Korea International Trade Specialist Grade 1 flashcards

33 cards. Read the term and the definition here. The deck at the top of this page is optional.

FCA on-board bill of lading option

Under Incoterms 2020, the buyer may instruct the carrier to issue an on-board bill of lading to the seller after loading, letting the seller satisfy letter-of-credit on-board requirements while keeping FCA risk transfer at delivery to the carrier.

DPU unloading obligation

Delivered at Place Unloaded is the only Incoterms 2020 rule in which the seller must unload the goods at the named destination. Under DAP the buyer unloads.

CIF minimum insurance cover

CIF requires the seller to obtain Institute Cargo Clauses (C) cover at 110 percent of contract value in the contract currency, unless the contract specifies broader cover.

CIP insurance under Incoterms 2020

CIP now requires Institute Cargo Clauses (A) all-risks cover at 110 percent of contract value, a change from Incoterms 2010, which required only Clause (C) cover.

Clean on-board bill of lading

A transport document showing goods loaded on board a named vessel with no clause declaring defective packaging or condition. Banks reject clauses noting damage or insufficient packing.

EXW export clearance

Under Ex Works the buyer handles both export and import formalities. This makes EXW unsuitable when the seller can obtain export refunds or the buyer cannot clear export locally.

Firm offer essentials

A firm offer states goods, quantity, price, shipment, and a validity period, and becomes binding when accepted within that period. A price list is only an invitation to treat.

Counter-offer effect

A counter-offer rejects and extinguishes the original offer, so the original offeror can no longer accept it. The counter-offer itself becomes a new offer open for acceptance.

Claim letter structure

An effective claim letter states the contract and shipment reference, describes the defect factually, attaches evidence, requests a specific remedy, and sets a reply deadline.

Subject to final confirmation

A quotation clause making the price non-binding until the seller confirms. It converts what looks like an offer into an invitation to treat and protects the seller from market movement.

L/C amendment request wording

A precise request identifying the credit number and the exact field to change, for example extending expiry to a stated date or permitting partial shipment, reduces processing delay and refusal risk.

Trade abbreviation FCR

Forwarder's Cargo Receipt: a document issued by a freight forwarder confirming receipt of goods for shipment. It is not a document of title and is not a bill of lading.

Adjustment letter purpose

A seller's reply to a claim that concedes verified facts, states the remedy offered such as replacement or credit note, and avoids open-ended admissions of liability.

CISG Article 1 scope

The Convention applies to sales of goods between parties in different Contracting States, or when private international law rules lead to a Contracting State's law, subject to reservations.

CISG Article 2 exclusions

The Convention excludes consumer sales, auctions, execution sales, securities, stocks, ships, aircraft, hovercraft, and electricity from its scope of application.

CISG fundamental breach test

Article 25: a breach is fundamental when it substantially deprives the other party of what it expected, unless the breaching party did not foresee and a reasonable person would not have foreseen the result.

CISG notice of non-conformity

Article 39 requires the buyer to notify the seller of non-conformity within a reasonable time after discovery, with a two-year outside limit from delivery unless a longer warranty applies.

CISG Article 74 damages

Damages equal the loss suffered, including lost profit, but are capped at the loss the breaching party foresaw or ought to have foreseen at contract conclusion.

UCP 600 five banking days

Article 14(c) gives the issuing or nominated bank five banking days after presentation to examine documents and decide compliance, not a fixed calendar-day period.

UCP 600 independence principle

Article 4: a credit is separate from the underlying sale. Banks deal with documents only and are not bound by or responsible for the goods or the contract.

eUCP supplement

A supplement to UCP 600 permitting electronic records in presentation. It applies only when the credit expressly states it is subject to eUCP version 1.1.

Incoterms 2020 effective date

Incoterms 2020 took effect on 1 January 2020. Contracts should cite the version expressly, because earlier versions remain valid if incorporated by the parties.

Forward rate formula

F equals S times (1 plus the quote currency interest rate times days over 360) divided by (1 plus the base currency rate times days over 360).

Interest rate parity

The forward premium or discount on a currency equals the interest rate differential between the two currencies for the same maturity, preventing riskless covered arbitrage.

D/P versus D/A

Under documents against payment the bank releases documents only after payment. Under documents against acceptance it releases them against a time draft, leaving the exporter exposed to buyer default.

Confirmed letter of credit

A credit to which a second bank adds its independent payment undertaking. Exporters request confirmation when the issuing bank or its country carries elevated commercial or political risk.

Standby letter of credit

A guarantee-type instrument payable on presentation of documents evidencing default. It is governed by ISP98 or UCP 600 and is not a documentary credit for a sale of goods.

Bid bond percentage

A guarantee submitted with a tender, typically two to five percent of the contract value, compensating the buyer if the winning bidder fails to sign or furnish performance security.

Market entry mode ladder

Entry modes ordered by rising control and risk: indirect export, direct export, licensing, joint venture, wholly owned subsidiary. Choice depends on market size, regulation, and capability.

Price escalation in export

The rise from ex-factory price to landed retail price caused by freight, insurance, duties, distributor margins, and VAT. It can make an otherwise competitive product uncompetitive abroad.

Break-even export volume

Fixed export costs divided by unit contribution margin, where contribution margin equals export unit price minus variable unit cost. The result is the minimum volume covering export overhead.

Country risk components

Country risk includes political risk such as expropriation or war, transfer risk such as blocked currency conversion, and commercial risk of buyer default, each mitigated by different instruments.

Agent versus distributor

An agent solicits orders in the principal's name without taking title; a distributor buys and resells for its own account. Distributors absorb credit risk, agents leave it with the exporter.