IBMR

“INCOTERMS”
PRESENTED BY
Mr. Swapnil Jain
In the enlightening guidance of
Mrs. Megha Jain
 Rules at the core of world trade

IN-CO-TERMS
International commercial terms
 WHAT ARE INCOTERMS ?
1. ICC (International Chamber of Commerce) Official Rules for the
Interpretation of Trade terms.

2. First published by the ICC in 1936 Since then, ICC expert

lawyers and trade practitioners have updated them six times to
keep pace with the development of international trade.

3. ICC is currently revising Incoterms 2000. The new

edition, Incoterms 2011, is expected to enter into force
on 1 January 2011.
 ……WHAT ARE
INCOTERMS ?
4. Incoterms are available from ICC Publishing and
ICC national committees throughout the world.
5. Incoterms are developed, maintained and
promoted by the ICC Commission on
Commercial Law and Practice (CLP).
6. The English text is the original and official
version of Incoterms 2000, authorized
translations into 31 languages are available from
ICC national committees.
 Why Incoterms?
 Incoterms are international rules that are accepted by
governments, legal authorities and practitioners
worldwide for the interpretation of the most commonly
used terms in international trade.
 They either reduce or remove altogether uncertainties
arising from differing interpretations of such terms in
different countries.
 Incoterms make international trade easier and help
traders in different countries to understand one
another. These standard trade definitions that are
most commonly used in international contracts are
protected by ICC copyright.
 What do they cover?
• The scope of Incoterms is limited
to matters relating to the rights
and obligations of the parties to
the contract of sale with respect
to the delivery of goods sold, but
excluding "intangibles" like
computer software.
INCOTERMS 2000
 Four Groups of Incoterms

Less More
Control 1) “E” group Control

2) “F” group
Seller Buyer
3) “C” group
More Less
4) “D” group Control
Control

8
 ( INCOTERMS )
 GROUP TERM Stands for

 E EXW Ex Works

 F
FCA Free Carrier
FAS Free Alongside Ship
FOB Free On Board

 C
CFR Cost and Freight
CIF Cost, Insurance and Freight
CPT Carriage Paid To
CIP Carriage and Insurance Paid To

 D DAF Delivered At Frontier

DES Delivered Ex Ship
DEQ Delivered Ex Quay
DDU Delivered Duty Unpaid
DDP Delivered Duty Paid
 EXW
EX WORKS (…named place)

 "Ex works" means the seller's only responsibility is to make the

goods available at the seller's premises, i.e. factory, mill or
warehouse
 The seller is not responsible for loading the goods on the
vehicle provided by the buyer unless otherwise agreed.

 The buyer bears the full costs and risk involved in collecting
the goods from there to the desired destination. Ex works
represents the minimum obligation of the seller.
 EXW
Ex Works …(named place)
SELLER BUYER

Seller/ Export Delivered Loading Onboard Discharging Delivery at Import Buyer/

Exporter Documents at named Port of Ship Port of named place of Documents Importer
Premises Formalities place of: Shipment Rail Arrival destination: Formalities Premises
Frontier/ Plane Frontier/
Terminal/ Ship’s Ship’s Terminal/Quay
Quay Rail Rail
Seller’s Buyer’s Risks
Risks

Seller’s Buyer’s Cost

Cost

11
 Obligations of the Buyer.
Obligations of the
Salesperson. • Pay of the merchandise

• Freight internal (of factory to the export place)

• He surrenders of • Customs (documents, permits, requirements,

the merchandise taxes)
and necessary
documents • Export expenses (you maneuver, storage, agents)

• Pack and packing • Freight international (of export place to the import
place)

• Import expenses (you maneuver, storage, agents)

• Transport and sure (import place to plant)

 Incoterms 2000
• The “F” –terms require the seller to deliver
goods for carriage as instructed by the buyer.
• FCA
• FAS
• FOB
 FCA
FREE CARRIER (named place)
• Seller delivers when goods, cleared for export, to the
carrier nominated by the buyer at a named place.

• The risk of loss or damage to the goods is transferred

from seller to buyer at that time and not at the ship's
rail.
• Seller obligated to load goods on arriving vehicle if it
arrives at the seller’s premises.

• The term "carrier" means any person by whom or in

whose name a contract of carriage by road, rail, air,
sea, or a combination of modes has been made.
 FCA
Free Carrier… (named place)
SELLER BUYER

Seller/ Export Delivered Loading O nboard Discharging Delivery at Import Buyer/

Exporter Docum ents at nam ed Port of Ship Port of named place of Documents Importer
Premises Formalities place of: Shipment Rail Arrival destination: Form alities Premises
Frontier/ Plane Frontier/
Terminal/ Ship’s Ship’s Terminal/Q uay
Q uay Rail Rail
Seller’s Risks Buyer’s
Risks

Seller’s Cost Buyer’s Cost

15
FAS -FREE ALONGSIDE SHIP
(…named port of shipment)
FAS or "free alongside ship" requires the seller to
deliver the goods alongside the ship on the quay.

