2. The Foundations of International Trade & Finance Vin O’Brien Vin O’Brien Hanoi – Thursday 21 April 2016 THE INTERNATIONAL TRADE CONRACT

4. Workshop That Contract may take a number of different forms: Seller Buyer Formal Agreement Proforma Invoice Purchase Order Exchange of emails Formal Agreement Proforma Invoice Purchase Order Exchange of emails SELLER agrees to sell BUYER agrees to buy

8. 1936 – 1957 – 1967 – 1974 – 1980 – 1990 – 2000 – 2010

9. USD3,250,000.00 CIF Jebel Ali Port Terminal 2. ….is acceptable. Great … …. That was easy and clear!

10. 9 Shared Imaging, Inc.(buyer) plaintiff V Neuromed Medical Systems & Support (seller) defendant

11. EXW - FCA - CPT - CIP – DAT – DAP – DDP – FAS – FOB – CFR - CIF EXW - FCA - CPT - CIP – DAT – DAP – DDP – FAS – FOB – CFR - CIF The Incoterms publication consists of 11 rules that clearly set out the duties, costs and transfer of risks involved in the delivery of goods from sellers to buyers. The Incoterms publication consists of 11 rules that clearly set out the duties, costs and transfer of risks involved in the delivery of goods from sellers to buyers. The 11 Incoterm rules provide a wide choice to sellers and buyers as to how they wish to share those duties, costs and risks. The 11 Incoterm rules provide a wide choice to sellers and buyers as to how they wish to share those duties, costs and risks. Each rule is represented by 3 letters. Each rule is represented by 3 letters. – CIF Singapore Incoterms 2010) – CIF Singapore Incoterms 2010)

12. Incoterms rules become part of the contract of sale by express incorporation. Including this 3 letter term into a contract of sale provides clarity to the seller and buyer and reduces the need to include detailed information within the sales contract. A key benefit of using Incoterms rules is that they are an international standard and universally recognised. Incoterms rules become part of the contract of sale by express incorporation. Including this 3 letter term into a contract of sale provides clarity to the seller and buyer and reduces the need to include detailed information within the sales contract. A key benefit of using Incoterms rules is that they are an international standard and universally recognised. The chosen Incoterms rule can only work if the parties include a specific named place or port. The chosen Incoterms rule can only work if the parties include a specific named place or port.

13. 12 INCOTERMS What do they define? Who has to take care and pay for the transport of the goods Who has to take care and pay for the insurance of the goods Who has to take care and pay for other costs like, e.g. customs, handling,.. Define the place where the seller has to put the goods available to the buyer. Define clearly the place and time when the risk is transferred from one party to another. DELIVERED

14. 13 INCOTERMS 2010 ICC publication 715 E As of January 1 st, 2011 the new “INCOTERMS 2010” came into force, involving the following changes in relation to INCOTERMS 2000: 4 INCOTERMS are eliminated and 2 new are created, all belonging to the so-called D's : DDU Delivered Duty Unpaid DAF Delivered At Frontier DES Delivered Ex Ship DEQ Delivered Ex Quay DAT Delivered At Terminal DAP Delivered At Place Eliminated New terms

15. OBLIGATIONS OF SELLEROBLIGATIONS OF BUYER A1 General obligations of the seller B1 General obligations of the buyer A2 Licenses, authorizations security clearances and other formalities B2 Licenses, authorizations security clearances and other formalities A3 Contracts of carriage and insurance B3 Contracts of carriage and insurance A4 Delivery B4 Taking delivery A5 Transfer of risks B5 Transfer of risks A6 Allocation of costs B6 Allocation of costs A7 Notices to the buyer B7 Notices to the seller A8 Delivery document B8 Proof of delivery A9 Checking-packaging-marking B9 Inspection of goods A10 Assistance with information and related costs B10 Assistance with information and related costs The Top 10

16. INCOTERMS Extent of obligations From the standpoint of the seller EXW FCA – FAS - FOB CFR - CPT CIF - CIP DAT – DAP - DDP Goods available to the buyer, in our warehouse and unloaded meaning NOT LOADED. Deliver the goods to the carrier chosen by the buyer. Deliver the goods to the carrier selected by seller. Deliver the goods to the carrier chosen by seller, dealing and paying the insurance. Maximum obligation. Delivering the goods at destination….named place.

