International Sales Contracts and Incoterms

Introduction and Context

International sales contracts convert a commercial intention—one party will supply goods and another will pay for them—into enforceable rights, duties, remedies, and risk allocations. Their importance is greater in cross-border transactions because the parties may operate under different legal systems, currencies, languages, regulatory regimes, transport networks, and commercial customs. A contract that merely states the product, price, and destination may leave fundamental questions unanswered: Who arranges export clearance? When does risk of loss transfer? Who bears unloading costs? What happens if goods fail inspection? Which law applies, and where will a dispute be resolved?

Incoterms® 2020, published by the International Chamber of Commerce (ICC), provides standardized trade terms for allocating selected costs, tasks, and risks between seller and buyer. Incoterms do not constitute a complete contract and do not determine every legal issue. They must therefore be integrated with carefully drafted provisions on specifications, payment, title, conformity, warranties, force majeure, governing law, and dispute resolution.

This chapter examines the architecture of an international sales agreement, the operation and limits of Incoterms 2020, and the relevance of the United Nations Convention on Contracts for the International Sale of Goods (CISG).

Learning Objectives

By the end of this chapter, the reader should be able to:

1. Structure an international sales contract covering product specifications, price, delivery, inspection, title, risk, warranties, force majeure, and disputes.
2. Explain the three-part logic of Incoterms: obligations, cost allocation, and risk transfer.
3. Select an appropriate Incoterm 2020 for a particular logistics model and identify unsuitable choices.
4. Distinguish delivery and risk transfer from transfer of ownership and payment.
5. Recognize major CISG principles and identify when the Convention applies or may be excluded.
6. Analyze contractual gaps and recommend commercially and legally robust drafting practices.

1. The Architecture of an International Sales Contract

A well-designed contract is both a legal instrument and an operational control document. It should enable procurement, logistics, finance, quality, customs, insurance, and legal teams to execute the same transaction without relying on assumptions.

1.1 Parties, authority, and transaction scope

The agreement should identify each party by legal name, registration details, address, and place of incorporation. It should identify authorized representatives and, where relevant, the relationship among manufacturer, seller, distributor, consignee, and end customer. The contract should also state whether affiliates, subcontractors, or nominated carriers may perform obligations.

A precise definition of “goods” is essential. It should identify product codes, quantities, packaging, country of origin, technical standards, and any included services. Attachments such as specifications, drawings, bills of materials, quality plans, and approved samples should be incorporated by an order-of-precedence clause. Without such a clause, inconsistent terms in a purchase order, quotation, technical annex, or standard conditions may create uncertainty.

1.2 Specifications and conformity

Specifications should be sufficiently objective to permit a reasonable inspector or court to determine conformity. Relevant elements may include:

• description, model, grade, dimensions, tolerances, and performance;
• applicable standards, certifications, labeling, and safety requirements;
• materials, country-of-origin rules, and sustainability requirements;
• packaging, palletization, marking, and shelf-life requirements; and
• required documents, including certificates of origin, test reports, manuals, and commercial invoices.

The contract should distinguish mandatory requirements from preferred characteristics. It should also specify whether conformity is assessed at manufacture, dispatch, delivery, or another stated point, and which version of a standard applies.

1.3 Quantity, price, currency, and payment

The price clause should state the currency, unit price, total price, tax treatment, and what the price includes. It should cross-reference the selected Incoterm and named place. A price described as “USD 500 per unit, DAP Buyer’s warehouse, Incoterms® 2020” has a different economic meaning from “USD 500 per unit, EXW Seller’s premises, Incoterms® 2020.”

Payment provisions should specify payment instruments, due dates, bank charges, documentary requirements, late-payment consequences, and rights of suspension. Common mechanisms include advance payment, open account, documentary collection, and documentary credit. If a letter of credit is used, the contract should address applicable rules, such as the current version of the Uniform Customs and Practice for Documentary Credits, and should ensure that the sales contract does not impose impossible documentary conditions.

Price-adjustment clauses may be appropriate for volatile freight, energy, commodity, or exchange-rate exposure. Such clauses should state the reference index, base date, adjustment formula, notice period, cap or floor, and the parties’ rights if the index becomes unavailable. The drafting objective is transparency, not an open-ended power to reprice.

1.4 Delivery and schedule

The delivery clause should identify the delivery term, named place, shipment window, partial-shipment rules, transshipment rules, notice requirements, and consequences of delay. The phrase “delivery in June” is weaker than “shipment from the port of Rotterdam between 1 and 15 June 2026, with at least five business days’ advance notice.”

