Terms of Sale
Terms of Sale
In the domestic United States market, it is customary to quote, Free On Board (F.O.B.) factory. But in international business, suppliers use entirely different pricing terms, called Terms of Sale. Either of two versions of these terms might be specified so long as both parties agree: INCOTERMS-1980; or Revised American Foreign Trade Definitions-1941.
If, when drawing up the contract, buyer and seller specifically refer to INCOTERMS or to the Revised American Definitions, they can be sure of defining their respective responsibilities. In so doing, buyer and seller eliminate any possibility of misunderstanding and subsequent dispute. You can order a copy of INCOTERMS for about $10.00, from: The ICC Publishing Corporation, Inc., 125 East 23rd St. Suite 300, New York, NY 10010. You can order Revised American Definitions from The National Council of American Importers, the National Foreign Trade Council, or the Chamber of Commerce of the United States, 1615 H Street, N.W. Washington, D.C.
Following are the four most commonly-used terms of sale in international trade (to understand the many variations of these, read INCOTERMS).
C.I.F. (cost, marine insurance, freight), is used to a named overseas port of import. The seller is responsible for charges up to the port of final destination.
F.A.S. (free alongside a ship), is usually followed by a named port of export. A seller quotes this term for the price of goods that includes charges for delivery alongside a vessel at the port. The buyer is responsible thereafter.
F.O.B. (free on board), is the quote that, unlike F.A.S., includes the cost of loading the product aboard the vessel at the named point—a port or inland point of origin.
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Marine Insurance An insurance that will compensate the owner
of goods transported on the seas in the event of loss if such loss would not legally be recovered from the carrier. This insurance also covers overseas air shipments.
Specific Delivery Point A point in sales quotations which designates specifically where and within what geographical locale the goods will be delivered at the expense and responsibility of the seller (e.g., F.A.S. named vessel at named port of export).
EX (named point of origin, e.g., Ex-Factory, Ex-Warehouse, Ex-Destination), means the seller agrees to cover all charges to place the goods at a specified delivery point. From that point on, all other costs are for the buyer.
INCOTERMS are used most widely. These pricing terms clearly define the geographical point where the risks and costs of the exporter stops and those of the importer begins.
In the domestic United States market, it is customary to quote, Free On Board (F.O.B.) factory. But in international business, suppliers use entirely different pricing terms, called Terms of Sale. Either of two versions of these terms might be specified so long as both parties agree: INCOTERMS-1980; or Revised American Foreign Trade Definitions-1941.
If, when drawing up the contract, buyer and seller specifically refer to INCOTERMS or to the Revised American Definitions, they can be sure of defining their respective responsibilities. In so doing, buyer and seller eliminate any possibility of misunderstanding and subsequent dispute. You can order a copy of INCOTERMS for about $10.00, from: The ICC Publishing Corporation, Inc., 125 East 23rd St. Suite 300, New York, NY 10010. You can order Revised American Definitions from The National Council of American Importers, the National Foreign Trade Council, or the Chamber of Commerce of the United States, 1615 H Street, N.W. Washington, D.C.
Following are the four most commonly-used terms of sale in international trade (to understand the many variations of these, read INCOTERMS).
C.I.F. (cost, marine insurance, freight), is used to a named overseas port of import. The seller is responsible for charges up to the port of final destination.
F.A.S. (free alongside a ship), is usually followed by a named port of export. A seller quotes this term for the price of goods that includes charges for delivery alongside a vessel at the port. The buyer is responsible thereafter.
F.O.B. (free on board), is the quote that, unlike F.A.S., includes the cost of loading the product aboard the vessel at the named point—a port or inland point of origin.
} V
Marine Insurance An insurance that will compensate the owner
of goods transported on the seas in the event of loss if such loss would not legally be recovered from the carrier. This insurance also covers overseas air shipments.
Specific Delivery Point A point in sales quotations which designates specifically where and within what geographical locale the goods will be delivered at the expense and responsibility of the seller (e.g., F.A.S. named vessel at named port of export).
EX (named point of origin, e.g., Ex-Factory, Ex-Warehouse, Ex-Destination), means the seller agrees to cover all charges to place the goods at a specified delivery point. From that point on, all other costs are for the buyer.
INCOTERMS are used most widely. These pricing terms clearly define the geographical point where the risks and costs of the exporter stops and those of the importer begins.
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