17. INCOTERMS 2010 International Commercial Terms They are a term of the contract of sale between the buyer and seller. They are a term of the contract of sale between the buyer and seller. Clarify what parties must do in respect of 1- CARRIAGE of Goods from Seller to buyer 2- RISK TRANSFER between seller and buyer Clarify what parties must do in respect of 1- CARRIAGE of Goods from Seller to buyer 2- RISK TRANSFER between seller and buyer 3-COSTS between seller and buyer 3-COSTS between seller and buyer

18. INCOTERMS 2010 First Published in 1936 First Published in 1936 Official title is: International Rules for the Interpretation of Trade Terms Official title is: International Rules for the Interpretation of Trade Terms 1936 – 1957 – 1967 – 1974 – 1980 – 1990 – 2000 – 2010

19. INCOTERMS 2010 …international contract terms Beneficiary (Seller) Applicant (Buyer) EXW FCA FAS FOB DAT DAP DDP CFR CIF CPT CIP Dock of Exportation Dock of Importation Transportation to Dock Transportation to Buyer Import Duty Loading onto Vessel Ocean Freight Marine Insurance Unloading Charges CARRIAGE – RISK - COST

20. To avoid any possible confusion a reference to the current version should always be referenced in the contract of sale: INCOTERMS 2010 Big Chopper Corporation Ltd Dublin Port Dublin Rep of Ireland SOLD TO: Central Fine Furniture 898 Makati City Manila Philippines INVOICE NUMBER 0009 01 EXPORT GOODS SHIPPED BY AIR (AIR FRANCE /AEROFLOT) VALUE 250 METRIC TONNES EXCLUSIVE IRISH PINE WOOD DRIED FUMAGATED 253,800. IN ACCORDANCE WITH CONTRACT NO POL787/99 CIP Manila (INCOTERMS 2010) TOTAL USD 253,800. Big Chopper Corporation Ltd Dublin Port Dublin Rep of Ireland SOLD TO: Central Fine Furniture 898 Makati City Manila Philippines INVOICE NUMBER 0009 01 EXPORT GOODS SHIPPED BY AIR (AIR FRANCE /AEROFLOT) VALUE 250 METRIC TONNES EXCLUSIVE IRISH PINE WOOD DRIED FUMAGATED 253,800. IN ACCORDANCE WITH CONTRACT NO POL787/99 CIP Manila (INCOTERMS 2010) TOTAL USD 253,800.

21. Link Sales Contract Payment Link Sales Contract Payment Seller Buye r Bank Cash in Advance Open Account L/C Collections Bank Signing Shipment Receipt of Documents Receipt of Goods/ Acceptance JAN FEB MAR APR MAY JUN JUL PAYMENT METHOD – SHOW ME THE MONEY???

22. INCOTERMS 2010 Traditionally Marine Terms used most often but trend is towards multimodal and delivered terms. Traditionally Marine Terms used most often but trend is towards multimodal and delivered terms. CIF Named Port CIP Named Place of Destination

23. INCOTERMS 2010 Groups Group E - Minimum obligation Group E - Minimum obligation Group F - seller must hand over the goods to a nominated carrier free of risk and expense to the buyer Group F - seller must hand over the goods to a nominated carrier free of risk and expense to the buyer Group C - seller must bear costs even after the delivery to carrier where risk transfers. Group C - seller must bear costs even after the delivery to carrier where risk transfers. Group D- good must arrive at a stated destination. Group D- good must arrive at a stated destination. …. Still here…

