AED-01 UNIT-3 EXPORT SALES CONTRACT 1. Stat State e the the mean meanin ing g and and basi basic c elem elemen ents ts of an expo export rt sale sales s contract. contract. Disting Distinguish uish Between Between Domesti Domestic c sales sales Contract Contract and Export Sales Contract. ANS: The export contract should be very explicit regarding goods and spec sp ecif ific icat atio ions ns,, pric price, e, mode mode of paym paymen ent, t, stor storage age,, pack packin ing, g, deli delive very ry schedule and so on. Normally the contract is sent with a pro forma invoice by airmail. Although contracts may be oral or partly in writing and partly by word of mouth, it is always safer for the exporter to produce his terms of selling in wri writing ting and and obta obtaiin the the sign signat atur ure es of his his buy buyer or aut author horised sed representative.
Export sales contract can be informal or formal, depending on the foreign buyer. 1. An offer to sell made over the telephone by the exporter, covering the type of good, quantity quantity to be sold, per unit unit price and deliver delivery y and payment terms accepted by the foreign buyer or an offer to buy from the importer. # Such a contract may be preceded by the series of offers and counteroffers before the final offer and acceptance. Such a contract may or may not be confirmed in writing. # It usually occurs between branches of the same company or between long-standing trade partners or between reputable companies dealing in commodities subject to rapid price changes.
2. An offer to sell made by airmail, airmail, courier, courier, telex, cable, facsimile facsimile or Email by the exporter and accepted by the foreign buyer. 3. A pro-forma invoice by facsimile, air mailed, E-mailed or courier by the exporter to the buyer and confirmed by the foreign buyer. 4. A formal typewritten contract setting out all the conditions of the sale and signed by both buyer and seller. The essential elements elements of a contract of sale should include the following: following: a) Names and addresses of the parties b) Product, standards (quality) and specifications s pecifications 1
AED-01 UNIT-3 EXPORT SALES CONTRACT 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 asked for 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 the contract, detailing payment arrangement and other details and an indication that a letter of credit (LC) has been opened in favour of the exporter. Details of documents required will also be indicated in the export order. The following must happen: a) Acknowledgment - exporter must acknowledge receipt of the order indicating that confirmation follows b) Scrutiny - contents of the order in respect of product, sizes, specifications etc. as per quotation must be examined in terms of elements of contract conveyed by the exporter to his buyer. Qualities/volume should be examined and ascertained in respect of capability to supply within the stipulated time.
Delivery schedule: All efforts should be made to ensure adherence to delivery schedule as this would affect the requirements of the LC. The export 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 be borne in mind when examining the LC: a) confirmation of the LC b) documents stipulated in the LC will be submitted by the exporter's bank
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AED-01 UNIT-3 EXPORT SALES CONTRACT c) draft to be drawn against the LC is for the period set out in terms of the 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 of foreign exchange control regulations.
Documents Since the LC indicates the documents required along with the bill of exchange, the exporters should look for availability of the documents called 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 of copies required by him along with the bill of exchange and nonnegotiable 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 be effected by the exporter on behalf of the importer. The name of the company from which the insurance contract is to be obtained should also 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 his confirmation of the export order to the buyer. No special form of
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AED-01 UNIT-3 EXPORT SALES CONTRACT confirmation is needed as any letter giving details of order and indicating clearly terms and conditions would be sufficient. If dissatisfied, the exporter should write to the importer to seek for clarification and necessary corrections, If the export transaction presents itself to the businessman as a natural and indivisible whole and he is apt to pay little attention to its constituent parts, like the motorist who thinks of the components of his car only when he notices a fault in them. Special trade terms in export sales Export transactions based on the contract of sale usually have terms which are not customary in the local trade. The most common are the FOB and CIF clauses. Other clauses are ex-works, or ex-warehouse or exstore, the FOR, FOT, the COF, ex-ship, ex-quay and arrival.
