lHR

"NCOTERMS
!RESENTED BY
Mr. Swapnil Jain
n the enlightening guidance of
Mrs. Megha
Jain
Rules at the core of world trade
N-CO-TERMS
nternational commercial terms
T RE NCOTERMS ?
1. CC (nternational Chamber of Commerce) Official Rules for the
nterpretation of Trade terms.
2. First published by the CC in 1936 Since then, CC expert
lawyers and trade practitioners have updated them six times to
keep pace with the development of international trade.
3. CC is currently revising ncoterms 2000. The new
edition, ncoterms 2011, is expected to enter into force
on 1 January 2011.
T RE NCOTERMS ?
4. ncoterms are available from CC !ublishing and
CC national committees throughout the world.
5. ncoterms are developed, maintained and
promoted by the CC Commission on
Commercial Law and !ractice (CL!).
6. The English text is the original and official
version of ncoterms 2000, authorized
translations into 31 languages are available from
CC national committees.
hy ncoterms?
ncoterms 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.
ncoterms 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 CC copyright.
hat do they cover?
The scope of ncoterms 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.
NCOTERM8 2000
Four Groups oI Incoterms
Less
Control
More
Control
1) " group
2) " group
3) " group
4) " group
$eller Buyer
More
Control
Less
Control

( NCOTERMS )
GROU! TERM Stands for
E EX Ex orks
F
FC Free Carrier
FS Free longside Ship
FOB Free On Board
C
CFR Cost and Freight
CF Cost, nsurance and Freight
C!T Carriage !aid To
C! Carriage and nsurance !aid To
D DF Delivered t Frontier
DES Delivered Ex Ship
DEQ Delivered Ex Quay
DDU Delivered Duty Unpaid
DD! Delivered Duty !aid
EX
EX ORKS (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/
Exporter
Premises
Export
Documents
Formalities
Delivered
at named
place of:
Frontier/
Terminal/
Quay
Loading
Port of
Shipment
Onboard
Ship
Rail
Plane
Ship`s Ship`s
Rail Rail
Discharging
Port of
Arrival
Delivery at
named place of
destination:
Frontier/
Terminal/Quay
Import
Documents
Formalities
Buyer/
Importer
Premises
Seller`s
Risks


Buyer`s Risks

Seller`s
Cost


Buyer`s Cost



11
ObIigations of the
SaIesperson.
e surrenders of
the merchandise
and necessary
documents
!ack and packing
ObIigations of the Buyer.
!ay of the merchandise
Freight internal (of factory to the export place)
Customs (documents, permits, requirements,
taxes)
Export expenses (you maneuver, storage, agents)
Freight international (of export place to the import
place)
mport expenses (you maneuver, storage, agents)
Transport and sure (import place to plant)
ncoterms 2000
The "F terms require the seller to deliver
goods for carriage as instructed by the buyer.
FC
FS
FOB
FC
FREE CRRER (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 obIigated 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/
Exporter
Premises
Export
Documents
Formalities
Delivered
at named
place of:
Frontier/
Terminal/
Quay
Loading
Port of
Shipment
Onboard
Ship
Rail
Plane
Ship`s Ship`s
Rail Rail
Discharging
Port of
Arrival
Delivery at
named place of
destination:
Frontier/
Terminal/Quay
Import
Documents
Formalities
Buyer/
Importer
Premises
Seller`s Risks




Buyer`s
Risks
Seller`s Cost

Buyer`s Cost


15
FS -FREE LONGSDE S!
(named port of shipment)
FS 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..S. requires the buyer to clear
the goods for export and pay the cost of loading
the goods.

FAS
Free Alongside.(named place)
SELLER BUYER


Seller/
Exporter
Premises
Export
Documents
Formalities
Delivered
at named
place of:
Frontier/
Terminal/
Quay
Loading
Port of
Shipment
Onboard
Ship
Rail
Plane
Ship`s Ship`s
Rail Rail
Discharging
Port of
Arrival
Delivery at
named place of
destination:
Frontier/
Terminal/Quay
Import
Documents
Formalities
Buyer/
Importer
Premises
Seller`s Risks

Buyer`s
Risks
Seller`s Cost

Buyer`s Cost


17
RFF R0
(... HF0 PRT SHlPHFT)
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.
f intent is not to deliver goods across the ship's rail, use
FC