The contract should distinguish a delivery date from an arrival date. Under some Incoterms, the seller delivers when goods are handed to a carrier or placed on board a vessel; the goods may arrive much later. If the buyer requires arrival by a fixed date, the agreement must say so expressly and allocate consequences for failure.

1.5 Inspection and acceptance

Inspection provisions should address who inspects, where and when inspection occurs, sampling methods, standards, costs, and the effect of silence or failure to inspect. A pre-shipment inspection may confirm quantity and apparent condition but does not necessarily waive latent-defect claims.

A sophisticated clause separates:

1. inspection for shipment release;
2. acceptance testing after delivery or installation; and
3. warranty claims for defects that could not reasonably be discovered earlier.

The agreement should establish a claims procedure: notice period, evidence, access to samples, independent testing, and available remedies. “Final and binding inspection” language should be used cautiously because it may unintentionally eliminate legitimate claims for concealed defects or fraud.

1.6 Title and risk

Title means ownership; risk concerns the economic consequences of loss or damage. They are conceptually distinct. Incoterms primarily regulate delivery and risk, not ownership. A contract may provide that risk transfers at shipment while title remains with the seller until payment, subject to the effectiveness of retention-of-title rules in the relevant jurisdictions.

The contract should state:

• the precise event transferring risk;
• whether risk transfer is affected by breach or nonconformity;
• when title transfers;
• whether title is conditional on payment;
• which party must insure the goods; and
• how loss, damage, or shortage is documented.

A conflict can arise if an Incoterm transfers risk at delivery but a title clause transfers ownership only upon final payment. This is not necessarily contradictory, but the parties should understand that the buyer may bear transit risk without yet owning the goods.

1.7 Warranties and remedies

A warranty should define duration, scope, exclusions, claim procedure, and remedies. It should address whether the seller warrants conformity to specification, merchantable quality where applicable, fitness for a disclosed purpose, regulatory compliance, non-infringement, and manufacturing quality.

Remedies may include repair, replacement, refund, price reduction, reimbursement of reasonable costs, or termination for material breach. The contract should distinguish ordinary warranty remedies from remedies for fraud, willful misconduct, confidentiality breaches, intellectual-property infringement, or personal injury, for which liability limitations may be inappropriate or unenforceable.

Limitations of liability require careful drafting. A clause may cap aggregate liability at a stated amount, exclude indirect loss, or exclude lost profits, but mandatory law may restrict such exclusions. The contract should also state whether consequential-loss exclusions apply to delay, recall, regulatory penalties, or third-party claims.

2. Incoterms® 2020: Concept and Operating Logic

An Incoterm is a three-letter rule used with a named place or port, for example, “FCA Seller’s warehouse, Incoterms® 2020.” Each rule allocates specified obligations between seller and buyer. Incoterms generally address:

• transport organization;
• export and import clearance;
• delivery and risk transfer;
• allocation of transport-related costs;
• packaging and checking; and
• limited insurance obligations.

They do not normally determine price, payment, transfer of ownership, product conformity, remedies, governing law, or dispute resolution.

A useful analytical model is to ask three separate questions:

1. Who performs the task? For example, who contracts for carriage?
2. Who pays the cost? The party performing a task may pass costs through the price, but the rule allocates contractual responsibility.
3. When does risk transfer? This is the critical point for loss or damage.

These answers often occur at different times. Under CPT, for example, the seller pays carriage to the named destination, but risk transfers when the goods are handed to the first carrier—not when they arrive at the destination.

2.1 The eleven Incoterms 2020 rules

The rules can be classified by mode of transport.

The named place is not a minor drafting detail. “FCA Terminal X” identifies a different delivery point from “FCA Seller’s premises.” The parties should specify the exact facility, address, and, where relevant, loading position.

2.2 Rules for any mode of transport

EXW (Ex Works) places the greatest operational burden on the buyer. The seller makes goods available, usually at its premises, without loading them onto the collecting vehicle or clearing them for export. EXW may be unsuitable for international transactions where the buyer cannot legally or practically perform export formalities in the seller’s country. FCA is often more appropriate.

FCA (Free Carrier) is flexible and generally preferred for containerized shipments. If delivery occurs at the seller’s premises, the seller loads the buyer’s collecting vehicle. If delivery occurs elsewhere, the seller delivers goods to the carrier or another person nominated by the buyer, ready for unloading. The 2020 rule includes an option for the parties to agree that the buyer instructs its carrier to issue an onboard bill of lading to the seller after loading.

