aed-1 unit-3 export sales contract

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AED-01UNIT-3 EXPORT SALES CONTRACT

1. State the meaning and basic elements of an export salescontract. Distinguish Between Domestic sales Contract andExport Sales Contract.

ANS: The export contract should be very explicit regarding goods andspecifications, price, mode of payment, storage, packing, deliveryschedule and so on. Normally the contract is sent with a pro formainvoice by airmail.

Although contracts may be oral or partly in writing and partly by word ofmouth, it is always safer for the exporter to produce his terms of sellingin writing and obtain the signatures of his buyer or authorisedrepresentative.

Export sales contract can be informal or formal, depending on theforeign buyer.

1. An offer to sell made over the telephone by the exporter, coveringthe type of good, quantity to be sold, per unit price and delivery andpayment terms accepted by the foreign buyer or an offer to buy fromthe importer.

# Such a contract may be preceded by the series of offers and counter-offers before the final offer and acceptance. Such a contract may or maynot be confirmed in writing.

# It usually occurs between branches of the same company or betweenlong-standing trade partners or between reputable companies dealing incommodities subject to rapid price changes.

2. An offer to sell made by airmail, courier, telex, cable, facsimile or E-mail by the exporter and accepted by the foreign buyer.

3. A pro-forma invoice by facsimile, air mailed, E-mailed or courier bythe exporter to the buyer and confirmed by the foreign buyer.

4. A formal typewritten contract setting out all the conditions of the saleand signed by both buyer and seller.

The essential elements of a contract of sale should include the following:

a) Names and addresses of the parties

b) Product, standards (quality) and specifications

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c) Inspection of products

d) Packaging, labelling and marking requirements

e) Marine insurance

f) Port of shipment, destination and delivery schedule

g) Method of payment

h) Price FOB, CIF, C & F etc. in international currency or currency askedfor by the buyer and,

i) Settlement of disputes including arbitration clause.

If the buyer is satisfied with the terms set out in the contract and the pro

forma, the exporter can then get an order with duplicate copy of thecontract, detailing payment arrangement and other details and anindication that a letter of credit (LC) has been opened in favour of theexporter. Details of documents required will also be indicated in theexport order. The following must happen:

a) Acknowledgment - exporter must acknowledge receipt of the orderindicating that confirmation follows

b) Scrutiny - contents of the order in respect of product, sizes,specifications etc. as per quotation must be examined in terms ofelements of contract conveyed by the exporter to his buyer.Qualities/volume should be examined and ascertained in respect ofcapability to supply within the stipulated time.

Delivery schedule: All efforts should be made to ensure adherence todelivery schedule as this would affect the requirements of the LC. Theexport order should indicate whether part shipment is permissible or not

Terms of payment

This is very important: If payment is to be by LC the following should beborne in mind when examining the LC:

a) confirmation of the LC

b) documents stipulated in the LC will be submitted by the exporter'sbank

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c) draft to be drawn against the LC is for the period set out in terms ofthe contract, "sight draft" is payment by the recipient or "usance draft"if credit has been allowed in the contract

d) the credit validity period allowed in the LC

e) payment against the LC is permissible according to requirements offoreign exchange control regulations.

Documents

Since the LC indicates the documents required along with the bill ofexchange, the exporters should look for availability of the documentscalled for by the importer and particularly:

a) Commercial customs consular/legalised invoice. The Buyer should

endeavour to send a special form of invoice required by him.

b) Kind of Bill of Lading (usually "clean on board") and the number ofcopies required by him along with the bill of exchange and non-negotiable copies to be sent to the buyer.

c) Certificate of origin

d) Packing list - number of copies required

e) Marine Insurance Policy whether in FOB or CIF contract is to beeffected by the exporter on behalf of the importer. The name of thecompany from which the insurance contract is to be obtained shouldalso be mentioned.

Pre-shipment inspection

To be carried out by an appointed body or any other agency.

Packing, labelling and marking requirements

Special or usual activities for example, colour contents, language,packing etc.

Confirmation

If the exporter is satisfied with all of the above, then he must send hisconfirmation of the export order to the buyer. No special form of

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confirmation is needed as any letter giving details of order andindicating clearly terms and conditions would be sufficient.

If dissatisfied, the exporter should write to the importer to seek forclarification and necessary corrections, If the export transaction

presents itself to the businessman as a natural and indivisible whole andhe is apt to pay little attention to its constituent parts, like the motoristwho thinks of the components of his car only when he notices a fault inthem.

