Answerkey Exporting and the Export Contract

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CHAPTER 1 DELIVERY
1. What are 5 steps in negotiating delivery?
Timing - Location - Transport - Risk, Title and Insurance - Terms of trade 2. Why is location important?
Because it’s where the risk and responsibilities are passed. And date of payment depends on place of delivery. 3. Why is transportation important?
Because suitable mode of transport will reduce the cost; moreover the transport which is appropriate to the goods ensures the goods to arrive safely. 4. What are modes of transportation?

• Sea transport
• Air transport
• Inland transport ( by road, by rail, by barge, by mail, or by mixture) 5. Where is risk often passed from the exporter to the importer? At the point of delivery.
6. Where does transfer of ownership take place?
At any point between the signature of the contract and the final payment for the goods. 7. How many kinds of delay in delivery?
• Excusable delay
• Non- excusable delay
8. What events does delivery date trigger?
• -Exporter fulfills duties under the contract.
• Payment may become due.
• Risk and title pass to the buyer.
9. How to fix delivery date?
To use a straightforward calendar date.
10. When is a contract binding?
After the signature date.

CHAPTER 2 PRICE AND PAYMENT
1. Why payment in international trade tightly controlled? • Trust is rare and Court is far away and unpredictable 2. What are the common methods of payment in international trade? • Open account

• - Open account with no security
• - Open account with secured by export credit insurance • - Open account with secured by payment guarantee
• Bills for collection
• Letter of credit (Document credit)
• Advance payment
3. What are methods of payment in small purchases?
• Cash on delivery
• Cash against invoice
• Cash with order
4. What are payment insurances?
• Bank guarantee.
• Export credit insurance
5. Who can offer bank guarantee?
A bank
6. Who can offer export cerdit insurance?
An insurance company.
7. What are the two main elements in payment?
• Time and Structure
8. What does the exporter have to suffer from late payment? Bank interest
9. What is an incentive for early payment?
A discount
10. How to fix payment date?
• A calendar date.
• Interval times.
11. When delay in payment is excused?
• Delay happens in the grace period.
• Delay is caused by Force Majeure
12. What payment does the importer have to pay the exporter in case of late payment? Compensation for losses due to late payment.
13. What kind of method of payment makes late payment impossible? The confirmed, irrevocable, at- sight L/C

CHAPTER 3 INSPECTION AND
DEFECTS LIABILITY
1. What are 5 steps in negotiating Defect Liability Period? • Inspection- Terms - Definitions- Timing- Corrective action 2. Why do companies have quality assurance programs?
To ensure that customers get what they pay for
3. Why do conflicts may arise in negotiating specifications? Because even inside the exporter’s own team, there’re different goals for the different departments. 4. What is the benefit of a well- designed set of specifications? It offers vital protection to both sides

5. Which kind of goods need pre- delivery inspection?
Sophisticated items or capital equipment
6. What are the functions of independent inspection?
Prevent exporter and buyer agreeing an unrealistically low invoice price in order...
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