CPT (Carriage Paid To) and CIP (Carriage and Insurance Paid To) are “C” rules. The seller pays carriage to the named destination, but delivery and risk occur earlier, when goods are handed to the carrier. CIP requires the seller to obtain insurance at the higher level specified by the rule, subject to the contract and policy terms. The buyer should verify whether the coverage suits the cargo, route, and loss exposures.

DAP (Delivered at Place) requires the seller to bring goods to the named destination and place them at the buyer’s disposal ready for unloading. The buyer generally handles unloading and import clearance. DPU (Delivered at Place Unloaded) requires the seller to unload at the destination. DPU is the only Incoterm that expressly requires seller-arranged unloading. DDP (Delivered Duty Paid) places maximum responsibility on the seller, including import clearance, duties, and taxes, but may be impractical where the seller cannot act as importer of record.

2.3 Rules for sea and inland waterway transport

FAS (Free Alongside Ship) is appropriate where the seller delivers goods alongside the vessel at the shipment port. FOB (Free on Board) requires the seller to deliver goods on board the vessel. FOB is traditionally used for bulk or general cargo, but it is often misapplied to container shipments. Where containers are handed to a terminal before vessel loading, FCA more accurately reflects the seller’s delivery point.

Under CFR (Cost and Freight) and CIF (Cost, Insurance and Freight), the seller delivers on board at the shipment port, while paying freight to the destination port. Risk nevertheless transfers at shipment. CIF includes seller-arranged insurance, but the default insurance level is limited compared with CIP. A buyer requiring broad coverage should negotiate additional insurance or use CIP where appropriate.

2.4 Incoterms and insurance

Only CIF and CIP impose a seller insurance obligation. The absence of an insurance obligation does not mean that goods are uninsured; it means the contract does not require that party to procure insurance under the Incoterm. The party bearing risk should normally arrange suitable cargo insurance, unless another contractual arrangement is made.

Insurance clauses should identify insured value, risks covered, exclusions, deductible, currency, claims process, insurer rating, and beneficiaries. The phrase “insurance included” is inadequate because it does not identify the level or scope of protection.

3. Selecting an Incoterm: A Decision Framework

Selection should begin with the physical and regulatory reality of the transaction rather than with a preference for a familiar abbreviation. The following questions are useful:

1. Is the shipment containerized, multimodal, bulk, or conventional sea cargo?
2. Which party has better access to carriers and freight rates?
3. Who can perform export and import formalities legally?
4. Where should risk transfer occur?
5. Does the buyer require seller-arranged insurance?
6. Who can unload safely at the destination?
7. Are duties, taxes, and importer-of-record responsibilities commercially acceptable?
8. Is the named place operationally precise?

A practical choice may be FCA for container exports, CIP where the seller should arrange carriage and broad insurance, DAP where the seller can deliver but the buyer handles import clearance, or DDP only where the seller can lawfully and reliably manage import obligations.

Incoterms should be written in the complete form: [rule] [precise named place] Incoterms® 2020. “CIF Europe” is defective because Europe is not a port or precise destination. “CIF Port of Hamburg, Container Terminal X, Incoterms® 2020” is materially clearer, although CIF remains a sea/inland-waterway rule and must fit the shipment.

4. CISG: Relevant Principles

The CISG is a uniform international sales law instrument. It may apply to contracts for the international sale of goods where the parties have places of business in different Contracting States, subject to the Convention’s scope and conflict-of-law rules. It may also apply through private international law in some circumstances. Parties may exclude the CISG or vary many of its provisions, but exclusion should be explicit rather than assumed.

The CISG generally does not govern consumer sales, services-dominant contracts, securities, ships, aircraft, electricity, or certain other excluded transactions. It also does not comprehensively regulate validity, ownership effects, or all issues concerning third-party rights. National law may therefore remain important.

4.1 Formation

The Convention treats a sufficiently definite offer as capable of acceptance and generally regards a contract as concluded when acceptance becomes effective. Questions concerning modified acceptances, counteroffers, revocation, and battle of forms require close analysis of the communications and the Convention’s rules.

4.2 Seller’s obligations

The seller must deliver the goods, hand over documents, and transfer property as required by the contract and the Convention. Goods should conform in quantity, quality, description, packaging, and fitness for ordinary or disclosed purposes, subject to the circumstances and contractual terms. The seller may be liable for nonconformity existing when risk passed, even if discovered later.

