sara014 Ineaterms - Wikipedia, the fee encyclopedia Incoterms From Wikipedia, the free eneyelopedis ‘The Incoterms rules or International Commercial Terms are a series of pre-defined commercial terms published by the International inber of Commerce (ICC) that are widely used in International commercial transactions or procurement processes. A series of three- letter trade terms related to common contractual sales practices, the Incoterms rules are intended primarily to clearly communicate the tasks, costs, and risks associated with the transportation and delivery of goods. ‘The Incoterms rules are accepted by governments, legal authorities, and practitioners worldwide forthe interpretation of most commonly used terms in international trade. They are intended to reduce or remove allogether uncertainties arising from different interpretation of the rules in different countries, As such they are regularly incorporated into sales contracts! worldwide. First published in 1936, the Incoterms rules have been periodically updated, with the eighth version— Incoterms 2010 having been published on January 1, 2011 "Incoterms" is a registered trademark of the ICC. Contents = L Incoterms 2010 = 2 Incoterms in Government Regulations = 3.General Transport 3. EXW—Ex Works (named place) = 3.2 FCA - Free Carrier (named place of delivery) National Incoterms chambers, = 3.3 CPT Carriage Paid To (named place of destination) = 3.4 CIP— Carriage and Insurance Paid to (named place of destination) = 35 DAT - Delivered at Terminal (named terminal at port or place of destination) ‘= 36 DAP - Delivered at Place (named place of destination) = 3.7 DDP - Delivered Duty Paid (named place of destination) ‘= 4 Sea and Inland Waterway Transport 1 4.1 FAS —Fice Alongside Ship (named port of shipment) = 42 FOB—Free on Board (named port of shipment) = 4.3. CFR —Cost and Freight (named port of destination) = 4,4 CIF —Cost, Insurance and Freight (named port of | destination) = 5 Allocations of costs to buyer/seller according to Incoterms 2010 = 6 Previous terms from Incoterms 2000 eliminated from Incoterms 2010 = 6.1 DAF - Delivered at Frontier (named place of delivery) ‘= 6.2 DES — Delivered Ex Ship = 63 DEQ ~ Delivered Ex Quay (named port of delivery) = 6.4 DDU - Delivered Duty Unpaid (named place of destination) = 7See also = 8 References = 9 Excemal Links Incoterms 2010 hitpien wikipedacrgwikitncaterms 48svar Inctems- Wikipa, he ee encyclopedia Incoterms 2010 is the cighth set of pre-defined international contract terms published by the International Chamber of Commerce, with the first set having been published in 1936, Incoterms 2010 defines 11 rules, down from the 13 rules defined by Incoterms 2000.5) Four rules ‘of the 2000 version ("Delivered at Frontier", DAF, "Delivered Ex Ship", DES; "Delivered Ex Quay", DEQ; "Delivered Duty Unpaid’, DDU).""| are replaced by two new rules ("Delivered at Terminal", DAT; "Delivered at Place", DAP) in the 2010 rules. In the prior version, the rules were divided into four categories, but the 11 pre-defined terms of Incoterms 2010 are subdivided into two ‘categories based only on method of delivery. The larger group of seven rules may be used regardless of the method of transport, with the smaller group of four being applicable only to sales that solely involve transportation by water where the condition of the goods ean be verified at the point of loading on board ship. They are therefore not to be used for containerized freight. Incoterms in Government Regulations In some jurisdictions, the duty costs of the goods may be calculated against a specific Incoterm (for example in India, duty is calculated against the CIF value of the goods, and in South A\tica the duty is calculated against the FOB value of the goods). Because of this itis ‘common for contracts for exports to these countries to use these Incoterms, even when they are not suitable for the chosen mode of transport, Care must be exercised to ensure thatthe liability issues are addressed by negotiation with the customer. General Transport EXW — Ex Works (named place) The seller makes the goods available at his/her premises. This term places the maximum obligation on the buyer and minimum obligations ‘on the seller. The Ex Works term is often used when making an initial quotation forthe sale of goods without any costs included. EXW ‘means that a buyer incurs the