Discuss the Various Price Quotations used in International Marketing.

Price quotations determine the relative obligations of two parties-exporter and importer. Following are various types of price quotations which may become the base of contract:

Ex-Works Price: Ex-works price means that seller’s obligation to deliver the goods is complete when he places the goods at the disposal of the buyer at his own premises or another place named therein, i.e., works, factory, warehouse etc. not cleared for export and not loaded on any collecting vehicle. The terra “ex-works”, thus, enjoins the minimum obligation for the seller. The buyer has to bear all costs and risks. The buyer has to carry out the export formalities himself.

Free Alongside ship or FAS (Named point of Shipment): Free Alongside Ship means that the exporter fulfills his obligation to deliver when the goods have been placed alongside the vessel on the quay or in lighters at the named port of shipment. This means that the importer has to bear all costs and risks of loss of or damage to goods from that moment.

The FAS term requires the importer to clear the goods for export. It should not be used when the importer cannot carry out directly or indirectly the export formalities. The term can only be used for sea or inland waterway transport.

Free on Board (…named port of shipment) FOB: Free op Board means that the exporter fulfills his obligation to deliver when the goods have passed over the ship’s rail at the named port of shipment. This means that the importer has to bear all costs and risks of loss of or damage to the goods from that point, i.e., after the goods have been loaded.

The FOB term requires that exporter to clear the goods for export and ensure their loading on the plane or the ship or any other carrier in case of road transportation. This term can only be used for sea or inland waterway transport. However, in practice FOB is used in the case of shipment by air transport also.

Cost and Freight or C&F (Named Port of Destination): Cost and Freight quotation includes the cost of goods and all expenses incurred for carrying the goods upto the port of destination.

Thus, C&F = Cost + Packing charges + Transport charges upto port + Dock charges + Loading charges + Port duty + Freight.

As a consequence of this quotation it is the duty of the buyer to take delivery of goods at the destination.

Cost, Insurance and Freight (…named port of destination) CIF: Cost, Insurance and Freight means that the exporter has the same obligations as under C&F but with the addition that he has to procure marine insurance against the importer’s risk of loss of or damage to the goods during the carriage. The exporter contracts for insurance and pays the insurance premium.

The importer should not that under the CIF term the exporter is only required to obtain insurance on minimum coverage. The CIF term requires the exporter to clear the goods for export. The term can only be used for sea and inland waterway transport.

Ex-dock (Named Port of Destination): Ex-dock quotation is also known as ex-quay, ex-pier and ex-ship. Ex-dock means that the seller will pay all expenses upto the time the goods arrive at the port of destination.

Thus, the buyer will bear the cost of taking delivery from the ship. In other words, the exporter is liable to deliver the goods off the dock at the named overseas port of destination with the landing charges and appropriate duty having been paid.

Delivered Duty Paid—DDP: DDP or landed price means that all expenses upto the time the goods arrive at the final destination. This quotation includes the cost and all expenses incurred for placing the goods in the importer’s warehouse. It means that an importer needs incur any expenses separately.

Free Carrier (…Named Port) FCA: Free Carrier means that the exporter fulfills his obligation to deliver when he has handed over the goods, cleared for export, into the charge of the carrier named by the importer at the named place or point. If no precise point is indicated by the importer, the exporter may choose within the place or range stipulated where the carrier shall take the goods into his charge.

When, according to commercial practice, the exporter’s assistance is required in making the contract with the carrier (such as in rail or air transport) the exporter may act at the importer’s risk and expense. This term may be used for any mode of transport, including multi modal transport.

Following are some other terms used for price quotations:

Carriage paid to (…named place of destination) CPT: Carriage paid to means that the exporter pays the freight for the carriage of the goods to the named destination. The risk of loss or of damage to the goods, as well as any additional costs due to events occurring after the time the goods have been delivered to the carrier, is transferred from the exporter to the importer when the goods have been delivered into the custody of the carrier.

Carrier means any person who, in a contract of carriage, undertakes to perform or to procure the performance of carriage, by rail, road, sea, air, inland waterway or by a combination of such modes. If subsequent carriers are used for the carriage to the agreed destination, the risk passes when the goods have been delivered to the first carrier. The CPT term requires the exporter to clear the goods for export. This term may be used for any mode of transport including multi model transport.

Carriage and Insurance Paid to (…named place of destination) CIP: Carriage and insurance paid to means that the exporter has the same obligations as under CPT but with the addition that the exporter has to procure cargo insurance against the importer’s risk of loss of or damage to the goods during the carriage. The exporter contracts for insurance and pays the insurance premium.

The importer should note that under the CIP term the exporter is only required to obtain insurance on minimum coverage. The CIP term requires the exporter to clear the goods for export. This term may be used for any mode of transport including multi modal transport.

Tags: M.com

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