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Question
Explain the following terms used in external trade:
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Solution
Dear Student
(i) Free on Board (FOB): Under the FoB contract, the exporter is liable and bears the risk until the delivery of goods on the ship. After this, the importer has to bear all the costs and risk of loss or damage.
(ii) Cost and Freight (CFR): Under CFR contract, the exporters are expected to pay the cost and freight to bring the goods to the port of destination in the importer's country. After this, the importer bears the risk of loss or damage to goods.
(iii) Cost, Insurance and Freight (CIF): Under CIF contract, the exporter has to bear the cost and freight till the importer's port. Along with these expenses, the exporter has to take a marine insurance policy also. After the destination port, the importer bears the risk of loss or damage to goods.
Regards
(i) Free on Board (FOB): Under the FoB contract, the exporter is liable and bears the risk until the delivery of goods on the ship. After this, the importer has to bear all the costs and risk of loss or damage.
(ii) Cost and Freight (CFR): Under CFR contract, the exporters are expected to pay the cost and freight to bring the goods to the port of destination in the importer's country. After this, the importer bears the risk of loss or damage to goods.
(iii) Cost, Insurance and Freight (CIF): Under CIF contract, the exporter has to bear the cost and freight till the importer's port. Along with these expenses, the exporter has to take a marine insurance policy also. After the destination port, the importer bears the risk of loss or damage to goods.
Regards
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