DEFINITIONS
OF EXPORT
QUOTATIONS
(Con.)

5. It may be that the goods, on which a price is quoted covering the transportation of the goods to the seaboard, constitute less than a carload lot. In this case, the proper term is:

"F. O. B. Cars (named port) L. C. L."

Under this quotation:

A. Seller must

(1) deliver goods to the initial carrier
(2) secure railroad bill of lading
(3) pay all freight charges from for-

warding point to port on seaboard
(4) be responsible for loss and/or
damage until goods have arrived
on cars at the named port

B. Buyer must

(1) be responsible for loss and/or
damage incurred thereafter
(2) handle all subsequent movement
of the goods

(3) accept goods from the carrier
(4) transport goods to vessel

(5) pay all storage charges

(6) arrange for storage in warehouse or on wharf where necessary

6. Seller may quote a price which will include the expense of transportation of the goods by rail to the seaboard, including lighterage. In this case, the proper term is:

"F. O. B. Cars (named port) LIGHTERAGE FREE"

Under this quotation:

A. Seller must

(1) place goods on or in cars
(2) secure railroad bill of lading
(3) pay all transportation charges to,
including lighterage at, the port
named

(4) be responsible for loss and/or
damage until goods have arrived
on cars at the named port

B. Buyer must

(1) be responsible for loss and/or
damage incurred thereafter
(2) handle all subsequent move-
ment of the goods

(3) take out the insurance necessary
to the safety of the goods after
arrival on the cars

(4) pay the cost of hoisting goods into vessel where weight of goods is too great for ship's tackle

(5) pay all demurrage and other charges, except lighterage charges

DEFINITIONS OF
EXPORT QUO-
TATIONS-Con.

FOREIGN TRADE DEFINITIONS

7. The seller may desire to quote a price covering delivery of the goods alongside overseas vessel and within reach of its loading tackle. In this case, the proper term is: "F. A. S. vessel (named port)"

8. The seller may desire to quote a price covering all expenses up to and including delivery of the goods upon the overseas vessel at a named port. In this case, the proper term is:

9. The seller may be ready to go farther than the delivery of his goods upon the overseas vessel and be willing to pay transportation to a foreign point of delivery. In this case, the proper term is:

DEFINITIONS
OF EXPORT
QUOTATIONS
(Con.)

GENERAL

RECOMMENDA

TIONS

FOREIGN TRADE DEFINITIONS

10. The seller may desire to quote a price covering the cost of the goods, the marine insurance on the goods, and all transportation charges to the foreign point of delivery. In this case, the proper term is:

"C. I. F. (named foreign port)”

Under this quotation:

A. Seller must

(1) make freight contract and pay
freight charges sufficient to carry
goods to agreed destination

(2) take out and pay for necessary
marine insurance

(3) deliver to buyer or his agent clean

bills of lading to the agreed destin-
ation, and insurance policy and/or
negotiable insurance certificate
(4) be responsible for loss and/or

damage until goods have been de-
livered alongside the ship, and
clean ocean bill of lading and in-
surance policy and/or negotiable
insurance certificate have been de-
livered to the buyer, or his agent.
(Seller is not responsible for the
delivery of goods at destination
nor for payment by the under-
writers of insurance claims)

(5) provide war risk insurance, where
necessary, for buyer's account.

B. Buyer must

(1) be responsible for loss and/or
damage thereafter, and must
make all claims to which he may
be entitled under the insurance
directly on the underwriters
(2) take delivery and pay costs of
discharge, lighterage and landing
at foreign port of destination in
accordance with bill of lading
clauses

(3) pay foreign customs duties and
wharfage charges, if any

In reaching the conclusions set forth in this statement the Conference considered the fact that there are, in more or less common use by manufacturers in different parts of the United States, numerous variations of these abbreviations, practically all of which are employed to convey meanings substantially synonymous with those here defined. For instance, there are manufacturers who quote “F. O. B. Cars," "F. O. B. Works," "F. O. B. Mill" or "F. O. B. Factory" meaning that the seller and buyer have the same responsibilities as those set forth in section 1. The Conference considered all those variations and determined to recommend the use of "F. O. B. (named point)," as "F. O. B. Detroit," "F. O. B. Pittsburgh," etc. Of the considerable number of these abbreviations which are used in the United States, the Conference felt that the form "F. O. B. (named point)" is most widely used and understood, and therefore should be adopted as the standard of practice.

The chief purpose of the Conference is to simplify and standardize American practice, and to that end it urges manufacturers and exporters to cease the use of synonymous abbreviations and quote habitually in the terms here recommended, just as far as these terms will cover the price conditions which it is desired to arrange with the buyer.

Variations of the abbreviations recommended in other sections also are in more or less common use throughout the United States. The recommendations of the Conference set forth above apply to them with the same force as to those cited under section 1.

FOREIGN TRADE DEFINITIONS

TIONS

(Con.)

Manufacturers and exporters are urged to bear in mind that the confusion and controversies which have arisen have sprung in part from the use of an excessive number of abbreviated forms with substantially similar meanings, as well as from the use of abbreviations in a sense different from their original meanings, or in an application not originally given them and different from the sense or application understood by foreign buyers.

In simplified and standardized practice lies the best hope of reducing confusion and avoiding controversy.