Special trade terms in export sales

Export transactions based on the contract of sale usually have termswhich are not customary in the local trade. The most common are theFOB and CIF clauses. Other clauses are ex-works, or ex-warehouse or ex-store, the FOR, FOT, the COF, ex-ship, ex-quay and arrival.

Distinction between Domestic Sales Contract and Export SalesContractA major point of distinction between a domestic and export contract liesin identifying the proper law governing the export contract. This is n0t.aproblem for domestic sales contracts because the proper law will alwaysbe the Indian law in India. It will be .the respective national laws in eachcountry so far as their domestic transactions are concerned . But inexport transactions, there are two nations, that of the exporter andimporter. Therefore, the question arises, which country's law will applyto an export contract. This is a very complex problem but the principlegenerally followed is that the parties to the contract may agree mutuallyabout the applicability of particular country's law. The country chosenmust be either that of the exporter or the importer. In specialcircumstances, a third country's law bay be chosen, provided that thecountry has something to do with the contract. For example, that maybe the country where the goods will be re-exported by the importersubsequently. Only when the parties fail to mention the applicable lawand a dispute arises later on, the court will decide which law shouldapply.

International Commercial Terms (INCOTERMS)

2. Explain briefly various contracts under INCOTERMS.?Ans: International Commercial Terms (INCOTERMS)

The INCOTERMS (International Commercial Terms) is a universallyrecognized set of definitions of international trade terms, such as FOB,CFR and CIF, developed by the International Chamber of Commerce

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(ICC) in Paris, France. It defines the trade contract responsibilities andliabilities between buyer and seller. It is invaluable and a cost-savingtool. The exporter and the importer need not undergo a lengthynegotiation about the conditions of each transaction. Once they haveagreed on a commercial term like FOB, they can sell and buy at FOB

without discussing who will be responsible for the freight, cargoinsurance, and other costs and risks.

The INCOTERMS was first published in 1936---INCOTERMS 1936---andit is revised periodically to keep up with changes in the internationaltrade needs. The complete definition of each term is available from thecurrent publication---INCOTERMS 2000. The publication is available atyour local Chamber of Commerce affiliated with the InternationalChamber of Commerce (ICC).

Many importers and exporters worldwide are accustomed to and may

still use the INCOTERMS 1980, the predecessor ofINCOTERMS 1990and INCOTERMS 2000. Under the INCOTERMS 2000, the internationalcommercial terms are grouped into E, F, C and D, designated by thefirst letter of the term (acronym), as follows:

GROUP TERMS STANDS FOR

E EXW Ex Works

F FCAFAS

FOB

Free CarrierFree Alongside Ship

Free On Board

C CFRCIFCPTCIP

Cost and FreightCost, Insurance and FreightCarriage Paid ToCarriage and Insurance Paid To

D DAFDESDEQ

DDUDDP

Delivered At FrontierDelivered Ex ShipDelivered Ex Quay

Delivered Duty UnpaidDelivered Duty Paid

In practice, trade terms are written with either all upper case letters(e.g. FOB, CFR, CIF, and FAS) or all lower case letters (e.g. fob, cfr, cif,and fas). They may be written with periods (e.g. F.O.B. and c.i.f.).

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In international trade, it would be best for exporters to refrain, whereverpossible, from dealing in trade terms that would hold the sellerresponsible for the import customs clearance and/or payment of importcustoms duties and taxes and/or other costs and risks at the buyer'send, for example the trade terms DEQ (Delivered Ex Quay) and DDP

(Delivered Duty Paid). Quite often, the charges and expenses at thebuyer's end may cost more to the seller than anticipated. To overcomelosses, hire a reliable customs broker or freight forwarder in theimporting country to handle the import routines. Similarly, it would bebest for importers not to deal in EXW (Ex Works), which would hold thebuyer responsible for the export customs clearance, payment of exportcustoms charges and taxes, and other costs and risks at the seller's end.

1. EXW {+ the named place}Ex WorksEx means from. Works means factory, mill or warehouse, which is the

seller's premises. EXW applies to goods available only at the seller'spremises. Buyer is responsible for loading the goods on truck orcontainer at the seller's premises, and for the subsequent costs andrisks.

In practice, it is not uncommon that the seller loads the goods on truckor container at the seller's premises without charging loading fee.

In the quotation, indicate the named place (seller's premises) after theacronym EXW, for example EXW Kobe and EXW San Antonio.