FOB
Free On Board.(named port of shipment)
SELLER BUYER


Seller/
Exporter
Premises
Export
Documents
Formalities
Delivered
at named
place of:
Frontier/
Terminal/
Quay
Loading
Port of
Shipment
Onboard
Ship
Rail
Plane
Ship`s Ship`s
Rail Rail
Discharging
Port of
Arrival
Delivery at
named place of
destination:
Frontier/
Terminal/Quay
Import
Documents
Formalities
Buyer/
Importer
Premises
Seller`s Risks




Buyer`s
Risks
Seller`s Cost

Buyer`s Cost


19
ncoterms 2000
The "C terms require the seller to
contract for carriage at his expense to a
specified point.
CFR
CF
C!T
C!
CFR COST ND FREGT
(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.
f intent is not to deliver goods across the ship's
rail, use C!T

CFR
Cost and Freight .(named port of destination)

SELLER BUYER


Seller/
Exporter
Premises
Export
Documents
Formalities
Delivered
at named
place of:
Frontier/
Terminal/
Quay
Loading
Port of
Shipment
Onboard
Ship
Rail
Plane
Ship`s Ship`s
Rail Rail
Discharging
Port of
Arrival
Delivery at
named place of
destination:
Frontier/
Terminal/Quay
Import
Documents
Formalities
Buyer/
Importer
Premises
Seller`s Risks

Buyer`s Risks

Seller`s Cost

Buyer`s Cost



22
CF COST, NSURNCE ND
FREGT (named port of destination)
CF 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.
%he seIIer procures marine insurance, against
buyer's risk of Ioss. SeIIer is required to obtain
insurance onIy on minimum cover.

CIF
Cost, Insurance and Freight .(named port of destination)

SELLER BUYER


Seller/
Exporter
Premises
Export
Documents
Formalities
Delivered
at named
place of:
Frontier/
Terminal/
Quay
Loading
Port of
Shipment
Onboard
Ship
Rail
Plane
Ship`s Ship`s
Rail Rail
Discharging
Port of
Arrival
Delivery at
named place of
destination:
Frontier/
Terminal/Quay
Import
Documents
Formalities
Buyer/
Importer
Premises
Seller`s
Risks


Buyer`s Risks

Seller`s
Costs




Buyer`s Cost



24
C!T CRRGE !D 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.
ccordingly, "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/
Exporter
Premises
Export
Documents
Formalities
Delivered
at named
place of:
Frontier/
Terminal/
Quay
Loading
Port of
Shipment
Onboard
Ship
Rail
Plane
Ship`s Ship`s
Rail Rail
Discharging
Port of
Arrival
Delivery at
named place of
destination:
Frontier/
Terminal/Quay
Import
Documents
Formalities
Buyer/
Importer
Premises
Seller`s Risks

Buyer`s
Risks

Seller`s Cost

Buyer`s
Costs



26
C! CRRGE ND NSURNCE !D
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 (C!T)" 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/
Exporter
Premises
Export
Documents
Formalities
Delivered
at named
place of:
Frontier/
Terminal/
Quay
Loading
Port of
Shipment
Onboard
Ship
Rail
Plane
Ship`s Ship`s
Rail Rail
Discharging
Port of
Arrival
Delivery at
named place of
destination:
Frontier/
Terminal/Quay
Import
Documents
Formalities
Buyer/
Importer
Premises
Seller`s Risks

Buyer`s Risks

Seller`s Cost

Buyer`s Cost



2
ncoterms 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.
DF
DES
DEQ
DDU
DD!
DDU DELVERED DUTY UN!D
(named place of destination)
Seller delivers goods to the buyer, not cleared
for import, and not unIoaded, 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.
f 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/
Exporter
Premises
Export
Documents
Formalities
Delivered
at named
place of:
Frontier/
Terminal/
Quay
Loading
Port of
Shipment
Onboard
Ship
Rail
Plane
Ship`s Ship`s
Rail Rail
Discharging
Port of
Arrival
Delivery at
named place of
destination:
Frontier/
Terminal/Quay
Import
Documents
Formalities
Buyer/
Importer
Premises
Seller`s Risks




