NEGOTIATING

DELIVERY
PROBLEM
How can the exporter be sure that
all the necessary delivery provisions
are in the contract?
PRINCIPLE
The exporter and the buyer should
negotiate delivery systematically,-
making all necessary decisions and
discussing how they will solve any
problems that might arise.
What is the date of delivery? Where
must the goods be sent?
Who pays for transportation?
 LOEM
IPSUM

5 Steps in
Negotiating
Delivery
 5 Steps in Negotiating Delivery

TRANSPORT

RISK, TITLE &

LOCATION INSURANCE

TERM OF
TIMING TRADE
STEP 1: TIMING
1. Naming the date:
The date of coming into force is not usually a
calendar date, but the date on which the last
precondition is met.
Common preconditions are:
• Receipt of import and/of export approval
• Receipt of foreign exchange approval from a
central bank
• Issuance of a letter of credit or bank guarantee
• Issuance of an insurance policy
• Issuance of a certificate of origin
Negotiators often agree a cut-off date: if
the contract has not come into force within
a certain time
2. Timing and "Time is of the Essence" Clauses

Time is and shall be of the essence of this contract.

3. Delay and compensation for
delay:
a. Excused Delay and the Grace
Period
- For each week of late delivery the
Seller shall pay the Buyer 0.1% of the
contract price.
- If delivery is not effected within one
month of the agreed delivery date, then
the Seller shall pay the Buyer 0.1% of
the contract price.
3. Delay and compensation for delay:
b. Excused Delay and Force Majeure
- If either party is prevented from, or delayed
in, performing any duty under this Contract
by an event beyond his reasonable control,
then this event shall be deemed force
Majeure, and this party shall not be
considered in default and no remedy, be it
under this Contract_or otherwise, shall be
available to the other party
3. Delay and compensation for delay:
b. Excused Delay and Force Majeure
- Force majdure events do not include
monsoon rains.
- If either party is prevented from, or delayed
in, performing any duty under this Contract,
then this party shall immediately notify the
other party of the event, of the duty
affected, and of the expected duration of the
event
3. Delay and compensation for delay:
c. Unexcused Delay and the Buyer's Remedies
- The court may order the exporter to fulfill his
Obligations.
- The court may require the exporter to pay the buyer
compensatory dainages.
STEP 2:
LOCATION
Where is the delivery take places?
Place of delivery: The point at which the exporter passes
responsibility for the Goods to the Buyer. Delivery can
take place at a number of places between manufacturer’s
factory and the Buyer’s warehouse.

Most international trade works on that principle: control

and responsibility go together. One common pattern is
for the exporter to transport the goods to the docks in
his own country and for the importer to organize
transport on from there. (This is the pattern of FOB
delivery, as we shall see later) Such an arrangement is
usually cheaper than if the exporter tries to organize
door-to-door transportation
FOB
A contract for the sale of Goods abroad (transportation
by ship) is normally considered as an FOB (Free on
board) contract: delivery takes place when the Goods
cross the rail of the ship nominated by the Buyer

CIF
Another is CIF, the exporter pays the full costs plus the
freight charges plus insurance up to the named place of
destination, usually a port.
The delivery takes place at B. But the parties are free to
arrange anything that suits them. The place of delivery
is doubly important to the exporter because the date of
payment normally depends
STEP 3: TRANSPORT
1. MODE OF TRANSPORT

- Air transport - Road transport

- Sea transport - Multimodal transport

 1. MODE OF TRANSPORT

Advantages Disadvantages

 Long transportation time.

Perishable goods cannot be sent
 Need the exact size of the
High carrying capacity
Sea

consignment for maximizing its
 Lower cost
capacity
 Affected by weather and climatic
conditions

 Very high cost. The costs

sometime exceed the value of the
Fastest mode of transport
Air

cargo
 Offers high safety
 Lower capacity
 Cannot connect all marketplaces
 2. PACKING AND SHIPPING MARKS

- Packing: protects the goods, maximize - Shipping marks: prevent wrong delivery,
the amount of cargo shipped, reduce accidents, losses, customs penalties or damage.
emission, pollutants & costs.
2. PACKING AND SHIPPING MARKS
3. DOCUMENTATION

- Airway bill / bill of lading - Packing list

- Commercial invoice - Other documents required to clear
- Certificate of origin customs and take delivery of the
goods.
STEP 4: RISK, TITLE AND INSURANCE
1. TRANSFER OF RISK
- The risk of loss or damage: one side must - The risk of the goods injuring a third party:
bear the loss, normally covered by a consignment of corrosives left in the sun
insurance explodes and severely burns a passer-by.
2. TRANSFER OF OWNERSHIP

- Specific goods (identified and agreed): the - Unascertained goods (defined by

buyer takes ownership when the contract is description or by sample from a larger
made, irrespective of payment or delivery consignment): the buyer takes ownership
when he receives the goods allocated, or
- Future goods (to be manufactured or notice of their delivery
acquired on the buyer’s behalf): the buyer
takes ownership when he receives the goods
allocated, or notice of their delivery
3. POLICY, CERTIFICATE, OR LETTER OF INSURANCE

 Insurance policy - Letter of Insurance:

 Take considerable time to prepare. - Institute Cargo Clause A
- Institute Cargo Clause A
 Certificate of Insurance: - Institute Cargo Clause A
 States in outline the cover offered.
 Gives the details of the individual
shipment.
STEP 5: TERMS OF
TRADE
Group E:

• EXW: The seller makes the goods available at

their premises, or at another named place.

Group F:

• FCA: The seller delivers the goods, cleared for

export, at a named place.

• FAS: The seller delivers when the goods are

placed alongside the buyer's vessel at the
named port of shipment.

• FOB: the seller bears all costs and risks up to

the point the goods are loaded on board the
vessel.
Group C:

- CFR: The seller pays for the carriage of the

goods up to the named port of destination.

- CIF: similar to CFR, except that the seller is

required to obtain insurance for the goods
while in transit to the named port of
destination.

- CPT: The seller pays for the carriage of the

goods up to the named place of destination.

- CIP: similar to CPT, except that the seller is

required to obtain insurance for the goods
while in transit.
Group D:

- DAT: the seller delivers the goods, unloaded, at

the named terminal.

- DAP: the seller delivers when the goods are

placed at the disposal of the buyer on the
arriving means of transport ready for
unloading at the named place of destination.

- DDP: Seller is responsible for delivering the

goods to the named place in the country of the
buyer.