Exam 2

Question 1

seller makes goods available at seller premises. seller not responsible for loading the goods on Buyers vehicle or for clearing goods for export (unless otherwise agreed upon)
Buyer bears all risks and costs in taking goods from seller’s premises to destination

Answer 1

Ex Works

Question 2

seller obligated to get the goods over the ship’s rail at the port of shipment. Buyer bears all costs and risks of loss from that point. seller must clear goods for export

Answer 2

FOB (Free on Board)

Question 3

seller must pay cost and freight necessary to get goods to named port of destination. Risk of loss and any additional costs after goods delivered to the vessel are transferred to the Buyer when goods pass the ship’s rail. Seller must also obtain marine insurance and clear goods for export

Answer 3

CIF (Cost, Insurance, and Freight)

Question 4

seller obligated to deliver the goods alongside the vessel on the quay/pier at the named port of shipment
buyer bears all costs and risks loss from that moment
seller must clear the goods for export

Answer 4

FAS (Free Alongside Ship)

Question 5

seller delivers at named place in country of importation

seller bears risks and costs, including duties, taxes, and other charges

Answer 5

DDP (Delivered Duty Paid)

Question 6

the seller ships the goods together with the necessary documents to the buyer before the payment is made and without any form of guarantee. when the goods have been dispatched, the seller also sends the buyer an invoice asking for payment within the agreed credit terms

Answer 6

Open account

Question 7

the seller asks his or her bank to obtain the payment from the buyer (through the buyers bank) in exchange for related shipping documents

Answer 7

documentary collections

Question 8

one of the most commonly used methods of payment. offers the seller the security of knowing that he will be paid while offering the buyer the assurance that payment will only be made when his bank is presented with documents that keep to the agreed terms
buyer acts first

Answer 8

letter of credit

Question 9

the buyer is given the documents when a payment is made to the bank

Answer 9

D/P (Document Against Payment)

Question 10

the documents required to take possession of the goods are released by the bank only after the buyer accepts a time draft drawn upon him

Answer 10

D/A (Document Against Acceptance)

Question 11

releases the payment once the buyer has confirmed the collection of goods

Answer 11

Issuing Bank

Question 12

acts on behalf of the seller, and has to confirm whether the L/C is in order

Answer 12

Acquiring/Advising Bank

Question 13

seller requests payment from the buyer before he will ship the goods. The seller only ships out the goods to the buyer after receiving the payment.

Answer 13

Payment in Advance

Question 14

Riskier than open account

Answer 14

Sale of Consignment Basis

Question 15

ask another bank to confirm LOC

Answer 15

Confirmed Letter of Credit

Question 16

a negotiable instrument which buyer signs

Answer 16

Bill of Exchange

Question 17

Cannot be changed without the consent of all parties (term of payment)

Answer 17

Irrevocable LOC

Question 18

Can be changed without the consent of all parties (term of payment)

Answer 18

Revocable LOC

Question 19

used to discourage importas and increase their costs, sometimes to the point wehre trade is no longer profitable

Answer 19

non-tariff barriers

Question 20

a document that states a commitment on part of the seller to deliver the products or services as notified to the buyer for a specific price. not a true invoice

Answer 20

pro-forma invoice

Question 21

a legal document bw supplier and customer that clearly describes the sold goods, and the amount due

Answer 21

commercial invoice

Question 22

a certificate, typically provided by the government of the exporter, certifying the nationality of the cargo

Answer 22

Certificate of Origin

Question 23

permission for sample goods to enter without paying duties as regular cargo

Answer 23

carnet

Question 24

protects carriiers and crew from liability for negligent ship management and navigation

Answer 24

Nautical Fault Defense

Question 25

part of SCM and an important quality control method for checking the quality of goods clients buy from suppliers

Answer 25

Pre-shipment inspection

Question 26

the most important document in the entire process. this is a document of title, a receipt of goods, and a contract of carriage. can be transferred by endorsement to third parties