4.3 Buyer’s obligations

The buyer must pay the price and take delivery. The buyer should examine the goods within as short a period as practicable and notify the seller of the nature of a lack of conformity within a reasonable time after discovery or when it ought to have been discovered. Failure to provide timely notice can restrict remedies, subject to recognized exceptions.

4.4 Remedies and fundamental breach

For breach, the CISG provides a range of remedies, including damages, repair, replacement in appropriate circumstances, price reduction, and avoidance of the contract. Avoidance is generally associated with a fundamental breach—one that substantially deprives the aggrieved party of what it was entitled to expect—subject to the Convention’s requirements.

Damages reflect the loss, including loss of profit, suffered as a consequence of breach, subject to foreseeability and mitigation principles. A party must take reasonable measures to reduce loss; recoverable damages may be reduced if it fails to do so.

4.5 Exemption for impediments

The CISG contains an exemption for failure caused by an impediment beyond a party’s control that could not reasonably have been taken into account at contract formation or avoided or overcome. The party relying on the exemption must generally give notice of the impediment and its effect. This provision is not identical to every domestic concept of force majeure, so the contract should contain a tailored force-majeure clause where the parties require broader or more specific relief.

5. Force Majeure, Compliance, and Dispute Resolution

A force-majeure clause should define covered events, causation, notice, mitigation, documentation, suspension, payment obligations, allocation of additional costs, and termination after a prolonged event. Events may include natural disasters, war, terrorism, epidemics, government restrictions, port closures, cyber incidents, and labor disruption, but the drafting should address whether foreseeable congestion, price increases, or supplier failure qualify.

The clause should not automatically excuse every commercial difficulty. A rise in freight rates may be economically painful without making performance legally impossible or impracticable. Parties may separately adopt a hardship or renegotiation clause for severe economic disruption.

International transactions also require compliance controls concerning sanctions, export controls, customs valuation, anti-bribery, forced labor, product safety, data protection, and environmental regulation. Compliance obligations should identify responsible parties and permit suspension or termination where performance would violate mandatory law.

Dispute clauses should select:

• governing substantive law;
• court jurisdiction or arbitration;
• arbitral institution and rules, if applicable;
• seat and language of arbitration;
• number and appointment of arbitrators;
• service and interim-relief mechanisms; and
• escalation steps such as negotiation or mediation.

The governing law clause and dispute-resolution clause perform different functions. A clause selecting arbitration in Singapore does not, by itself, select Singapore substantive sales law. Similarly, selecting English law does not necessarily determine the location of the tribunal.

6. Worked Application: Selecting Terms for a Container Export

A German manufacturer sells industrial pumps to a Canadian distributor. The pumps are packed into containers at the manufacturer’s facility. The Canadian buyer wants the seller to arrange ocean freight and cargo insurance to Vancouver. The buyer will perform import clearance and pay Canadian duties and taxes.

A first proposal is FOB Hamburg. This is problematic because the goods are containerized and are normally delivered to a terminal before the carrier loads them on the vessel. FOB would also not require the seller to arrange insurance, contrary to the buyer’s requirement.

A better proposal is CIP Vancouver Container Terminal, Incoterms® 2020, provided the named destination and insurance requirements are accurately specified. Under CIP:

• the seller clears the goods for export;
• the seller contracts and pays for carriage to the named destination;
• the seller obtains the required insurance;
• risk transfers when the seller hands the goods to the first carrier; and
• the buyer handles import clearance, duties, and taxes.

The contract must explain that the seller’s payment of freight to Vancouver does not postpone risk transfer until arrival. If the buyer instead wants the seller to bear risk until the pumps reach Vancouver, the parties should consider DAP, subject to the seller’s ability to arrange delivery and the buyer’s responsibility for unloading and import clearance.

7. Illustrative Case Study: The Damaged Components

This is a fictional illustrative case.

Background

Orion Components, a South Korean producer, sells electronic control units to MetroRail, a Brazilian equipment integrator. The purchase order states “CIF Santos, Incoterms® 2020.” The contract contains no separate title clause, no inspection timetable, and only a general reference to “standard warranty.”

Problem

A container is damaged by seawater during the voyage. MetroRail refuses to pay, arguing that the goods arrived damaged. Orion argues that risk passed when the goods were loaded at the Korean port and that it fulfilled its insurance obligation.

