International Business Environment & Trade Report: The Express Company

This report delves into the international business environment and trade, focusing on The Express Company, a UK-based exporter of crude oil to Denmark. It analyzes the application of trade laws, including the Sale of Goods Act and foreign trade regulations, and examines three export scenarios: FOB without insurance, CIF with insurance, and consignment basis. Key documents such as quotations, bills of lading, international sales contracts, drafts of bills of exchange, letters of credit (UCP 600), and insurance documents (Marine Insurance Act, ICC clauses) are discussed. The report recommends exporting with insurance, highlighting the benefits of risk mitigation for the exporter. Additionally, it details the different shipping options available. This report offers a comprehensive overview of the legal, contractual, and logistical aspects of international trade in the context of crude oil export.

INTERNATIONAL
BUSINESS ENVIRONMENT
& TRADE

Table of Contents
TASK ..............................................................................................................................................3
1. Application of Trade law........................................................................................................3
2. Case scenario...........................................................................................................................3
3. Key documents........................................................................................................................5
5 Recommended scenario out of the three scenarios..................................................................7
6. Different shipping options ......................................................................................................8
CONCLUSION ...............................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
International trade and business environment refers to import and export of goods and
services. In this assignment, "The Express " will be consider which is company involved in
export of crude oil which is easily measurable with weight, volume, size and can be fit in a
container. This business is located in London, UK and it exports its product to Denmark by Sea.
Bank which will provide the letter of credit will be Bank of England. The insurer for the product
trade will be Aviva is an insurance company which is located in London, UK. In this report, It
will provide information regarding Trade law. Moreover, it will provide information regarding
the documents, laws and regulations relating to export and import.
TASK
1. Application of Trade law
Trade law is that which provide rules and regulation for exporting and importing the
products and service between countries. Trade laws are made in order to prevent unfair trade
practices. The trade laws are applicable for the business which is importing or exporting the
products and services. The Express Company will Export Crude oil to Denmark which will apply
the Trade laws for performing the operations regarding export of the products to Denmark. The
trade laws which are required to be complied by the company includes the Sale of goods Act,
Foreign trade regulations etc (Hamilton and Webster, 2018). The trade laws are applicable to The
export companies assist in performing the export of Crude oil in effective way and perform fair
trade practices. The firm have to comply with the rules and regulation relating to export of
import of the products and services. The export of crude oil is regulated by the authority of Oil
and gas. The trade laws applicable to the company assist in reducing the unfair trade practices.
Moreover, with the help of trading law the business is able to performing its operation as per the
law. The Export Control Joint Unit provide export license in UK. The sale of good Act provide
understanding about the trade agreement which can be formed between countries. The main
purpose of trade law is to control the unfair trade practices between the countries.
2. Case scenario
Scenario Contract terms and conditions Price Risk
Exporting FOB (Freight on The risk associated The price for High as no

crude oil
without
insurance
Board) with the export will be
of insurer.
the carrier will
be lower as it
will exclude
the insurance
cost. Expected
price for the
shipment will
be £30000
insurance is
being made by
the exporter.
Exporting
crude Oil with
Insurance
CIF (Cost, insurance
and freight)
The risk associated
with the export will be
of the importer as
insurance is being
made by the exporter
The price for
the export will
be higher than
it will include
the insurance
cost as well.
Expected price
for the
shipment will
be £50000
Low risk as
insurance is
being made.
Exporting
crude oil on
consignment
basis
Sale of Good Act The risk associated
with the export will be
for both exporter and
importer
The price for
the export of
the shipment
will be equal
to £40000
The risk
associated
with the
shipment is
higher as there
are various
damages that
can take plave.
 Export of crude oil without Insurance : In this scenario, The company will export
Crude oil to Denmark without Insurance which means It will form the contract of FOB in
which the risk associated with the contract is high because there are no insurance made

