Freight or carriage paid to

Under these terms, which are used only in rail, road and inland waterway transport, the seller's and the buyer's duties are as follows:

The seller must deliver the goods at his own expense to the agreed point and bear the risks of the goods until they have been delivered into the custody of the first carrier.

The buyer must pay all costs from the time of arrival of the goods at the agreed point and bear the risks from the time the goods have been delivered into the custody of the first carrier.

Also see Incoterms.

Import duty

A duty levied on dutiable goods on importation. It is usually assessed on the basis of the value of the goods (ad valorem duty) or their weight (specific duty).

Import licence

A government permit for which an importer must apply if the goods he wants to import are subject to quota. (An import quota is the maximum quantity of a certain commodity which the government allows to be imported.)

Incoterms(International Commercial Terms)

The Incoterms are uniform definitions of terms of delivery in foreign trade, which were drafted by the International Chamber of Commerce. They were first published in 1936; a revised edition appeared in 1953. The most important Incoterms are: ex works, F.O.R. / F.O.T., F.A.S., F.O.B., C.I.F., C. & F. and freight or carriage paid to ...

The Incoterms indicate the seller's and the buyer's duties, and the costs and risks to be borne by each. They also serve as the basis of price quotations. When a supplier quotes a price, for example, on a C.I.F. basis, his quotation includes all the costs he has to assume under the contract.

The application of the Incoterms is completely voluntary. However, when a contract is concluded on the basis of Incoterms, the buyer and the seller know exactly what their duties are, a fact which helps to avoid misunderstandings and disputes in international trade.

It should be noted, however, that there are terms of delivery which have not been defined in the Incoterms and the American generally prefer to use their own terms (Revised American Foreign Trade Definitions of 1941,) which differ from the Incoterms in many respects.

Inquiry agency

See credit-inquiry agency.

Insurance certificate

Seeinsurance policy.

Insurance policy

In marine insurance the most important types of policies are voyage policy, open policy and floating (or: declaration) policy.

Under a voyage policy, the goods are insured for a practical voyage. Open policies are taken out for recurring shipments; they may give cover for a fixed period, or for an indefinite period (until notice has been given). The insured is required to declare the individual shipments effected under the policy and to pay the premium assessed by the insurance company. A floating policy is taken out for a lump sum on which the premium is assessed. The individual shipments are declared to the insurance company and deducted from this sum. When the policy is exhausted it has to be renewed.

An exporter who wants proof of insurance for an individual shipment under an open or floating policy must obtain an insurance certificate. The certificate takes the place of policy in respect of the shipment to which it refers.

International Chamber of Commerce(I.C.C.)

A world federation of chambers of commerce and similar organizations, with headquarters in Paris, founded in1919.

The I.C.C. acts as a spokesman for the international business community and has an important advisory position with the U.N. It has done much to standardize international business practices by creating uniform rules, including the Incoterms,Uniform Customs and Practice for Documentary Credits (1974 Revision), supplemented by the Standard Forms for the Opening of Documentary Credits (1951), and the Uniform Rules for the Collection of Commercial Paper (1957). Furthermore, the I.C.C. has established a court of arbitration for the settlement of international commercial disputes (see arbitration).

letter of credit(L/C)

See documentary letter of credit.

Limited company

A company limited by shares in Great Britain. Its capital is divided up into shares; the liability of the shareholders is limited to the par value of the shares held by them. (The name of the company must end with word Limited or the abbreviation Ltd.)

A limited company which offers its shares (and debentures) to the public is called public limited company. A private limited company restricts the right to transfer its shares and limits the number of its members (shareholders).

The shareholders elect directors, who are responsible for the management of the company. The actual management may be in the hands of a managing director. Limited companies are also required to have a secretary, who has special duties and responsibilities.

Compare stock corporation.

Lloyd’s

The Corporation of Lloyd’s in London is an association of underwriters. Insurance business is not transacted by Lloyd’s itself, but only by it’s members, the underwriters.

Lloyd’s agent.Seesurvey report.

Mercantile agents

In this classification there are commission agents, factors and brokers. A commission agent sells (or buys) goods for his principal. For his work he receives a commission calculated at a certain percentage of the amount of the transaction. An agent is called sole agent. A foreign agent represents his principal in a foreign market.