The term EXW is commonly used between the manufacturer (seller) andexport-trader (buyer), and the export-trader resells on other trade termsto the foreign buyers. Some manufacturers may use the term ExFactory, which means the same as Ex Works.

2. FCA {+ the named point of departure}

Free CarrierThe delivery of goods on truck, rail car or container at the specified point(depot) of departure, which is usually the seller's premises, or a namedrailroad station or a named cargo terminal or into the custody of thecarrier, at seller's expense. The point (depot) at origin may or may notbe a customs clearance center. Buyer is responsible for the maincarriage/freight, cargo insurance and other costs and risks. In the airshipment, technically speaking, goods placed in the custody of an aircarrier is considered as delivery on board the plane. In practice, manyimporters and exporters still use the term FOB in the air shipment.

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The term FCA is also used in the RO/RO (roll on/roll off) services.

In the export quotation, indicate the point of departure (loading) afterthe acronym FCA, for example FCA Hong Kong and FCASeattle.Some manufacturers may use the former terms FOT (Free On

Truck) and FOR (Free On Rail) in selling to export-traders.

3. FAS {+ the named port of origin} Free Alongside Ship

Goods are placed in the dock shed or at the side of the ship, on thedock or lighter, within reach of its loading equipment so that they canbe loaded aboard the ship, at seller's expense. Buyer is responsiblefor the loading fee, main carriage/freight, cargo insurance, and othercosts and risks.

In the export quotation, indicate the port of origin (loading) after theacronym FAS, for example FAS New Yorkand FAS Bremen.

The FAS term is popular in the break-bulk shipments and with theimporting countries using their own vessels.

4. FOB {+ the named port of origin} Free On Board

The delivery of goods on board the vessel at the named port of origin(loading), at seller's expense. Buyer is responsible for the maincarriage/freight, cargo insurance and other costs and risks.

In the export quotation, indicate the port of origin (loading) after theacronym FOB, for example FOB Vancouver and FOB Shanghai.

Under the rules of the INCOTERMS 1990, the term FOB is used forocean freight only. However, in practice, many importers andexporters still use the term FOB in the air freight. In North America,the term FOB has other applications. Many buyers and sellers inCanada and the U.S.A. dealing on the open account and consignmentbasis are accustomed to using the shipping terms FOB Origin andFOB Destination.

FOB Origin means the buyer is responsible for the freight and othercosts and risks. FOB Destination means the seller is responsible forthe freight and other costs and risks until the goods are delivered tothe buyer's premises, which may include the import customsclearance and payment of import customs duties and taxes at thebuyer's country, depending on the agreement between the buyer andseller.

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In international trade, avoid using the shipping terms FOB Originand FOB Destination, which are not part of the INCOTERMS(International Commercial Terms).

5. CFR {+ the named port of destination} Cost and Freight

The delivery of goods to the named port of destination (discharge) atthe seller's expense. Buyer is responsible for the cargo insurance andother costs and risks. The term CFR was formerly written as C&F.Many importers and exporters worldwide still use the term C&F.

In the export quotation, indicate the port of destination (discharge)after the acronym CFR, for example CFR Karachi and CFRAlexandria.

Under the rules of the INCOTERMS 1990, the term Cost and Freight

is used for ocean freight only. However, in practice, the term Costand Freight (C&F) is still commonly used in the air freight.

6. CIF {+ the named port of destination} Cost, Insurance andFreight

The cargo insurance and delivery of goods to the named port ofdestination (discharge) at the seller's expense. Buyer is responsiblefor the import customs clearance and other costs and risks. In theexport quotation, indicate the port of destination (discharge) after theacronym CIF, for example CIF Pusan and CIF Singapore. Under therules of the INCOTERMS 1990, the term CIF is used for ocean freightonly. However, in practice, many importers and exporters still use theterm CIF in the air freight.

7. CPT {+ the named place of destination} Carriage Paid ToThe delivery of goods to the named place of destination (discharge)at seller's expense. Buyer assumes the cargo insurance, importcustoms clearance, payment of customs duties and taxes, and othercosts and risks. In the export quotation, indicate the place ofdestination (discharge) after the acronym CPT, for example CPT LosAngeles and CPT Osaka.

8. CIP {+ the named place of destination} Carriage andInsurance Paid To

The delivery of goods and the cargo insurance to the named place ofdestination (discharge) at seller's expense. Buyer assumes the importcustoms clearance, payment of customs duties and taxes, and othercosts and risks. In the export quotation, indicate the place of

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destination (discharge) after the acronym CIP, for example CIP Parisand CIP Athens.