From that point on, the buyer bears all costs and risks
of loss and damage to the goods.

Unlike F.O.B., F.A.S. requires the buyer to clear the

goods for export and pay the cost of loading the
goods.
 FAS
Free Alongside… (nam ed place)
SELLER BUYER

Seller/ Export Delivered Loading O nboard Discharging Delivery at Im port Buyer/

Exporter Docum ents at nam ed Port of Ship Port of nam ed place of D ocum ents Im porter
Premises Form alities place of: Shipment Rail Arrival destination: Form alities Premises
Frontier/ Plane Frontier/
Terminal/ Ship’s Ship’s Terminal/Q uay
Q uay Rail R ail
Seller’s Risks Buyer’s
R isks

Seller’s C ost Buyer’s Cost

17
 FOB FREE ON BOARD
(... named port of shipment)
• Under FOB the goods are placed on board the ship by
the seller at a port of shipment named in the sales
agreement.

• The risk of loss of or damage to the goods is transferred

to the buyer when the goods pass the ship's rail (i.e., off
the dock and placed on the ship).

• The seller pays the cost of loading the goods.

• If intent is not to deliver goods across the ship’s rail, use
FCA
 FOB
Free On Board… (named port of shipment)
SELLER BUYER

Seller/ Export Delivered Loading O nboard Discharging Delivery at Import Buyer/

Exporter Docum ents at nam ed Port of Ship Port of named place of Documents Importer
Premises Formalities place of: Shipment Rail Arrival destination: Form alities Premises
Frontier/ Plane Frontier/
Terminal/ Ship’s Ship’s Terminal/Q uay
Q uay Rail Rail
Seller’s Risks Buyer’s
Risks

Seller’s Cost Buyer’s Cost

19
 Incoterms 2000
• The “C” –terms require the seller to
contract for carriage at his expense – to a
specified point.
• CFR
• CIF
• CPT
• CIP
 CFR – COST AND FREIGHT
(…named port of destination)
• Seller delivers when goods, cleared for export,
pass the ship’s rail at the named port of
shipment.
• The seller pays the costs and freight necessary
to bring goods to port of destination, but the
buyer bears the risk of loss and additional costs
occurring after delivery.
• Term can be used for sea or inland waterway
transport.
• If intent is not to deliver goods across the ship’s
rail, use CPT
 CFR
C ost and F reigh t … (n am ed p ort of d estin ation )
SELLER BUYER

S eller/ E xp ort D elivered L o ad in g O n b oard D isch argin g D elivery at Im p ort B u yer/

E xporter D ocu m en ts at nam ed P ort of S h ip P ort of n am ed p lace o f D ocu m en ts Im po rter
P rem ises F orm alities p lace of: S h ip m en t R ail A rrival d estination : F orm alities P rem ises
Fron tier/ Plan e F ron tier/
T erm in al/ S h ip ’s Sh ip ’s T erm in al/Q u ay
Q u ay R ail R a il
S eller’s R isk s B u yer’s R isk s

S eller’s C ost B u yer’s C ost

22
 CIF – COST, INSURANCE AND
FREIGHT (…named port of destination)
• CIF is CFR with the additional requirement that the seller
procure transport insurance against the risk of loss or
damage to goods.

• The seller pays the costs and freight necessary to bring

goods to port of destination, but the buyer bears the risk
of loss and additional costs occurring after delivery.

• The seller procures marine insurance, against

buyer’s risk of loss. Seller is required to obtain
insurance only on minimum cover.
 C IF
C ost, In su ran ce an d F reigh t … (nam ed p ort of d estination)
SELLER BUYER

S eller/ E xp ort D elivered L o ad in g O n b oard D isch argin g D elivery at Im p ort B u yer/

E xporter D ocu m en ts at nam ed P ort of S h ip P ort of n am ed p lace o f D ocu m en ts Im po rter
P rem ises F orm alities p lace of: S h ip m en t R ail A rrival d estination : F orm alities P rem ises
Fron tier/ Plan e F ron tier/
T erm in al/ S h ip ’s Sh ip ’s T erm in al/Q u ay
Q u ay R ail R a il
S eller’s B u yer’s R isk s
R isk s

S eller’s B u yer’s C ost

C osts

24
 CPT – CARRIAGE PAID TO (…
named place of destination)
• Seller delivers the goods, cleared for export, to
the carrier.
• The seller pays the costs of carriage necessary
to bring goods to named destination, but the
buyer bears the risk of loss and additional costs
occurring after delivery.
• Accordingly, "freight/carriage paid to" can be
used for all modes of transportation, including
container or roll-on roll-off traffic by trailers and
ferries.
 CPT
Carriage Paid To …(named port of destination)
SELLER BUYER

Seller/ Export Delivered Loading Onboard Discharging Delivery at Import Buyer/

Exporter Documents at named Port of Ship Port of named place of Documents Importer
Premises Formalities place of: Shipment Rail Arrival destination: Formalities Premises
Frontier/ Plane Frontier/
Terminal/ Ship’s Ship’s Terminal/Quay
Quay Rail Rail
Seller’s Risks Buyer’s
Risks

Seller’s Cost Buyer’s

Costs

26
 CIP – CARRIAGE AND INSURANCE PAID
TO (…named place of destination)
• Seller delivers the goods, cleared for export, to the carrier.

