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iwan orders plastic from China plastic company, both parties agree that incoterm Cost and Freight (CFR) will be used, therefore the plastic company load all the goods into a vessel selected by the Tupperware Company and ship leave China. During the journey to Taiwan the ship crushed causing part of the cargos drops into the sea so the Tupperware company sue the plastic company for the damages they suffer, so who will win the lawsuit ? The answer will be the plastic company because they had signed on an agreement of incoterm Cost and Freight (CFR) that the risk will transfer to the Tupperware company because once the goods are loaded on the ship all the risk belong to the Tupperware company. SNY building company from Singapore orders 2 tonnes of cement powder from ASD company from Indonesia, the cement are then sent from Indonesia via seaway transport. Both parties agree that incoterm Free Alongside Ship (FAS) is used. As soon as the day of shipment arrives, it is soon find out that the cement powder are not at the agreed port therefore the delivery of the cement powder to Singapore has been delayed resulting in an extra fees such problem who need to take the responsibilities to pay for the delay the answer is the import even through it’s the shipper’s fault on the delay because under the Free Alongside Ship (FAS) contract it stated that all the cost and damage will be issued to the buyer when all the goods reach the loading port of shipment (Coyle, Bardie & Langley, n.d.).

Firstly, the objective of terms of payment is that both parties is to optimize the outcome and profitability of the transaction within the framework of an established and acceptable risk level. It depends on things like the connection between exporter and importer distance, location and amount so what method that could fit (Export, n.d.). Example 1, A new company ABC order large amount of metal from QWERTY company a well-known company therefore what is the acceptable practice for payments terms for the company to make the shipment? Since the customer is new and the product are expensive therefor cash in advance will be the most suitable method to use in case the new customer and since the product are expensive the risk are high too, because cash in advance is risk free for QWERTY company, letter of credit will also be good if the importer ABC company is a well-known company shows that they have large capital that will be signal that the company is creditworthiness could guarantees payment through the sales agreement of letter of credit. Example 2, Apple Company from USA a well-known company order 2 cargo of microchip from ASD company a well-known company from China therefore what is the standard practice for payments terms for the company to make the shipment? Since Apple Company is a very well-known company proof open account certainly will be the best choice to make if they want to build a long term relationship between each other.

There’s always risk when shipping of goods outside of the domestic market and domestic market, cargo insurance commonly known as marine insurance, applies to all methods of shipping (David, 2013). The need for export or import insurance often varies from exporter to export or importer to import, unless the insurance is binding in trade term, the exporter or the importer may opt out to insure the goods on their own risk (David, 2013). Depending on the Incoterms, either the seller or buyer is responsible fo