9. DAF {+ the named point at frontier} Delivered At FrontierThe delivery of goods to the specified point at the frontier at seller's

expense. Buyer is responsible for the import customs clearance,payment of customs duties and taxes, and other costs and risks.

In the export quotation, indicate the point at frontier (discharge) afterthe acronym DAF, for example DAF Buffalo and DAF Welland.

This term is primarily intended to be used when goods are tobe carried by rail or road, but it may be used for any mode ofTransport.

10. DES {+ the named port of destination}Delivered Ex Ship

The delivery of goods on board the vessel at the named port ofdestination (discharge), at seller's expense. Buyer assumes theunloading fee, import customs clearance, payment of customs dutiesand taxes, cargo insurance, and other costs and risks. In the exportquotation, indicate the port of destination (discharge) after theacronym DES, for example DES Helsinki and DES Stockholm.

The term can only be used for sea or inland waterwaytransport.

11. DEQ {+ the named port of destination}Delivered Ex Quay

The delivery of goods to the quay (the port) at destination at seller'sexpense. Seller is responsible for the import customs clearance andpayment of customs duties and taxes at the buyer's end. Buyer assumesthe cargo insurance and other costs and risks. In the export quotation,indicate the port of destination (discharge) after the acronym DEQ, forexample DEQ Libreville and DEQ Maputo.

12. DDU {+ the named point of destination} Delivered DutyUnpaid

The delivery of goods and the cargo insurance to the final point atdestination, which is often the project site or buyer's premises, atseller's expense. Buyer assumes the import customs clearance andpayment of customs duties and taxes. The seller may opt not to insurethe goods at his/her own risks. In the export quotation, indicate the pointof destination (discharge) after the acronym DDU, for example DDU LaPaz and DDU Ndjamena.

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The term can only be used for sea or inland waterway transport.

13. DDP {+ the named point of destination} Delivered Duty Paid

The seller is responsible for most of the expenses, which include the

cargo insurance, import customs clearance, and payment of customsduties and taxes at the buyer's end, and the delivery of goods to thefinal point at destination, which is often the project site or buyer'spremises. The seller may opt not to insure the goods at his/her ownrisks. In the export quotation, indicate the point of destination(discharge) after the acronym DDP, for example DDP Bujumbura andDDP Mbabane.

Diagram: International Commercial Terms

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3. What are the duties of exporter and importer Under FOBcontracts.Ans: FOB (named port of shipment) Contract:Following are the duties of exporter under FOB contract:i) Supply the contracted goods in conformity with the contract of saleand deliver the goods on board the vessel named by the buyer at thenamed port of shipment.ii) Bear all costs and risks of the' goods until such time as they shallhave effectively passed the ship's rail.iii) Provide at his own expense the customary clean documents in proofof the delivery of the goods.Duties of the importer include:i) Reserve the necessary shipping space and give due notice of the sameto the exporter and 'ii) Bear all costs and risks of the goods from the time they haveeffectively passed the ship's rail and pay the price as provided for in thecontract.

4. What are the duties of exporter and importer Under CIFcontracts.

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Ans: CIF (named port of destination) Contract: Following a r e thedutles of the exporter under CIF contract:i ) Supply the goods in conformity with the contract of sale, arrange athis own expense for the shipping space by the usual route and payfreight charges for the carriage of goods.

ii) Obtain at his own risk and expense all documentation regardinggovernmental - authorization necessary for the export of goods,iii) Load the goods at his own expense on board the vessel at the port ofshipment. He should procure at his own cost in a transferable form apolicy of marine insurance for a value equivalent of CIF plus 10 per cent.iv) Bear all risks until the goods have effectively crossed the ship's railand furnish to the buyer a clean negotiable bill of lading.. .Duties of the importer include:i) Accept the document hen tendered by the exporter, if these are inconformity with the contract of sale and pay the price.

ii) Receive the goods at the port of destination and bear all costs exceptfreight and marine insurance incurred in respect of the carriage-of thegoods.iii) Bear all risks of the goods, from the time they have effectivelypassed the ship's rail at the port of shipment.

