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Selecting Incoterms Documentary Credit And Bill Of Exchange Notes

LPC Law Notes > International Commercial Law Notes

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Selecting Incoterms When we internationalise our deals we are worried about a number of things

For the Seller:

Delay receiving payment equals a potential cash flow problem The Seller is risking not getting paid and may also find difficulty enforcing the contract due to expense and distance etc.

For the Buyer

There is an increased risk that the good s are going to get damaged The goods will take longer to arrive and the buyer will have to reconsider its business strategy.


Higher transport costs who pays for what?
Choice of law and Jurisdiction considerations will have to be taken into account.


What is the means of transportation?
Is it by sea/air/land?
F & C = the risk passes in the Seller's country. The difference between F and C is that in the F terms the Buyer will pay for the main carrier and in the C terms the Seller will pay for the main carrier.

1. Who is paying for the main carriage?
Buyer : F Terms Seller : C Terms

Risk passes before main carriage (i.e. risk passes in S's country). Therefore, If S is a UK Co. risk passes in UK

2. What is the method/form of transport?
Shipping: FAS, FOB CFR CIF

Any (e.g. air or multi-modal (container)): FCA CPT, CIP

4. Select most favorable option for your client using the grid.

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