Forwarders and international trade agreements
Forwarder and international trade agreements: Forwarder, according to his duties and responsibilities, should have a complete coverage of all international trade, including international agreements, trade terms, regulations and documents used in transportation. Sales contract, shipping contract and insurance contract are among the most important contracts in international trade that are concluded between buyer and seller and third parties such as carrier or forwarder.
These contracts and all business correspondence follow common principles known as Incoterms, and unfamiliarity with them can cause major problems. Commercial and shipping documents have become largely uniform, and familiarity with them and the international rules and conventions that govern them are essential to international trade, especially for forwarders.
Every business transaction is done at least between the two parties, the buyer and the seller. Execution of any international commercial transaction requires the conclusion of several independent and at the same time related contracts, each of which plays a separate role. The most important of these contracts are the sales contract, the shipping contract and the insurance contract.
Contract of Sale:
A contract of sale is a contract that specifies the main terms of the transaction, including the agreement of the parties to the transaction, the subject of the transaction and its terms and price. In other words, it is a contract that determines the obligations and rights of the parties. This contract may be written or oral. The following example shows concluding a contract for a simple transaction.
A person (buyer) asks a shop (seller) for a kilo of goods (purchase offer). The seller weighs some goods (agreement with the sale) and announces the price to the buyer (price). The buyer pays for the goods. (Instead) and receives the goods (date and place of performance of the obligation) and carries the goods home personally.
When a transaction is made internationally, it is not simply the above and has certain complexities that must be considered in the contract. In addition to the above, the sales contract also specifies the general conditions of the transaction, the most important of which are as follows:
– Date of Execution Date if Fulfilment, which is usually the date of shipment.
Place of Fulfilment, which may be the starting point for the shipment of goods.
– Evidence of Fulfilment certificate that can be signed.
Evidence of Compliance, which is usually the business certificate.
Other items that are usually included in a sales contract are as follows:
– – Specifications of the traded goods, including technical specifications and quality of the goods
– – How to resolve disputes, law and competent courts in case of dispute
– – Terms of delivery
– – Terms and how to pay the transaction price
– – How to obtain and the type of related guarantees, if necessary
– – Conditions related to force majeure
– – How to perform quantitative and qualitative inspection of goods
– – How to terminate the contract
Contract of Carriage:
It is a contract that specifies how to transport the goods and in cases where the seller is responsible for transporting it, it is concluded by the seller and based on the terms of the sales contract with the carrier, to deliver the goods to the buyer at a specific destination. Shipping is very complete to the terms of purchase and the terms of purchase specify whether the shipment is the responsibility of the buyer or seller, in other words, which one should conclude the contract of carriage. The contract of carriage usually includes the following:
Specifications of the parties to the contract
– The subject of the contract, which is the transportation of goods by mentioning its specifications
Obligations of the forwarder or carrier
– Obligations of the owner of the goods
– Determining the shipping schedule including the relevant schedule and shipping route
– How to pay the contract price
– How to transport the goods, is it permissible to transport frequently and from one means of transport to another?
– Contract performance guarantee and required guarantees
– Type of insurance and its amount
– Other conditions including force majeure, how to resolve the dispute and so on
– Duration of the contract
Contract of Insurance
The insurance contract specifies how the insurance will cover the relevant risks. In this case, too, the responsibility for concluding the contract depends on the terms of the purchase.
As mentioned, concluding a purchase contract needs to determine the terms of the purchase, which in the past you determined based on local customs. With the expansion of international trade, there was a need for specific conditions, which were formulated by the International Chamber of Commerce in 1936 and were called incoterms. This collection was last revised in 2000 and what is used today is this collection.
Goals of Incoterms
1. The main purpose of Incoterms is to create a series of rules regarding the terms used in international trade so that there is a specific meaning for each term.
2. Differences in the interpretation of terms used in international trade in different countries and different trading systems have always been one of the causes of differences between traders at the international level. It has achieved one of its main goals, which is to standardize these terms internationally.
