INCOTERMS 2000
Incoterms are a set of international rules for the interpretation of commonly used foreign trade terms. Their intent is to avoid or reduce the problems that may occur due to different interpretations of the various terms in different countries. Incoterms 2000 is the most recent revision. We recommend that all parties to international transactions obtain a copy of "Incoterms 2000" and the "ICC Guide to Incoterms 2000" available from ICC Publishing, Inc. www.iccbooks.com
Incoterms are not locked in stone and each term may be amended or adjusted if agreed to by both the seller and the buyer to conform to local practices or reallocate costs or risks.
In offering a brief description of each Incoterm below, we have made every effort to ensure the accuracy of the definitions, however, we accept no responsibility for errors or omissions in any of the descriptions.
EXW EX WORKS (…named place)
"Ex works" means that the seller delivers when he places the goods at the disposal of the buyer at the seller's premises or another named place (i.e. works, factory, warehouse, etc.) not cleared for export and not loaded on any collecting vehicle.
This represents the minimum obligation for the seller, and the buyer has to bear all costs and risks involved in taking the goods from the seller's premises.
FCA FREE CARRIER (... named place)
"Free Carrier" means that the seller delivers the goods, cleared for export, to the carrier nominated by the buyer at the named place. It should be noted that the chosen place of delivery has an impact on the obligations of loading and unloading the goods at that place. If delivery occurs at the seller's premises, the seller is responsible for loading. If delivery occurs at any other place, the seller is not responsible for unloading.
FAS FREE ALONGSIDE SHIP (... named port of shipment)
"Free Alongside Ship" means that the seller delivers when the goods are placed alongside the vessel at, the named port of shipment. This means that the buyer has to bear all costs and risks of loss of or damage to the goods from that moment
The FAS term requires the seller to clear the goods for export. THIS IS A REVERSAL FROM PREVIOUS INCOTERMS VERSIONS WHICH REQUIRED THE BUYER TO ARRANGE FOR EXPORT CLEARANCE. However, if the parties wish the buyer to clear the goods for export, this should be made clear by adding explicit wording to this effect in the contract of sale'.
FOB FREE ON BOARD (... named port of shipment)
"Free on Board" means that the seller delivers when the goods pass the ship's rail at the named port of shipment. This means that the buyer has to bear all costs and risks of loss of or damage to the goods from that point. The FOB term requires the seller to clear the goods for export. This term can be used only for sea or inland waterway transport. If the parties do not intend to deliver the goods across the ship's rail, the FCA or FAS term should be used.
CFR COST AND FREIGHT (... named port of destination)
"Cost and Freight" means that the seller delivers when the goods pass the ship's rail in the port of shipment. The seller must pay the costs and freight necessary to bring the goods to the named port of destination BUT the risk of loss of or damage to the goods, as well as any additional costs due to events occurring after the time of delivery, are transferred from the seller to the buyer.
CIF COST INSURANCE AND FREIGHT (... named port of destination)
"Cost, Insurance and Freight" means that the seller delivers when the goods pass the ship's rail in the port of shipment. The seller must pay the costs and freight necessary to bring the goods to the named port of destination BUT the risk of loss of or damage to the goods, as well as any additional costs due to events occurring after the time of delivery, are transferred from the seller to the buyer. However, in CIF the seller also has to procure marine insurance against the buyer's risk of loss of or damage to the goods during the carriage.
Consequently, the seller contracts for insurance and pays the insurance premium. The buyer should note that under the CIF term the seller is required to obtain insurance only on minimum cover'.
CPT CARRIAGE PAID TO (... named place of destination)
"Carriage paid to..." means that the 'seller delivers the goods to the carrier nominated by him but the seller must in addition pay the cost of carriage necessary to bring the goods to the named destination. This means that the buyer bears all risks and any other costs occurring after the goods have been so delivered. If subsequent carriers are used for the carriage to the agreed destination, the risk passes when the goods have been delivered to the first carrier.
This term may be used irrespective of the mode of transport including multimodal transport.
CIP CARRIAGE AND INSURANCE PAID TO (... named place of destination)
"Carriage and insurance paid to..." means that the 'seller delivers the goods to the carrier nominated by him but the seller must in addition pay the cost of carriage necessary to bring the goods to the named destination. This means that the buyer bears all risks and any other costs occurring after the goods have been so delivered. However, in CIP the seller also has to procure insurance against the buyer's risk of loss of or damage to the goods during the carriage.
Consequently, the seller contracts for insurance and pays the insurance premium. The buyer should note that under the CIF term the seller is required to obtain insurance only on minimum cover'.
If subsequent carriers are used for the carriage to the agreed destination, the risk passes when the goods have been delivered to the first carrier.
This term may be used irrespective of the mode of transport including multimodal transport.
DES DELIVERED EX SHIP (... named port of destination)
"Delivered Ex Ship" means that the seller delivers when the goods are placed at the disposal of the buyer on board the ship not cleared for import at the named port of, destination. The seller has to bear all the costs and risks involved in bringing the goods to the named port of destination before discharging.
DEQ DELIVERED EX QUAY (... named port of des destination)
"Delivered Ex Quay" means that the seller delivers when the goods are placed at the disposal of the buyer not cleared for import on the quay (wharf) at the named port destination. The seller has to bear costs and risks involved in bringing the goods to the named port of destination and discharging the goods on the quay (wharf). The DEQ term requires the buyer to clear the goods for import and to pay for all formalities, duties, taxes and other charges upon import. THIS IS A REVERSAL FROM PREVIOUS INCOTERMS VERSIONS WHICH REQUIRED THE SELLER TO ARRANGE FOR IMPORT CLEARANCE. If the parties wish to include in the seller's obligations all or part of the costs payable upon import of the goods, this should be made clear by adding explicit wording to this effect in the contract of sale'.
DDU DELIVERED DUTY UNPAID (... named place of destination)
"Delivered duty unpaid" means that the seller delivers the goods to the buyer, not cleared for import, and not unloaded from any arriving means of transport at the named place of destination. The seller has to bear the costs and risks involved in bringing the goods thereto, other than, where applicable, any "duty' (which term includes the responsibility for and the risks of the carrying out of customs formalities, and the payment of formalities, customs duties, taxes and other charges) for import in the country of destination. Such "duty" has to be borne by the buyer as well as any costs and risks caused by his failure to clear the goods for import in time.
This term may be used irrespective of the mode of transport.
DDP DELIVERED, DUTY PAID (... named place of destination)
"Delivered duty paid" means that the seller delivers the goods to the buyer, cleared for import, and not unloaded from any arriving means of transport at the named place of destination. The seller has to bear all the costs and risks involved in bringing the goods thereto including, where applicable', any "duty" (which term includes the responsibility for and the risk of the carrying out of customs formalities and the payment of formalities, customs duties, taxes and other charges) for import in the country of destination.
The EXW term represents the minimum obligation for the seller, DDP represents the maximum obligation.
This term should not be used if the seller is unable directly or indirectly to obtain a required import license.
This term may be used irrespective of the mode of transport.