Question 1

The Incoterms definitions will automatically become a part of a contract for the sale of goods,governed by the UN Convention for the International Sale of Goods.

Accepted Answer

The Incoterms definitions do not automatically become a part of a contract for the sale of goods governed by the UN Convention for the International Sale of Goods. It is up to the parties involved in the contract to specifically incorporate Incoterms into their agreement.

Question 2

A sale made with terms "CIF Tokyo" includes in the price quoted for the goods which of the following:

Accepted Answer

CIF stands for Cost, Insurance, and Freight, therefore the price quoted includes the cost of the goods, the insurance, and the freight to transport the goods to Tokyo.

Question 3

Under an FOB contract,the bill of lading need not be market "Freight Prepaid."

Accepted Answer

Under an FOB (Free on Board) contract, the buyer is responsible for the freight costs, so the bill of lading does not need to be marked "Freight Prepaid," which indicates that the seller has paid the freight charges.

Question 4

According to Incoterms,the trade term that represents the maximum responsibility of the seller is:

Accepted Answer

Delivered Duty Paid (DDP) represents the maximum responsibility of the seller, as they are responsible for delivering the goods to the destination country, paying all taxes, customs duties, and fees, and making arrangements for the goods to be cleared for import. DDP also includes the cost of insurance and transport up to the agreed-upon destination.

Question 5

The difference between terms "CFR" and "CIF" is that under "CIF" term of sale,the buyer must procure his own marine insurance coverage on the goods.

Accepted Answer

Under CIF (Cost, Insurance, and Freight), the seller is responsible for arranging and paying for the marine insurance coverage on the goods, not the buyer.

Question 6

According to Incoterms,the risk of loss or damage to goods under a CIF contract passes from seller to buyer when:

Accepted Answer

Under CIF (Cost, Insurance, and Freight) Incoterm, the risk of loss or damage to goods passes from the seller to the buyer when the goods cross the ship's rail at the port of shipment. This means that the seller is responsible for ensuring the goods are loaded safely onto the vessel, and the buyer assumes all risk and responsibility once the goods are on board.

Question 7

A carrier is entitled to release a shipment covered by a negotiable bill of lading to a holder in possession of a clean copy of the bill of lading only if the holder also presents a written guarantee of ownership.

Accepted Answer

A carrier is entitled to release a shipment covered by a negotiable bill of lading to a holder in possession of a clean copy of the bill of lading, but there is no legal requirement for the holder to present a written guarantee of ownership. However, the carrier may request additional documentation or information to ensure the lawful release of the shipment.

Question 8

Because negotiable bearer documents are transferred by delivery,they are not used in foreign trade.

Accepted Answer

The answer of Because negotiable bearer documents are transferred by...

Question 9

Under contract terms "DES Stockholm," the seller must pay the ocean freight to Stockholm,but the buyer pays the unloading charges at the Stockholm terminal.

Accepted Answer

The contract terms state that the seller is responsible for paying the ocean freight to Stockholm, but the buyer is responsible for paying the unloading charges at the Stockholm terminal.

Question 10

Under the Uniform Commercial Code,the risk of loss in a destination contract passes to the buyer when the goods are tendered to the buyer at that place.

Accepted Answer

This is the rule under the Uniform Commercial Code (UCC) for a destination contract. In a destination contract, the seller bears the risk of loss until the goods are tendered to the buyer at the specified destination. Once the goods are tendered at the destination, the risk of loss passes to the buyer.

Question 11

Under Incoterms,a sale on terms "DDP" represents the minimum responsibility of the seller and the maximum responsibility of the buyer.

Accepted Answer

The answer of Under Incoterms,a sale on terms "DDP" represents...

Question 12

The trade terms "FOB" and CIF" are defined by which of the following:

Accepted Answer

FOB and CIF are both Incoterms, which are a set of internationally recognized trade terms used to define the responsibilities and obligations of buyers and sellers in an international transaction. The Uniform Commercial Code pertains specifically to domestic transactions within the United States, and the Revised American Foreign Trade Definitions are not a recognized standard in international trade.

Question 13

Under the terms "Ex Factory," the seller is responsible for transporting the goods to the buyer's factory.

Accepted Answer

Under the terms "Ex Factory," the seller is only responsible for making the goods available at their factory, and the buyer is responsible for arranging and paying for transportation from the seller's factory to their own destination.

Question 14

The Bolero project is an international treaty requiring trading nations to implement uniform Electronic Data Interchange for the electronic transfer of documents.

Accepted Answer

The Bolero project is not an international treaty but a commercial initiative aimed at facilitating the electronic transfer of trade documents through a secure platform.

Question 15

The Bolero project is a cross-industry system for worldwide electronic transfer of commercial trade information.

Accepted Answer

The statement correctly describes the Bolero project.

Question 16

Shipment contracts are more common in international trade than destination contracts.

Accepted Answer

Shipment contracts, also known as FOB (Free on Board) contracts, are more commonly used in international trade than destination contracts, also known as CIF (Cost, Insurance, and Freight) contracts. In shipment contracts, the responsibility and risk of the goods transfer from the seller to the buyer at the port of shipment, while in destination contracts, the transfer occurs at the port of destination.

Question 17

A sale made "CIF foreign port" implies that the terms of the sale are:

Accepted Answer

CIF (Cost, Insurance, and Freight) is a trade term where the seller is responsible for arranging and paying for transportation and insurance of goods to the port of destination, while the buyer is responsible for any additional costs like customs duties and taxes. When a sale is made CIF foreign port, it means that the buyer will pay for the goods upon presentation of documents, and only after they have arrived at the foreign port, which is known as "cash against documents" or CAD. Therefore, the best choice is B.

Question 18

All Incoterms are intended for use with ocean cargo.

Accepted Answer

Incoterms can be used for any mode of transportation, not just ocean cargo.

Question 19

According to Incoterms,the risk of loss under contract terms "FAS Name of Vessel" passes to the buyer when the goods are delivered alongside the named vessel.

Accepted Answer

According to FAS (Free Alongside Ship) Incoterms, the risk of loss passes from the seller to the buyer when the goods are delivered alongside the named vessel at the port of shipment, making it the buyer's responsibility from that point onward.

Question 20

A straight bill of lading assures that the goods have actually been loaded on board the ship for shipment.

Accepted Answer

A straight bill of lading is a non-negotiable document that indicates the goods are consigned to a specific person or entity, but it does not necessarily confirm that the goods have been loaded on board.

Quiz 5: The Documentary Sale and Terms of Trade