International Business INB355 Study Guide - Final Guide: Incoterms, Consignor, Promissory Note

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Final Exam - Learning Outcomes – UPDATED VERSION
Part 1 – Terms of payment / Terms of sales
1. Analyze an export sale contract from the terms of payment/terms of sales point
of view and recognize at which point responsibility for the performance of a
particular function (cost/risk/title) passes from the seller to the buyer.
Traditional terms of payment: open account; documentary collection; letters of
credit and cash in advance (see pages number 2-9 to 2-21) Transfer of “title
Terms of Sale (terms of delivery; terms of shipment: INCOTERMS (see pages
number 3-18 to 3-46) Transfer of “cost and risk”
Sample: CFR Port of Buenos Aires / Collection @ sight
Risk: Cargo on board vessel named port of loading.
Cost: Cargo reached Port of Buenos Aires
Title: As soon as buyer pays invoice value at presenting bank.
2. Outline the sequence of events for each traditional payment method used in
international trade.
Letter of credit: see page number 6-35
Documentary collection: see page number 4-5
Open account and cash in advance; see class notes
3. Select the method of payment appropriate to different trading circumstances.
Class discussion (shipment value, product customization, etc) plus pages number:
2-6; 2-10; 2-11; 2-12; 2-22
4. Define constructive control and state which of the traditional trading methods
provide it.
Control exercised by the operation of law. A consignor, for
example, maintains a constructive ownership-control over an in-
transit shipment through the shipping documents (air waybill or bill of lading)
made out ”to the order of his or her name”, or by consigning the shipment to
a bank instead of to a buyer. (www.businessdictionary.com)
1
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