25. EXW (..named place) EXW (..named place) Carriage of goods Delivery/Risks Costs Export Clearance Import Clearance

26. EX WORKS is one of the Incoterms® rules which may be used irrespective of the mode of transport and may also be used where more than one mode of transport is employed. It is suitable for domestic trade as well as for international trade. Under “Ex Works” the critical point of delivery occurs when the seller places the goods at the disposal of the buyer at the seller’s premises or at another named place such as a works, factory or an agreed warehouse. The primary duties of the seller: The seller delivers when the goods are placed at the disposal of the buyer, typically at the sellers premises. This means that the seller has no obligation to the buyer in respect of the contract of carriage. The risk transfers from the seller to the buyer when the goods are placed at the buyers disposal at the named place of delivery. The seller bears the cost until the goods until placed at the disposal of the buyer a the named place of delivery. All further costs have to be borne by the buyer including any costs incurred for export or security clearance. Once the goods are delivered to the named place of delivery in accordance with Ex Works then all obligations that may arise in respect of the any contract of carriage, all risks and any related costs are for the account of the buyer. The seller must provide the goods and the commercial invoice in conformity with the contract of sale and any other evidence of conformity that may be required by the contract. The seller must provide the buyer, at the buyer’s request, risk and expense assistance in obtaining any export licence, or other official authorization necessary for the export of the goods. Ex Works may be used for domestic trade and international trade. If used for international trade then all formalities in respect of export clearance are also for account of the buyer.

27. FCA (..named place) FCA (..named place) Carriage of goods Risks Costs Export Clearance Import Clearance

28. FREE CARRIER is one of the Incoterms® rules which may be used irrespective of the mode of transport and may also be used where more than one mode of transport is employed. Under “FREE CARRIER” the critical point of delivery occurs when the seller delivers the goods to the carrier or another person nominated by the buyer at the seller’s premises or another named place. The primary duties of the seller: The seller delivers when the goods are either: placed at the disposal of the carrier or another person nominated by the buyer on the sellers means of transport ready for unloading. Or If the named place is the seller’s premises, when the goods have been loaded on the means of transport provided by the buyer. In either case the seller has no obligation to the buyer in respect of the contract of carriage. The risk transfers from the seller to the buyer when the goods have been delivered to the carrier or other nominated person at the named place of delivery. Alternatively, if the means of transport is provided by the buyer then when delivered loaded on the buyers means of transport. The seller bears the cost until the goods have been delivered at the named place of delivery including any costs incurred for export or security clearance. Once the goods are delivered to the named place of delivery in accordance with FREE CARRIER including costs for export and security clearance then all obligations that may arise in respect of any contract of carriage, all risks and any subsequent costs are for the account of the buyer. The seller must provide the goods and the commercial invoice in conformity with the contract of sale and any other evidence of conformity that may be required by the contract.

29. FAS (..named port of shipment) FAS (..named port of shipment) Carriage of goods Risks Costs Export Clearance Import Clearance

30. FREE ALONGSIDE SHIP (FAS) is one of the Incoterms® rules used for sea and inland waterway transport. FAS means that the seller delivers when the goods are placed alongside the vessel nominated by the buyer at the named port of shipment/loading or procures the goods already so delivered. The risk of loss or damage to the goods passes from seller to buyer when the goods are placed alongside the ship and the buyer bears all costs and risk from this point. The primary duties of the seller: The seller is responsible for carriage of the goods only until they are placed alongside the vessel nominated by the buyer at the named port of shipment/loading The seller bears the risk until the goods are delivered alongside the vessel at the port of shipment/loading The seller bears the costs until the goods delivered alongside the vessel at the port of shipment/loading. The seller has no obligation to the buyer to make a contract of insurance and the buyer has no obligation to the seller to make a contract of insurance. The seller also bears the cost incurred for export or security clearance in country of export. The seller will provide the buyer with the usual proof that the goods the goods delivered alongside the vessel at the port of shipment/loading. If a transport document is required by the buyer then the seller must provide the buyer at the buyers risk and expense with assistance in obtaining the transport document. The seller must provide the goods and the commercial invoice in conformity with the contract of sale and any other evidence of conformity that may be required by the contract.

