International Trade Terms (1)

Trade terms, also called price terms or delivery termsm are am important conponet of a unit price in international trade,standing for specific obligations of the buyer and the seller. Every commercial trasactions are maily based oon the sales contract,and the trade terms used in the contract have the important function of naming the exact point at which the ownership of merchandises is transferred form the seller to the buyer. The trade terms also define the resposibilities and expenses of both the seller and the buyer.The use of the trade terms greatly simplifies the contract negotiation, and thus save time and cost.
The role of Incoterms is to give the businessperosn a set of international rules for the interpretation of the commonly used terms such as FOB,CIF,Ex work,etc. in foreign trade contract. Such a range of terms enables business-people to decide which is most suitable for their needs.

According to the first letter of the terms,Incoterms 1990 can be devided into four groups:Group E (Ex Works),Group F ( FCA,FAS and FoB),Group C (CFR,CIF,CPT and CIP), and Group D( DAF,DES,DEQ,DDU and DDP), with increasing resposibilities,costs and risks for the seller while decreasing resposibilities,costs and risks for the buyer. Listd below is a detailed explanation of the Incomterms 1990.

1. Ex Works (EXW)(...named place)
This terms means maxinum involvement by the buyer in arrangements for the conveyance of the consignment to the specified destination. The exporter merely makes the goods available to the buyer by an agreed day at the factory or warehouse. The seller's obligation cease when the buyer accepts the goods at the factory or warehouse.By using this iterm, the seller can minimizes his obligations while the buyer can obtain the gooods at the lowest possible price.
The seller must supply the goods in accordance with the sales contract ( the contract of sale).provide at his expense basic packing (special packing may be a charge on the customer)and give the buyer prompt notice when the goods are ready. Equally, the buyer should render the seller on request every assistance to provide all the documentation or to clear the customs.Sometimes, the buyer requests the seller to clear the customs.Therefore,the term provides two opitions:Ex works cleared for export and Ex works uncleared for export
Obviously, the resposibilites of the buyer are more extensive. He must pay for the goods in accordance with the sales contract and bear all the costs and risks of the goods from the time they have been placed at his disposal by the seller.The buyer must fund any customs and taxes and all costs in obtaining the documents required for the purpose of importation and exprotation.