4. What are the Legal implications of FOB contract and CIFcon.Ans: FOB (named port of shipment) Contract:

1) FOB Contract: Under FOB contracts, the seller has the duty to placethe goods onboard the carrier which has been nominated by the buyer.However, sometimes due to reasons of convenience, the exporterhimself may contract with the carrier.In both cases, the freight has to be paid by the importer. The exporter'sresponsibility ends when he delivers the goods to the carrier.The major legal irnplicatiois of FOB contracts are:i) The delivery is completed by delivering the goods to the carrier. Thismeans that delivery to the carrier operates as delivery to the buyer,unless the seller has reserved the right of disposal over the goods.ii) The price in a FOB contract covers all expenses upto the loading ofthe goods on the carrier. All costs subsequent to that point will be on thebuyer's account.iii) Risks in the goods passes from the seller to the buyer at the sametime when delivery is completed i.e. when the goods are placed on thecarrier.

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iv) Normallly property in the goods also should pass from the exporter tothe importer along with risks. The passing of property may be postponedby a specific provision in the contract.v) Payments fall due when the delivery is completed. It is generallystipulated that property will pass only when the buyer fulfils his

contractual obligations under the relevant terms. For example,acceptance of the Bill of Exchange submitted along with the Bill ofLading or the Airway Bill.Form a practical point of view, it is easier for an exporter to implementan FOB contract. This is because of the following two reasons:a) When the space is not available on ship, the exporter will be unableto export the goods. In FOB contract reservation of ship is the duty ofimporter. Therefore, this is the fault of buyer.b) In FOB contract, risks associated with freight escalation has to beborne by the importer.Though selling on FOB basis may be easier for an exporter, this is not

good for the country as a whole. This is because since under an FOBcontract, the importer will organise both shipping and insurance, he willgive the business to local firms in his own country. As a result, theIndian shipping/Air lines and insurance companies stand to loseconsiderable amount of business.2) CIF Contracts: The exporter undertakes the responsibility ofcontracting the shipping space and also getting the insurance cover forthe goods in a CIF contract. These responsibilities are in addition to whathe does under an FOB contract.The legal nature of a CIF contract is rather complicated as it necessarilyinvolves three contracts, viz., contract of sale, contract of affreightmentand contract of insurance.Further, over the centuries, the nature of CIF contracts has evqlvedbased upon courts interpretation all over the world. One of theobjectives of CIF contract is to facilitate resale of goods while on transiton the basis of only shipping documents. The shipping documentsrepresent title to the goods and, therefore, physical transfer of goods isnot required for trading Purposes. It is, therefore, said that legallyspeaking, a CIF contract is not a sale of goods themselves but a sale ofdocuments relating to the goods. Under a CIF contract, the right of thebuyer is to have the shipping documents and not the goods. The sellercan claim payment only by tendering the relevant shipping documents.The major legal implications of CIF Contracts are:i) The seller has to procure a contract of affreightment. This will enablehim to ship the goods on the due date to the named port of destination.ii) He must deliver the goods on board the ship, collect the shippingdocuments and send to the importer.iii) He must also procure a contract of insurance covering the shippedgoods and the risks, 3s desired by the importer.

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iv) He also has to send along with the shipping documents the paymentdocument, such as the Bill of Exchange.V) The importer has to make the payment on the basis of the documentstendered to him. He has a right to scrutinize the documents or rejectthem.

vi) The property in the goods does not normally pass on shipment. Itpasses when the Bill of Lading is delivered to the buyer and thereby heacquires the right of disposal of the goods.vii) The property right that the buyer is acquiring is conditional.viii) The exporter's duty comes to an end when the goods have beenplaced on board the vessel. The goods will be at the importer's risks,though the freight & insurance premium have been paid by theexporter.ix) The CIF contract is so structured that even if the buyer knows thatthe goods have already got lost or damaged, he is under an obligation lopay. The importer has his remedy either under the contract of

affreightment against a ship owner or under the policy of insuranceagainst the insurance company.

INTERNATIONAL DISPUTE SETTLEMENT

5. Explain the meaning of International Arbitration.?Ans: International arbitration is a leading method for resolvingdisputes arising from international commercial agreements and otherinternational relationships. As with arbitration generally, internationalarbitration is a creature ofcontract, i.e., the parties' decision to submitdisputes to binding resolution by one or more arbitrators selected by oron behalf of the parties and applying adjudicatory procedures, usuallyby including a provision for the arbitration of future disputes in theircontract. The practice of international arbitration has developed so as toallow parties from different legal and cultural backgrounds to resolvetheir disputes, generally without the formalities of their respective legalsystems.Enforcement of international arbitrationIn the case of international transactions, arbitration becomesinternational when at least one of the parties involved is resident ordomiciled outside India or the subject matter of the dispute is abroad. Inthis case, the law applicable to an arbitration proceeding depends uponthe terms and conditions of the export contract and the rules of conflictof laws. Therefore, it is always advisable to specify in the export contractas to which laws the contract is subject to in case a dispute arises infuture.