Analysis

Under CIF, delivery and risk transfer occur when the goods are on board the vessel at the shipment port. Orion’s obligation to pay freight and procure insurance to Santos does not move the risk-transfer point to Brazil. However, the parties must still examine whether the damage resulted from pre-shipment nonconformity, inadequate packaging, or a transport event after risk passed. The insurance policy, bill of lading, survey report, and loading records are central evidence.

The absence of a title clause creates a separate question. Ownership may be governed by applicable national law and payment arrangements; CIF alone does not resolve it. The lack of an inspection and claims procedure also increases evidentiary uncertainty.

Approach and solution

The parties should obtain an independent survey, notify the carrier and insurer within contractual and policy deadlines, preserve damaged goods and packaging, and review whether the components conformed when risk passed. For future orders, they should use a complete specification annex, a defined inspection regime, an express title clause, and an insurance schedule identifying coverage and claims procedures. If the shipment is containerized, they should reassess whether FCA or CIP better reflects the logistics.

Learning points

1. Freight payment and risk transfer are not the same event.
2. CIF does not transfer ownership.
3. Insurance obligations require review of actual policy coverage.
4. A familiar Incoterm may be operationally unsuitable.
5. Contract completeness reduces the cost of evidence and dispute resolution.

8. Limitations, Governance, and Contemporary Practice

Incoterms simplify recurring trade issues but cannot eliminate legal or operational complexity. National customs law may assign importer obligations regardless of the contract. Tax rules may not follow the commercial allocation. A carrier’s transport contract may contain different liability limits from the sales contract. Electronic documents, sanctions restrictions, port congestion, cyberattacks, and supply-chain disruption can expose gaps in traditional drafting.

Digital trade platforms and electronic bills of lading can improve visibility and document control, but they introduce authentication, data-integrity, cybersecurity, and interoperability risks. AI tools can assist contract review by identifying missing named places, inconsistent delivery terms, or conflicting specifications. They should not replace legal judgment: an AI system may detect the phrase “CIF warehouse” but fail to recognize that CIF is restricted to sea or inland-waterway transport and that a warehouse is not necessarily a suitable named port.

Best practice is to maintain an approved Incoterm playbook, require legal and logistics review for nonstandard terms, use a contract checklist, map obligations to responsible functions, and conduct post-transaction reviews of claims, delays, and freight variances. Contract governance should include version control and an order-of-precedence rule for purchase orders, specifications, logistics instructions, and standard terms.

Chapter Summary

International sales contracts should be drafted as integrated commercial systems. They must define the goods, specifications, price, payment, delivery schedule, inspection, title, risk, warranties, remedies, force majeure, compliance, governing law, and dispute resolution. Incoterms® 2020 standardizes selected delivery obligations, costs, and risk points, but it does not normally determine ownership, payment, conformity, warranties, or governing law.

The principal Incoterms decision is not simply which party pays freight. It is where delivery and risk should occur, who can perform customs and transport tasks, whether insurance is needed, and whether the rule fits the physical shipment. FCA is commonly suitable for containerized exports; CPT and CIP transfer risk at the first-carrier point despite seller-paid carriage; DAP, DPU, and DDP place progressively greater destination responsibilities on the seller. CIF and FOB are sea and inland-waterway rules and should not be applied casually to container shipments.

The CISG may govern qualifying international sales unless excluded or displaced. It addresses formation, conformity, examination, notice, remedies, damages, fundamental breach, and impediments, but it does not answer every question concerning ownership, validity, or services. Strong contracts therefore combine appropriate Incoterms with explicit provisions and disciplined operational governance.

Key Terms

Incoterms® 2020: ICC rules allocating specified delivery obligations, costs, and risks.

Named place: The precise location stated with an Incoterm.

Delivery: The contractual event at which the seller performs the Incoterm delivery obligation.

Risk transfer: The point at which loss or damage becomes the buyer’s economic responsibility.

Title: Legal ownership of goods.

EXW: Rule under which the seller makes goods available at its premises or another named place.

FCA: Rule requiring delivery to a carrier or nominated person at a specified place.

CIP: Carriage and Insurance Paid To; seller pays carriage and arranges specified insurance, while risk transfers at first-carrier delivery.

DAP: Delivered at Place; seller delivers ready for unloading at destination.

DPU: Delivered at Place Unloaded; seller delivers and unloads at destination.

DDP: Delivered Duty Paid; seller bears extensive delivery and import responsibilities.

CIF: Cost, Insurance and Freight; a sea/inland-waterway rule with seller-arranged insurance.

FOB: Free On Board; delivery occurs when goods are on board the vessel.

