Finalization of terms and conditions is the most important part in importing and must be handled properly.
• As stated earlier, we must check the authenticity and credit-worthiness of the supplier.
• It is advisable to obtain the samples, catalogs and other literature and specifications of the items to be imported.
• Only after confirming the authenticity and samples of the final product, we should go ahead with finalizing the terms of the contract.
• The importer should be fully conversant with the mode of pricing and the manner of payment for the imports. For mode of pricing, the overseas suppliers generally quote the terms prevailing in the international trade. To avoid confusion, the importer should know the meaning of the technical terminology popularly known as ‘INCO TERMS’ (e.g. Ex-Work, Free On Board (FOB), Cost & Freight (C & F), Cost, Insurance, Freight (CIF) etc.) which mean inclusion or exclusion of various charges on the way.
• All the terms and conditions of the deal must be carefully and comprehensively covered in an Import Contract.
• The final terms must clarify the following:
o The exact standards and specifications of the goods
o Quantity
o Import price
o Total value of the contract
o Terms of payment: Amount, mode of payment and currency
o Terms of usage, licenses and permits
o Documentary requirements
o Type of packaging, labeling and marking
o Guarantee, warranties
o Port of shipment
o Delivery terms and schedule
o Taxes, duties and charges payable at exporting country and payable in the importing country
o Force Majeure or Excuse for Non-performance of Contract
o Insurance, Remedies, Arbitration
• Payment against imports is generally executed through a Letter of Credit (LC). A Letter of Credit is an undertaking by the importer’s bank to pay the seller a certain sum of money when the seller presents documents proving the shipment of specified goods to the importer. The bank confirms the compliance with the stipulated terms and conditions before making the payment. There is generally an elaborate document checking process to confirm the same. Hence, we must ensure that the entire documentation of import is correct and accurate in all manners.
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