Gatot Soemartono, S.E., S.H., LL.M., M.M., Gatot Soemartono, S.E., S.H., LL.M., M.M., LL.M., Ph.D.LL.M., Ph.D.

Mariske Myeke Tampi, S.H., M.H. Mariske Myeke Tampi, S.H., M.H.

*Exporting and Exporting and Importing: Importing: The The

Documentary TransactionDocumentary Transaction

INTERNATIONAL BUSINESS TRANSACTIONINTERNATIONAL BUSINESS TRANSACTION

• www.itds.treas.gov/glossaryfrm.html - International Trade - International Trade Data SystemData System

• www.unzco.com/basicguide/figure10.html - International - International Trade Administration, sample export quotation work-Trade Administration, sample export quotation work-sheetsheet

• www.iccwbo.org – International Chamber of Commerce – International Chamber of Commerce• www.yellowglobal.com/resources/index.jsp - Company - Company

Guide to Shipping includes material on INCOTERMS, Guide to Shipping includes material on INCOTERMS, bill of lading, shipping documents and glossarybill of lading, shipping documents and glossary

*Stay informed!Stay informed!

1.1.Open account and consignment salesOpen account and consignment sales2.2.Documentary collectionDocumentary collection3.3.Documentary creditDocumentary credit4.4.Cash in advanceCash in advance

*Methods of Methods of Payment SystemPayment System

* Methods of Payment System Risk Methods of Payment System Risk ScaleScale

EXPORTER

EXPORTER

Before exporting to or entering a foreign Before exporting to or entering a foreign market, market, an analysis of the factors that relate to an analysis of the factors that relate to the profitability of such an entrythe profitability of such an entry should be should be undertaken.undertaken.•Cost-plus methodCost-plus methodThe exporter starts with the domestic manufacturing cost and The exporter starts with the domestic manufacturing cost and adds administration, research and development, overhead, adds administration, research and development, overhead, freight forwarding, distributor margins, custom charges, and freight forwarding, distributor margins, custom charges, and profit.profit.•Marginal cost pricing methodMarginal cost pricing methodConsiders the direct, out-of-pocket expenses of producing and Considers the direct, out-of-pocket expenses of producing and selling products for export as a floor beneath which prices selling products for export as a floor beneath which prices cannot be set without incurring a losscannot be set without incurring a loss

*The Sales Contract The Sales Contract and Documentary and Documentary TransactionTransaction

• Production costsProduction costs• Overhead research and developmentOverhead research and development• Market research and credit checksMarket research and credit checks• Business travelBusiness travel• International postage, cable and telephone ratesInternational postage, cable and telephone rates• Translation costsTranslation costs• Commissions, training charges and other costs Commissions, training charges and other costs

involving foreign representativesinvolving foreign representatives• Consultant and freight forwarding costsConsultant and freight forwarding costs• Product modification and special packagingProduct modification and special packaging

*Costs of Producing Costs of Producing Products for Export Products for Export PurposesPurposes

• The importance of entering into a well-The importance of entering into a well-defined aggrementdefined aggrement

• International sale of goods transaction International sale of goods transaction has become more complicatedhas become more complicated

• Exporting and importing transaction Exporting and importing transaction requires the use of various third parties requires the use of various third parties (commercial banks, international common (commercial banks, international common carriers, custom brokers and freight carriers, custom brokers and freight forwarders)forwarders)

• The need of form that describes the The need of form that describes the allocation of the costs associated between allocation of the costs associated between seller and buyerseller and buyer

*Pro Forma InvoicePro Forma Invoice

* The The Example of Example of Pro Forma Pro Forma InvoiceInvoice

*The Documentary The Documentary TransactionTransaction

BUY PROVIDE

• In the documentary transaction, the seller is paid and the buyer receives title to the goods while the goods are in transit to the port of destination.

• The buyer’s delivery and seller’s payment risks are diminished.

