Transportation documents

Transportation documents are usually attached to commercial invoices as a proof of shipment which also enables the buyers to receive the goods. Transportation documents include bills of lading, air waybills, railway bills, road carriage bills and others depending on the mode of transportation used. Since sea and river shipments are considered most economical, they are most often used and bills of lading are the most popular transportation documents.

Bills of ladingusually contain the following details:

• name of consignor

• name of consignee

• name of vessel

• shipping date

• weight

• measurement

• marking

• number of cases

• contents of the cases

Sometimes, when the packing is bad or the cases are damaged, the master of the ship makes a certain note of it on the bill. It makes the bill dirty then. If no notes are made on the bill it is clean. Usually the contracts say that only clean bills of lading can be attached to the commercial invoices and thus considered a proof of shipment.

Here is a part of a specimen bill of lading:

Bill of Lading No 156

• Shipper: Morflot

• Consignee: Petrol Co., Liverpool, England

• Ocean vessel: Aleksandr Pushkin

• Port of loading: Riga

• Freight payable at: Riga

• Port of discharge: Liverpool

• Description of goods: Chemicals ST

• Gross weight: 5100 kg

• Number of bags:100 bags

November, 2007

Practice

Answer the following questions about the specimen Bill of Lading

1. What company issued this bill of lading?

2. From what port and to what port were the goods shipped?

3. Who paid for the transportation of the goods?

4. Was it a dirty or clean bill of lading?

5. Did the master of the ship sign the bill of lading?

COMMERCIAL INVOICES

Commercial invoices are usually issued by sellers or sellers' banks after the goods are shipped. Together with shipping documents of invoices are usually sent to the buyers' bank for payment. Commercial invoices generally contain the following information:

• number and date of the invoice

• number and date of the contract

• date of delivery

• number and date of the transport document

• description of the goods

• price per unit

• quantity

• total amount to be paid

Here is a part of a specimen invoice:

• Contract Reference: Contract 32-1 of 4 September, 2005

• Payment terms: by letter of credit

• Sold to: Petrol Co., Liverpool, England

• Shipped: by Hafta Co., Liverpool, England

• Vessel: Aleksandr Pushkin

• Date of shipment: 20 November, 2005

• Port of shipment: Riga

• Port of destination: Liverpool

• Description: Chemicals ST cif Liverpool

• Quantity: 5000 kg

• Unit price: GBP 1750 per kilo

• Total price GBP 8 750 000

• Currency: English Pound Sterling

Practice

Answer the following questions about the specimen invoice:

1. On board what vessel were the chemicals shipped?

2. When were the goods shipped?

3. Were all the goods stipulated by the contract shipped?

4. What are the terms of delivery?

5. What are the terms of payment?

TERMS OF PAYMENT

Basic Vocabulary

kinds of payment – виды оплаты

by Banker’s transfer – банковским переводом

by Letter of credit - аккредитивом

by Drafts - векселем

for Collection - инкассо

on an open account – на открытый счет

Reading

Payment in foreign trade may be made in cash and on credit. There are several kinds of payment used in business transactions:

· On an open account

· By drafts

· For collection

· By Letter of credit

But the most popular kind of payment is by Letter of credit. When a buyer in one country wants to pay a seller abroad he asks his bank (called “issuing”) to issue or open a letter of credit. It means that the buyer’s bank issues a documentary letter of credit. It is an agreement with banks, made by a buyer, provided certain conditions are fulfilled. There are four participants in this operation because the buyer and the seller act through their banks:

ADVISING BANK

SAMPLE CONTRACT

CONTRACT No.

Hereinafter referred to as the Sellers, on the one part, and Vserossiyskoye Objyedineniye..., Moscow, hereinafter referred to as the Buyers on the other part, have concluded the present Contract as follows:

1. SUBJECT OF THE CONTRACT

The Sellers have sold and the Buyers have bought on ____terms the goods in accordance with the Specifications attached to the present Contract and forming integral part thereof.

2. PRICE AND TOTAL AMOUNT OF THE CONTRACT

Prices for the goods are fixed in____and to be understood____including the cost of packing and marking. The total amount of the present Contract comprises______.

