Expression and use of trade terms

Expression of trade terms: Trade terms should be expressed in the unit price of the goods.

In international goods trade contracts, the unit price should include: pricing unit, price and trade terms. It should be noted that after the abbreviation of the trade term, the specified place of shipment (port) or country (port) is written.

For example: $1,000 per ton FOB Shanghai, where Shanghai should be the port of shipment.

CIF New York at $1,100 per ton, where New York should be the port of destination.

CIP New York Heathrow Airport $1,200 per ton. Here New York Heathrow Airport should be an air destination.

Use of trade terms: Different trades and sellers have different obligations. The trade technique used is not only related to the interests of both parties, but also to the smooth performance of the contract. Therefore, when negotiating a transaction, both parties should choose trade terms appropriately. At present, in international trade, the terminology of symbolic delivery is used more, that is, the method of delivery at the port of shipment or the place of shipment. In the import and export business of China's foreign trade enterprises, the following factors are mainly considered in the selection of trade terms:

It is conducive to the development of China's ocean shipping industry and insurance industry, increasing revenues and reducing expenditures. Most of China's import trade uses FOB or FCA terminology. In the export trade, it is required to trade in CIF or CIP.

Conducive to the development of cooperation between the two sides. Some countries stipulate that import trade must be insured in the country. Some buyers have a pre-warranty contract with the insurance company in order to obtain preferential insurance premiums, then we can agree to export according to CFR and CPT. When exporting bulk commodities, foreign buyers are seeking to charter at a lower rate, and we can also trade with FOB or FCA.

Adapted to the mode of transport. FOB, CFR, CIF are only suitable for marine transportation and inland water transportation. In the case of air transport and rail transport, the terms FCA, CPT and CIP should be adopted. But even ocean transportation. When transported by container, the exporter loses control of the goods after the carrier is delivered to the carrier. Therefore, as an exporter, FCA, CPT and CIP should be used as much as possible. Such trade terms are also conducive to the early transfer of risks by exporters, the issuance of transport documents in advance, the early collection of foreign exchange, and the acceleration of capital turnover.

Pay attention to avoiding risks. When we import bulk cargoes that need to be shipped by chartering, FOB will be used in principle. We will charter and insure ourselves to avoid the collusion between the seller and the ship, and use the chartering bill of lading to defraud the purchase price.

Trade terms are one of the many terms of trade for contracts. Its selection must be compatible with other terms of trade. In the following chapters. There will be further elaboration.