31. FOB (..named port of shipment) FOB (..named port of shipment) Carriage of goods Risks Costs Export Clearance Import Clearance

32. FREE ON BOARD (FOB) is one of the Incoterms® rules used for sea and inland waterway transport. FOB involves one critical point when the seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment/loading or procures the goods already so delivered. The risk of loss or damage to the goods passes from seller to buyer at this critical point and the buyer bears all costs and risk from this point. The primary duties of the seller: The seller is responsible for carriage of the goods only until they are delivered on board the nominated vessel at the port of shipment/loading. The seller bears the risk until the goods are delivered on board the vessel at the port of loading The seller bears the costs including loading until the goods are loaded on board the nominated vessel at the port of shipment/loading. The seller has no obligation to the buyer to make a contract of insurance and the buyer has no obligation to the seller to make a contract of insurance. The seller also bears the cost incurred for export or security clearance in country of export. The seller will provide the buyer with the usual proof that the goods have been delivered on board the vessel at the port of shipment. If a transport document is required by the buyer then the seller must provide the buyer at the buyers risk and expense with assistance in obtaining the transport document. The seller must provide the goods and the commercial invoice in conformity with the contract of sale and any other evidence of conformity that may be required by the contract.

33. CFR (..named port of destination) CFR (..named port of destination) Carriage of goods Risks Costs Export Clearance Import Clearance Remember, risk transfers from seller to buyer when goods ARE LOADED ON BOARD @ port of shipment.

34. COST AND FREIGHT (CFR) is one of the Incoterms® rules used for sea and inland waterway transport. CFR involves two critical points, one being the delivery point and the other being the destination port. Under CFR the seller delivers the goods when the goods are on board the vessel at the port of loading but the seller must also contract, or procure a contract, for the carriage of the goods to the named destination port. The primary duties of the seller: The seller must contract for the carriage of the goods to the named port of destination The seller bears the risk until the goods are delivered on board the vessel at the port of loading The seller bears the costs of carriage including loading (and unloading if included in contract of carriage) to the named port of destination. The seller has no obligation to the buyer to make a contract of insurance and the buyer has no obligation to the seller to make a contract of insurance. The seller also bears the cost incurred for export or security clearance in country of export. The seller will provide the buyer with the usual transport document to enable the buyer claim the goods from the carrier at the port of destination and, if sale of goods in transit is intended with a negotiable transport document, such as a bill of lading. The seller must provide the goods and the commercial invoice in conformity with the contract of sale and any other evidence of conformity that may be required by the contract.

35. C I F (..named port of destination) C I F (..named port of destination) Carriage of goods Risks Costs Export Clearance Import Clearance TESTED TELEX…URGENT..TESTED TELEX.. ON BEHALF OF POLIMEX CEKOP WE ISSUE OUR IRREVOCABLE DOCUMENTARY CREDIT FOR USD3.700.000.00 AVAILABLE BY SIGHT PAYMENT WITH BARCLAYS BANK LONDON PLEASE ADD YOUR CONFIRMATION COVERING 50,000 TONNES OF CEMENT MAGNASITE ‘QUICK DRY’ AS PER CONTRACT NO POL898/.87 CIF GDYNIA POLAND (INCOTERMS ICC CURRENT VERSION) DOCUMENTS REQUIRED +SIGNED INVOICES IN TRIPLICATE + INSURANCE POLICY FOR 110% OF CIF VALUE WITH CLAIMS PAYABLE IN WARSAW FREE OF EXCESS OR FRANCHISE. +MARINE BILL OF LADING CONSIGNED TO ORDER OF BIG BANK WARSAW NOTIFY APPLICANT MARKED FREIGHT PAID. +INSPECTION CERTIFICATE ISSUED BY QUALSPECO INTERNATIONAL DATED BEFORE SHIPMENT DATE STATING THE QUALITY QUANTITY AND SPECIFICATIONS OF GOODS AND THAT GOODS HAVE BEEN PACKED AND STOWED IN SEAWORTHY MANNER. THIS CREDIT IS SUBJECT TO UCP 400 OF THE INTERNATIONAL CHAMBER OF COMMERCE PARIS FRANCE.

