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Flashcards in Exam 2 Deck (56)
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seller makes goods available at seller premises. seller not responsible for loading the goods on Buyers vehicle or for clearing goods for export (unless otherwise agreed upon)
Buyer bears all risks and costs in taking goods from seller's premises to destination

Ex Works


seller obligated to get the goods over the ship's rail at the port of shipment. Buyer bears all costs and risks of loss from that point. seller must clear goods for export

FOB (Free on Board)


seller must pay cost and freight necessary to get goods to named port of destination. Risk of loss and any additional costs after goods delivered to the vessel are transferred to the Buyer when goods pass the ship's rail. Seller must also obtain marine insurance and clear goods for export

CIF (Cost, Insurance, and Freight)


seller obligated to deliver the goods alongside the vessel on the quay/pier at the named port of shipment
buyer bears all costs and risks loss from that moment
seller must clear the goods for export

FAS (Free Alongside Ship)


seller delivers at named place in country of importation
seller bears risks and costs, including duties, taxes, and other charges

DDP (Delivered Duty Paid)


the seller ships the goods together with the necessary documents to the buyer before the payment is made and without any form of guarantee. when the goods have been dispatched, the seller also sends the buyer an invoice asking for payment within the agreed credit terms

Open account


the seller asks his or her bank to obtain the payment from the buyer (through the buyers bank) in exchange for related shipping documents

documentary collections


one of the most commonly used methods of payment. offers the seller the security of knowing that he will be paid while offering the buyer the assurance that payment will only be made when his bank is presented with documents that keep to the agreed terms
buyer acts first

letter of credit


the buyer is given the documents when a payment is made to the bank

D/P (Document Against Payment)


the documents required to take possession of the goods are released by the bank only after the buyer accepts a time draft drawn upon him

D/A (Document Against Acceptance)


releases the payment once the buyer has confirmed the collection of goods

Issuing Bank


acts on behalf of the seller, and has to confirm whether the L/C is in order

Acquiring/Advising Bank


seller requests payment from the buyer before he will ship the goods. The seller only ships out the goods to the buyer after receiving the payment.

Payment in Advance


Riskier than open account

Sale of Consignment Basis


ask another bank to confirm LOC

Confirmed Letter of Credit


a negotiable instrument which buyer signs

Bill of Exchange


Cannot be changed without the consent of all parties (term of payment)

Irrevocable LOC


Can be changed without the consent of all parties (term of payment)

Revocable LOC


used to discourage importas and increase their costs, sometimes to the point wehre trade is no longer profitable

non-tariff barriers


a document that states a commitment on part of the seller to deliver the products or services as notified to the buyer for a specific price. not a true invoice

pro-forma invoice


a legal document bw supplier and customer that clearly describes the sold goods, and the amount due

commercial invoice


a certificate, typically provided by the government of the exporter, certifying the nationality of the cargo

Certificate of Origin


permission for sample goods to enter without paying duties as regular cargo



protects carriiers and crew from liability for negligent ship management and navigation

Nautical Fault Defense


part of SCM and an important quality control method for checking the quality of goods clients buy from suppliers

Pre-shipment inspection


the most important document in the entire process. this is a document of title, a receipt of goods, and a contract of carriage. can be transferred by endorsement to third parties

Bill of Lading


no notions by the carrier of problems, otherwise it is foul

Clean Bill of Lading


signed by the carrier that it is loaded

Onboard Bill of Lading


means only that is was received

Received-for-shipment Bill of Lading


non-negotiable, cargo delivers only to the cosignee

straight Bill of Lading