3. TIME AND DATE OF DELIVERY

The goods are to be delivered in the time stipulated in the Specifications attached to the present Contract. The date of ____is to be considered as the date of delivery. Delivery before the time stipulated in the Contract as well as partial delivery of the goods without accessories is not allowed without the Buyers' consent.

4. QUALITY

The quality of the goods is to be in conformity with the re­quirements given in the Specifications attached to the Contract.

The goods are to be of the latest design and manufactured of the first grade materials. The Sellers on their own initiative but at the Buyers' consent or request are to make improvements of the design and the materials of which the goods are made taking into account the latest technical achievements in this field without any extra charges or postponement of the delivery time. The quality of the goods is to be evidenced by a Certificate of Quality issued by the manufacturing works, or by a Letter of Guarantee of the Sellers.

5. PACKING AND MARKING

Packing should protect the cargo from any damage, corrosion and shortage during transportation by all kinds of transport in­volving several transhipments on route. A definite kind of pac­king may be indicated in the Specifications to the Contract.

Each case is to contain a Packing List indicating the deno­mination of the goods and spare parts, Contract No., Trans No., Case No., Item No. as per the Specification, Series No., Net gross weight. Packing Lists are to be inserted in each case in a waterproof envelope.

The Sellers are to submit for the Buyers' approval overall sketches of the equipment. The size, weight and the center of gra­vity of the case are to be indicated on each sketch.

The following marking is to be made in waterproof black pa­int on each case in Russian and English:

Top

With Care

Do not turn over

V/O

Contract No.

Trans. No.

Narjad No.

Case No.

Gross weight... kg

Net weight... kg

Size of case (length, width, height in cm).

When delivering complete equipment, the case No is to be given in fraction, in which the numerator is the ordinal No of case and the denominator - the total number of cases.

The Sellers are to bear responsibility for all eventual losses and/or damages caused by inadequate or unsuitable packing and marking.

6. PAYMENT

Payment is to be effected in _____ within... days after receipt by the Buyers through the RF Bank for Foreign Economic affairs, Moscow, of the following documents:

a. Invoice - in quadruplicate.

b. Full set of clean on board Bills of Lading issued in the name of the. Buyers,with destination to the port of the RF indicated by the Buyers, or airway bill, or railway bill, or post receipt.

c. Certificate of Quality of the manufacturing works or a Letter of Guarantee of the Sellers.

d. Case per case Specification or Packing List - in duplicate.

e. Additional information if necessary.

Bank charges connected with collection of documents are to be for the Sellers' account.

7. ADVICE OF SHIPMENT AND SHIPPING INSTRUCTIONS

The Sellers are to cable to the Buyers within 24 hours after shipment stating the following data: date of shipment, Contract No., denomination of the goods, number of cases, weight, ship's name, B/L No ( railway bill, or airway bill, or post receipt), Trans No.

The Sellers are to send by Captain's mail a non-negotiable copy of the Bill of Lading and Specification.

8. INSPECTION AND TESTS

The Buyers have the right to send their inspectors to the ma­nufacturing plant in the Sellers' country to participate in the inspection and tests of the goods.

The Sellers are to render assistance to the Buyers' inspectors to enable them to perform such inspection and tests.

If such inspection or tests reveal that the goods do not com­ply with the Contract conditions or have defects of any kind, the Sellers are to eliminate such defects.

The participation of the Buyers' inspectors in the tests and inspection does not free the Sellers from the liability provided for in the Clause "Guarantee" of the present Contract.

The final inspection and testing of the goods are to be effec­ted in the RF.

9. GUARANTEE AND CLAIMS

The Sellers guarantee that the quality of the goods conform to the requirements of the Contract and in particular guarantee that:

a. the delivered goods and all the accessories conform to the latest achievements of technics and the highest standards existing in the Sellers' country at the time of execution of the present Contract;

b. the material of which the goods and all the accessories ha­ve been manufactured are of the highest quality;

c. the goods have been delivered complete with all the neces­sary accessories in strict accordance with the terms and condi­tions of the Contract so that to ensure their normal and uninter­rupted operation;

d. the drawings and other technical documents are of high quality and are sufficient for mounting and operation of the equipment.

