Chapter 14 - Export and Import Practices
Answers to Questions
1. In exporting, to what point does the seller pay transportation and delivery costs?
Where does the responsibility for loss or damage pass to the buyer? Use Incoterms in
2. Explain the various export payment terms that are available and the protection they
offer the seller.
Cash in Advance offers most protection to the seller because the seller receives payment
before the good ship. Open Account, Consignment (payment made when good sold),
3. What is the procedure for a letter-of-credit transaction?
4. The manager of the international department of the Cape Cod Five Bank learns on the
way to work that the ship on which a local exporter shipped some goods to Spain,
Wellfleet oysters in salt water tanks, has sunk in high seas. She has received all the
documents required in the letter of credit and is ready to pay the exporter for the
shipment. In view of the news about the ship, the manager now knows that the
Spanish customer will never receive the goods. Should the manager pay the exporter,
or should she withhold payment and notify the overseas customer?