EXIM NOTES-1

• International trade operations involve risk. The risk can be of exporter or importer.
• The risk for exporter is that of non-payment, delayed payment and exchange risk.
• The risk for importer is that of Non delivery or defective delivery
• The exporter cover the risk of non payment and delayed payement by asking payment in advance, by making payment through bank and getting insurance cover through ECGC (Export Credit Guarantee Corporation) Schemes
• The importer covers the risk of non delevery by asking for delivery before payment. He ccovers the risk of defective delivery by getting an appropriate marine insurance.
• Documents are important in Exim operations because of commercial requirement, cover the risk of buyers and sellers, intermediaries are involved, to comply with certain laws and to claim some incentives by exporters.
• A contract is an agreement with the force of a law
• Which law- that is agreed, if not then we go by 'rule of conflict of law'- which say that the law should be followed of the place where it is concluded, or that of a place where it was performed or that is followed by prevailing practices
• Basic principles of conclusion of a contract- Principle of consensus Ad idem- It says that same things should be understood in the same manner. Thus in an agreement the essential thing is form of a proposal which state the three most important things: Specifications, terms of delivery and price. The other desirable things include packing conditions, Quality manual and payment terms.
• Proposal to buy or sell is called an offer, for a proposal to buy it is called purchase order and proposal to sell is called proforma invoice
• Formal contract has the following features: it if formed by mutual consent, it involves legal considerations which means it creates rights in rem( fundamental) and rights in personan (rights of a person against a group), there is a clause of non performance : if reasons for non performance are within control, the guilty has to pay damage, if reasons for non performance are beyond control- 'force majure' clause is applied, and there is a mechanism to settle disputes; normally dispute is settled by arbitration, or court of law.
• Documents are needed for three purpose, commercial requirement, legal or regulatory requirement and export assistance
• Essential commercial documents are Commercial Invoice, Transport document, Insurance policy and Bill of Exchange. Other documents required are Packing list, inspection certificate, certificate of origin , GSP for developing countries (issued by textile commissioner), consular invoice (it is generated by consular office), Hazardous chemical certificate.
• Commercial Invoice has the following characteristics: It is document of contract which means Description of the goods, quantity and make etc. should be mentioned in it; it is a seller bill which means it must contain name of the parties, value and consignee name.; It must incorporate all the details i.e. order number/date/ L/c source and destination etc.
• Transport Document is also called Bill of Lading, Multimodal Document ( for multiple modes of transport) or AirWay Bill (for airlifting of goods). It has the following features: It is the carrier receipt that states that goods are received for shipment (for FAS) or shipped on Board (For FOB). It can be clean or claused, clean means the transporter states that goods are received in clean state i.e. without damage. Also it acts as a contract of carrier. It can also acts as document of title (means anyone having these can receive goods; remember AWB is not a document of title) Therefore it is negotiable and can be transferred, called 'by order'