State two distinguishing features between each of... | WAEC SSCE - Commerce - 2013 (Essay)

Question 1 Report

State two distinguishing features between each of the following;

(a) Tramps vessels and ocean liners

(b) A factor and a broker

(d) consular invoice and proforma invoice

(e) Insurance and assurance

Answer

Two distinguishing features between each pair are given below.

(a) Tramp vessels and ocean liners

Tramp vessels	Ocean liners
They have no fixed routes or timetable; they sail wherever cargo is available.	They follow fixed routes and operate to a regular published timetable.
Freight charges are negotiable and vary with demand.	Freight charges are fixed and stated in advance.

(b) A factor and a broker

Factor	Broker
Takes physical possession of the goods he sells.	Does not take possession of the goods; he only brings buyer and seller together.
Can sell in his own name and give credit.	Sells in the name of the principal and merely negotiates the contract.

(c) A commission agent and a del credere agent

Commission agent	Del credere agent
Receives only ordinary commission for selling on behalf of the principal.	Receives an extra commission (del credere commission) for the added responsibility he bears.
Does not guarantee payment; the principal bears the loss if a buyer defaults.	Guarantees the payment of the customer's debt and bears the loss of any bad debt.

(d) Consular invoice and pro-forma invoice

Consular invoice	Pro-forma invoice
Used in foreign trade and certified by the consul of the importing country.	Not certified; it is a provisional invoice sent to a prospective buyer.
Certifies the correctness of the goods and their value for customs purposes.	Serves as a quotation, or accompanies goods sent on approval or on sale-or-return, and does not demand payment.

(e) Insurance and assurance

Insurance	Assurance
Covers risks that may or may not happen, e.g. fire, theft, accident.	Covers an event that is certain to happen, e.g. death, or attaining a certain age.
The insured is compensated only if the loss actually occurs (indemnity).	The sum assured is paid whenever the certain event occurs, so it is not strictly indemnity.

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