• The seller pays the costs of carriage to named destination, but

the buyer bears the risk of loss and additional costs occurring
after delivery.
• The seller procures insurance against buyer’s risk of loss.
• Seller is required to obtain insurance only on a minimum cover.

• This term is the same as "freight/carriage paid to (CPT)" but

with the additional requirement that the seller has to procure
transport insurance against the risk of loss or damage to the
goods during the carriage.
 CIP
Carriage and Insurance Paid To …(named port of destination)
SELLER BUYER

Seller/ Export Delivered Loading Onboard Discharging Delivery at Import Buyer/

Exporter Documents at named Port of Ship Port of named place of Documents Importer
Premises Formalities place of: Shipment Rail Arrival destination: Formalities Premises
Frontier/ Plane Frontier/
Terminal/ Ship’s Ship’s Terminal/Quay
Quay Rail Rail
Seller’s Risks Buyer’s Risks

Seller’s Cost Buyer’s Cost

28
 Incoterms 2000

• The “D” –terms require the seller to take the

goods all the way to destination at the border or
within the country of import.
• DAF
• DES
• DEQ
• DDU
• DDP
 DDU – DELIVERED DUTY UNPAID
(…named place of destination)
• Seller delivers goods to the buyer, not cleared
for import, and not unloaded, at the named
place of destination.
• Seller bears all costs and risks (except duty) to
bring goods to the named place of destination.
• Term may be used irrespective of mode of
transport.
• If delivery is to take place at the port, quay or on
board a vessel, DES or DEQ should be used.
 DDU
Delivered Duty Unpaid… (named place of destination)
SELLER BUYER

Seller/ Export Delivered Loading O nboard Discharging Delivery at Import Buyer/

Exporter Docum ents at named Port of Ship Port of named place of Documents Importer
Premises Form alities place of: Shipment Rail Arrival destination: Formalities Premises
Frontier/ Plane Frontier/
Terminal/ Ship’s Ship’s Terminal/Q uay
Q uay Rail Rail
Seller’s Risks Buyer’s
Risks

Seller’s Cost Buyer’s Cost

31
 DDP – DELIVERED DUTY PAID (…
named place of destination)

• Seller delivers goods to the buyer, cleared for import,

and not unloaded, at the named place of destination.
• Seller bears all costs and risks, including import duty,
to bring goods to the named place of destination.
• Term may be used irrespective of mode of transport.
• If delivery is to take place at the port, quay or on board
a vessel, DES or DEQ should be used.
 DDP
Delivered Duty Paid…(named place of destination)
SELLER BUYER

Seller/ Export Delivered Loading Onboard Discharging Delivery at Import Buyer/

Exporter Documents at named Port of Ship Port of named place of Documents Importer
Premises Formalities place of: Shipment Rail Arrival destination: Formalities Premises
Frontier/ Plane Frontier/
Terminal/ Ship’s Ship’s Terminal/Quay
Quay Rail Rail
Seller’s Risks Buyer’s
Risks

Seller’s Cost Buyer’s Cost

33
 DAF – DELIVERED AT FRONTIER
(…named place)
• Seller delivers goods, cleared for export, at
disposal of buyer on arriving means of
transport.
• Not unloaded, not cleared for import at point at
frontier before customs border of adjoining
country.
• Term may be used irrespective of the mode of
transport when goods are delivered at a land
frontier.
 DAF
Delivered At Frontier…(named place)
SELLER BUYER

Seller/ Export Delivered Loading Onboard Discharging Delivery at Import Buyer/

Exporter Documents at named Port of Ship Port of named place of Documents Importer
Premises Formalities place of: Shipment Rail Arrival destination: Formalities Premises
Frontier/ Plane Frontier/
Terminal/ Ship’s Ship’s Terminal/Quay
Quay Rail Rail
Seller’s Risks Buyer’s
Risks

Seller’s Cost Buyer’s Cost

35
 DES – DELIVERED EX SHIP (…
named port of destination)
• Seller delivers goods at disposal of buyer on
board the ship.
• Not cleared for import at the named port of
destination.
• Seller bears all costs and risks to bring goods
to the named port before discharging.
• Term used only for delivery by sea.
• If the seller is to bear the costs of discharging
the goods, DEQ should be used.
 DES
Delivered exShip…(named port of destination)
SELLER BUYER

