IBT 5: International Sale of Goods III - Structure & Financing
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29 Terms
what is the main challenge in international sales of goods?
distance, transport, and different legal systems
what must parties allocate in advance?
risks, costs, and responsibilities
what key risks must be addressed?
damage during transport, delays and quality/quantity issues
what is the main mode of international transport?
sea transport (90%)
advantage of sea transport?
cheap for bulky goods
disadvantage of air transport
expensive but fast
advantage of road transport?
door to door flexibility
what are Incoterms?
standard trade terms defining obligations, costs and risk transfer
are Incoterms legally binding automatically?
no only if included in the contract
what is EXW (Ex Works)?
buyer bears almost all costs and risks
when does risk transfer in EXW?
when goods are made available at seller’s premises
what is CPT?
seller pays transport, but risk transfers early (to carrier)
CPT ?
Carriage Paid To
what is CIF?
seller pays cost, insurance and freight to destination port
CIF?
cost, insurance, freight
when does risk transfer in CIF?
when goods are loaded on the ship
what are key payment risks in IBT?
buyer not paying, currency risk, delay
what is factoring ?
selling a claim to a bank
what is forfaiting?
similar to factoring but for export transactions
what is financial leasing?
using equipment without owning it
what is payment against documents
buyer pays when documents are presented
what is a bill of lading?
document proving shipment and controlling delivery
what is a letter of credit (LoC)?
bank promise to pay seller upon presentation of documents
why is LoC used?
to reduce trust risk between buyer and seller
what is an e-contract?
contract formed electronically
what is a smart contract?
self-executing contract via blockchain
under CIF, when does risk transfer?
At loading on ship
Which Incoterm places MAX responsibility on the buyer?
EXW
What is the main purpose of a Letter of Credit?
guarantee payment