CISG: United Nations Convention on Contracts for the International Sale of Goods.

Conformity: Compliance of goods with contractual, statutory, and relevant CISG requirements.

Fundamental breach: A breach substantially depriving a party of its expected contractual benefit.

Force majeure: Contractual relief for specified extraordinary events preventing or substantially affecting performance.

Retention of title: Clause postponing transfer of ownership, commonly until payment, subject to applicable law.

Importer of record: Party legally responsible for import declarations and associated obligations.

Review Questions

Short Answer Questions

1. Why should title and risk be addressed in separate contractual provisions?
2. What matters are generally outside the scope of Incoterms 2020?
3. Why may FCA be preferable to FOB for a containerized shipment?
4. What is the principal difference between DAP and DPU?
5. Identify two circumstances in which the CISG may not govern a transaction.

Long Answer Questions

1. Explain how an international sales contract should address specifications, inspection, conformity, warranties, and remedies.
2. Compare EXW, FCA, CPT, CIP, DAP, and DDP from the perspectives of risk, customs, and transport responsibility.
3. Explain the difference between CIF and CIP, including transport scope, risk transfer, and insurance.
4. Discuss the CISG rules concerning seller obligations, buyer examination, notice of nonconformity, and remedies.
5. Evaluate the legal and operational risks of using a vague Incoterm such as “CIF Europe.”

Analytical / Application Questions

1. A seller agrees to “CPT Buyer’s warehouse, Incoterms® 2020,” but the buyer believes the seller bears risk until arrival. Analyze the misunderstanding and recommend a corrective contract provision.
2. A seller cannot legally act as importer in the buyer’s country, but the buyer wants delivery to its warehouse. Which Incoterm would you investigate first, and what obligations must be clarified?
3. A containerized shipment is damaged after handover to the first carrier but before loading onto the vessel. Compare the likely risk outcomes under FCA, FOB, CIP, and CIF, and recommend the most suitable term for a buyer requiring seller-arranged insurance.

Multiple Choice Questions with Answers

Question 1

Which issue is generally not determined by Incoterms® 2020?

A. The point of risk transfer

B. The party responsible for export clearance

C. Transfer of ownership

D. Certain transport-related costs

Correct Answer: C. Transfer of ownership

Question 2

Under CPT, when does risk generally transfer to the buyer?

A. When the goods arrive at the named destination

B. When the goods are handed to the first carrier

C. When the buyer completes import clearance

D. When the buyer pays the invoice

Correct Answer: B. When the goods are handed to the first carrier

Question 3

Which Incoterm requires the seller to unload the goods at the destination?

A. DAP

B. DPU

C. CIP

D. FCA

Correct Answer: B. DPU

Question 4

Which rule is generally most appropriate for a containerized export when the seller delivers to a carrier at a terminal?

A. FCA

B. FOB

C. FAS

D. EXW

Correct Answer: A. FCA

Question 5

Which two Incoterms 2020 impose a seller insurance obligation?

A. EXW and FCA

B. DAP and DDP

C. CIP and CIF

D. CPT and CFR

Correct Answer: C. CIP and CIF

Question 6

Under CIF, when does risk normally transfer?

A. When goods are placed at the buyer’s warehouse

B. When goods are unloaded at the destination port

C. When goods are on board the vessel at the shipment port

D. When the insurance claim is settled

Correct Answer: C. When goods are on board the vessel at the shipment port

Question 7

Which statement about DDP is correct?

A. The buyer always performs export clearance

B. The seller assumes extensive import-clearance responsibilities

C. Risk transfers when goods are handed to the first carrier

D. It is restricted to sea transport

Correct Answer: B. The seller assumes extensive import-clearance responsibilities

Question 8

A contract clause stating that ownership transfers only after full payment is primarily a clause concerning:

A. Title

B. Inspection

C. Force majeure

D. Transport insurance

Correct Answer: A. Title

Question 9

Which CISG remedy is generally associated with a breach that substantially deprives the aggrieved party of its expected benefit?

A. Avoidance for fundamental breach

B. Automatic price indexing

C. Mandatory arbitration

D. Transfer of title

Correct Answer: A. Avoidance for fundamental breach

Question 10

Which statement best describes the relationship between freight payment and risk under C rules such as CIP?

A. The party paying freight always bears risk until arrival

B. Freight payment and risk transfer may occur at different points

C. Risk never transfers under C rules

D. The buyer bears no risk until import clearance

Correct Answer: B. Freight payment and risk transfer may occur at different points