3. Major problems that exporters and importers have always faced include three categories as follows:
– – Which country’s law governs disputes?
– – Problems caused by having inappropriate information.
– Problems arising from different interpretations of the terms used.
The use of Incoterms has greatly reduced the above problems. In general, using Incoterms can answer the following questions about each transaction:
– – Who should arrange the shipment of goods?
– – Who is responsible for paying the shipping cost?
– – Where does the risk transfer take place?
– – What is the responsibility of the buyer and seller?
– What is the safest way to make the transaction better?
Importance of using Incoterms for the parties to the transaction:
Uniformity – Using the rules of Incoterms, the parties accept the rules of uniformity and do not consider different interpretations of their local law.
Assurance – The parties enter into a transaction with full confidence in what the other party owes. It also specifies what documents each must prepare and what documents they must receive.
Flexibility – Incoterms regulations are always reviewed with the development of telecommunications and transportation, and its provisions are revised when necessary.
Determining the rights and duties of the parties to the transaction – Using Incoterms, the method of delivery and transformation of goods, risk transfer point, how to distribute costs and how to transport goods are fully specified and the parties are aware of their duties in these cases.
Commercial and shipping documents
Here it is necessary to make a brief reference to commercial documents. In commercial transactions, documents are generally issued as follows:
A trade list is a document that the seller of the goods issues in the name of the buyer and always sends other documents to him. This document indicates that an agreement has been reached between the buyer and the seller regarding a certain transaction that contains the following information:
– – Name and address of the seller
– – Name and address of the buyer
– – Origin and destination of goods
– – Terms of delivery of goods
– – Type of product and its specifications
– – Type and number of packages
– – Unit price of goods
Administrative business list is of the following types:
It is a list that has been approved by a competent authority such as the local Chamber of Commerce. If the value of the goods is confirmed, it is called a Certificate of Value.
Consular Invoice list
It is a list that is approved by the consular authorities of the buyer country to determine that the goods are legally allowed to enter the country.
Proforma Invoice pre-invoice
It is an initial list that is issued by the seller before the transaction and states the specifications of the product and its quote. The pre-invoice is the seller’s final offer to sell the goods at the stated price within a certain period of time.
Certificate of Origin Certificate of origin
It is a document issued by the seller in which the country of manufacture of the goods is identified and approved and is usually approved by the chamber of commerce of the country.
If the goods are packaged, the packaging form is required. In this case, the specifications of the goods and the number of packages are mentioned in order to facilitate the customs work.
This certificate is issued by inspection bodies that inspect the goods in terms of quantity and quality. Buyers apply for inspection of goods by independent institutions to prevent losses, which is one of the required documents for inspection of these institutions.
Bill of Lading
The most important document is the bill of lading. The bill of lading is a document that indicates the contract of carriage, which the carrier or his representative after receiving the goods to transport it from one point (origin) to another point (destination) with the agreed means of carriage. (Ships, trucks, railways, airplanes, or a combination thereof) for a specific freight.) Is not called Waybill. The waybill contains the following information:
– – freight number
– – Name and address of the sender and recipient of the goods
– Name or number of vehicle, travel number or flight number
– – Name of origin of goods loading and destination of goods delivery
– – Specifications and number of product packages
– – Description, weight and dimensions of the product
– – How to pay for freight (advance payment or payment at destination)
– – Number of original copies issued
– – Date of shipment and date of issue of the bill of lading
– – Signature of the carrier or his authorized representative
A valid bill of lading has the following features:
– – Must be issued in full version Full Set.
– Unconditionally Clean Bill of Lading.
– – The bill of lading must indicate the loading of the goods on the On Board vehicles.
– – The bill of lading may be issued to To The OrderOf
– – How to pay the freight should be stated in the bill of lading.
– – The date of issuance of the bill of lading and other shipping documents must be after the date of opening and notification of validity.