for the products and if there is any damage to the product it cannot be recovered. The
price for the product will be lower because it will not include the insurance cost.
 Export of Crude oil with insurance : In this case scenario, The Express will export
crude oil with insurance policy which means the products will be insured and the risk
associated with the product will wholly be of importer which means the company will not
be liable for the damage to product (Rugman and Verbeke, 2017). The price for the
product will include the cost of insurance policy as thus the price will be higher than that
of FOB contract.
 Export of crude oil on consignment basis : In this scenario, The crude oil will be
exported on the basis of Consignment In which the consignor will export the product to
consignee and the payment will be made at the end.
3. Key documents
The documents which are being prepared by Exporter during exporting the crude oil to
Denmark will include the followings :
 Quotation : It is the commercial document prepared by exporter which is an offer to sell
good and include the quantity, price, trade terms, delivery terms and payments.
 Bill of lading : The bill of lading is issued by ocean carrier which provide transportation
of good through sea. It indicates that the shipment has been loaded in the vessel for
transit. It is issued at the time of loading into the ocean vessel. With the help of bill of
lading the carriers is able to provide the receipt of invoice (Kolk, 2016). It is the contract
between the company and the carrier which is transporting the products and services. It
serves as issue of receipt issued by carrier. It authorizes the another party to have
possession of the goods. The bill of lading is issued by the carrier and is given to the
shipper of goods.
 International sales contract : It is an agreement between the seller and buyer of the
goods and services. It is regulated by International sale of Good Act, 1980. It assists in
complying with the UK export laws which help in performing the fair trade practices.
With the help of making this sale contract the buyer and seller can identify the
responsibilities (Morschett, Schramm-Klein and Zentes, 2015). The sales contract
include FOB and CIF. FOB does not include insurance and therefore the quote will be
cheaper.

 Draft of bill of exchange : It is a negotiable instrument which is drawn to be payable by
exporter. The seller is paid under a letter of credit which is in the contract of sale. It
involves the seller and bank. They serve as mode of payment. The exporter draws bill of
exchange. The Article 6 of UCP 600 states that a credit must not be issued available by
draft drawn on the applicant. Moreover, the draft , transport document and insurance
must be dated even if the credit does not require.
 Letter of credit : It is a letter issued by the bank to another bank to serve as guarantor for
the payment made to the specified person under contract. The letter of credit is issued by
the bank and required various documents for getting the letter of credit for the payments.
The documents required for getting the letter of credit include the bill of lading, insurance
policy, commercial invoice etc. without these documents the bank does not grant the
letter of credit which act as guarantee for the future payment of the goods. UCP 600 is a
Uniform custom and practice for Documentary credit which is a set of rules agreed by
Chamber of commerce to get the letter of credit (Deresky, 2017). It assists in reducing the
risk of trading goods. The UCP 600 issues the letter of credit and the bank which is the
member of UCP 600 have the financial obligation to pay the credit amount.
 Insurance documents : As per the Marine Insurance Act, 1906 It covers the loss or
damage to the goods which are shipped through sea transport. The insurance document
include the insurance policy , certificate of insurance etc. The insurance policy set out the
terms and condition of contract between the insurer and insured. The certificate of
insurance is the documents which act as evidence but does not set out terms and
conditions of insurance. The insurance is part of Cost , insurance and freight and the con
tract based on this include the insurance policy of the goods which are being exported.
The Marine Insurance Act, 1906 provide understanding about the insurance which are
required for the export of the goods to the different places by sea. ICC (A,B,C) is a
Institute of Cargo Clauses. The ICC (A) is known as all risk insurance policy and offers
the widest range to cover the damage. ICC (B) It supply medium term cargo Insurance
coverage .ICC (C) it provides minimum cargo Insurance coverage.
ICC(A) : It covers the risk associated with loss or damage of goods except the following
conditions - Risk caused by following will not be covered by ICC(A) :
 wilful misconduct of Assured

 Insufficiency or unsuitability of packaging
 Damage caused by delay
 Charter party agreement : It is a contract with the carrier and ship owner if the career
does not own ship.
Price per unit
Particular Amount
Crude oil per barrel £100
No. Of unit shipped in bulk 42 gallon in one barrel (159 litres)
price 100/42 =2.38 per unit
5 Recommended scenario out of the three scenarios
In the above report there has been three scenarios being developed and analysed. The
three scenarios were exporting the crude oil without insurance, exporting crude oil with
insurance and exporting it on the consignment basis. Exporting the crude oil without insurance
means exporting the crude oil to other countries where the risk of any loss or any mishap is of
the seller only and there is not any insurance contract made for the products (Lester, 2014). If
there is any damage then it will not be recovered. Now come exporting crude oil with having
insurance contract with the insurance company (Flammer, 2015). It means that before exporting
the goods all the goods must be insured to in order to minimise the risk of the person exporting
the goods to other country. Here the risk associated with the damage of the goods is borne by the
importer because the insurance is made by the exporter to protect the goods purchased by the
importer. Lastly come the exporting of crude oil on the consignment basis. Consignment sale is a
special arrangement of trade wherein the seller sends the goods to the buyer/ consignee without
receiving the consideration of the goods. The buyer pays the consideration when the goods are
sold.
Out of the three scenarios the best and recommended scenario is exporting the crude oil
with insurance. This is because of the main reason that with help of insurance all the future
losses and blockages will be converted in good. It means that all the goods and different types of
products which are exported to other countries will be insured and all the risks associated with

