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INCOTERMS
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INCOTERM DEFINITIONS

INCOTERMS
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INCOTERMS
Incoterms - International Commercial Terms: A set of international rules issued by ICC for the interpretation of trade terms.

The first Incoterm rules were published in 1936, then it is revised and added six times in the 1953, 1967, 1976, 1980, 1990, 2000. The latest edition is the Incoterms 2010 which are effective from January 1, 2011.

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INCOTERMS
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INCOTERMS identify the obligations placed on the parties to the contracts in terms of:
- Responsibility relating the costs and the division when shipping the goods. - Distribution of risks associated with the movement of goods. - Where these risks transfer to another party

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What do INCOTERMS cover?

Who

does what, who pays for what, when risk in the goods passes from seller to buyer. When delivery occurs, as well as issues such as insurance, export and import clearance and the allocation of other costs pertaining to the delivery of goods.

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What do INCOTERMS not cover?

There is nothing on ownership/title to the goods, nothing in detail on payment obligations (when, how, what security, against what documents), nothing on detailed vessel requirements, force majeure, termination, insolvency.
tThis is short text. Go ahead and do with In an exampleINCOTERMS replace itnot your own text. tThis isa example constitute an complete text. Go ahead and replace it with your own text. contract convenient, This is an exampleof Go ahead and but it with your own provide text. sale, replace rather text.

internationally recognised rules for the sale of goods. They work well as general outline of the contract of sale which is to be specified and adjusted with further terms and conditions of the contract

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What is Incoterms 2010?

Incoterms 2010
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Incoterms 2010
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Incoterms 2010 consist of 11 terms. Four terms were eliminated (DAF, DEQ, DES, DDU) and two were added: DAT & DAP

Incoterms 2010 are divided into two categories: + Clauses for all types of transport: EXW, FCA, CPT, CIP, DAT, DAP, DDP + Clauses for sea and inland water transport: FAS, FOB, CFR, CIF.

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Is Incoterms 2010 always legally binding in international sales contracts?

- No, it isnt. Because Incoterms are not law, its only provide a set of international rules for obligations, risk and cost while the buyers get the goods to the sellers.

- The goal of the new Incoterms 2010 is to simplify the drafting of sale contracts by clearly defining some of the obligations of both buyers and sellers , thus avoiding misunderstandings , which might otherwise occur.

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Is Incoterms 2010 always legally binding in international sales contracts?

- Incoterms cant be used as a completed foreign contract - So, we can use Incoterms 2000 in international sales contracts. however, incoterms 2010 is still encouraged because it provides the new standards to current economic conditions

- Whether selecting any conditions Incoterms, the parties still need to know that the interpretation of contracts also govern its own strong traditions of each port or locality concerned.

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STRUCTURE OF INCOTERMS 2010

EXW FCA CPT CIP DAT DAP DDP - Rules for Any mode of transport EX WORKS FREE CARRIER CARRIAGE PAID TO CARRIAGE AND INSURANCE PAID TO DELIVERED AT TERMINAL DELIVERED AT PLACE DELIVERED DUTY PAID

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STRUCTURE OF INCOTERMS 2010

-Rules for Sea and inland waterway transport only FAS FREE ALONGSIDE SHIP FOB FREE ON BOARD CFR COST AND FREIGHT CIF COST INSURANCE AND FREIGHT

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RESPONSIBILITY OF SELLER AND BUYER UNDER EACH TERM

The Seller's only responsibility is to make the goods available at the Seller's premises. The Buyer bears full costs and risks of moving the goods from there to destination. The Seller delivers the goods, cleared for export, to the carrier selected by the Buyer. The Seller loads the goods if the carrier pickup is at the Seller's premises. From that point, the Buyer bears the costs and risks of moving the goods to destination The Seller pays for moving the goods to destination. From the time the goods are transferred to the first carrier, the Buyer bears the risks of loss or damage.
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EXW

FCA

CPT

RESPONSIBILITY OF SELLER AND BUYER UNDER EACH TERM

CIP

The Seller pays for moving the goods to destination. From the time the goods are transferred to the first carrier, the Buyer bears the risks of loss or damage. The Seller, however, purchases the cargo insurance. The Seller delivers when the goods, once unloaded from the arriving means of transport, are placed at the Buyer's disposal at a named terminal at the named port or place of destination. The Seller bears all risks involved in bringing the goods to and unloading them at the terminal at the named port or place of destination. The Seller delivers when the goods are placed at the Buyer's disposal on the arriving means of transport ready for unloading at the names place of destination. The Seller bears all risks involved in bringing the goods to the named place.

DAT

DAP

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Theo http://www.orey-shipping.com/60Incoterms.pdf

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What is the difference between: FOB & FCA, CIF & CIP, CFR & CPT?

The differences between FOB & FCA:

FOB (Free On Board) (Rule for sea and inland waterway transport): Seller delivers the good (cleared for export) on board the vessel nominated by buyer at the port of delivery . Cost and risk change from seller to buyer as the goods pass over the imaginary vertical line defined by the ship's rail. FCA (Free Carrier) (Rule for any mode of transport): Seller hands over the goods to buyer's designated carrier (precleared for export) at the named place. Cost and risk change from seller to buyer as soon as the goods are accepted and signed for by the buyer's designated carrier.
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What is the difference between: FOB & FCA, CIF & CIP, CFR & CPT?
The differences between CIP & CIF:

CIP - Carriage and Insurance Paid (To) (Rule for any mode of transport) The seller delivers the goods (cleared for export) to the carrier nominated by the seller and seller arranges and pays for the carriage up to the named place of destination. Seller contracts for insurance. Seller pays for carriage and insurance to the named destination point. CIF Cost, Insurance and Freight (Rule for sea and inland waterway transport): The seller delivers the goods on board the vessel and pays the cost and freight necessary to bring the goods to the named port of destination. Seller contracts for insurance. Risk passes and cost are transferred at difference places.
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What is the difference between: FOB & FCA, CIF & CIP, CFR & CPT?

The differences between CFR & CPT:

CFR- Cost and Freight (Rule for sea and inland waterway transport): The seller delivers the goods on board the vessel and pays the cost and freight necessary to bring the goods to the named port of destination. Risk passes and cost are transferred at difference places, the risk passes when the goods are on board the vessel (not until the goods reach the destination); the cost of carriage will be covered by the seller until the goods reach destination. CPT- Carriage Paid To (Rule for any mode of transport): The seller delivers the goods (cleared for export) to the carrier or another person nominated by the seller and seller arranges and pays for the carriage up to the named place of destination. Risk to the goods transfers from the seller to the buyer when good so delivered to the first carrier not until the goods reach destination.
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When shouldnt FOB, CIF, CFR be used?

FOB CIF CFR rules for sea and inland waterway transport, FCA CIP CPT are applicable to goods for transport by air, rail, road and containerised/multi-modal transport.

FOB, CIF, CFR may not be appropriate for use where goods are handed over to the carrier before they are on board the vessel, for example goods in containers, which are typically delivered at a terminal. In such situations, the FCA, CIP, CPT rule should be used.

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