The Conference urges upon manufacturers and exporters the very great importance at all times of making their intention in whatever quotations they employ so thoroughly clear as to be impossible of misunderstanding or misinterpretation. It is much better to take the time and space at the outset to make the quotation clearly understood, than to be compelled in the end to go through vexatious controversy or litigation, which costs not only time and expense but customers as well. Misunderstandings can best be avoided if the seller will formulate a written statement of the general conditions under which his sales are to be made, and will see that the foreign buyer possesses these terms of sale when considering a quotation. The items which may be included in such a statement, deal with: delivery, delays, partial shipments, shipping instructions, inspection, claims, damage and payment. If all contingencies are thus covered by carefully considered conditions of sale, disputes will largely be prevented.

The quotation "F. O. B. (named port)," as "F. O. B. New York," "F. O. B. New Orleans," "F. O. B. San Francisco," is often used by inland producers and distributors to mean merely delivery of the goods at railway terminal at the port RECOMMENDA-named. This abbreviation originated as an export quotation and had no application to inland shipments. It was used only to mean delivery of the goods upon an overseas vessel at the port named. That, in fact, is the meaning universally given to the phrase among foreigners, and is the meaning which the best practice among exporters requires it invariably to have. But because of the confusion which has arisen through the use of that form with a different meaning by inland producers and distributors, and in the interest of unmistakable clarity, the Conference most strongly urges the invariable use by American manufacturers and exporters of the form "F. O. B. Vessel (named port)." This adds only one word to the abbreviated form and has the great advantage that it cannot be misunderstood. It also avoids the difficulty which might arise among foreigners not always well versed in American geography, through confusing an inland forwarding point with a shipping port at seaboard.

The Conference calls attention to the fact that in selling "F. A. S. Vessel" manufacturers and exporters should be careful to have their agreements with buyers cover explicitly the question of responsibility for loss after goods have been delivered on the wharf or alongside the vessel and before they are actually loaded on the ship. There is no generally established practice on this point. The recommendation of the Conference in the definitions of responsibility under section 7 sets up a rule which it is hoped will lead to the establishment of a standard practice.

It is understood that the provision of lighterage covered in several of these recommendations is only within the usual free lighterage limits of the port, and that where lighterage outside such limits is required, it is for buyer's account.

In order to avoid confusion in another particular, attention is called to the care which must be exercised in all cases in making weight quotations. The net ton, the gross ton and the metric ton, all differ in weight. Similarly there is a variation in the use of the term "hundred weight" to mean either 100 pounds or 112 pounds.

GENERAL

RECOMMENDA

TIONS

(Con.)

FOREIGN TRADE DEFINITIONS

It is, therefore, not sufficient to quote a price per "ton" or per "hundred weight." Instead, the Conference recommends the use of the terms "ton of 2,000 lbs.," "ton of 2,240 lbs.," or "ton of 2,204 lbs.," etc., whichever is intended.

It is also important to note that a carload lot in the United States means the quantity of the particular commodity in question necessary to obtain the carload freight rate for transportation on American railways. This quantity varies according to the commodity and also varies in different parts of the country. Certain commodities being more bulky than others, the minimum carload for them is less than for heavier products occupying less space. The load required may range anywhere from 12,000 to 90,000 pounds. Consequently it is important, when quoting prices applicable to carload lots, to so state and to specify the minimum weight necessary to make a carload lot of the particular commodity for the particular shipment in question.

The Conference points out that in quoting "C. & F." or "C. I. F.," manufacturers and exporters moving large quantities of material by one vessel should be careful to ascertain in advance the buyer's capacity to take delivery. This because, under these terms and as a condition of making the freight rate, transportation companies may require a certain rate of discharge per day, and that rate of discharge might be in excess of the buyer's capacity to take delivery. In such event an adjustment with the transportation company would be necessary, which might affect the freight rate and consequently the price to be quoted.

The Conference also strongly urges shippers clearly to understand the provisions of their insurance protection on all foreign sales, irrespective of the general terms used thereon. In almost all cases it should be possible, when making shipments by steamer, to obtain insurance giving full protection from primary shipping point to designated sea port delivery and/or foreign port delivery. As ordinary marine insurance under F. P. A. conditions, i. e., free of particular average, gives no protection against deterioration and/or damage to the merchandise itself while in transit, when caused by the recognized hazards attending such risks, shippers should endeavor in all cases to obtain insurance under W. P. A. (S. P. A.) conditions, i. e., with particular average (subject to particular average), when in excess of the customary franchise of 3% to 5%. Under such form of insurance underwriters will be called upon to pay claims for damages when these exceed the stipulated franchise.

The Conference points out that, inasmuch as fees for consular invoices and similar items are arbitrary charges fixed by foreign governments, they are not included in the terms of C. & F. or C. I. F. quotations, and it is part of the duty of the buyer to meet them.

Finally, the Conference strongly recommends, as a most effective measure of simplication, the general practice of quoting for export, as far as possible, either "F. A. S. Vessel," "F. O. B. Vessel" or "C. I. F." Concentration on this small list, all of which terms are readily understood abroad, and are difficult of misinterpretation will, it is felt, be markedly influential in avoiding confusion and controversy.

The conclusions and definitions set forth above are the recommendations of a Conference which was composed of representatives of nine of the great commercial organizations of the United States interested in foreign trade. Not all have as yet the force of law or long-established practice; but it is the hope and expectation of the Conference that these recommendations will receive such adherence on the part of American producers and distributors as to make them in fact the standard American practice. And it is, therefore, expected that in due time they will receive the sanction of legal authority.