the products like breakages, cracks etc. will be wholly borne by the importer. It means that the
exporting company is not liable for any damage or destruction to the product. The other
important reason for this method is that it reduces the financial risk involved in this transaction
of the exporter. The risk can be on part of products and the importer itself like importers slow
payment, bankruptcy, default payments etc.
Other reason is that if the importer bears all the risk and losses if any comes in the way of the
transportation of the goods then it will lead to the increase in the sales with the importing
countries (Walzenbach, 2018). And if the sales will increase then automatically it will lead to
benefit for both the importer and the exporter. Another reason for the preferences of the export of
the crude oil with insurance cover is that it increases the international trade because the importer
provides protection against all the risks and losses which may damage the exporter. But because
with this method that is exporting with the insurance cover it encourages and influences the
exporter to trade with the importer. With this the market share of both the importer and the
exporter increases which is beneficial to bot of them and their country and the economy (Salcic,
2014). Another reason is that the insurance cover provides a cash flow income for the exporter
even if the importer is not able to pay its bill or become insolvent or bankrupt. This is because of
the insurance cover that all the losses of the exporter are indemnified.
6. Different shipping options
There are various shipping option which make carriers services easy to transit from one
place to another. Transacting goods through sea is the best way to deliver the goods before time.
As there are various shipping option to transit goods. Firstly Free shipping if the goods are
related to government or other some important purpose than they engaged in free shipping of
goods. Theses type of shipping are less in market as the availability is low. Secondly it related to
flat rate, as single rate is charged for the weight or size of package (Picciotto and Mayne, 2016).
They are not differentiated according to the weights and numbers. One price pays for large
number of container to deliver goods from one transit to another.
Third one is related to over night delivery of goods which deliver the goods to the ground
home delivery. They charge approx £11.88 per container of package. It involves fast delivery of
goods from the appropriate codes so that goods are not mixed with each other in the package. It
estimated that there goods are delivered within 24 hours of their order and they get it according
to the same condition they are receiving the package. Last one is same but related to standard

overnight shipping. In this the normal time takes but the goods are standard according to the said
norms in shipping through sea. If the goods are damage through sipping by sea and they are not
properly secured or damage through any natural calamity but outside the EU (Surugiu and
Surugiu, 2015). Then CRR 98 apply in that case to secure the goods which are transit in respect
of import and export of container. As shipping methods are properly secured and provide
insurance to their package but due to natural calamites or any certain changes in sea can't secure
the containers from long term.
CONCLUSION
From the above report, it has been concluded about trade laws which are required to be
followed by the companies involve din the trade of goods and services. Moreover, it has
involved the three scenario for the export of the crude oil which has included export of crude oil
without insurance which include FOB contracts. The another scenario is about export of crude
oil with insurance which is CIF contract. The third scenario which is created is related to export
of crude oil on consignment basis. Furthermore, it has involved the documents which are
required for the export of the good to Denmark that has included sales contract, insurance
document, bill of lading, bill of exchange etc.

REFERENCES
Books and journals
Deresky, H., 2017. International management: Managing across borders and cultures. Pearson
Education India.
Flammer, C., 2015. Does product market competition foster corporate social responsibility?
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1485.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Kolk, A., 2016. The social responsibility of international business: From ethics and the
environment to CSR and sustainable development. Journal of World Business. 51(1).
pp.23-34.
Lester, R., 2014. Insurance and inclusive growth. The World Bank.
Morschett, D., Schramm-Klein, H. and Zentes, J., 2015. Strategic international management (pp.
978-3658078836). Springer.
Picciotto, S. and Mayne, R. eds., 2016. Regulating international business: beyond liberalization.
Springer.
Rugman, A. and Verbeke, A., 2017. Global corporate strategy and trade policy. Routledge.
Salcic, Z., 2014. Export Credit Insurance and Guarantees: A Practitioner's Guide. Springer.
Surugiu, M.R. and Surugiu, C., 2015. International trade, globalization and economic
interdependence between European countries: implications for businesses and
marketing framework. Procedia Economics and Finance. 32. pp.131-138.
Walzenbach, G.P., 2018. Co-ordination in Context: institutional choices to promote exports.
Routledge.