risks for bringing the goods to thet final destination, The seller does not load the goods on collecting ‘vehicles and does not clear them for export. If the seller does load the goods, he does so at buyers tisk and cost. If parties wish seller to be responsible for the loading of the goods on departure and to bear the risk and all costs of such Ioading, this must be made clear by adding. explicit wording to this effect in the contract of sale. ‘The buyer arranges the pickup of the freight from the supplier's designated ship site, owns the in-transit freight, and is responsible for clearing the goods through Customs. he buyer is also responsible for completing all the export documentation, These documentary requirements may cause two principal issues. Firstly, the stipulation for the buyer to complete the export declaration ‘can be an issue in certain jurisdictions (not least the European Union) where the eustoms regulations require the declarant to be either an individual or corporation resident within the jurisdiction, Secondly, most jurisdictions require companies to provide proof of export for tax ‘purposes. In an Ex-Works shipment the buyer is under no obligation to provide such proof, or indeed to even export the goods. Itis therefore of utmost importance that these matters are discussed with the buyer before the contract is agreed. It may well be that another Incoterm, such as FCA seller's premises, may be more suitable. FCA - Free Can sr (named place of delivery) ‘The seller delivers the goods, cleared for export, at a named place. This can be to @ carrier nominated by the buyer, or to another person, ‘nominated by the buyer. Itshould be noted thatthe chosen place of delivery has an impact on the obligations of loading and unloading the goods at that place. If dolivery occurs at the seller's premises, the seller is responsible for loading the goods on to the buyers carier. However, If delivery occurs at any ther place, the seller is deemed to have delivered the goods once thei transport has arrived atthe named place; the buyer is responsible for both unloading the goods and loading them on to their own carrier: CPT ~ Carriage Paid To (named place of destination) CPT replaces the venerable C&F (cost and freight) and CER terms forall shipping modes outside of non-containerised seafreight. ‘The seller pays forthe carriage of the goods up to the named place of destination, Risk transfers to buyer upon handing goods over tothe first cartier atthe place of shipment in the country of Export. The Shipper is responsible for origin costs including export clearance and ‘rvight costs for carriage to named place (usually a destination port or airport). The shipper is not responsible for delivery tothe final destination (generally the buyer's facilites), or for buying insurance, Ifthe buyer does require the seller to obtain insurance, the Incoterm should be considered, CIP - Carriage and Insurance Paid to (named place of destination) hitpien wikipedacrgwikitncaterms 25sara014 Ineaterms - Wikipedia, the fee encyclopedia ‘This term is broadly similar to the above CPT term, with the exception that the seller is required to obtain insurance for the goods while in transit, CIP requires the seller to insure the goods for 110% of their value under atleast the minimum cover of the Institute Cargo Clauses, of the Institute of London Underwriters (which would be Institute Cargo Clauses (C)), or any similar set of clauses. The policy should be in the same eurreney as the contract. CIP can be used for all modes of transport, whereas the equivalent term CIF can only be used for non-containerized seafreight. DAT — Delivered at Terminal (named terminal at port or place of destination) ‘This term means thatthe seller covers all the casts of transport (export fees, carriage, unloading from main cartier at destination port and destination port charges) and assumes all risk until destination port or terminal. The terminal ean be a Port, Airport, or inland freight interchange. Import duty/taxes/customs costs are to be borne by Buyer. DAP — Delivered at Place (named place of destination) Can be used for any transport mode, or where there is more than one transport mode, The seller i responsible for arranging, carriage and for delivering the goods, ready for unloading from the arriving conveyance, at the named place. Duties are not paid by the