36. COST INSURANCE AND FREIGHT (CIF) is one of the Incoterms® rules used for sea and inland waterway transport. CIF involves two critical points, one being the delivery point and the other being the destination port. Under CIF the seller delivers the goods when the goods are on board the vessel at the port of loading but the seller must also contract, or procure a contract, for the carriage of the goods to the named destination port. The primary duties of the seller: The seller must contract for the carriage of the goods to the named port of destination The seller bears the risk until the goods are delivered on board the vessel at the port of loading The seller bears the costs of carriage including loading (and unloading if included in contract of carriage) to the port of destination. The seller will also pay the cost of insurance of the goods with minimum cover up to the port of destination. The insurance shall cover at a minimum, the price provided in the contract plus 10%, that is 110%, and shall be in the currency of the contract. This insurance shall entitle the buyer or any other party with an insurable interest in the goods to claim directly from the insurer. The seller will provide the buyer with the usual transport document to enable the buyer claim the goods from the carrier at the port of destination and, if sale of goods in transit is intended with a negotiable transport document, such as a bill of lading. The seller must provide the goods and the commercial invoice in conformity with the contract of sale and any other evidence of conformity that may be required by the contract.

37. CPT (..named PLACE of destination) CPT (..named PLACE of destination) Carriage of goods Risks Costs Export Clearance Import Clearance CPT NAMED PLACE CAN BE USED FOR ANY MODE OF TRANSPORT INCLUDING MULTIMODAL TRANSPORT

38. CARRIAGE PAID TO is one of the Incoterms® rules which may be used irrespective of the mode of transport and may also be used where more than one mode of transport is employed. CPT involves two critical points, one being the delivery point and the other being the named place of destination. Under CPT the seller delivers the goods when the goods are delivered to the carrier or another person nominated by the buyer at an agreed place or point of delivery. If the parties do not agree on a specific place or point of delivery, then the risk passes when the goods have been delivered to the first carrier at a point entirely of the seller’s choosing The seller must also contract for, or procure a contract of carriage and pay the cost of the carriage of the goods to the named place of destination. Under CPT the seller fulfils its obligation to deliver when it hands the goods over to the carrier and not when the goods reach the place of destination. The primary duties of the seller: The seller must contract for the carriage of the goods to the named place of destination The seller bears the risk until the goods are delivered to the carrier or another person nominated by the buyer at an agreed place or point The seller bears the costs of carriage including loading (and unloading if included in contract of carriage) to named place of destination together with any costs incurred for export or security clearance. The seller will provide the buyer with the usual transport document to enable the buyer claim the goods from the carrier at the named place of destination and enable the buyer to sell the goods in transit by the transfer of the document to a subsequent buyer or by notification to the carrier. When such a transport document is issued in negotiable form and in several originals, a full set of originals must be presented to the buyer. The seller must provide the goods and the commercial invoice in conformity with the contract of sale and any other evidence of conformity that may be required by the contract.

39. CIP (..named PLACE of destination) CIP (..named PLACE of destination) Carriage of goods Risks Costs Export Clearance Import Clearance Q. 120/0010 – CIP Moscow - who has the duty? We are glad to advise that the Russian market appears to have rebounded, at least in our business which is the export of confectionery ingredients. We are currently shipping to Moscow on a bi-monthly basis. Our problem is not a Documentary Credit or even a payment problem as we get payment in advance of shipment against our pro-forma invoice. Our problem relates to Incoterms 2010, specifically CIP Moscow. Having received payment by SWIFT transfer we shipped goods to Moscow. To obtain clearance of the goods our customer had to pay a duty surcharge. Our customer maintains that it is not their obligation to pay this duty surcharge, but that of the exporter. We disagree! While not a Documentary Credit question we would appreciate if you could clarify who is responsible for paying the duty surcharge under the incoterm CIP Moscow (Incoterms 2010)? Q. 120/0010 – CIP Moscow - who has the duty? We are glad to advise that the Russian market appears to have rebounded, at least in our business which is the export of confectionery ingredients. We are currently shipping to Moscow on a bi-monthly basis. Our problem is not a Documentary Credit or even a payment problem as we get payment in advance of shipment against our pro-forma invoice. Our problem relates to Incoterms 2010, specifically CIP Moscow. Having received payment by SWIFT transfer we shipped goods to Moscow. To obtain clearance of the goods our customer had to pay a duty surcharge. Our customer maintains that it is not their obligation to pay this duty surcharge, but that of the exporter. We disagree! While not a Documentary Credit question we would appreciate if you could clarify who is responsible for paying the duty surcharge under the incoterm CIP Moscow (Incoterms 2010)?

