International Commercial Terms Document - F

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Fair Market Purchase Option: An option to purchase leased property at the end of the lease term at its then fair market value. The lessor does not have the ability to retain title to the equipment if the lessee chooses to exercise the purchase option.

Fast Track Negotiating: Authority provided by the U.S. Congress to the Executive Branch to negotiate amendment-proof trade agreements.

FEU: A Forty-Foot Equivalent Unite, or 40-foot dry cargo container.

Finance Lease (See Single Investor Lease): Typically, a finance lease is a full-payout, noncancellable agreement, in which the lessee is responsible for maintenance, taxes, and insurance.

Financial document: A document relating to payment. The bill of exchange is the financial document most commonly used in collections and letters of credit. Promissory notes are also sometimes used in collections.

Fixed forward contract: Currency is bought or sold at a given future date.

Foreign Direct Investment: Foreign investment in plant and equipment.

Force majeure: The title of a standard clause in a marine contract exempting the parties for nonfulfillment of their obligations as a result of conditions beyond their control - such as floods, war, etc.

Foreign exchange: The currency of a foreign country.

Foreign Equity Requirements: Investment rules that limit foreign ownership to a minority holding is a company.

Foreign Trade Zone: Also known as Free Trade Zones, or FTZs, they are ports designated by the government of a country for the duty-free entry of non-prohibited goods. Merchandise may be stored, displayed, assembled, packaged, or used for manufacture within the zone and re-exported without duties being levied.

Forward contract: A contract for the sale or purchase of a given amount of foreign currency at a future time at a rate of exchange that is fixed when the contract is made.

Forward option contract: Currency must be bought or sold within a given period of time.

Foul Bill of Lading: A receipt for goods issued by a carrier with the indication that the goods were damaged when received from the shipper.

Free Alongside Ship(FAS): This is an incoterm whereby the exporter and importer have the following relationship:


  • delivers goods alongside ship
  • provides alongside receipt


  • pays freight charges and insurance
  • pays for export licence and taxes

Free Carrier (FCA): this is also an Incoterm that may be used for any mode of transport. It is very common for containerized shipments. Under this term, exporter and importer have the following rights:


  • delivers to a named place
  • provides export licence
  • pays export duties


  • pays all costs from named place (insurance, import duties, taxes)

Free On board (FOB): An Incoterm whereby the seller pays for loading the items to be purchased onto the vessel, but not for the cost of carriage or insurance.

Free Port: An area such as a port city into which merchandise may legally be moved without payment of duties.

Free-trade zone: A port designated by the government of a country for duty-free entry on any non-prohibited good. Merchandise may be stored, used or manufactured in the zone and reexported without duties being paid.

Freight Forwarders' Receipt: Transport document issued by Freight Forwarder. Not a document of title.

Full Payout Lease: A lease in which the lessor recovers, through the lease payments, all costs incurred in the lease plus an acceptable rate of return, without any reliance upon the leased equipment's future residual value.