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Depending upon the export contract, arbitration can take place either inthe exporters or importers .country.

6. Explain the meaning of Litigation.?Ans: A dispute is in litigation ( or being litigated) when it has

become the subject of a formal court action or law suit. Also the study ofcourt process, both civil and criminal.

7. What is the role of force majeure in international salescontract.?

Ans: There have been a number of global events in recent years thathave threatened the performance of international sale contracts. Firstly,there was the 2008 financial crisis and global recession. This wasfollowed by a number of natural disasters, including the eruption of theIcelandic volcano , the Japanese earthquake and tsunami, floods in

Australia affecting the export of commodities such as coal and droughtin Russia threatening wheat crops. There has also been civil and politicalunrest in the Middle East and North Africa this year, which hasjeopardised the fulfillment of contracts with counterparties in theaffected countries.Frustration of contractA party faced with an external occurrence or event that may make itsperformance under a contract impractical, onerous or even impossiblemight seek to argue that the contract has been frustrated. Under Englishlaw, frustration will result in the contract being terminated so that theparties are excused from further performance. However, in order for acontract to be frustrated, the event in question must be unforeseen, itmust have occurred without the fault of either party to the contract andit must either make the contracts performance impossible or it mustdestroy the fundamental purpose of the contract.Frustration compared to force majeureGiven the reluctance of the English courts to find that a contract hasbeen frustrated, many international trade contracts incorporate forcemajeure (FM) clauses. Force majeure is not an English law concept butit can be applicable to contracts governed by English law where theparties have incorporated an express FM provision in their contract. AnFM clause provides that one or both parties can cancel a contract or beexcused from either part or complete performance of the contract onthe occurrence of a certain specified event or events beyond the partiescontrol. Sometimes the FM clause will entitle one or both parties tosuspend performance or toseek an extension of time for performance. Unlike frustration, therefore,an FM event will not always bring a contract to an end if the FM clauseprovides otherwise.

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Another difference between frustration and force majeure is that Englishlaw does not prevent a party from relying on an FM clause in relation toan event that existed at the time the contract was concluded (so long asthe FM event falls within its terms), whereas frustration will only apply inrelation to a supervening event. Furthermore, an event must have been

unforeseen in the case of frustration, whereas an FM clause can berelied on even if the party relying on the FM event could reasonablyhave been expected to take it into account at the time of entering intothe contract.

An FM clause should define the FM events it is intended to cover.Although the FM events will differ according to the type of contract, thecommodity being bought and sold and the countries involved, the typesof specific event that are normally listed in an FM clause include:>> act of God (this may cover extreme weather conditions such asfloods)

>> war or threat of war, terrorist act, blockade, revolution, riot, civilcommotion>> fire>> industrial action/strike>> government action>> embargo>> unavailability of goods>> default of sub-contractors or suppliers>> loss or breakdown of carrying vessel.

8. Do you think arbitration is better than litigation?Discussion?

Ans: Yes Arbitration is more suitable than Litigation1. Arbitration can be set in two to three weeks or, at most, two to threemonths instead of two to three years for a trial setting.2. There is little or no discovery. Either depositions and interrogatorieswill be restricted or else there may be none.3. Arbitration is private. Court is public. In arbitration, strangers andnews media will not be allowed in court.4. Arbitration is not appealable. It is final. Court cases are always subjectto rehearings, new trials, and appeals. Post trial proceedings can takelonger and cost more than the original trial. Arbitration generally has norehearings, new trials, or appeals.5. Litigation costs in arbitration are substantially less than in court.6. Arbitrators are not known for awarding huge amounts for punitivedamages, mental anguish, pain and suffering and other non-economicdamages.

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7. Arbitration can be done with or without lawyers your choice.

Summary

Applicable Trade Terms in Different Modes of Transportation

GROUP TERM Stands forMode of

Transportation

Land Ocean Air Multimodal

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E EXW Ex Works


F FCA Free Carrier

FAS Free Alongside

Ship

FOB Free On Board


C CFR Cost and Freight

CIF Cost, Insurance

and Freight

CPT Carriage Paid To

CIP Carriage and

Insurance Paid To


D DAF Delivered

At Frontier

DES Delivered Ex Ship

DEQ Delivered Ex Quay

DDU DeliveredDuty Unpaid

DDP Delivered

Duty Paid

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