* The The Documentary Documentary Collection Transaction Collection Transaction (Export)(Export)

Sales Contract

Notification of Documents

Acceptance of Documents/draft

Release of Documents$ Documentary Collection

Letter

$

* DDocumentation: ocumentation: DHL’s Bill of DHL’s Bill of LadingLading

• Bill of LadingBill of Lading• Airway BillAirway Bill• Letter of CreditLetter of Credit• Letter of Letter of

IndemnityIndemnity• Export LicenseExport License• DockDock• ReceiptReceipt• Warehouse Warehouse

ReceiptReceipt• Commercial Commercial

InvoiceInvoice

* Doing Business Doing Business Internationally:Internationally:List of Export DocumentsList of Export Documents• Consular InvoiceConsular Invoice

• Certificate of Certificate of InspectionInspection

• Certificate of Certificate of OriginOrigin

• Bill of Exchange or Bill of Exchange or DraftDraft

• ATA CarnetATA Carnet• ISO 9000 ISO 9000

CertificateCertificate• Marine Insurance Marine Insurance

Certificate of Certificate of BinderBinder

• The rules for interpreting a trade term are of The rules for interpreting a trade term are of primary importance in international sale of primary importance in international sale of goods transactionsgoods transactions

• Trade terms are used to allocate the costs of Trade terms are used to allocate the costs of freight and insurance, along with stating the freight and insurance, along with stating the time that the risk of loss passes to the time that the risk of loss passes to the purchaserpurchaser

• The rules of interpretation for trade terms also The rules of interpretation for trade terms also determine who is responsible for dealing with determine who is responsible for dealing with customs agents and the payment of tariffscustoms agents and the payment of tariffs

• Traditionally, national laws provide the rules of Traditionally, national laws provide the rules of interpretationinterpretation

• In international trade, trade terms as define in In international trade, trade terms as define in INCOTERMS 2000 ManualINCOTERMS 2000 Manual, published by the , published by the International Chamber of Commerce, has International Chamber of Commerce, has obtained almost universal acceptanceobtained almost universal acceptance

* INCOTERMS 2000INCOTERMS 2000

• AcceptanceAcceptance• Additional termAdditional term• Adequate Adequate

assuranceassurance• Anticipatory Anticipatory

breachbreach• Battle of the formsBattle of the forms• Choice of law Choice of law

clauseclause• Conflict of law Conflict of law

rulesrules• Consequential Consequential

damagesdamages• Contract formationContract formation

*Key TermsKey Terms• Convention on the Convention on the

Limitation Period Limitation Period in the in the International Sale International Sale of Goodsof Goods

• Course of Course of performanceperformance

• DisclaimerDisclaimer• Doctrine of Doctrine of

frustrationfrustration• Doctrine of Doctrine of

impracticabilityimpracticability• Doctrine of Doctrine of

impossibilityimpossibility

• Four-corner analysisFour-corner analysis• ImpedimentImpediment• Implied warranty for Implied warranty for

a particular purposea particular purpose• Implied warranty of Implied warranty of

merchantabilitymerchantability• JurisdictionJurisdiction• Lex mercatoriaLex mercatoria• Limited express Limited express

warrantywarranty• Mailbox ruleMailbox rule

*Key TermsKey Terms• Mirror image ruleMirror image rule• MitigateMitigate• Mixed saleMixed sale• Nachfrist Nachfrist noticenotice• Objectively Objectively

unforseeableunforseeable• OfferOffer• OffereeOfferee• OfferorOfferor

• Parol evidence ruleParol evidence rule• Prior dealingsPrior dealings• Product liabilityProduct liability• RatificationRatification• Reasonable person Reasonable person

standardstandard• RejectionRejection• RevocationRevocation• Right to cureRight to cure• Rights and Rights and

obligationsobligations• Statute of fraudsStatute of frauds

*Key TermsKey Terms• Totalility of Totalility of

circumstancescircumstances• Trade usageTrade usage• Undue hardshipUndue hardship• Uniform Commercial Uniform Commercial

Code (UCC)Code (UCC)• United Nations United Nations

Convention on Convention on Contracts for the Contracts for the International Sale of International Sale of Goods (CISG)Goods (CISG)

• Virtual goodsVirtual goods• Written Written

confirmation ruleconfirmation rule

Larry A. Dimatteo, Larry A. Dimatteo, The Law of International The Law of International Business TransactionBusiness Transaction, 2003, USA: Thomson , 2003, USA: Thomson South WesternSouth Western

*Main ReferencesMain References