From: Richard McQuaid
Subject : Gemminnello agreement
Date: April 24, 2008
To: Michael Gillespie <email@example.com>
After we spoke, I realized that I should have been more specific about the duties that “CFR” imposes on the Seller. The cost and freight trade term requires the Seller to:
- “clear” the goods for export – that is, to bear the costs and risks of getting export clearance. For example, if Italy has enacted any new port taxes, Andrea Corredi would be responsible for them;
- provide a transport document, such as a bill of lading, which the Seller gives to the carrier, as a receipt for the goods being shipped;
- supply and pay for any packaging that is necessary for shipment of the goods;
- give notice that the goods have been delivered for shipment.
Thanks for the info, Rich.
Since we spoke, new information has come in. According to Adam’s latest e-mail, he just received Andrea Corredi’s standard form. It includes this clause about shipping terms:
- DELIVERY. The Seller agrees to deliver the Goods FOB at the port of shipment, Naples, and with respect to the use of trade terms, this Sales Agreement shall be governed by INCOTERMS (2000) (ICC Publication No. 560) as issued by the International Chamber of Commerce, or by those INCOTERMS in effect at the time the Goods are shipped.
Can you give me a little information about deliverable “FOB”?
We can’t agree to these terms. FOB stands for Free on Board. Deliverable FOB means that the Seller only has to pay to deliver and load the goods onto the carrier. By saying that the linens will be deliverable FOB Naples, Andrea Corredi is saying that they only have to pay to have the linens loaded at the port of shipment, Naples, and Adam would bear the costs of shipping the goods from Naples to New York. FOB is off the table.
Got it. Thanks again, Rich. I’m off to do a little more research.