For the first issue, it is confirmed that Huayu was the actual shipper in the present case; however, it does not certainly construct a forwarding contractual relationship between Huayu and Jincheng.
As per Article 3 of the Provisions:. To construct a contractual relationship between the forwarder and the actual shipper, Huayu shall prove either there was a contract between the parties, or Jincheng did be entrusted by the actual shipper to do any forwarding work. There was no evidence showing that Huayu entrusted or sub-entrusted Jincheng for cargo forwarding or delivering the cargo to the carrier. There was also no evidence for any commission paid by Huayu to Jincheng.
In conclusion, Huayu was the actual shipper, but there was no forwarding contractual relationship between Huayu and Jincheng. The distinction is important in specifying who is liable for goods lost or damaged during shipping. The primary difference between the two contracts is in the timing of the transfer of the title for the goods. Free on board , also referred to as freight on board, only refers to shipments made via waterways, and does not apply to any goods transported by vehicle or by air.
FOB shipping point, also known as FOB origin, indicates that the title and responsibility of goods transfer from the seller to the buyer when the goods are placed on a delivery vehicle. Since FOB shipping point transfers the title of the shipment of goods when the goods are placed at the shipping point, the legal title of those goods is transferred to the buyer.
Therefore, the seller is not responsible for the goods during delivery. FOB shipping point is a further limitation or condition to FOB, as responsibility changes hands at the seller's shipping dock.
If the designated carrier damages the package during delivery, Company ABC assumes full responsibility and cannot ask the supplier to reimburse the company for the losses or damages. The supplier is only responsible for bringing the electronic devices to the carrier. Consequently, the seller legally owns the goods and is responsible for the goods during the shipping process. Assume the computers were never delivered to Company XYZ's destination, for whatever reason.
The supplier takes full responsibility for the computers and must either reimburse Company XYZ or reship the computers. Shipping terms affect the buyer's inventory cost because inventory costs include all costs to prepare the inventory for sale.
This accounting treatment is important because adding costs to inventory means the buyer does not immediately expense the costs and this delay in recognizing the cost as an expense affects net income. Another key difference between these two terms is the way in which they are accounted for. Since the buyer assumes liability after the goods are placed on the ship for transport, the company can record an increase in its inventory at that point.
Similarly, the seller records the sale at the same time. If there is any damage or loss of goods during transport, the buyer may file a claim since the company holds title during delivery. The accounting rules change for FOB destination. In this case, the seller completes the sale in its records once the goods arrive at the receiving dock. That's when the buyer records the increase in its inventory. I request you to please help me out for the following issues so i can start my business and run it smoothly.
Also to whom will the bill of landing will be issued upon loading the document on the ship? If the consignee has already made the payment then will the shipping company issue the bill of landing in the name of the consignee?
Please kindly send me a link that will take me directly to the types of plastic panel that you carry with the prices attached to it.
Also, inform me about the Delivery time or FOB, and payment terms warranty. Your early reply is highly appreciated. Manish k loya: On 23 May Dear admin, Thanks for contributing such a valuable content on your domain. I would like to know that if I agree to deliver on fob basis and payment terms shall be irrevocable l c against delivery of bill of lading, if in case after delivering the consignment banker finds discripency in l c or product not meets specifications then bank would reject my payment?
And the goods shall be delivered to the buyer as he is booking the ship vessel Manish k loya: On 23 May Dear admin, Thanks for contributing such a valuable content on your domain.
And the goods shall be delivered to the buyer as he is booking the ship vessel Junaid: On 05 October who will bear the cost of shipping documents. Shiva kumara Shapur: On 12 July We are a seller my agent says he need fawb and carting info first then he can file shipping bill.. Jef: On 19 November Free on board, not freight on board.
Dipak Hadawale, If insurance covered the risk of natural calamities, the loss can be claimed due to Katrina hurricane. Nilee: On 24 June Very helpful which have you provided by this article. Jinsu Kim: On 15 June Thank you for kind explanation. And the goods shall be delivered to the buyer as he is booking the ship vessel.
Junaid: On 05 October who will bear the cost of shipping documents. The buyer bears all risks of loss or damage to the goods once the seller has delivered them as described in A2.
If the buyer fails to inform the seller of where and when the vessel will be presented or if the vessel fails to arrive on time, or it fails to take the goods, so that the seller cannot deliver, then the buyer bears the risk of loss or damage to the goods from the agreed date or at the end of the agreed period. The seller has no obligation to contract for carriage. The seller must comply with any transport-related security requirements but only up to delivery.
The buyer must contract for carriage from the port of shipment, except if it is agreed that the seller makes the contract of carriage as described in A4. The seller does not have the risk beyond the delivery point so it has no obligation to the buyer to arrange a contract of insurance.
However, if the buyer requests, at its risk and cost, the seller must provide the buyer with information in its possession that the buyer needs to arrange its insurance. Despite having the risk of loss or damage to the goods from the delivery point, the buyer does not have an obligation to the seller to insure the goods.
Whether the buyer chooses to insure the goods or bear the risk themselves is entirely their choice. The seller, at its own cost, must provide the buyer with the usual proof that the goods have been delivered in accordance with A2. The buyer must accept the proof of delivery provided by the seller. This rule, like all the multimodal rules, is suitable for both domestic and international transactions. Where applicable, the seller must at its own risk and expense carry out all export clearance formalities required by the country of export, such as licences or permits; security clearance for export; pre-shipment inspection; and any other authorisations or approvals.
Where applicable, the buyer must carry out and pay for all formalities required by any country of transit and the country of import. These include licences and permits required for transit; import licences and permits required for import; import clearance; security clearance for transit and import; pre-shipment inspection; and any other official authorisations and approvals.
At first glance it might seem strange that both seller and buyer have responsibility for pre-shipment inspections. The seller must also package the goods, at its own cost, unless it is usual for the trade of the goods that they are sold unpackaged, such as in the case of bulk goods. In all rules there is no obligation from the buyer to the seller as regards packaging and marking. There can in practice however be agreed exceptions, such as when the buyer provides the seller with labels, logos, or similar.
The seller must pay all costs until the goods have been delivered under A2, meaning alongside the vessel for FAS and loaded on board the vessel for FOB, except any costs the buyer must pay as stated in B9. The seller has to pay any costs involved in providing the usual proof that the goods have been delivered, so if the contract between the parties states that proof as being a bill of lading then any document fee is for the seller.
The seller pays any costs, export duties and taxes, where applicable, related to export clearance.
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