Price negotiation (3) Price terms

1. Price terms  Price terms, also called trade terms or delivery terms, are an important component of a unit price in international trade, representing specific obligations of the buyer and the seller.  Price terms are those English abbreviated letters used to represent relevant formalities, expenses, risks and obligations between sellers and buyers during the period of delivery of goods.

 International Chamber of Commerce Terms 2000 （国际商会国 际贸易术语解释通则）（ in short, Incoterms 2000 ）  E term  F terms  C terms  D terms

E term  EXW - Ex Works 工厂交货（ …… 指定地点）  EXW means that the seller delivers when he places the goods at the disposal of the buyer at the seller ’ s premises or another named place (i.e. works, factory, warehouse, etc.) not cleared for export and not loaded on any collecting vehicle.  -- Title and risk pass to buyer including payment of all transportation and insurance cost from the seller's door.  Used for any mode of transportation.

F terms  FCA - Free Carrier 货交承运人  -- Free Carrier means that the seller delivers the goods, cleared for export, to the carrier nominated by the buyer at the named place. The seller is obligated to load the goods on the Buyer's collecting vehicle if the delivery occurs at the seller ’ s premise.  Used for any mode of transportation.

 FAS - Free Alongside Ship 船边交货  --Title and risk pass to buyer including payment of all transportation and insurance cost once delivered alongside ship by the seller. The export clearance obligation rests with the seller.  Used for sea or inland waterway transportation.

 FOB - Free On Board 船上交货  FOB means that the seller delivers when the goods pass the ship ’ s rail at the named port of shipment.  The FOB term requires the seller to clear the goods for export.  Used for sea or inland waterway transportation.

C terms  CFR - Cost and Freight 成本加运费  CFR means that the seller delivers when the goods pass the ship ’ s rail at the named port of shipment.  The seller must pay the cost and freight necessary to bring the goods to the named port of destination. But the risk of loss of or damage to the goods, as well as any additional costs due to events occurring after the time of delivery, are transferred from the seller to the buyer.  It requires the seller to clear the goods for export.  Used for sea or inland waterway transportation.

 CIF - Cost, Insurance and Freight 成本、保险费加 运费付至  CIF means that the seller delivers when the goods pass the ship ’ s rail at the named port of shipment.  The seller pays transportation and insurance cost to destination port.  But the risk of loss of or damage to the goods, as well as any additional costs due to events occurring after the time of delivery, are transferred from the seller to the buyer.  It requires the seller to clear the goods for export.  Used for sea or inland waterway transportation.

 CPT - Carriage Paid To 运费付至  -- Title, risk and insurance cost pass to buyer when delivered to carrier by seller who pays transportation cost to destination.  It requires the seller to clear the goods for export.  Used for any mode of transportation.

 CIP - Carriage and Insurance Paid To 运费、 保险费付至  --Title and risk pass to buyer when delivered to carrier by seller who pays transportation and insurance cost to destination.  It requires the seller to clear the goods for export.  Used for any mode of transportation.

D terms  DAF - Delivered at Frontier 边境交货  -- Title, risk and responsibility for import clearance pass to buyer when delivered to named border point by seller.  It requires the seller to clear the goods for export.  Used for any mode of transportation.

 DES - Delivered Ex Ship 目的港船上交货  -- Title, risk, responsibility for vessel discharge and import clearance pass to buyer when seller delivers goods on board the ship to destination port.  Used for sea or inland waterway transportation.

 DEQ - Delivered Ex Quay (Duty Paid) 目的港码头交 货  -- Title and risk and import clearance pass to buyer when delivered on board the ship at the destination point by the seller who delivers goods on dock at destination point.  The seller has to bear costs and risks involved in bringing the goods to the named port of destination and discharging the goods on the quay.  Used for sea or inland waterway transportation.

 DDU - Delivered Duty Unpaid 未完税交货  -- Title, risk and responsibility of import clearance pass to buyer when seller delivers goods to named destination point.  The seller has to bear costs and risks involved in bringing the goods to the named destination point, other than any duty for import in the country of destination.  Buyer is obligated for import clearance.  Used for any mode of transportation.

