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1、part 2 Commercial Transaction DocumentsModule 2-2: Commercial Transaction Documents Participant Commercial Transaction Documents Overview This part covers the following topics: Commercial documents Banking documents Transportation and insurance documents Objectives By the end of this part, you will
2、be able to: Identify documents used in internat?onal trade Distinguish between the similar documents with different names and functions Analize the application of these documents in different transactions of international trade 2-47 47 Module 2-2: Commercial Transaction Documents Participant Scenari
3、o: Quality of Shipping Documents An African Company wants to sell lightweight working boots into European Union. The boot has been developed by the local manufacturer. At present it is supplying the local army and all agricultural cooperatives. Agents take care of the sales in neighbouring countries
4、 and the national salesmanager has been made responsible for export. A quality certificate is asked by the buyer in Europe and the supplier just prepared a quality statement on their own letterheaded paper. During delivery it was realised that the necessery shipping documents requested by the Europe
5、an customer, were missing and some were ill- prepared. Do you see the weak points in this approach? Think about the product, their present export experience, the responsible manager, their market experience. Introduction Foreign trade documents are important for the exporter or importer establishmen
6、ts, in terms of preparing according to the preferred qualities aware of customs, exportation and importation regulations and prevention of all the sides, led by exporters/importers, being wronged. The documents incomplete, faulty or not given to the authorities on time may give rise to some risks in
7、 the products delivery or during collection of the product costs. In this part, the necessary bank, delivery and commercial documents will be studied and preparation of these documents will be described with examples. 2-48 48 Module 2-2: Commercial Transaction Documents Participant Documents Used in
8、 International Trade It is a fact of modern life that people and cargo generally dont cross national borders without extensive documentation. In the worst case, cargo is stranded, partway to its destination, unable to move for lack of the right documents. As the cargo sits, it incurs storage charges
9、, deterioration and spoilage as its owners frustration mounts. Such a scenario must be avoided if profitable trade is to be conducted. It can be avoided if the trader has a good working knowledge of trade documentation. Are the documents currently used in international trade necessary or only a form
10、ality? Most international trade documents can be placed into the following categories: Commercial documents The Purposes of Documents Banking documents The general purpose of all categories Transportation and insurance of international trade documents is to documents facilitate, control, and keep tr
11、ack of international cargo movements. Below, the different categories of international trade documents will be discussed in detail. 2-49 49 Module 2-2: Commercial Transaction Documents Participant Commercial Documents Commercial documents are those that move between the buyer and the seller. The one
12、s to be discussed here are the following: Request for quotation Quotation Pro forma invoice Terms and conditions of sale Purchase order Order acceptance and confirmation Sales contract Commercial invoice Request for Quotation Buyers and sellers can exchange any What is Request for number oQuotation?
13、 f letters, telephone calls, and fax and E-mail messages as the initial steps of an A request for a quotation is simply a letter, telephone call, fax, or e-mail international transaction. This will normally lead message between buyers and sellers to a Request for Quotation. This can be a used as the
14、 initial step in a trade otransaction. simple fax r other form of message. 2-50 50 Module 2-2: Commercial Transaction Documents Participant A Request for a Quotation FAX E-MAIL Buyer Seller F igure 1: A Request for a Quotation An example of a “request for a quotation” letter can be found below. Dear
15、 Sirs: Please send me your quotation for 50 Farm Best lawn tractors, Model number 307H. Please quote C&F, Athens. Payment will be by 90 day letter of credit. Sincerely, Istanbul, MCN Trading Company Figure 2: An example of a “Request for Quotation” Letter Quotation The exporter would logically f
16、ollow with a Important Points Quotation, whRegarding Quotation ich is basically the price for which he/she can supply the goods with the The quotation should be as specific as possible, to avoid misunderstandings. specified shipping and payment terms (although It is normally signed, and of course it
17、 you are free to propose alternate terms). All the is now possible to send E-mail messages with signature on them. costs, and his/her profit or commission, must be included. The quotation should reference the number on the request, if there was one, and include a date until which it is valid. 2-51 5
18、1 Module 2-2: Commercial Transaction Documents Participant Quotation FCA DDU L/C SIGHT DRAFT Seller Shipping and Payment Buyer Terms Figure 3: Quotation What is the difference between a request for a quotation and a quotation? You can see an example of Quotation. A TRADE INTERNATIONAL Caml? Cad. 260
19、/2 Istanbul QUOTATION No. 21 This quotation is valid for 30 days from the date hereon: March 8, 2001. Shipper: A Trade International, Caml? Cad. No:260/2 Istanbul Consignee: EximCo., Street 5, 724 Tirane Albania 50 tractors, Farm Model 3 US$42,100 as shown in their catalogue dated January 2, 2001, p
20、acked for export by the manufacturer Inland freight Ankara to the Port of Istanbul l ,000 Forwarding and freight to Albania 5,125 Total CFR Albania US$48,225 Marine insurance to be arranged by the Consignee. Payment by 90-day irrevocable letter of credit from a first-class International bank. Shipme
21、nt to be made within 60 days after receipt of the letter of credit Figure 4: A Quotation Document 2-52 52 Module 2-2: Commercial Transaction Documents Participant Pro Forma Invoice Sometimes an importer will want a more A Pro Forma Invoice formal document that will help him/her get an import permit
22、or foreign exchange authorization It is more formal document. The difference from commercial invoice, is and/or to open a letter of credit; she may go one only the statement “Pro Forma” at the step farther and ask for a Pro Forma Invoice. top side. This looks like a regular commercial invoice, excep
