMS ARE THE INTERNATIONAL COMMERCIAL TERMS WHICH ARE MANDATORY TO MENTION IN CONTRACT TO KNOW THE REPONSIBILITIES OF EXPORTER AND IMPORTER.

• WHEN WE TALK ABOUT THE COST OF ANY PRODUCT IN ANY ORGANISATION IS BEEN DECIDED BY THE SUPPLYCHAIN AND THE DISTRIBUTION CHANNELS.

PRECAP/CONCLUSION

IN NUTSHELL, WE CAN SAY THAT INCOTERMS PLAYS A GREAT ROLE IN MITIGATING ALL KIND OF RISK ASSOCIATED WITH TRANSPORTATION AND MANY OTHER ISSUES. THIS TOPIC IS A COMPULSION TO BECOME FAMILIAR WITH FOR ENTERPRENEURS TO CLEARLY UNDERSTAND THE RIGHT THEY ARE ENTITLED TO AND OBLIGATION THEY ARE RESPONSIBLE FOR TRANSPORTING GOODS INTERNATIONALLY.

Video on INCOTERMS 2010:

http://www.youtube.com/watch?v=Ek25Y23XGFg

http://www.youtube.com/watch?v=zf3UUFcBhxQ

This videos describe the detailed mechanism and working of international commercial terms.

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ARE WELCOMED

THANK YOU CLASS FOR LISTENING US, WE APPRECIATE IT.