Reference no: EM132899985

You are a freight forwarder who has received a call from a Canadian export customer. This customer is negotiating a sales contract for a bulk shipment of beans to a large buyer (food wholesaler) located in France. This would be their first order with this company. The buyer is prepared to accept their best CFR price to the port of Le Havre, France of $60,000. 00 CAD. The buyer has requested that the seller issue a draft for the full invoice amount upon shipment with terms 30 days sight. The buyer also requests that the shipment documents (3/3 set bill of lading, certificate of origin, invoice and packing list) he sent directly to his office within 5 business days from the on board date. Your customer (the seller) is unsure whether to agree to all of these terms and seeks your advice.

Question 1 Is this incoterm proper/appropriate for this type of transaction/shipment?

Question 2 Which specific method of payment is the buyer requesting and how is this known?

Question 3 Would you recommend that your customer (the seller) accepts the method of payment that the buyer is offering? Support your response and if appropriate suggest alternatives.

Question 4 If this shipment was damaged as it was being unloaded from the ship at the port of Le Havre, which party (buyer or seller) would have risk?

Question 5 Which party (buyer or seller) would be required to insure this shipment for main carriage?

Question 6 Based upon incoterms 2020 list 5 responsibilities that the seller will have if they agree to this incoterm.

Question 7 If the product was damaged by salt water while shipping to France which party (buyer or seller) would have risk?

Question 8 Would you recommend that your customer proceed with this transaction using the incoterm that the buyer is requesting? Support your opinion or suggest alternatives to your customer. Be specific.

Question 10 In the selling price the seller must include unloading at the destination port.

Question 11 If the seller sold this shipment CIF instead of CFR what was the minimum insurable value ( amount) required for this shipment as per Incoterms 2010? Show your calculation and discuss what are the changes to the Incoterms 2020 rules regarding insurance.

Question 12 List the the 2 main responsibilities for the Buyer under CFR incoterm.