Distinction between Domestic Sales Contract and Export Sales Contract A major point of distinction between a domestic and export contract lies in identifying the proper law governing the export contract. This is n0t.a problem for domestic sales contracts because the proper law will always be the Indian law in India. It will be .the respective national laws in each country so far as their domestic transactions are concerned . But in export transactions, there are two nations, that of the exporter and importer. Therefore, the question arises, which country's law will apply to an export contract. This is a very complex problem but the principle generally followed is that the parties to the contract may agree mutually about the applicability of particular country's law. The country chosen must be either that of the exporter or the importer. In special circumstances, a third country's law bay be chosen, provided that the country has something to do with the contract. For example, that may be the country where the goods will be re-exported by the importer subsequently. Only when the parties fail to mention the applicable law and a dispute arises later on, the court will decide which law should apply. International Commercial Terms (INCOTERMS) 2. Explain briefly various contracts under INCOTERMS.? Ans: International Commercial Terms (INCOTERMS) The INCOTERMS (International Commercial Terms) is a universally recognized set of definitions of international trade terms, such as FOB, CFR and CIF, developed by the International Chamber of Commerce
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AED-01 UNIT-3 EXPORT SALES CONTRACT (ICC) in Paris, France. It defines the trade contract responsibilities and liabilities between buyer and seller. It is invaluable and a cost-saving tool. The exporter and the importer need not undergo a lengthy negotiation about the conditions of each transaction. Once they have agreed on a commercial term like FOB, they can sell and buy at FOB without discussing who will be responsible for the freight, cargo insurance, and other costs and risks. The INCOTERMS was first published in 1936---INCOTERMS 1936---and it is revised periodically to keep up with changes in the international trade needs. The complete definition of each term is available from the current publication---INCOTERMS 2000. The publication is available at your local Chamber of Commerce affiliated with the International Chamber of Commerce (ICC). Many importers and exporters worldwide are accustomed to and may still use the INCOTERMS 1980, the predecessor of INCOTERMS 1990 and INCOTERMS 2000. Under the INCOTERMS 2000, the international commercial terms are grouped into E, F, C and D, designated by the first letter of the term (acronym), as follows: GROUP
TERMS
STANDS FOR
E
EXW
Ex Works
F
FCA FAS FOB
Free Carrier Free Alongside Ship Free On Board
C
CFR CIF CPT CIP
Cost and Freight Cost, Insurance and Freight Carriage Paid To Carriage and Insurance Paid To
D
DAF DES DEQ DDU DDP
Delivered At Frontier Delivered Ex Ship Delivered Ex Quay Delivered Duty Unpaid Delivered 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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AED-01 UNIT-3 EXPORT SALES CONTRACT In international trade, it would be best for exporters to refrain, wherever possible, from dealing in trade terms that would hold the seller responsible for the import customs clearance and/or payment of import customs duties and taxes and/or other costs and risks at the buyer's end, for example the trade terms DEQ (Delivered Ex Quay) and DDP (Delivered Duty Paid). Quite often, the charges and expenses at the buyer's end may cost more to the seller than anticipated. To overcome losses, hire a reliable customs broker or freight forwarder in the importing country to handle the import routines. Similarly, it would be best for importers not to deal in EXW (Ex Works), which would hold the buyer responsible for the export customs clearance, payment of export customs charges and taxes, and other costs and risks at the seller's end.
1. EXW {+ the named place} Ex Works Ex means from. Works means factory, mill or warehouse, which is the seller's premises. EXW applies to goods available only at the seller's premises. Buyer is responsible for loading the goods on truck or container at the seller's premises, and for the subsequent costs and risks. In practice, it is not uncommon that the seller loads the goods on truck or container at the seller's premises without charging loading fee. In the quotation, indicate the named place (seller's premises) after the acronym EXW, for example EXW Kobe and EXW San Antonio . The term EXW is commonly used between the manufacturer (seller) and export-trader (buyer), and the export-trader resells on other trade terms to the foreign buyers. Some manufacturers may use the term Ex Factory , which means the same as Ex Works.
2. FCA
{+ the named point of departure}
Free Carrier The 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 named railroad station or a named cargo terminal or into the custody of the carrier, at seller's expense. The point (depot) at origin may or may not be a customs clearance center. Buyer is responsible for the main carriage/freight, cargo insurance and other costs and risks. In the air shipment, technically speaking, goods placed in the custody of an air carrier is considered as delivery on board the plane. In practice, many importers and exporters still use the term FOB in the air shipment.
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AED-01 UNIT-3 EXPORT SALES CONTRACT 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) after the acronym FCA, for example FCA Hong Kong and FCA Seattle.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 the dock or lighter, within reach of its loading equipment so that they can be loaded aboard the ship, at seller's expense. Buyer is responsible for the loading fee, main carriage/freight, cargo insurance, and other costs and risks. In the export quotation, indicate the port of origin (loading) after the acronym FAS, for example FAS New York and FAS Bremen. The FAS term is popular in the break-bulk shipments and with the importing 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 main carriage/freight, cargo insurance and other costs and risks. In the export quotation, indicate the port of origin (loading) after the acronym FOB, for example FOB Vancouver and FOB Shanghai. Under the rules of the INCOTERMS 1990, the term FOB is used for ocean freight only. However, in practice, many importers and exporters still use the term FOB in the air freight. In North America, the term FOB has other applications. Many buyers and sellers in Canada and the U.S.A. dealing on the open account and consignment basis are accustomed to using the shipping terms FOB Origin and FOB Destination.
