Terms of sales in international trade

Business studies study module

Here the cost trading which includes the cost of the product, cost of transporting, loading, shipping, insurance, warehousing and unloading may be expensive. This makes some of the cost to be borne the exporter, as some being borne the importer. The price of the goods quoted therefore at the exporters premises should clearly explain the part of the cost that he/she is going to bear and the ones that the importer will bear before receiving his/her goods. This is what is referred to as the terms of sale

Terms of sales therefore refers to the price quotation that state the expenses that are paid for the exporter and those paid for the importer.

Some of the common terms include;

  • Loco price/ex-warehouse/ex-works. This states that the price of the goods quoted are as they are at the manufacturers premises. The rest of the expenses of moving the good up to the importers premises will be met the importer
  • O.R (Free on Rail). This states that the price quoted includes the expenses of transporting the goods from the seller’s premises to the nearest railway station. Other railways charges are met the importer
  • D (Delivered Docks)/Free Docks. This states that the price quoted covers the expenses for moving the goods from the exporter’s premises to the dock. The importer meets all the expenses including the dock charges
  • A.S (Free Along Ship). States that the price quoted includes the expenses from the exporter’s premises to the dock, including the loading expenses. Any other expenses are met the importer
  • O.B (Free on Board). States that the price quoted includes the cost of moving the goods up to the ship, including loading expenses. The buyer meets the rest of the expenses
  • C&F (cost & freight). The price quoted includes the F.O.B as well as the shipping expenses. The importer meets the insurance charges
  • I.F (Cost Insurance & freight). The price includes the C&F, including the insurance expenses
  • The price includes all the expenses up to the port of destination as well as unloading charges
  • In Bond. The price quoted includes the expenses incurred until the goods reaches the bonded warehouse
  • Franco (Free of Expenses). The price quoted includes all the expenses up to the importer’s premises. The importer does not incur any other expenses other than the quoted price
  • N.O (Or Nearest Offer). This implies that the exporter is willing to accept the quoted price or any other nearest to the quoted one



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