International Trade An Essential Cog At Modern Day Business

I Introduction International trade has a timeline that dates back to the 19th century BC where the Assyrian merchant colony existed. Ever since, international trade has evolved more elaborate, more important, and has proved to become an essential cog to modern day business. It is for this reason that integral shipping agreements have been placed to mediate the responsibilities and liabilities between exporters and importers. There are different types of agreements that can be made that are preferred by the exporter/importer, but all with the purpose of reducing transactional confusion. This essay discusses the attractiveness of cost, insurance and freight (CIF) and free on board (FOB) contracts by comparing and contrasting their pros and†¦show more content†¦In the classic FOB framework, it is still the importer who nominates the shipping vessel, but then it is the exporter who remains a party to the contract of carriage until up until the moment s/he take out the bill of lading in the name of the importer. The additional services FOB framework, in essence is the reverse of the strict FOB framework. The exporter assumes responsibility for the nomination of vessel and contract of carriage and may take out the bill of lading in his/her name. The variations of FOB make it a more flexible option that some exporters may be inclined to choose. However there is more that needs to be discussed before one can come to conclusion. II Passing of Ownership and Risk for CIF and FOB Contracts Lord Wright stated that a CIF contract is â€Å"a type of contract which is more widely and more frequently in use than any other contract used for the purposes of sea-borne commerce. The exporter is obliged to obtain a bill of lading and insurance policy and send it to the importer along with an invoice for payment, where the buyer will pay upon receiving the documentation. In the case of Diamond Alkali v Bourgeois, McCardie affirmed that the only form of a correct transaction was if there was an on board bill of lading. His opinion stems from the Lickbarrow v Mason case where the on board bill of lading was aligned with the trade custom and so considered the bill of lading as a document of title at common law. However, if proved via