DOCUMENTARY TRANSACTION

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DOCUMENTARY TRANSACTION

• Fundamental Problem-seller fears relinquishing
  control over its goods before payment, while
  buyer fears making payment before obtaining
  possession of the goods.
• Methods of Payment
• Cash in Advance
• Open Account and Consignment
• Documentary Collection
• Documentary Credit

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DOCUMENTARY TRANSACTION

• Approach
• Documentary Transactions
• Necessary Documents to Complete International
  Private Business Transaction
• Decision to Export
• Bill of Lading
• Allocation of Risk Through the Use of Trade Terms

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Documentary Transaction

• Documentary Transaction alleviates the sellers
  risk of not being paid or the buyers risk of not
  receiving the goods.
• Sale of Goods Contract is converted into a sale
  of documents contract.
• Buyer contracts to buy documents and the seller
  promises to provide conforming documents to the
  buyer while goods or in transit.
• Buyer can use documents to conduct additional
  transactions

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Documentary Transaction

• Documentary Collections Documents
• Draft or Bill of Exchange-foreign buyers check
• Sight Draft-immediate payment due to seller.
• Cash Against Document-buyer takes possession by
  either making payment or accepting the draft
• Time Draft-payment due at some point in time in
  the future
• Document Against Acceptance-documents
  transferring title to buyer upon acceptance of
  time draft.

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DOCUMENTARY TRANSACTIONS

• Sales Contract
• Parties to Sales Contract
• Freight Forwarder
• Customs Broker
• Assortment of Common Carriers
• Insurance Companies
• Commercial Banks
• Letter of Credit
• Confirming Bank

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DOCUMENTARY TRANSACTIONS

• Checklist for Sales Transaction
• Entrance into Sales Contract
• Letter of Credit
• Confirming Letter of Credit
• Hire Carrier of Goods
• Insurance Policies
• Inspection
• Preparation for Shipment
• Obtain Shipping Documents
• Load Goods on Carriers
• Transmit Shipping Document
• Payment of Letter of Credit
• Customs Clearance
• Custom Duties

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DOCUMENTS

• Documents Necessary to Complete International
  Private Business Transaction
• Sales Contract-covers all necessary information
  to complete transactions in terms of performance,
  payment, description of goods and third parties.
• Commercial Invoice-contains information about
  goods, seller, buyer and country of origin.

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DOCUMENTS

• Documents
• Bill of Lading-contract between owner and common
  carrier of goods.
• Consular Invoice-invoice from country of
  departure.
• Certificate of Origin-origin of export item.
• Certificate of Inspection-specification of goods
  shipped

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DOCUMENTS

• Documents
• Insurance Certificates-insurance binder stating
  type and amount of coverage.
• Shippers Export Document-allows host country to
  keep statistics on exports.
• Export License-license to export
• Packing Slip-list that itemizes the material in
  each individual package being shipped.

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DECISION TO EXPORT

• Acquisition of Information in the Following
  Areas-Preparation of Pro Forma Invoice
• Objective of Entering Foreign Market
• Actual Cost of Exporting Products
• Computation of Final Price in Foreign Market
• Evaluation of Market Demand and Competition
• Modification of Product to Meet Local Laws and
  Standards
• Incidental Expenses in Travel and Communication

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BILL OF LADING

• Bill of Lading
• Functions
• Carriage Contract between ship owner and shipper
• Evidence of Receipt that the goods were delivered
  to ship
• Document of Title
• Forms
• Electronic Bill of Lading
• On Board Bill of Lading
• Received For Shipment Bill of Lading
• Straight and Order Bill of Lading
• Clean Bill of Lading

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BILL OF LADING

• Carriage of Goods By Sea Act
• Applies to Bill of Lading
• Imposes Duties of Performance on Part of Carrier
• Provides for Defenses for Carrier If Goods Are
  Destroyed While In Transit
• Per Package Limitation
• See Chapter 10 of Text

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BILL OF LADING

• Trade Terms-Allows contracting parties to
  allocate risk and cost of transporting goods.
• Common Terms
• CIF-(cost, insurance, freight)-the seller quotes
  the price for the goods including insurance and
  all transportation charges.
• CFR-(cost and freight)-insurance costs excluded.
• CPT-(carriage paid) and CIP (carriage and
  insurance paid)-modes other than water
• EXW (ex work)-sellers place.
• FAS-(free along side)FCA(free carrier), FOB-free
  on board
• DES-(Delivered EX Ship)-goods delivered to
  destination specified on bill of lading.

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BILL OF LADING

• Incoterms-created by International Chamber of
  Commerce to standardize allocation of risk-1990
  and 2000-13 Categories
• E Group (EX Work)
• F Group (FCA, FAS, FOB)
• C Group (CFR, CIF, CPT, CIP)
• D Group (DAF, DES, DEQ, DDU, DDP)
• 2000 Revisions-Export Clearance Obligations Under
  FAS, Loading of Goods on Buyers Vessel, Placing
  Import Clearance obligation under DEQ

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