 DDP - Delivered Duty Paid 完税后交货  -- Title and risk pass to buyer when seller delivers goods to named destination point cleared for import.  The seller has to bear costs and risks involved in bringing the goods to the named destination point ， including any duty for import in the country of destination.  Used for any mode of transportation.

Useful Expressions  实例一： FOB Zhongshan Port USD4.58USD/PCS （ 1USD=8.0350RMB ） 离岸价（中山装运港船上交货，单价 4.58 美元 / 件， 汇率： 1 美元 = 元）  实例二： CFR Zhongshan Port USD4.58USD/PCS （ 1USD=8.0350RMB ） 成本加运费（中山装运港船上交货，单价 4.58 美 元 / 件，汇率： 1 美元 = 元）

 实例三： CIF New York Port USD4.58USD/PCS (1USD=8.0350RMB) 成本加运费保险费（纽约港 CIF 交货，单价 4.58 美 元 / 件，汇率： 1 美元 = 元）  实例四： EXW Shenzhen Techone Tech Co.,Ltd RMB /PCS 工厂交货价（深圳电王科技有限公司交货，单价 元 / 件）

 I can give you a definite answer on the price terms.  我可以就价格条款答复你方。  You wish to have a discussion of the price terms of washers.  您是想谈谈洗衣机的价格条款吧。  Yes, all of the price terms are acceptable.  是的，哪种价格条款都可以接受的。  C.I.F. is the price term normally adopted by you, right?  C.I.F. 是你们经常采用的价格条款，是吗？

 Sometimes F.O.B. and C&F are also employed.  我们有时也用离岸价或成本加运费价。  You said yesterday that the price was $60/mt, C.I.F. Brussels.  您昨天说价格定为每公吨 60 英镑 C.I.F. 布鲁塞尔。  In case F.O.B. is used, risks and charges are to be passed over to the buyers once the cargo is put on board the ship.  如果采用离岸价，货一上船，货物的风险和费用就都转给买方 了。  Your price is quoted C&F Xingang at USD200 per washer, right?  你方报价是每台洗衣机 200 德国马克， C&F 新港价，对吗？

A Dialogue  A: I believe you ’ ve studied our proposal for fertilizers.  B: Yes, Mr. Smith. And we ’ re very much interested.  A: It ’ s almost twenty years since we first supplied you with our products in To our regret, for one reason or another, business between us has failed to develop. I hope we ’ ll succeed in concluding some business this time. 

 B: As we ’ ve repeatedly stated, US does business on the basis of equality, mutual benefit and exchange of needed goods. If these principles are adhered to, I ’ m certain that mutually beneficial business will result.  A: May we hear your comments on our products?  B: We find the quality of your samples well up to standard and suitable for our requirements. On the other hand, we ’ ve received offers for higher quality products. So business depends very much on your prices.

 A: Taking everything into consideration, you ’ ll find that our prices compare favorably with the quotations you can get elsewhere.  B: I ’ m not sure of that. Before coming to the discussion of price, may I point out that we would like to have you quote us on a F. O.B. basis?  A: I don ’ t quite understand. For bulk goods such as chemical fertilizers, it ’ s the sellers who arrange the shipping space. It is more convenient for us, as well as for you.  B: Well, we prefer to have the US National Chartering Corporation take care of the shipping. It doesn ’ t make a difference to you, does it?  A: Well, it does make a slight difference, but we ’ ll do as you request.

A Specimen Letter  Dear Sir,   Your letter of 15th August addressed to our Head Office has been passed on to us for attention and reply.   We now take pleasure in advising you that the price of Brown Crystal Sugar （红砂糖 ） is at USD … per metric ton F.O.B. Of course we also quote C.F.R. or C.I.F. prices if buyers so desire. The price terms to be employed depend much on the characteristics of the goods as well as their specific transport requirement and shall always serve the best interest of buyers and sellers alike.  We are looking forward to your order.  Yours truly,