seller under this, term (an important difference from Delivered At Terminal DAT, where the buyer is responsible for unloading). DDP — Delivered Duty Paid (named place of destination) Seller is responsible for delivering the goods tothe named place in the country ofthe buyer, an pays all costs in bringing the goods tothe destination including import duties and taxes The sellers not responsible for unloading, This term is often used in place ofthe non- Incoterm "Free In Store (FS) This tem places the maximum obligations onthe seller and minimum obligations on the buyer, With the delivery at the named place of destination al the risks and responsibilities are transfered tothe buyer and itis considered thatthe seller has completed his obligations! Sea and Inland Waterway Transport ‘To determine if a location qualifies for these four rules, please reer to (uNLoconEy. (9 ited Nations Code for Trade and Transport Locations ‘The four rules defined by Incoterms 2010 for international trade where transportation is entitely conducted by water are as per the below. It is important to note that these terms are generally not suitable for shipments in shipping containers; the point at which visk and responsibility forthe goods passes is when the goods are loaded on board the ship, and if the goods are sealed into a shipping container it is impossible to verify the condition of the goods at this point. Also of note is that the point at which risk passes under these terms has shifted from previous editions of Incoterms, where the risk passed at the ship's rail FAS — Free Alongside Ship (named port of shipment) The seller delivers when the goods are placed alongside the buyer's vessel atthe nated pot of shipment. Tis means thatthe buyer has to bear all costs and risks of oss of or damage othe goods fom tat moment. The FAS term requires the seller to clear the goods for expor, vihich se reversl from previous Tncoteres versions that required the buyer to arrange for export clearance. However, ifthe partes wish the buyer to clea the goods for export, this should be made clear by adding expict wording otis effect inthe contract of sale. This term can be used only for sea or inland waterway transport FOB — Free on Board (named port of shipment) ‘The seller must advance government tax in the country of origin as of commitment to load the goods on board a vessel designated by the buyer. Cost and risk are divided when the goods are sea transport in containers (see Incoterms 2010, ICC publication 715). The seller must instruct the buyer the details ofthe vessel and the port where the goods are to be loaded, and there is no reference to, or provision for, the use of a cartier of forwarder. This term has been greatly misused over the last three decades ever since Incoterms 1980 explained that FCA should be used for container shipments It means the seller pays for transportation of goods to the port of shipment, loading cost. The buyer pays cost of marine freight ‘transportation, insurance, unloading and transportation cost from the arrival port to destination. The passing of risk occurs when the goods are in buyer account. The buyer arranges for the vessel and the shipper has to load the goods and the named vessel at the named port of shipment withthe dates stipulated in the contract of sale as informed by the buyer. hitpien wikipedacrgwikitncaterms 35sara014 Ineaterms - Wikipedia, the fee encyclopedia CFR — Cost and Freight (named port of destination) Seller must pay the costs and freight 1o bring the goods to the port of destination. However, risk is transferred to the buyer once the goods are loaded on the vessel. Insurance for the goods is NOT included CIF - Cost, Insurance and Freight (named port of destination) Exactly the same as CFR except that the seller must in addition procure and pay for the insurance, Allocations of costs to buyer/seller according to Incoterms 2010 Loading Carriage Unloading Carriage , Incoterm | EXPO | o port jof truck in| vessel (Sea/Air) Unloading | Loading on Camriage | Import | teyport customs "insurance | in port of truck in port to place of | customs 2010 declaration, of , | Portof in port to port of import | ofimport destination clearance," export | export of import " export EXW Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer FCA Seller | Seller | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer