Methods of foreign trade

Methods of foreign trade.
Direct sales.
The most common means of doing business nowadays is through straight sales of foreign goods in exchange for foreign currency or commodities, which were produced in our country (countertrade).
Countertrade is a term, which denotes various methods of linking two export operations. In countertrade transaction the Seller agrees to take full or partial payment in goods.
1. The clear definition of the mutual obligation of the parties.
2. Specification of the countertraded goods and condition of setting the value on FOB and CIF basis.
4. The arrangements for settlement account and evidence account and for the payment of the credit balance of terminations of the agreement in cash.
5. The conditions of participating of the factor in a countertrade process.
6. Penalty provision for non-performance of the countertrade obligations by the exporter.
7. A choice of law clause and arbitration clause.
Sometimes the framework agreement takes a form of a letter of intent, which is undesirable because a letter of intent is not enforceable in law.
Countertrade covers barter, counterpurchase, buyback, reciprocal sales.
A barter deal involves an exchange of goods to an equal value.
Counterpurchase refers to short and medium-term transactions. The western Seller commits himself to purchase an agreed value of the Buyers products to help finance the original sale.
Buyback refers to long-term contracts and is connected with the development projects supported with huge credits. Buyback involves two phases, one for the delivery of equipment to the Buyer and a second for the delivery of the end product to the Seller.
Reciprocal sales or counter deliveries. These are two contracts; the export contract and the countersale. Then there is the so-called commercial triangular form, which involves a third party in this or that way. It is rather complicated and varies from country to country, from deal to deal.
Companies prefer doing their business abroad through intermediaries: agents...

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