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5 Sample Questions

EXW Incoterm as per INCOTERMS 2020  can be very difficult to work with for a Buyer because

  • A. (a) Seller's responsibility is to make goods available at their warehouse (even if they are on shelves) and advise Buyer to come and get them. At that moment the Risk of damage transfers to the Buyer who now has to pay for them.
  • B. (b) The seller does not have to load the collecting vehicle which can create issues with Seller's insurance and their work safety rules as buyers appointed organisation has to bring their forklift for collection of cargo from shelves.
  • C. (c) The seller is not the Exporter and includes export formalities which in most countries requires a Company registered in the Exporting Country which is highly unlikely.
  • D. (d) The seller treats it as local sale so has to charge GST/VAT which they might be able to recover if they get proof of export but Buyer cannot get refund of the VAT if they are not registered in Exporting country
  • E. All of the above.
  • F. Only b) and d) are true

FCA means Free Carrier as per  INCOTERMS 2020. Which of the statements are true regarding FCA?

  • A. (a) It’s the only  INCOTERM that has 2 options;  (i) Seller loads Buyers collecting vehicle at their premises. (ii) Seller delivers to warehouse nominated by Buyer and buyer has to Unload the vehicle
  • B. (b) The seller pays any costs, export duties and taxes, where applicable, related to export clearance.
  • C. (c) The Seller considers "delivery" to be when they hand over the cargo to the Buyer' carrier meaning that the seller has no obligation to put good on board. The Risks transfers to Buyer after "Delivery".
  • D. (d) The term “loaded” generally implies that the goods have been safely positioned on the vehicle. However, securing tasks such as tying down or lashing pallets or crates loaded onto a truck falls under the vehicle driver’s responsibility, adhering to safety and traffic regulations. Conversely, if goods are placed into a container attached to the vehicle, it is reasonable to expect the seller to undertake the lashing and securing of the goods.
  • E. Only b) and c)
  • F. All of the above

CPT means Carriage Paid To  as per  INCOTERMS 2020. Which of the statements are true regarding CPT?

  • A. a) Under CPT, the seller is responsible for:
    (i) export packing,
    (ii) loading charges,
    (iii) delivery to port/place,
    (iv) export duties and taxes,
    (v) origin terminal charges,
    (vi) loading on carriage,
    (vii) carriage charges, and
    (viii) destination terminal charges.                                                                                    and the buyer is responsible for:
    (i) Delivery to destination and
    (ii) import duties and taxes.
  • B. (b) "Delivery" occurs when the seller passes the goods to their carrier to transport them, not when the goods reach the destination. The buyer must take delivery when they have been handed to the seller’s carrier and physically receive the goods at the named place, or point within that place, of destination.
  • C. (c) The buyer bears all risks of loss or damage to the goods once the seller has “delivered” them when Seller passes goods to Seller's carriers
  • D. (d) Seller does not have the risk beyond the moment of “delivery” under CPT, it has no obligation to the buyer to arrange a contract of insurance.
  • E. All of the above  
  • F. Only a) and c)

DAP means Delivered at Place  as per  INCOTERMS 2020. Which of the statements are true regarding DAP?

  • A. (a) The seller is responsible for: delivering the goods to a place named by a buyer (which is typically the buyer’s premises), and carrying out any export formalities. It does not work well with Letters of Credit.
  • B. (b) The buyer is responsible for: arranging for goods to be unloaded at the named place of destination, and carrying out any import formalities.
  • C. (c) If the goods are damaged or lost at any stage before the final destination, then the seller will be unable to deliver and may well be in breach of contract, with the additional complication that the buyer will have already paid import duties and VAT/GST.
  • D. (d) In cross-ocean transactions, the buyer must import-clear the goods, so typically, they will be held in a customs bonded warehouse or terminal until those formalities have been completed.
    Until they go into customs control in the importing country, they are at the seller’s risk, but while they are under customs control, they are at the buyer’s risk. If the buyer has a problem, say with an incorrectly issued import permit, which delays clearance or even leads to a refusal to clear, the buyer’s actions prevent the seller from delivering. Once import clearance has been completed, and assuming the delivery point was not the customs warehouse or terminal where the goods were waiting for that clearance, the goods need to be released to the seller’s carrier or its agent to then continue the journey to the named destination.
  • E. All of the above
  • F. a), b) and d) only

Under CIF / CIP, the seller buys insurance for the buyer. In Incoterms® 2010, insurance is required under Cargo Clause (C), but in Incoterms® 2020, CIP requires insurance complying with Institute Cargo Clause (A). State if above is True or False.

  • A. True
  • B. False

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