FAS Seller Seller | Seller | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer Buyer Seller | Seller Seller | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer eller Seller | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer Seller Seller | Buyer | Buyer | Buyer | Buyer | Buyer | Buyer Seller Seller | Seller | Buyer | Buyer | Buyer | Buyer Buyer Seller Seller | Seller | Seller Buyer/Seller Buyer/Seller| Buyer | Buyer | Buyer Seller Seller | Seller | Seller | Seller | Buyer | Buyer | Buyer | Buyer Seller Seller Seller | Seller | Seller | Seller | Seller | Buyer | Buyer Seller/Not bP Seller | Seller Seller | Seller Seller | Seller | Seller | Seller | Seller | Seller | including VATFAT Previous terms from Incoterms 2000 eliminated from Incoterms 2010 DAF — Delivered at Frontier (named place of delivery) ‘This term can be used when the goods are transported by rail and road. The seller pays for transportation to the named place of delivery at the frontier. The buyer arranges for customs clearance and pays for transportation from the frontier to his factory. The passing of risk ‘occurs atthe frontier DES - Delivered Ex Ship Where goods arc delivered ex ship, the passing of risk does not occur until the ship has arrived at the named port of destination and the ‘goods made available for unloading to the buyer. The seller pays the same freight and insurance costs as he would under a CIF arrangement, Unlike CFR and CIF terms, the seller has agreed to bear not just cost, but also Risk and Title up to the arrival ofthe vessel at the named port. Costs for unloading the goods and any duties, taxes, etc. are for the Buyer. A commonly used term in shipping bulk ‘commodities, such as coal, grain, dry chemicals; and where the seller either owns or has chartered, their own vessel DEQ — Delivered Ex Quay (named port of delivery) This is similar to DES, but the passing of risk does nat occur until the goods have been unloaded atthe port of discharge. This is no more. In ICC 2010 itis deleted DDU — Delivered Duty Unpaid (named place of destination) hitpien wikipedacrgwikitncaterms 45sara014 Ineaterms - Wikipedia, the fee encyclopedia ‘his term means thatthe seller delivers the goods to the buyer to the named place of destination in the contract of sale. A transaction in international trade where the seller is responsible for making a safe delivery of goods to a named destination, paying all transportation ‘expenses but not the duty, The seller bears the risks and costs associated with supplying the goods to the delivery location, where the buyer becomes responsible for paying the duty and other customs clearing expenses. See also = Commercial law ‘= International trade International trade law = Uniform Commercial Code United Nations Convention on Contracts for the International Sale of Goods United Nations Code for Trade and Transport Locations (UN/LOCODE) (http:/Avww.uns org/cefactilocode/service/location uml) References ICC Guide to Incoterms® 2010" (hipistoreieewbo. orpfce-puide-o-incotems-2010). ICC. Retrieved March 14, 2014 (upistoreicewbo orglincoterms-2010), ICC. Rettieved March 14, 20} Incoterms® 2000" (htpstoreieewbo.orglineoterms-2000), ICC. Rettieved Match [4,201 rom the intoduetion of Incoterms 2010" (p/w jcewbo org/lacotesVindexbes?id-40772), ICC. Retrieved May 16, 2011, * hap incotermsexplained comthe coterms-rulesithe-eleven-rules-in-bveldlivered-duy-paid corgicefacvlocadelservieeTocation ml hap ifdgroup.nefincoterm_FAS.htm * hapsisrw-une External links = International Chamber of Commerce - Official website (hiip://www.icewbo.org/ineoterms) ' Incoterms® -ICC Store (http://store.icewbo.org/incoterms-2) = Incoterms® 2010 ¢http:www-icewbo.org/products-and-servicesitrade-faclitation/incoterms-20101) = ICC Guide To Incoterms® 2010 (htp:/store.icewbo org/ice-guide-to-incoterms-2010)) = Incoterms® 2010 Q&A (bitp//store.icewbo.orgiineoterms-2010-qa/) = Export.gov: Incoterms® (htips/export.gov/faqieg_main_023922.asp) Retrieved from "http:/en.wikipedia.org/w/index php ttle=Incoterms®oldid~637588156" (Categories: International rade | Commercial item transport and distribution | Intemational commerce terms * This page was last modified on 11 December 2014 at 06:24, ‘= Text is available under the Creative Commons Attribution-ShareAlike License; additional terms may apply. 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