Buyer`s
Risks
Seller`s Cost

Buyer`s Cost


31
DD! DELVERED DUTY !D
(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.
f 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/
Exporter
Premises
Export
Documents
Formalities
Delivered
at named
place of:
Frontier/
Terminal/
Quay
Loading
Port of
Shipment
Onboard
Ship
Rail
Plane
Ship`s Ship`s
Rail Rail
Discharging
Port of
Arrival
Delivery at
named place of
destination:
Frontier/
Terminal/Quay
Import
Documents
Formalities
Buyer/
Importer
Premises
Seller`s Risks




Buyer`s
Risks
Seller`s Cost

Buyer`s Cost


33
DF DELVERED T FRONTER
(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/
Exporter
Premises
Export
Documents
Formalities
Delivered
at named
place of:
Frontier/
Terminal/
Quay
Loading
Port of
Shipment
Onboard
Ship
Rail
Plane
Ship`s Ship`s
Rail Rail
Discharging
Port of
Arrival
Delivery at
named place of
destination:
Frontier/
Terminal/Quay
Import
Documents
Formalities
Buyer/
Importer
Premises
Seller`s Risks




Buyer`s
Risks
Seller`s Cost

Buyer`s Cost


35
DES DELVERED EX S!
(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.
f 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/
Exporter
Premises
Export
Documents
Formalities
Delivered
at named
place of:
Frontier/
Terminal/
Quay
Loading
Port of
Shipment
Onboard
Ship
Rail
Plane
Ship`s Ship`s
Rail Rail
Discharging
Port of
Arrival
Delivery at
named place of
destination:
Frontier/
Terminal/Quay
Import
Documents
Formalities
Buyer/
Importer
Premises
Seller`s Risks




Buyer`s
Risks
Seller`s Cost

Buyer`s Cost


37
30 November, 2009
DEQ DELVERED EX QUY
(named port of destination)
Seller delivers goods, not cIeared 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/
Exporter
Premises
Export
Documents
Formalities
Delivered
at named
place of:
Frontier/
Terminal/
Quay
Loading
Port of
Shipment
Onboard
Ship
Rail
Plane
Ship`s Ship`s
Rail Rail
Discharging
Port of
Arrival
Delivery at
named place of
destination:
Frontier/
Terminal/Quay
Import
Documents
Formalities
Buyer/
Importer
Premises
Seller`s Risks




Buyer`s
Risks
Seller`s Cost

Buyer`s Cost


39
30 November, 2009
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. f 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. n the case of CFR
terms, it would be the buyer while in the case of
DDU or DD! terms, it would be the seller.
30 November, 2009
February , 2006
ES Yes Yes Yes Yes Yes Yes No No No Yes No No
EQ Yes Yes Yes Yes Yes Yes Yes No No Yes No No
U Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No No
! Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes
Load to
truck
Export-
duty
payment
Transport
to
exporter's
port
Unload
Irom
truck at
the
origin's
port
Landing
charges at
origin's
port
Transport
to
import's
port
Landing
charges at
importer's
port
Unload
onto
trucks
Irom the
importers'
port
Transport
to
destinatio
n
Insurance
Entry -
Customs
clearance
Entry -
uties
and Taxes
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
C!T Yes Yes Yes Yes Yes Yes No No No No No No
CI! Yes Yes Yes Yes Yes Yes No No No Yes No No
AF Yes Yes Yes Yes Yes Yes No No No No No No
Mode of Transport and ppropriate
ncoterm - ny Mode of Transport
EX
FC
C!T
C!
DF
DDU
DD!
30 November, 2009
Mode of Transport and ppropriate
ncoterm Maritime and nland
aterway Transport Only
FS
FOB
CFR
CF
DES
DEQ
30 November, 2009
&l0FllFS T &Sl
lTFRHS
lways specify which terms are applicable.
hen 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 190.
f C&F is used by mistake a court of law will use the
pre 190 meaning of the term which is very different
from the current meaning of CFR as in ncoterms 1990
and ncoterms 2000.
K..&l0FllFS T &Sl
lTFRHS
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.
nform your bank and insurance company which
ncoterm(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.
l S&HHRY
Must name a place after the NCOTERM
NCOTERMS are negotiable!
NCOTERMS should appear on all commercial
documents
Establish a close relationship with a forwarder
46
30 November, 2009
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