FOB Origin means the buyer is responsible for the freight and other costs and risks. FOB Destination means the seller is responsible for the freight and other costs and risks until the goods are delivered to the buyer's premises, which may include the import customs clearance and payment of import customs duties and taxes at the buyer's country, depending on the agreement between the buyer and seller. 7
AED-01 UNIT-3 EXPORT SALES CONTRACT In international trade, avoid using the shipping terms FOB Origin and 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) at the seller's expense. Buyer is responsible for the cargo insurance and other 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 CFR Alexandria . Under the rules of the INCOTERMS 1990, the term Cost and Freight is used for ocean freight only. However, in practice, the term Cost and Freight (C&F) is still commonly used in the air freight.
6. CIF {+ the named port of destination} Cost, Insurance and Freight The cargo insurance and delivery of goods to the named port of destination (discharge) at the seller's expense. Buyer is responsible for the import customs clearance and other costs and risks. In the export quotation, indicate the port of destination (discharge) after the acronym CIF, for example CIF Pusan and CIF Singapore. Under the rules of the INCOTERMS 1990, the term CIF is used for ocean freight only. However, in practice, many importers and exporters still use the term CIF in the air freight.
7. CPT {+ the named place of destination} Carriage Paid To The delivery of goods to the named place of destination (discharge) at seller's expense. Buyer assumes the cargo insurance, import customs clearance, payment of customs duties and taxes, and other costs and risks. In the export quotation, indicate the place of destination (discharge) after the acronym CPT, for example CPT Los Angeles and CPT Osaka. 8. CIP {+ the named place of destination} Carriage and Insurance Paid To The delivery of goods and the cargo insurance to the named place of destination (discharge) at seller's expense. Buyer assumes the import customs clearance, payment of customs duties and taxes, and other costs and risks. In the export quotation, indicate the place of
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AED-01 UNIT-3 EXPORT SALES CONTRACT destination (discharge) after the acronym CIP, for example CIP Paris and CIP Athens.
9. DAF {+ the named point at frontier} Delivered At Frontier The 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) after the acronym DAF, for example DAF Buffalo and DAF Welland.
This term is primarily intended to be used when goods are to be carried by rail or road, but it may be used for any mode of Transport. 10. DES {+ the named port of destination}Delivered Ex Ship The delivery of goods on board the vessel at the named port of destination (discharge), at seller's expense. Buyer assumes the unloading fee, import customs clearance, payment of customs duties and taxes, cargo insurance, and other costs and risks. In the export quotation, indicate the port of destination (discharge) after the acronym DES, for example DES Helsinki and DES Stockholm. The term can only be used for sea or inland waterway transport. 11. DEQ {+ the named port of destination}Delivered Ex Quay The delivery of goods to the quay (the port) at destination at seller's expense. Seller is responsible for the import customs clearance and payment of customs duties and taxes at the buyer's end. Buyer assumes the cargo insurance and other costs and risks. In the export quotation, indicate the port of destination (discharge) after the acronym DEQ, for example DEQ Libreville and DEQ Maputo. 12. DDU Unpaid
{+ the named point of destination} Delivered Duty
The delivery of goods and the cargo insurance to the final point at destination, which is often the project site or buyer's premises, at seller's expense. Buyer assumes the import customs clearance and payment of customs duties and taxes. The seller may opt not to insure the goods at his/her own risks. In the export quotation, indicate the point of destination (discharge) after the acronym DDU, for example DDU La Paz and DDU Ndjamena.
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AED-01 UNIT-3 EXPORT SALES CONTRACT 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 customs duties and taxes at the buyer's end, and the delivery of goods to the final point at destination, which is often the project site or buyer's premises. The seller may opt not to insure the goods at his/her own risks. In the export quotation, indicate the point of destination (discharge) after the acronym DDP, for example DDP Bujumbura and DDP Mbabane.
Diagram: International Commercial Terms
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AED-01 UNIT-3 EXPORT SALES CONTRACT
3. What are the duties of exporter and importer Under FOB contracts. 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 sale and deliver the goods on board the vessel named by the buyer at the named port of shipment. ii) Bear all costs and risks of the' goods until such time as they shall have effectively passed the ship's rail. iii) Provide at his own expense the customary clean documents in proof of the delivery of the goods. Duties of the importer include: i) Reserve the necessary shipping space and give due notice of the same to the exporter and ' ii) Bear all costs and risks of the goods from the time they have effectively passed the ship's rail and pay the price as provided for in the contract. 4. What are the duties of exporter and importer Under CIF contracts.
