Chapter 9: Performance of Import and Export Contract

Abstract: this chapter mainly talks about the main steps in the general process in performance of the contract and its related issues that should be pay close attention to.

Section 1: Performance of Export Contract

Section 2: Performance of Import Contract

Section 3: Main documents of import&export

Section 1: Performance of Export Contract

Exporter will experience many steps in performance of the export contract under CIF terms, payment by L/C. They are as follows:

1. Preparation of the goods, applying for inspection

2. Urging the establishment of L/C, examination of L/C, asking amendment to the L/C

(1) Urging establishment of L/C

(2) Examination of L/C

Both the bank and export firm have the responsibility to examine the L/C. The bank mainly examines the contents, such as authenticity, background of issuing bank, credit ability, payment ability,etc. The export firm mainly examines the consistence of the L/C and contract

(3) Asking amendment to the L/C

Both applicant and beneficiary can ask for amendment to an L/C. If the beneficiary asks for amendment, the usual procedure is that the buyer should first obtain consent form the beneficiary and then instruct the opening bank to amend the L/C.

Beneficiary----applicant----issuing bank----advising bank----beneficiary

3．Shipment, Making Declaration to the Customs, Taking out Insurance

(1) Steps of shipment

1, checking the date of shipment, fills in the booking note of the export goods (B/N)

2. Shipping company or shipping agency issues the shipping order

3. After shipment, the master or mate issues the mate’s receipt

4. Shipper exchanges the mate’s receipt for the bill of lading from the Ocean Shipping Agency.

(2) Declaration to the Customs

There are three kinds of companies making declaration to the customs: the specialized enterprise for customs clearance, the agent, the enterprise dealing with it on its own?

(3) Taking out Insurance

“four lining ” examining the four condition “documents with goods, documents without goods, no documents, no goods, no goods, no documents”

“Three balance” means to achieve an effective coordinationamong goods, documents and shipments.

4. Making out documents for settlement under L/C

(1) Three means to make settlement under L/C

1.Make Settlement after the Payment Is Made

2. Make Time Settlement

3. Make Settlement through Negotiation

(2) Several methods to deal with discrepancies

1. Discrepancies addressedby documents

2. Discrepancies addressed by telegraph

3．Documentary collection

Section 2: Performance of Import Contract

The main steps in the general process in performance of the import contract are (under FOB terms, payment by L/C) as follows:

  1. Open L/C
  2. Conclusion of the transport contract
  3. Cover insurance
  4. Examination of documents and payment for the purchanse price
  5. Customs entry
  6. Taking delivery and allocation

Section 3: Main documents of import&export

1. Main operating documents of import&export

(1) Inspection certificate

(2) Customs declaration

(3) Insurance policy

(4) Shipping order

(5) Mate’s receipt

(6) The checking form of collecting foreign currency

(7) Tax-refund form of export goods

2. Main documents of import&export for settlement

(1) Bill of exchange (B/E)

(2) Invoice

1. Commercial Invoice

Note: The column of “To__” in a commercial invoice refers to “consignee”.

Case analysis:

2. Customs Invoice

The customs invoice is one of the documents required by the customs which has a unified form.

3. Consular Invoice

4. Manufacturer，s Invoice

5. Proforma Invoice

The proforma invoice is an invoice sent for form’s sake. It serves as a price reference and enables the buyer to make the necessary preliminary arrangements, such as obtaining an import licence.

(3) Bill of Lading

(4) Insurance Policy

(5) Certificate of Origin

(6) Genernalized System of Preferences Documents

(7) Packing List, Measurement List and Weight Memo

(8) Inspection Certificate

3. Basic principles of making and examming documents.

Accuracy, complete, prompt, concise, neat

The order of issuing documents is as follows: Commercial Invoice, Packing List; Certificate of Origin;Inspection Certificate; Insurance Policy; Bill of lading; Draft

Summary: This chapter mainly talks about the main steps in the general process in performance of the contract and its related issues that should be pay close attention to.

Key point: Import&export documents

Difficult point: document for settlement under the L/C

Questions:

  1. Whatkind of work do both parties need to do to fullfill the import&export contract?
  2. What are the precautions of amending L/C?
  3. What kind of the methods do we have to deal with the discrepancy?
  4. What’re the methods of making document for settlement?