Seller/ Export Delivered Loading Onboard Discharging Delivery at Import Buyer/

Exporter Documents at named Port of Ship Port of named place of Documents Importer
Premises Formalities place of: Shipment Rail Arrival destination: Formalities Premises
Frontier/ Plane Frontier/
Terminal/ Ship’s Ship’s Terminal/Quay
Quay Rail Rail
Seller’s Risks Buyer’s
Risks

Seller’s Cost Buyer’s Cost

30 November, 2009
37
DEQ – DELIVERED EX QUAY (…
named port of destination)
• Seller delivers goods, not cleared for
import, at disposal of buyer on the
quay at the named port of destination.
• Seller bears all costs and risks to bring
goods to the named port of destination
and discharging the goods on the quay.
• Term used only for delivery by sea.
 DEQ
Delivered Ex Quay…(named port of destination)
SELLER BUYER

Seller/ Export Delivered Loading Onboard Discharging Delivery at Import Buyer/

Exporter Documents at named Port of Ship Port of named place of Documents Importer
Premises Formalities place of: Shipment Rail Arrival destination: Formalities Premises
Frontier/ Plane Frontier/
Terminal/ Ship’s Ship’s Terminal/Quay
Quay Rail Rail
Seller’s Risks Buyer’s
Risks

Seller’s Cost Buyer’s Cost

30 November, 2009 39
 Summary of terms
For a given term, "Yes" indicates that the seller
has the responsibility to provide the service
included in the price. "No" indicates it is the
buyer's responsibility. If insurance is not
included in the term (for example, CFR) then
insurance for transport is the responsibility of the
buyer or the seller depending on who owns the
cargo at time of transport. In the case of CFR
terms, it would be the buyer while in the case of
DDU or DDP terms, it would be the seller.

30 November, 2009
 Unload Unload
Transport from Landing Transport Landing onto Transport Entry -
Export- Entry -
Load to to truck at charges at to charges at trucks to Duties
duty Insurance Customs
truck exporter's the origin's import's importer's from the destinatio and
payment clearance
port origin's port port port importers' n Taxes
port port

EXW No No No No No No No No No No No No
FCA Yes Yes Yes No No No No No No No No No
FAS Yes Yes Yes Yes No No No No No No No No
FOB Yes Yes Yes Yes Yes No No No No No No No
CFR Yes Yes Yes Yes Yes Yes No No No No No No
CIF Yes Yes Yes Yes Yes Yes No No No Yes No No
CPT Yes Yes Yes Yes Yes Yes No No No No No No
CIP Yes Yes Yes Yes Yes Yes No No No Yes No No
DAF Yes Yes Yes Yes Yes Yes No No No No No No

DES Yes Yes Yes Yes Yes Yes No No No Yes No No

DEQ Yes Yes Yes Yes Yes Yes Yes No No Yes No No

DDU Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No No

DDPFebruary
Yes 8, 2006
Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes
 Mode of Transport and Appropriate
Incoterm - Any Mode of Transport
• EXW
• FCA
• CPT
• CIP
• DAF
• DDU
• DDP

30 November, 2009
 Mode of Transport and Appropriate
Incoterm – Maritime and Inland
Waterway Transport Only
• FAS
• FOB
• CFR
• CIF
• DES
• DEQ

30 November, 2009
 Guidelines to Using Incoterms
• Always specify which terms are applicable.
• When completing documents ensure that you are
using the correct format of a term e.g.
• The term CFR is persistently misused/replaced with
C&F or C+F.
• C+F has never existed.
• C&F did exists but was replaced with CFR in 1980.
• If C&F is used by mistake a court of law will use the
pre 1980 meaning of the term which is very different
from the current meaning of CFR as in Incoterms 1990
and Incoterms 2000.
 …..Guidelines to Using Incoterms

• Draw up a check list of your duties and rights under the

selected term and check that every intended or
completed transaction conforms to this list, and that
nothing is omitted.
• Request your trading partner to do the same, and
exchange this information with them.
• Inform your bank and insurance company which
Incoterm(s) have been selected for your business, so
that they can determine exactly what your duties and
rights are with regard to a transaction in which they
may have a role to play.
 In Summary

• Must name a place after the INCOTERM

• INCOTERMS are negotiable!

• INCOTERMS should appear on all commercial

documents

• Establish a close relationship with a forwarder

30 November, 2009 46
 Reference
• Short overview of international commerce
vocabulary

• International Chamber of Commerce (ICC)

incoterm list

• INCOTERMS 2000

• Wikipedia.
Questions !

Swapi
my breakfast

Swapi
my breakfast

you know
“feedback”
is the……
Swapi