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AED-01 UNIT-3 EXPORT SALES CONTRACT Ans: CIF (named port of destination) Contract: Following a r e the dutles of the exporter under CIF contract: i ) Supply the goods in conformity with the contract of sale, arrange at his own expense for the shipping space by the usual route and pay freight charges for the carriage of goods. ii) Obtain at his own risk and expense all documentation regarding governmental - authorization necessary for the export of goods, iii) Load the goods at his own expense on board the vessel at the port of shipment. He should procure at his own cost in a transferable form a policy 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 rail and 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 in conformity with the contract of sale and pay the price. ii) Receive the goods at the port of destination and bear all costs except freight and marine insurance incurred in respect of the carriage-of the goods. iii) Bear all risks of the goods, from the time they have effectively passed the ship's rail at the port of shipment.
4. What are the Legal implications of FOB contract and CIF con. Ans: FOB (named port of shipment) Contract: 1) FOB Contract: Under FOB contracts, the seller has the duty to place the goods onboard the carrier which has been nominated by the buyer. However, sometimes due to reasons of convenience, the exporter himself may contract with the carrier. In both cases, the freight has to be paid by the importer. The exporter's responsibility 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. This means 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 of the goods on the carrier. All costs subsequent to that point will be on the buyer's account. iii) Risks in the goods passes from the seller to the buyer at the same time when delivery is completed i.e. when the goods are placed on the carrier.
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AED-01 UNIT-3 EXPORT SALES CONTRACT iv) Normallly property in the goods also should pass from the exporter to the importer along with risks. The passing of property may be postponed by a specific provision in the contract. v) Payments fall due when the delivery is completed. It is generally stipulated 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 of Lading or the Airway Bill. Form a practical point of view, it is easier for an exporter to implement an FOB contract. This is because of the following two reasons: a) When the space is not available on ship, the exporter will be unable to export the goods. In FOB contract reservation of ship is the duty of importer. Therefore, this is the fault of buyer. b) In FOB contract, risks associated with freight escalation has to be borne 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 FOB contract, the importer will organise both shipping and insurance, he will give the business to local firms in his own country. As a result, the Indian shipping/Air lines and insurance companies stand to lose considerable amount of business. 2) CIF Contracts: The exporter undertakes the responsibility of contracting the shipping space and also getting the insurance cover for the goods in a CIF contract. These responsibilities are in addition to what he does under an FOB contract. The legal nature of a CIF contract is rather complicated as it necessarily involves three contracts, viz., contract of sale, contract of affreightment and contract of insurance. Further, over the centuries, the nature of CIF contracts has evqlved based upon courts interpretation all over the world. One of the objectives of CIF contract is to facilitate resale of goods while on transit on the basis of only shipping documents. The shipping documents represent title to the goods and, therefore, physical transfer of goods is not required for trading Purposes. It is, therefore, said that legally speaking, a CIF contract is not a sale of goods themselves but a sale of documents relating to the goods. Under a CIF contract, the right of the buyer is to have the shipping documents and not the goods. The seller can 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 enable him 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 shipping documents and send to the importer. iii) He must also procure a contract of insurance covering the shipped goods and the risks, 3s desired by the importer.
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AED-01 UNIT-3 EXPORT SALES CONTRACT iv) He also has to send along with the shipping documents the payment document, such as the Bill of Exchange. V) The importer has to make the payment on the basis of the documents tendered to him. He has a right to scrutinize the documents or reject them. vi) The property in the goods does not normally pass on shipment. It passes when the Bill of Lading is delivered to the buyer and thereby he acquires 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 been placed on board the vessel. The goods will be at the importer's risks, though the freight & insurance premium have been paid by the exporter. ix) The CIF contract is so structured that even if the buyer knows that the goods have already got lost or damaged, he is under an obligation lo pay. The importer has his remedy either under the contract of affreightment against a ship owner or under the policy of insurance against the insurance company.
