THE
13 INCOTERMS
The
International Chamber of Commerce's Incoterms 2000 include 13 trade terms that specify the
buyer's and seller's rights, costs, and obligations when
they use those terms in an international sales contract.
Here's
a brief look at the terms and what they mean. For a full explanation, consult Incoterms 2000, ICC
Official Rules for Interpretation of Trade Terms,
published by the International Chamber of Commerce (ICC).
Keep
in mind that risk of loss and damage passes to the buyer after the seller effects delivery as
specified in the term of sale. Also, the parties must
specify which version of the terms they will use as well as the relevant destination--i.e.,
up to which point the seller bears an obligation.
An example of a correctly stated Incoterm is DDU Frankfurt Schmidt GmbH Warehouse
Incoterms 2000.
-
EXW EX WORKS (named place): any mode of transport; seller makes
goods available
to buyer at seller's premises or other location, not cleared for export and not loaded on a
vehicle. The buyer bears all risks and costs involved
in taking the goods from the seller's premises and thereafter.
-
FCA FREE CARRIER (named place): any mode of transport; seller
delivers goods,
cleared for export, to the carrier named by the buyer at the specified place. If
delivery occurs at the seller's premises, the seller is responsible
for loading; if delivery occurs elsewhere, the seller must load the conveyance but is not
responsible for unloading.
-
FAS FREE ALONGSIDE SHIP (named port of shipment): maritime and
inland waterway
only; seller delivers when the goods are placed alongside the vessel at the named port of
shipment. The seller also clears the goods for export.
-
FOB FREE ON BOARD (named port of shipment): maritime and inland
waterway only;
seller delivers when the goods pass the ship's rail at the named port. The seller clears the goods
for export.
-
CFR COST AND FREIGHT (named port of destination): maritime and
inland waterway
only; seller delivers when the goods pass the ship's rail at the port of export. The seller pays cost and
freight for bringing the goods to the
foreign port and clears the goods for export.
-
CIF COST, INSURANCE, AND FREIGHT (named port of destination):
maritime and inland
waterway only; seller delivers when the goods pass the ship's rail at the port of export. The
seller pays cost and freight for bringing the goods to
the foreign port, obtains insurance against the buyer's risk of loss or damage, and clears the
goods for export.
-
CIP CARRIAGE AND INSURANCE PAID TO (named place of destination):
any mode of
transport; seller delivers the goods to a carrier it nominates but also pays the cost of bringing
the goods to the named destination. The seller also
obtains insurance against the buyer's risk of loss or damage during
carriage
and clears the goods for export.
-
CPT CARRIAGE PAID TO (named place of destination): any mode of
transport; seller
delivers goods to carrier it nominates and pays costs of bringing goods to the named
destination. The seller also clears the goods for export.
-
DAF DELIVERED AT FRONTIER (named place): any mode of transport to
a land frontier;
seller delivers when goods are placed at the buyer's disposal on the "arriving means of
transport" (not unloaded), cleared for export but not cleared for import before
the customs border of the destination country.
-
DES DELIVERED EX SHIP (named port of destination): maritime and
inland
waterway
only; seller delivers when goods are at the buyer's disposal on
board
the ship not cleared for import. The buyer pays discharging costs.
-
DEQ DELIVERED EX QUAY (named port of destination): maritime and
inland
waterway
only; seller delivers when the goods are placed at the buyer's
disposal,
not cleared for import, on the dock (quay) at the named port of
destination.
The seller pays discharging costs, but the buyer pays for
import
clearance.
-
DDU DELIVERED DUTY UNPAID (named place of destination): any mode
of
transport;
seller delivers the goods to the buyer not cleared for import and
not
unloaded from the arriving means of transport at the named destination,
but
the buyer is responsible for all import clearance formalities and costs.
-
DDP DELIVERED DUTY PAID (named place of destination): any mode of
transport;
seller delivers goods to the buyer, cleared for import (including
import
license, duties, and taxes) but not unloaded from the means of
transport.
The
following resources will be helpful for anyone who wants to
learn more about the Incoterms.
The
International Chamber of Commerce publishes Incoterms 2000, the official
text and definitions; ICC
Guide to Incoterms 2000, a detailed commentary on the
Incoterms; and an Incoterms 2000 wall chart.
Additional
good reading:
info@globalssc.com