40. CARRIAGE AND INSURANCE PAID (CIP) is one of the Incoterms® rules which may be used irrespective of the mode of transport and may also be used where more than one mode of transport is employed. CIP involves two critical points, one being the delivery point and the other being the named place of destination. Under CIP the seller delivers the goods when the goods are delivered to the carrier or another person nominated by the buyer at an agreed place or point of delivery. The primary duties of the seller: The seller must contract for the carriage of the goods to the named place of destination The seller bears the risk until the goods are delivered to the carrier or another person nominated by the buyer at an agreed place or point The seller bears the costs of carriage including loading (and unloading if included in contract of carriage) to the named place of destination. The seller will also pay the cost of insurance of the goods with minimum cover during carriage. The insurance shall cover at a minimum, the price provided in the contract plus 10%, that is 110%, and shall be in the currency of the contract. This insurance shall entitle the buyer or any other party with an insurable interest in the goods to claim directly from the insurer. The seller will provide the buyer with the usual transport document to enable the buyer claim the goods from the carrier at the named place of destination and enable the buyer to sell the goods in transit by the transfer of the document to a subsequent buyer or by notification to the carrier. When such a transport document is issued in negotiable form and in several originals, a full set of originals must be presented to the buyer. The seller must provide the goods and the commercial invoice in conformity with the contract of sale and any other evidence of conformity that may be required by the contract.

41. DELIVERED AT PLACE DAP (insert named place of destination) Incoterms® 2010 Carriage of goods Risks Costs Export Clearance Import Clearance EXW - FCA - CPT - CIP – DAT – DAP – DDP – FAS – FOB – CFR - CIF EXW - FCA - CPT - CIP – DAT – DAP – DDP – FAS – FOB – CFR - CIF DAP can be used now if you used DES before

42. DELIVERED AT PLACE (DAP) is one of the Incoterms® rules which may be used irrespective of the mode of transport and may also be used where more than one mode of transport is employed. DAP means that the seller delivers the goods, once they are placed at the disposal of the buyer on the arriving means of transport ready for unloading at a named place of destination. The seller must contract for the carriage and pay the cost of the carriage of the goods to the named place of destination. If a specific place or point is not agreed at the named place of destination or is not determined by practice, the seller may select the point at the agreed place of destination that best suits the sellers purpose. The primary duties of the seller: The seller must contract for the carriage of the goods to the named place of destination. The seller bears the risk until the goods are delivered ready for unloading at the agreed point at the named place of destination The seller bears the cost of carriage including loading for carriage plus the costs for the transport of the goods through any country, prior to delivery at the named place of destination. The seller does not bear the costs of unloading at the destination point unless such unloading costs are included in the sellers contract of carriage. The seller will provide the buyer with a document to enable the buyer to take delivery of the goods at the named place of destination. The seller must provide the goods and the commercial invoice in conformity with the contract of sale and any other evidence of conformity that may be required by the contract.

43. DELIVERED AT TERMINAL DAT (insert named terminal at port or place of destination) Incoterms® 2010 Carriage of goods Risks Costs Export Clearance Import Clearance EXW - FCA - CPT - CIP – DAT – DAP – DDP – FAS – FOB – CFR - CIF EXW - FCA - CPT - CIP – DAT – DAP – DDP – FAS – FOB – CFR - CIF INCLUDING UNLOADING DAP DAT The main difference between DAP and DAT is that DAT includes cost of UNLOADING/DISCHARGING. DAT can be used now if you used DEQ before Jebel Ali – Terminal 2 VIN