23、t that it says ;PRO FORMA; at the top. These words mean that the docu-ment in hand isnt the actual commercial invoice but is almost exactly what the real invoice will look like. Pro Forma Invoice Pro Forma Invoice Pro Forma Invoice Seller (When buyer wants Buyer more formal document) Figure 5: Pro F
24、orma Invoice Why do you think an importer would want more formal document? What are the advantages for him/her? 2-53 53 Module 2-2: Commercial Transaction Documents Participant Terms and Conditions of Sale Sometimes quotations and pro forma Terms and Conditions of Sale invoices are accompanied by ot
25、her documents known as Standard Term s and Conditions of Terms and Conditions of Sale include information that is not on a quotation Sale. These give important information - such as or pro forma invoice and it is similar to ;Athe fine print used on the documents ll shipments are made F.O.B. stanbul
26、Turkey; necessary when opening a bank - that is not shown on quotations or pro forma account or receiving a credit card. invoices. This information is somewhat similar to the fine print you read when you open a bank account or receive a credit card. Terms and Conditions of Sales Quotations Terms and
27、 Pro Forma CInvoice +onditions of Sales Buyer Seller F igure 6: Terms and Conditions of Sale What kind of benefits does the extra information on the Terms and Conditions of Sale give the buyer and seller? 2-54 54 Module 2-2: Commercial Transaction Documents Participant Purchase Order If the importer
28、 is satisfied with the An Important Point quoAbout Purchase Order tation and/or pro forma invoice, he/she may place an order. This can be a simple oral or Note that it shows how to mark the wboxes and specifies payment by sight ritten statement such as ;We hereby order as draft, documentary against
29、payment, per your pro forma invoice number 627.; More and is signed. often there are additional details - for example, ;We hereby order 100 dozen Model R bicycle pumps, C.I.F. Romania, to be shipped by ocean no later than January l, 2001, with payment by irrevocable letter of credit.; An order can i
30、nclude other conditions such as documents that should be provided and even what should be said on the documents. Purchase Order Purchase Order I? 1234 ? Bu yer Seller After accepting Quotation and/or Pro Forma Invoice Figure 7: A Purchase Order Order Acceptance and Confirmation The exporter should r
31、eply with a simple statement such as, ;We accept your Purchase Order No. 291/91, dated May 2, 2001;. In international trade, an order and an unconditional acceptance make a contract that theoretically can be enforced by either the contracting parties. 2-555 5 Module 2-2: Commercial Transaction Docum
32、ents Participant Order Acceptance And Confirmation Order Acceptance and Confirmation I? 1234 ? 1234 I? 1234 ? 1234 SeBuyer ller Reply for Purchase Order F igure 8: Order Acceptance and Confirmation Sales Contract In some cases, importers order informally, by telephone, although this system has been
33、partly replaced by fax and E-mail. The exporter then sends an order confirmation, which the importer signs and returns. This procedure creates a Contract of Sale. Sales Contract ORDER 1 1 Order C onfirmation 2I? 1234 ? I? 1234 ? 2 I? 1234Seller ? Buyer I? 1234 ? 3 3 SIGNED Figure 9: The Sales Contra
34、ct 2-56 56 Module 2-2: Commercial Transaction Documents Participant Commercial Invoice An Invoice is a document that provides Be Carefull! information about the terms and conditions of a sales transaction. A number of dThe invoice should be in English or ifferent accompanied by an accurate types of
35、invoices are used in international translation. trade. A Commercial Invoice is used for most purposes. It is simply a document prepared by the seller on its own form that sets forth the names of the parties, the type of merchandise sold, the price, and other information the seller deems relevant. Ty
36、pically this includes the port of entry for the goods, the time and place of the sale, and a description of the goods including the name of the goods, the grade or quality level of the goods, and the quantity by weight or measure. It may include incidental charges such as sales commissions, insuranc
37、e, freight, and packaging. If the sale involves rebates or drawbacks, these might be listed on the commercial invoice. Most, but not all, nations customs services accept a commercial invoice as evidence of the nature and value of the cargo for customs purposes. Commercial Invoice Commercial Invoice
38、1234 I? ? 23 1234 I? ? 342 1234 ? I? 349 1234 I? 452 1234 I? ? ? 3429 Buyer S eller (How much money will be paid for what) Figure 10: Commercial Invoice What does a commercial invoice give evidence of? If this document is not used what type of problems could be encountered? 2-5 577 Module 2-2: Comme
39、rcial Transaction Documents Participant Table 1: The Contents of Invoice The invoice must provide the following information; Final destination of the merchandise If merchandise is sold or agreed to be sold, the time, place, and names of buyer and seller; if consigned, the time and origin of shipment
40、, and names of shipper and receiver A detailed description of the merchandise, including the name and quality of each item, marks used in domestic trade in the country of origin, and marks and numbers on the export packing The quantities in weights and measures The kind of currency The country of or
41、igin Banking Documents The processes of paying and getting paid require relatively Banking few documents. Cash in advance may be as simple as the Documents importer sending the exporter a check or depositing it in his/her bank account. It is rarely more complicated than filling out a simple form to
42、buy a bank draft or to order an airmail or cable transfer. Consignment, open-account, and credit card transactions are equally uncomplicated. With payment by Bill of Exchange (sight or time draft), the exporter must complete a form to instruct his/her bank to prepare the draft and send it to the imp
43、orters bank. A Letter of Credit sale is somewhat more complex than other forms of international payment; the application for a Letter of Credit must be completed by the importer and given to the opening bank. There are at least four documents involved; these are as follows: 2-58 58 Module 2-2: Commercial Transaction Documents Participant Application for letter of credit Letter of credit Advice of letter of credit Drafts (drawn on a bank for payment) More details regarding the above documents can be found in t