10.4 What should be mentioned in a quotation?

In your reply to an enquiry, you may want to give your prospective customer a quotation. Below is a guide to the subjects you should cover in your quotation: prices, transport and insurance costs, discounts, methods of payment, quoting delivery, fixed terms and negotiable terms.

10.5 Are the prices quoted always legally binding?

A firm's quotation is not necessarily legally binding, i.e. they do not always have to sell you the goods at the price they quoted in their reply to an enquiry. However, when prices tend to fluctuate, the supplier will add a provision to their quotation stating that their prices are subject to change. If the company makes a firm offer, it means they will hold the goods for a certain time until you order, e.g. firm 14 days. Again, this is not legally binding, but suppliers generally keep to their offer to protect their reputation.

10.6 What types of discounts do you know?

Manufacturers and wholesalers sometimes allow discounts to be deducted from the net or gross price. They may allow a trade discount to sellers in similar trades; or a quantity discount over a certain amount; or a cash discount if payment is made within a certain time, e.g. seven days, or a loyalty discount when firms have a long association.

10.7 What main Incoterms do you know?

The International Chamber of Commerce uses a set of terms for delivery in overseas contracts - these are called Incoterms. Their use is optional, but deals are much clearer if contracts are subject to Incoterms 1990.

GROUP C - Main carriage paid

CFR (Cost and Freight) named port of destination e.g. the port the goods are going to.

Delivery has occurred when the goods are on the ship at the port of shipment. The seller pays all the costs to this point and freight charges to the named port of destination. S/he provides the buyer with all the transport documentation showing freight paid to that point. The goods and transit risks become the buyer's when the goods have gone over the ship's rail at the port of shipment.

CIF (Cost, Insurance & Freight) named port of destination

Delivery occurs as in CFR (above) and the risks are the same, but the exporter pays cargo insurance.

CFR and GIF can only be used for sea and inland waterways.

CPT (Carriage Paid To) named place of destination

Delivery happens when goods are given to the carrier (if more than one, the first carrier, or a freight forwarder). The seller pays the costs of delivery to the named place and the buyer's risks start from there.

CIP (Carriage and Insurance Paid) named place of destination

Delivery occurs as in CPT with the buyer's risks being the same. The only change is the exporter pays the cost of cargo insurance.

GROUP D-Arrival

DAF (Delivered at Frontier) named place

Delivery happens when the buyer gets the goods at a named place on the frontier, cleared for export, but not cleared for import. The buyer assumes all risks from here. The exporter pays all the costs to this point, but does not pay for unloading or import clearing charges.

DES (Delivered Ex Ship) named port of destination

Delivery happens when buyer gets goods at named port. He then assumes all risks, but the exporter pays all costs to that point, but not unloading or import clearance.

DEQ (Delivered Ex Quay - Duty Paid) named port of destination

Delivery happens when the buyers gets the goods on his/her quay (dock) and assumes all risks from that point. The seller pays all charges to that point including import and customs clearance costs.

DES and DEQ can only be used for sea and inland waterways.

DDU (Delivered Duty Unpaid) named place of destination

Delivery takes place when the buyer gets the goods at the named place in the importing country and takes all the risks thereafter. The seller pays all costs to this point, but not duties and taxes.

DDP (Delivered Duty Paid) named place of destination

Delivery happens as in DDU, with the buyer taking the same risks. The seller pays all costs to this point including taxes and duties.

GROUP E - Departure

Ex-Works (EXW) e.g. from the factory or warehouse

Seller packs and prepares goods for dispatch with delivery taking place at his/her factory or warehouse. The buyer now takes all transit risks.

GROUP F - Main carriage unpaid

FCA (Free Carrier) named place e.g. where the carrier - the plane or ship etc., pick up the goods

Delivery occurs when the seller gives the goods to the carrier (airline, shipping company, or freight forwarder) who is named by the buyer. The seller will pay all the costs up to this point, including export formalities and licences. From this point the buyer takes the risks for the goods and transit. This term is used for any type or combination of types of transport.

FAS (Free Alongside Ship) with port of shipment named e.g. where the goods are leaving from

Delivery occurs alongside the ship named by the buyer at the named port of shipment. The buyer has the expense of loading. The seller pays costs up to and including delivery alongside the ship, including all documentation. The goods and transit risks are the buyer's when the goods are delivered within the period stated in the contract of sale. This term is only used for sea and inland waterways e.g. canals.

FOB (Free on Board) named port of shipment e.g. where the goods are leaving from.

Delivery takes place when goods are on board the named ship at the buyer's named port. The seller pays all costs of loading. The buyer's risks for the goods and transit begin once the goods have been put over the ship's rail.

The term is only used for sea and inland waterways.