Jia Qingkun lawyer tips: how to apply trade terms

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Hot words：DDU CIF FAS DAP CPT CFR CIP FOB DAT EXW fraud DDP DAF DES DEQ Incoterms letter of credit bill of lading FCA

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First, the main factors affecting trade terms used

(1) in the international market. Trade terms are also an important means of import and export enterprise clients, (2) transport and insurance conditions. If there is sufficient capacity to transport matters in the case of minimum freight towards consistent trade arrangement and mode of transport on their own terms, (3) Customs procedures. Concerned must be national of a party in charge of customs clearancepolicies, formalities and costs and other details, without the ability to do this work,you should try to use other terms, (4) settlement. Not suitable for collection settlement using DES, DEQ, DDU, DDP, real delivery terms, CIF, CFR, FOB, FAS and otherterms can be used in conjunction with collection and/or letter of credit way; (5) exchange of trade and Government intervention.

Second, trading correct application of terms

(1) taking into account the customs, risk and insurance, transportation, exchange rate changes and other factors, selecting trade terms of the exporting Party shall be carried out in a CIP-CIF-CPT-CFR-FCA-FAS-FOB order. Because if the exporter used CIF, CIP, CFR, CPT trade term-time, responsible for arranging transport and insurance by exporters, exporters can choose familiar their ship to their insurance company. This will help exporters informed of transport of goods, can effectively avoidthe occurrence of acts of obtaining export goods.

But when rates rise, overseas transport business are not familiar with, when local currency appreciation, exporters should use FOB, FCA, FAS terms. Overseas transport operations when tariffs fall trends, familiarity, expertise in freight and insurance premium calculations, devaluation of the local currency trend, national insurance rates when less expensive, export business should use CIF, CFR, CPT, CIP terms.

(2) taking into account the customs, risk and insurance, means of transport, exchange rate changes and other factors, selecting trade terms of the importing party should be carried out according to the order of FOB-FAS-FCA-CFR-CPT-CIF-CIP, because if shipping and insurance by the importer is responsible for, importers can choose familiar with their ship to their insurance company. So you can keep informed of cargo transportation, avoid carrier and the collusion of the exporting Party, reselling the goods in transit, acts of obtaining payment.

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