COMMERCIAL ACTIVITIES AND TYPES OF CONTRACTS.

4 main CA: importing; exporting; re-exporting (re-exports are goods that have been imported and then exported in the same form, i.e. not put through any manufacturing or finishing process)re-importing(i.e. bringing back into a country an article or commodity that has earlier been exported from the same country, such as a motor car being re-imported after temporary export).

Basic Activities:import/export transactions: includes selling goods for money, countertrade deals, leasing, tooling, consignation and futures.

Countertrade deals are exchanging goods or services that are paid for, in whole or part, with other goods or services. It includes reciprocal sales, barter, buy-back deals, offset, switch trading. Reciprocal sales (counterpurchase or counterdelivery or link purchase) are a common form of countertrade, especially with the former Comecon (Council for Mutual Economic Assistance) countries and with developing countries.

Barter is an exchange of goods or services directly for other goods or services of equal value, without the use of money. In the true barter, there is a simple exchange and no value is placed on the goods exchanged. In the valued barter, some value is put on the exchanged goods.

Buyback occurs when importer builds a plant in a country, exporter supplies technology, equipment, training, or other services to the country – and agrees to take a certain percentage of the plant’s output as partial payment for the contract. refers to long-term contracts.

Offset is widely used in high technology products. Export orders are given for items such as aircraft on condition that the exporter incorporates components or sub-assemblies manufactured in the importing country.

Switch trading is a practice in which one company sells to another its obligation to make a purchase in a given country.

Leasing is one of the forms of credit of durable export, e.g. cars, equipment or machinery. It is based on the lease of equipment with future buyout at a price, which includes leasing payments, and the cost of equipment.

Tolling is a kind of joint production when one company works on the raw materials of the partner. One part of the produced goods compensates the value of the raw materials to their supplier and the other part is sold to third countries. It is beneficial to the raw material exporter.

Consignation is providing the goods by the exporter to be sold by the importer. The exporter still remains the owner of the goods. The importer does not own the goods but is responsible for their safety.

Futuresare trade in futures contracts to buy and sell standardized class of commodities at a stated price at some fixed time in the future.

Auxiliary activities ensure the successful performance of the basic ones; associated with carriage of goods, insurance, banking operations. To ensure the successful and profitable fulfilment of the above basic contracts, a number of auxiliary agreements (contracts) are to be concluded. Agency agreements, agreements with the suppliers for the export of goods and with importers for the purchase of goods, agreements with advertising agencies and firms dealing with the market research and with other organisations helping to achieve the targets of foreign trade also refer to auxiliary activities.

Licence agreements do not deal with selling and buying physical goods but with the sale and purchase of ideas, scientific-technical knowledge in the form of licences, patents and know-how. The patent issued for the invention gives its owner the right to produce, use or sell the products on the monopoly basis of the invention or specific methods of their production.

Classification of LA:according to their subject, according to the volume of rights transferred (simple, non-standard and full) and according to the methods of safeguarding the subject of the licence agreements.

The subject of the licence agreement may beinventions, industrial samples and the right to use them and trademarks, know-how and scientific-technical and other knowledge associated with them and required to realize the aims of the licenсe agreements. The licence agreements may be classified accordingly.

According to the volume of the rights transferred there may be three types of licences:

1) Simple (standard, non-exclusive) licences when the licensor permits the licensee on certain conditions to use the subject of the license agreement, retaining the right to use it himself or to transfer licences on similar conditions to any other persons (firms) concerned.

2) Non-standard (exclusive) when the licensor gives the licensee the exclusive (monopoly) right to use the subject of the licence agreement on the conditions specified and limited geo­graphically. In this case the lisensors have no right to use the licence in the licensee's country themselves or to sell it to third persons, which excludes any competition in the market of the licensee's country.

3) Full licences when the licensor gives the licensee the monopoly right to use the subject of the licence within the period of time specified. The licensors remain the owners of the patent and can break the licence agreement in certain circumstance at their option and can use it upon the expiration of the term of the licence agreement. But while it is in force, the licensors have no right to use it themselves or sell similar licences to other persons.

There are many different types of contracts. They can be classified according to different criteria and on different bases:

1) on the basis of a performed deal or a specific commercial activity;

2) according to the method of international trade;

3) according to the method of concluding a contract – verbally or in writing;

4) according to their form and validity – implied and implicit contracts, express and specialty contracts, contracts under seal and nude contracts, voidable and void contracts.

Date: 2015-12-17; view: 1105