The guarantee period is 12 months from the date of putting the equipment, apparatus and/or instruments into operation, but not more than 15 months from the date of shipment.

In case of a delay in putting the equipment, apparatus and/or instruments into operation through the Sellers' fault, the period of the guarantee is to be prolonged accordingly.

Should the goods and/or accessories prove to be defective during the period of guarantee or to be not in conformity with the terms and conditions of the Contract, the Sellers undertake, at the Buyers' option, to eliminate the defects or to replace the faulty goods free of charge and without a delay, the cost of transportation and insurance being at the Sellers' expense. If, according to agreement between the parties, the defects have been eliminated by the Buyers, the expenses involved are to be paid by the Sellers.

Any claims, if any, are to be presented by the Buyers to the Sel­lers not later than 30 days after the date of expiration of the gua­rantee period provided that the defects have been discovered during the guarantee period.

Survey Reports made out with participation of experts of the RF Chamber of Commerce and Industry will serve as a suf­ficient proof of a claim.

10. CONTINGENCIES

Should any circumstances arise preventing any of the parties to fulfil their respective obligations under this Contract partially or in full, namely: acts of elements, war, military operations of any character, blockades, prohibitions of exports or imports, the time of delivery under this Contract is to be extended for the period equal to that during which such circumstances will remain in force. The Sellers are to immediately advise the Buyers by cable of the beginning and cessation of the above circumstances preventing them to fulfil their obligations.

In case a delay in the delivery of the goods owing to the abo­ve circumstances is more than 3 months, the Buyers have the right to refuse fulfillment of the Contract in full or in respect of any partof the goods not delivered by the time stipulated and in this case the Sellers are not entitled to claim from the Buyers any compensation for eventual losses.

Certificates issued by the Chamber of Commerce of the Sel­lers' country will be sufficient evidence of such circumstances and their duration.

11. PENALTY

If the Sellers fail to deliver the goods in the time stipulated by the contract, they are to pay to the Buyers a penalty at the rate of __ per cent of the value of the goods delayed for each week during the first__ weeks and___per cent of the value of the goods for each following week of the delay in the delivery. However, the total sum of the penalty is not to ex­ceed____per cent of the value of the goods delayed.

The sum of the penalty is to be deducted by the Buyers from the Sellers' invoices when paying same. The payment of the penalty does not free the Sellers from their obligation to deliver the goods under the present Contract.

Should a delay in the delivery exceed 3 months, the Buyers have the right to cancel the Contract.

12. ARBITRATION

Any disputes which may arise under or in connection with this Contract are to be settled by the Foreign Trade Arbitration Commission at the Chamber of Commerce and Industry of the RF, Moscow, in accordance with the Rules of Procedure of the said Commission, no recourse to law courts being permitted. The award of such arbitration is to be considered final and bin­ding upon both parties.

13. OTHER TERMS AND CONDITIONS

A. The Sellers are to obtain an Export License at their own expense. If the Sellers fail to obtain an Export License within___months from the date of signing the Contract, the Buyers have the right to cancel the contract. The Sellers have to inform immediately the Buyers of obtaining an Export License.

B. If the deliveries are effected on FOB terms, the Sellers are to bear all the expenses incurred at the port of shipment, inclu­ding those connected with packing, marking, loading on shipboard and storage, as well as port and dock dues, duty on the cargo and all the charges con­nected with customs formalities.

If deliveries are effected on CIF terms, the Sellers are to insure the goods for their own account for the total invoice value plus 10 per cent (the expected benefit) with "INGOSSTRAKH", Moscow, against all transport risks subject to point 1 § 2 of Trans­port Insurance Rules published by "INGOSSTRAKH".

C. After this Contract has been signed all and any previous negotiations and correspondence pertaining thereto to be consi­dered null and void.

D. All amendments and additions to this Contract are to be valid only if made in writing and signed by duly authorized representatives of both parties.

E. Neither of the parties has the right to assign their rights and obligations under this Contract to any third party without written consent of the other party.

F. Moscow is to be considered the place of the conclusion of this Contract.

14. LEGAL ADDRESSES OF THE PARTIES

The Sellers:

The Buyers:

The Sellers (Signatures) The Buyers (Signatures)