Answerkey Exporting and the Export Contract

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