Answer 26

Bill of Lading

Question 27

no notions by the carrier of problems, otherwise it is foul

Answer 27

Clean Bill of Lading

Question 28

signed by the carrier that it is loaded

Answer 28

Onboard Bill of Lading

Question 29

means only that is was received

Answer 29

Received-for-shipment Bill of Lading

Question 30

non-negotiable, cargo delivers only to the cosignee

Answer 30

straight Bill of Lading

Question 31

Created by forwarder, who is acting as an intermediary

Answer 31

forwarder's bill of lading

Question 32

simmilar to the BL, but does not convey title. Mostly for air cargo

Answer 32

Waybill

Question 33

commonly used in food shipments to certify that it is gygenic

Answer 33

Sanitary Certificate

Question 34

essentially the same thing as a commercial invoice, but has all the specific pieces of info needed by customs

Answer 34

Consular Invoice

Question 35

the right of an individual or organization that publicly advertises itself for hire of the transportation of goods to keep possession of the cargo it has delivered to a destination until the person who is liable to pay the cost has done so

Answer 35

Carrier's lien

Question 36

seller can fix the problem and the right to additional time to perform

Answer 36

Right to remedy

Question 37

a buyer can simply not accept a shipment if there is a breach, but this may only be done after the seller has been notified

Answer 37

right of avoidence

Question 38

a financial protection plan that provides coverage for goods in transit by sea. vessel transporting cargo must be in good condition and vessels crew must be competent

Answer 38

Voyage Policy

Question 39

neglegence from shipper (risk)

Answer 39

inherent vice

Question 40

people not pay for this. every buyer needs this. depends on the terms of sale

Answer 40

insurable interest

Question 41

security or protection against a loss or other financial burden

Answer 41

indemnity

Question 42

the right for an insurer to legally pursue a third party that caused an insurance loss to the insured. This is done as a means of recovering the amount of the claim paid by the insurance carrier to the insured for the loss

Answer 42

Principle of subrogation

Question 43

a key principle of insurance and is concerned with how the loss or damage actually occured and whether it is indeed as a result of an insured peril

Answer 43

Proximate cause

Question 44

when cargo is sold in a foreign market at below market prices, normally to eliminate the competition

Answer 44

dumping

Question 45

refers to the practice of importing a product contrary to the wishes of the producer who normally has their oficcial distributor

Answer 45

Gray market importing

Question 46

a way that customs can control the amount of a product that is imported

Answer 46

quotas

Question 47

states an amount that may be imported at a given tariff rate and beyond that a different/higher tariff rate applies

Answer 47

tariff rate quotas

Question 48

states a given quantity that may be imported

Answer 48

absolute quota

Question 49

customs wants one entity that can be held responsible for a shipment. this is the one party held responsible for fulfilling most of the regulations associated with customs compliance

Answer 49

importer of record

Question 50

a book which lists how much is charged for imports depending on the product and country of origin

Answer 50

Harmonized Tariff Schedule (HTS)

Question 51

generally where Customs exercises its controls. where importers/exporters must produce the documents that will allow them to move their cargo and where customs is most likely to inspect or seize cargo

Answer 51

Port of Entry

Question 52

the country where an article was grown, mined, produced, or manufactured

Answer 52

Country of Origin

Question 53

the price charged by one member of a multinational organization to another member of the same organization for the provision of goods or services of a property

Answer 53

transfer pricing

Question 54

a bond given by an importer for payment of damage resulting from failure to comply with the customs laws and regulations

Answer 54

customs bonds

Question 55

GATT in 1994 agreed on country-of-origin rules, in which the country of origin is the last country where the product underwent a change that meant a new tariff classification

Answer 55

tariff shift rule

Question 56

to let commodities which are subject to taxation be exported and sold in a foreign country on the same terms as goods from countries where they are untaxed

Answer 56

duty drawback