A factor (consignee) is an agent to whom goods are consigned for the purpose of sale (see consignment stock).He has possession of the goods and sells them in his own name on a commission basis.

A broker is an agent who negotiates contracts for other parties for a compensation called brokerage. He acts as an intermediary in bringing the parties together. The services of brokers are employed in the following fields of business activity: purchase and sale of goods, security dealing, real estate, shipping and insurance.

Money order

Money orders are issued for any amount up to €50. They may be crossed in the same way as postal orders. For urgent remittances, telegraphic money orders are used. Money orders purchased in the United Kingdom can be made payable overseas.

In the United States, money orders are issued by post offices, banks, or express companies. They are transmitted through the post, by telegraph or cable, and may be payable in the United States (domestic money orders) or abroad (international money orders).

one-man business (US: sole proprietorship)

A business owned and operated by one person (sole trader).

Partnership

An association of two or more persons (partners), who carry on business together for the purpose of making a profit. The partners of an ordinary partnership (US: general partnership) have unlimited liability. A limited partnership consists of at least one general partner, who has unlimited liability, and one or more partners with limited liability, called limited partners.

Postal order

Postal orders are issued for sums ranging between 1s. and 21s. The sender of the order enters on it the name of the payee and the name of the post office where payment is to be made. Postal orders may be crossed, in which case payment will be made only through a bank. Compare money order.

Prolongation of bills

The acceptor of a bill of exchange, who is faced with financial difficulties, may approach the drawer before maturity and ask for a prolongation of the bill. The drawers will agree to a prolongation only if the acceptor is a reliable businessman and his difficulties are of a temporary nature.

Prolongation may be effected in either of the following ways: if the drawer is the holder of the bill, a new bill, payable at a later date, is made out and accepted by the debtor. (The old bill is destroyed). For the time of extension interest is charged. If the bill is not in the hands of the drawer, the drawer must advance the amount of the bill to enable the acceptor to meet it when it is presented for payment. The debtor, in turn, is required to accept a new bill and to pay interest for the additional time allowed.

Promissory note

Legally, a promissory note is defined as “an unconditional promise in writing, made by one person to another, signed by the maker, engaging to pay on demand or at a fixed or determinable future time a certain sum of money to, or to the order of, a specified person, or to bearer”.

Promissory notes have only two parties: the maker, who makes the promise, and the payee, to whom the promise is made.

Compare bill of exchange.

Pty. Ltd.

Abbreviation of proprietary limited. Proprietary companies are private limited companies in Australia and South Africa. See limited company.

Quantity discount

A discount granted to a customer who buys a large quantity of goods.

railroad bill of lading(US)

Seeconsignment note.

Rebate

An amount returned out of a sum already paid. A rebate is, for example, the refund granted by a manufacturer to a dealer who achieves a specified volume of trade within a fixed period of time. Compare discount.

salesman (US)

See commercial traveler.

Sole agency

See mercantile agents.

Stock corporation

A type of business organization in the United States, which corresponds to the limited company in Great Britain.

The shares of open corporations are bought and sold on the open market. Closed corporations do not offer their shares to the public.

As in a British limited company, the shareholders of a corporation elect directors. The directors select (from among themselves) the officers or executives, who are entrusted with the actual management. These officers are: a president, a vice-president (or several vice-presidents), a secretary and a treasurer (or a secretary-treasurer). (If there are only a few directors, these are also the officers.)

Survey report

When a shipment arrives in damaged condition, the consignee has to notify the surveyor named in the insurance policy or certificate, who will examine the damage and issue a survey report. Surveyors are representatives of the insurance company; a surveyor representing Lloyd’s in London is known as a Lloyd’s agent.

Tender

The tender system, utilized by government agencies and other organizations, is a method of placing contracts for supplies or work. Under this system, the fact that supplies have to be bought or work has to be performed is made publicly known, and all companies interested in the contract are invited to submit offers (tenders, US: bids) by a certain date. On the appointed day the tenders are opened and compared, and the tenderer offering the best terms is awarded the contract.

Trade association

An association of firms engaged in a particular trade. Its purpose is the protection and advancement of the interests of its members.

Trade discount

A discount on the list price granted to a middleman (wholesaler or retailer) who buys goods for resale.