”F.O.B”, ”LC”, ”C.I.F”

I see the following terms in some quotation but I don't know that meanings. Please explain:

1) F.O.B.

2) C.I.F.

3) Letter of Credit

4) Bills of Exchange, document against acceptance.

Many Thanks!

2 Answers

  • 1 decade ago
    Favorite Answer

    1) F.O.B is an initialism which deals with the shipping of goods. Depending on specific usage, it may stand for Free On Board or Freight On Board, with similar but distinct implications. FOB specifies which party (buyer or seller) pays for which shipment and loading costs, and/or where responsibility for the goods is transferred. The last distinction is important for determining liability for goods lost or damaged in transit from the seller to the buyer.

    Precise meaning and usage of "FOB" can vary significantly. International shipments typically use "FOB" as defined by the Incoterm standards. Domestic shipments within the US or Canada often use a different meaning, specific to North America, which is inconsistent with the Incoterm standards.

    North American FOB usage corresponds to Incoterms approximately as follows:

    North America


    FOB shipping point or FOB shipping point, freight collect

    FCA shipping point

    FOB shipping point, freight prepaid

    CPT destination

    FOB destination or FOB destination, freight prepaid

    DDU destination

    FOB destination, freight collect

    No Incoterm equivalent

    2) C.I.F. is the Cost, Insurance & Freight 【商】包括運費、保險費在內之到岸價格, 付貨人承擔貨物在目的港越過船舷之前的費用, 但風險轉移地點是裝貨港! The Cost, Insurance and Freight (named destination port) exactly the same as CFR except that the seller must in addition procure and pay for insurance for the buyer. Maritime transport only.


    2009-05-09 10:15:47 補充:

    3) Letter of Credit is 信用狀!

    A standard, commercial letter of credit is a document issued mostly by a financial institution, used primarily in trade finance, which usually provides an irrevocable payment undertaking.

    2009-05-09 10:16:19 補充:

    The LC can also be the source of payment for a transaction, meaning that redeeming the letter of credit will pay an exporter. Letters of credit are used primarily in international trade transactions of significant value, for deals between a supplier in one country and a customer in another.

    2009-05-09 10:23:36 補充:

    They also used in the land development process to ensure that approved public facilities will be built. The parties to LC are usually a beneficiary who is to receive money, issuing bank of whom applicant is client & advising bank of whom beneficiary is client.

    2009-05-09 10:23:47 補充:

    Almost all letters of credit are irrevocable, i.e., cannot be amended or canceled without prior agreement of the beneficiary, the issuing bank and the confirming bank, if any. In executing a transaction, letters of credit incorporate functions common to giros and Traveler's cheques.

    2009-05-09 10:23:56 補充:

    Typically, the documents a beneficiary has to present in order to receive payment include a commercial invoice, bill of lading, and documents proving the shipment was insured against loss or damage in transit.

    2009-05-09 10:24:03 補充:

    However, the list and form of documents is open to imagination and negotiation and might contain requirements to present documents issued by a neutral third party evidencing the quality of the goods shipped, or their place of origin.

    2009-05-09 10:24:14 補充:

    4) Bills of Exchange is a written order by the drawer to the drawee to pay money to the payee. A common type of bill of exchange is the cheque (check in American English), defined as a bill of exchange drawn on a banker and payable on demand.

    2009-05-09 10:24:17 補充:

    Bills of exchange are used primarily in international trade, and are written orders by one person to his bank to pay the bearer a specific sum on a specific date. Prior to the advent of paper currency, bills of exchange were a common means of exchange. They are not used as often today.

    2009-05-09 10:24:53 補充:

    希望幫到你!! ^_^

  • ?
    Lv 6
    1 decade ago

    Question 1&2 are shipping term (INCOTERM)

    Question 3&4 are payment term

    舉例貨物是由香港運到荷蘭阿姆斯特丹 (Hong Kong to Amsterdam)

    1) F.O.B. = Free on Board


    貨物在香港運上船之前所產生一切費用如碼頭費,裝箱費等等均由賣方(seller)負責,而買方(buyer)則需負責香港至阿姆斯特丹的運費, 保險費和目的地所產生之一切費用。

    F.O.B.之後要加上載貨港口(loading port)的名字,按此例即是 FOB HONG KONG


    2) C.I.F. = Cost、Insurance、Freight

    Cost 可代表為問題1的 F.O.B.

    Insurance = 香港至阿姆斯特丹的保險費用

    Freight = 香港至阿姆斯特丹的運費

    以上均由賣方(seller)負責, 至於貨物到達目的港所產生之一切費用則由買方(buyer)負責

    C.I.F.之後要加上目的港口(Destination port)的名字,按此例即是 CIF Amsterdam

    3) Letter of Credit (簡稱 L/C) = 信用証 (或可稱為信用狀)

    簡單來說LC是買方向銀行申請作一個擔保及中間人角色,出一份保証書給賣方,向賣方保証收到貨款後才放貨給買方。只要賣方能出示所有符合L/C要求的文件,就算買方公司倒閉或是未能付款, 銀行亦必須履行付款的責任。 所以用L/C付款此方式特別適合用在新的客戶。

    4) Bill of Exchange = 匯票 (一般銀行亦稱作 draft)



    Document against Acceptance 簡稱 D/A,即承兌之後才能拿到文件, 而且有分為 30天、45天、60天、90天……到360天不等的期限。


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