INTERNATIONAL DISPUTE SETTLEMENT 5. Explain the meaning of International Arbitration.? Ans: International arbitration is a leading method for resolving disputes arising from international commercial agreements and other international relationships. As with arbitration generally, international arbitration is a creature of contract, i.e., the parties' decision to submit disputes to binding resolution by one or more arbitrators selected by or on behalf of the parties and applying adjudicatory procedures, usually by including a provision for the arbitration of future disputes in their contract. The practice of international arbitration has developed so as to allow parties from different legal and cultural backgrounds to resolve their disputes, generally without the formalities of their respective legal systems. Enforcement of international arbitration In the case of international transactions, arbitration becomes international when at least one of the parties involved is resident or domiciled outside India or the subject matter of the dispute is abroad. In this case, the law applicable to an arbitration proceeding depends upon the terms and conditions of the export contract and the rules of conflict of laws. Therefore, it is always advisable to specify in the export contract as to which laws the contract is subject to in case a dispute arises in future.
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AED-01 UNIT-3 EXPORT SALES CONTRACT Depending upon the export contract, arbitration can take place either in the exporter’s or importer’s .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 of court process, both civil and criminal.
7. What is the role of force majeure in international sales contract.? Ans: There have been a number of global events in recent years that have threatened the performance of international sale contracts. Firstly, there was the 2008 financial crisis and global recession. This was followed by a number of natural disasters, including the eruption of the Icelandic volcano , the Japanese earthquake and tsunami, floods in Australia affecting the export of commodities such as coal and drought in Russia threatening wheat crops. There has also been civil and political unrest in the Middle East and North Africa this year, which has jeopardised the fulfillment of contracts with counterparties in the affected countries. Frustration of contract A party faced with an external occurrence or event that may make its performance under a contract impractical, onerous or even impossible might seek to argue that the contract has been frustrated. Under English law, frustration will result in the contract being terminated so that the parties are excused from further performance. However, in order for a contract to be frustrated, the event in question must be unforeseen, it must have occurred without the fault of either party to the contract and it must either make the contract’s performance impossible or it must destroy the fundamental purpose of the contract. Frustration compared to force majeure Given the reluctance of the English courts to find that a contract has been frustrated, many international trade contracts incorporate force majeure (“FM”) clauses. Force majeure is not an English law concept but it can be applicable to contracts governed by English law where the parties have incorporated an express FM provision in their contract. An FM clause provides that one or both parties can cancel a contract or be excused from either part or complete performance of the contract on the occurrence of a certain specified event or events beyond the parties’ control. Sometimes the FM clause will entitle one or both parties to suspend performance or to seek an extension of time for performance. Unlike frustration, therefore, an FM event will not always bring a contract to an end if the FM clause provides otherwise.
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AED-01 UNIT-3 EXPORT SALES CONTRACT Another difference between frustration and force majeure is that English law does not prevent a party from relying on an FM clause in relation to an event that existed at the time the contract was concluded (so long as the FM event falls within its terms), whereas frustration will only apply in relation to a supervening event. Furthermore, an event must have been unforeseen in the case of frustration, whereas an FM clause can be relied on even if the party relying on the FM event could reasonably have been expected to take it into account at the time of entering into the 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, the commodity being bought and sold and the countries involved, the types of specific event that are normally listed in an FM clause include: >> act of God (this may cover extreme weather conditions such as floods) >> war or threat of war, terrorist act, blockade, revolution, riot, civil commotion >> 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 Litigation 1. Arbitration can be set in two to three weeks or, at most, two to three months instead of two to three years for a trial setting. 2. There is little or no “discovery.” Either depositions and interrogatories will be restricted or else there may be none. 3. Arbitration is private. Court is public. In arbitration, strangers and news media will not be allowed in court. 4. Arbitration is not appealable. It is final. Court cases are always subject to rehearings, new trials, and appeals. Post trial proceedings can take longer and cost more than the original trial. Arbitration generally has no rehearings, 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 punitive damages, mental anguish, pain and suffering and other non-economic damages.
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AED-01 UNIT-3 EXPORT SALES CONTRACT 7. Arbitration can be done with or without lawyers — your choice.
Summary
Applicable Trade Terms in Different Modes of Transportation
GROUP
TERM
Mode of Transportation
Stands for Land
Ocean
Air
Multimodal
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AED-01 UNIT-3 EXPORT SALES CONTRACT E
F
C
D
EXW
Ex Works
FCA
Free Carrier
FAS
Free Alongside Ship
FOB
Free On Board
CFR
Cost and Freight
CIF
Cost, Insurance and Freight
CPT
Carriage Paid To
CIP
Carriage and Insurance Paid To
DAF
Delivered At Frontier
DES
Delivered Ex Ship
DEQ
Delivered Ex Quay
DDU
Delivered Duty Unpaid
DDP
Delivered Duty Paid
Land
Ocean
Air
Multimodal
Land
Ocean
Air
Multimodal
Land
Ocean
Air
Multimodal
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