The commercial invoice; the pro forma invoice - Assignment Example

Question 2 The amount of risk that a business will bear will depend on whether the business is the importer or the exporter, as well as the particular incoterms that are involved on a particular transaction. For instance, if the business is an importer, the business will incur the least risk if the incoterm being used is CIF, because this will have the least risk (William, 2009). This is because the seller (exporter) will have to take care of the goods on their way not only to the destination port but all the way to the inland destination of the buyer.

This includes buying the insurance for the goods as they are on transit. As a result, this means two important things to the buyer, who is the importer. First, is that there is no risk of the goods on transit that the importer will have to bear incase the risk materializes. Second is that even if the risk was to materialize, the importer would be protected because the insurance will pay off the losses. The importance of Cost, Insurance and Freight (named port of destination) is that incase the goods are lost or damaged and the seller was not in a position to compensate the buyer, the buyer doesn’t have to incur the loss because the insurance will pay for the goods. . The fact that the process by which the US government uses to create money and value for the same money is faulty and needs to be changed is not debatable.

However, as Maxwell (2009) says, it can only be hoped that the new technology that is eliminating the issuance of printed money will solve part of this problem. However, this is a problem that will need to be solved and a better mechanism be put in place to avoid the problem that fiat currency is causing. This as McGregory (2009) says, is going to be one of the main things that will have to be solved in the twenty-first millennium for the world economy to succeed. Question 4 Part i FOB – Free on Board to a named port of shipment This incoterm makes sure that the risk of the goods is shared between the two sides of the deal.

The buyer assumes the risk after the goods have been loaded for shipping, while the seller assumes the risk of the goods only until the goods have been loaded for shipping. Part ii CIF – Cost, Insurance and Freight to a named port of destination This incoterm puts all obligation, both transport and insurance of the goods in transit to the seller and makes sure that the buyer is fully protected from any risk or obligation. Part iii CIF – Cost, Insurance and Freight to a named port of destination Same as above, the exporter assumes all risks and costs for shipping the goods.

Part IV EXW – Ex Works to a named place of delivery. This incoterm minimizes the obligation of the exporter so that the exporter only has insurance and freight costs only up to the point where the goods are loaded at the port of export. The buyer has to know how to get the goods from the seller’s premises and decide on whether they want to