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1. Why did some of the lecturers say that understanding the way Incoterms work
could be a quite confusing area?
R// Because when analyzing in depth it can be seen that some Incoterms are not
considered a law and therefore their use is not mandatory, but once used they are applied,
they are fully binding as part of a commercial contract signed between two parties, It is
also confusing because it depends on the rules or type of negotiation in each contract.
R// The INCOTERMS (International Trade Terms) establish international rules that aimto
facilitate the conduct of global trade and thus be able to avoid uncertainties derived
fromthe different interpretations in different countries, they help in the
identification ofobligations when now making the purchase and sale of merchandise
3. Why do many people see the incoterm ex-works (EXW) as the simplest way to
understand how the incoterms work?
R// People see the ex-works (EXW) incoterm as the easiest way because it has
little responsibility for the exporter and all the responsibility for the importer and
applied to intermodal use.
4. Why could you use a wrong incoterm for your business if there is not right or
wrong
when using an Incoterm?
R// Because the seller must be clear to what extent he needs to have control of the
operation, depending on the product you are selling. And additional because if you are not
clear about the term of the negotiation you can make a mistake in the quote if you do not
take into account the costs involved in the incoterm you select and have problems for the
documentation that must be in charge for the release of the merchandise
5. How many Incoterms should you use to stablish a good contract for your
international trade?
Ex Works.
FOB: Free on Board.
CFR: Cost and Freight.
CIF: Cost, Insurance, and Freight
6. What are some of the operations that generate costs and must be paid either by
the buyer or the seller?
R// The operations that generate costs are those that are generated as:
Packaging
Storage
Displacement from factory to port or airport
Handling
Transit insurance, customs and local transport
7. What are the three basic elements that Incoterms cover? Briefly explain how they
work all together in a contract of sale.
R// Some elements that are contemplated within the INCOTERMS are:
The main carriage, the insurance of the goods, the customs export formalities and
the handling charges at destination, according to the mode of transport.
They work by establishing responsibilities and obligations of the buyer and seller in a sale
and purchase, with respect to the agreed conditions for the supply of goods,
licenses, authorizations and customs formalities in the countries of origin and destination.
are also known as price clauses, since each term makes it possible to specify the
elements of which it is composed; in this way, the choice of Incoterms, i.e. the type of
contract to be carried out, has an influence on the cost of the contract.
R// have knowledge, competition, distribution networks, habits and needs of potential
customers, market size, financial and political situation of the country, public
statistical data, import and export data, technical and administrative barriers, tariffs,
etc.
9. What aspects should be taken into account to establish the best incoterm(s) to
define the shipment of services?
R// It is important that the date for the terms proposed in the Incoterms set guidelines of
the sales contract be set. They are widely used by buyers and sellers, but since they are
not accepted globally, extreme caution should be exercised, especially with countries that
do not use them or use them very little.
Local business uses may overlap the term Incoterms in some respects. Reference
is made to freight and shipping conditions, customs clearance and formalities. And
another aspect is to take into account the container and packaging for which the
exporter is responsible.
R// If one of the parties that does not comply with the words that they added in
thecontract or disagree, any aspect could generate legal problems or affect
legal issues. It is necessary for the success of an international business
transaction, because it helps to establish the basis of the relationship between
seller and buyer. It is suggested that the provisions in the contract be drafted in a
simplified manner, free of shorthand phrases, legalisms, and jargon familiar to only
one of the parties.Provisions should be stated in simple terms that ensure that
both parties understandthem in the same way, especially if the contract is
translated into the language of the other party.