44. DELIVERED AT TERMINAL (DAT) is one of the Incoterms® rules which may be used irrespective of the mode of transport and may also be used where more than one mode of transport is employed. DAT means that the seller delivers the goods, once they are unloaded from the arriving means of transport and placed at the disposal of the buyer at a named terminal located at the named port or place of destination. The seller must contract for the carriage and pay the cost of the carriage of the goods to the named terminal at the agreed port or place of destination. If a specific terminal is not agreed or is not determined by practice, the seller may select the terminal at the agreed port or place of destination that best suits the sellers purpose. The primary duties of the seller: The seller must contract for the carriage of the goods to the named terminal at the agreed port or place of destination. The seller bears the risk until the goods are delivered unloaded and placed at the disposal of the buyer at the named terminal at the agreed port or place of destination. The seller bears the cost of carriage including loading for carriage plus the costs for the transport of the goods through any country, prior to delivery at the named destination terminal. The seller also bears the cost of unloading at the destination terminal together with any costs incurred for export or security clearance in country of export. The seller will provide the buyer with a document to enable the buyer to take delivery of the goods at the named place of destination. The seller must provide the goods and the commercial invoice in conformity with the contract of sale and any other evidence of conformity that may be required by the contract. In the context of the of the Incoterms® rules “Terminal” includes any place, whether covered or not, such as a quay, warehouse, container yard or road, rail or air cargo terminal.

45. DDP (..named place of destination) DDP (..named place of destination) Carriage of goods Risks Costs Export Clearance Import Clearance MAXIMUM OBLIGATIONS OF SELLER Ready for UNLOADING

46. DELIVERED DUTY PAID (DDP) is one of the Incoterms® rules which may be used irrespective of the mode of transport and may also be used where more than one mode of transport is employed. DDP means that the seller delivers the goods, once the good are placed at the disposal of the buyer, cleared for import on the arriving means of transport ready for unloading at the named place of destination. The seller must contract for the carriage and pay the cost of the carriage of the goods to the named place of destination. If a specific place or point is not agreed at the named place of destination or is not determined by practice, the seller may select the point at the agreed place of destination that best suits the sellers purpose. The seller bears all the costs and risks involved in bringing the goods to the place of destination and has an obligation to carry out all customs formalities to clear the goods for export and import and to pay any duty for both export and import up to the named place of destination. The primary duties of the seller: The seller must contract for the carriage of the goods to the named place of destination. The seller bears the risk until the goods are delivered cleared for import and ready for unloading at the agreed point at the named place of destination The seller bears the cost of carriage including loading for carriage plus the costs for the transport of the goods through any country, prior to delivery at the named place of destination. The seller does not bear the costs of unloading at the destination point unless such unloading costs are included in the sellers contract of carriage. However, the seller bears the cost of all customs formalities and payments of duties on export and import up to the named place of destination. The seller will provide the buyer with a document to enable the buyer to take delivery of the goods at the named place of destination. The seller must provide the goods and the commercial invoice in conformity with the contract of sale and any other evidence of conformity that may be required by the contract.

47. Revenue Recognition Revenue Recognition The Sarbanes Oxley Act (SOX) imposes financial integrity on publicly traded companies by making senior management personally responsible for accounting accuracy. The Sarbanes Oxley Act (SOX) imposes financial integrity on publicly traded companies by making senior management personally responsible for accounting accuracy. —two criteria apply throughout: —two criteria apply throughout: –1. Delivery, and –2. Ownership transfer. Many companies take the approach that revenue recognition = DELIVERY as specified in Incoterms unless conflicting with local regulation or law. Many companies take the approach that revenue recognition = DELIVERY as specified in Incoterms unless conflicting with local regulation or law.

49. Sales Contract Seller Buye r Bank Cash in Advance Open Account L/C Collections Bank Signing Shipment Receipt of Documents Receipt of Goods/ Acceptance JAN FEB MAR APR MAY JUN JUL PAYMENT METHOD – SHOW ME THE MONEY???

50. Vin O’Brien

51. The Foundations of International Trade & Finance Hanoi – Thursday 21 April 2016 THE INTERNATIONAL TRADE CONRACT