Incoterm is formed from phrase i-e international commercial term.

Incoterms are a set of international rules for interpretation of trade terms developed by the ICC for the ist time in 1936 OBJECTIVE: In order to remove the source of friction in international trade leading to disputes

 Incoterms

has been revised and updated to keep pace with changing trend in IT The 1980 version catered for the revolutionary changes in the transportation industry brought about by containerization It covered transportation from exporters warehouse to importers warehouse through the term known multi-modal transport

 The

1990 version recognizes the increasing use of electronic data interchange and amended the MMT to FCA (free carrier named place), CPT (carriage paid named place and destination) CIP (carriage and insurance paid to named place and destination)

 In

international trade transactions, goods movement would be: 1. from sellers place to international transporters place, e.g Pesh-to Karachi 2. from sellers transporters place to buyers transporters placekarachi port to Hull port 3. from port to buyers place of business

 Any

international trade transaction will involve: i. arrangement and payment of goods from the place of seller to the place of buyer Ii. Coverage of risk if the transaction is not carried out as per agreed terms Iii. Compensation for the loss of or damage to the goods during transit

There are 13 Incoterms 1. Ex-Works (EXW) sellers responsibility is to deliver the goods at his own premises. The seller is not responsible for loading the goods on vehicles brought in by the buyer 2. FCA: Free Carrier (named place) Delivery of goods at a named place, container terminal. The sellers obligation is to bear all risks and costs until the goods are delivered into the custody of the carrier named by the buyer at the named place or point

 3.

FAS (free alongside shipnamed port) The sellers obligation is to bear all risks and costs until the goods have been placed alongside the ship on the quay at the named port of shipment. Karachi sea port provide Dock Receipt 4. FOB (free on board) Goods to cross ships rail and be loaded on board a named ship. The seller obligation is to bear all risks and cost until the goods are loaded on board a ship named in the contract

 5.

Cost & Freight (c &f) The sellers obligation is to bear all risks and costs including freight to bring the goods to the named destination until the goods pass the ships rail in the port of shipment. The seller will complete export customs formalities, payment of duties, freight and loading

 6.

Cost, Insurance & Freight (CIF) The sellers obligation is to supply goods and commercial invoice, carriage of goods to the named port of destination, procure at his own expenses and in a transferable form, a policy of cargo insurance and bear all risks of loss of or damage to the goods until such time as they have passed the ships rail at the port of shipment

 7.

CPT (Carriage paid to named place of destination) The sellers obligation is to pay the freight for the carriage of goods to the named destination and bear the risk until the goods are delivered into the custody of the carrier 8. CIP (Carriage & insurance paid to the named place and destination) CPT + to procure cargo insurance against the risk of loss of or damage to the goods during the carriage. i=invoice value +10%

 9.

DAF (Delivered at Frontier named place) The sellers obligation is until the time the goods have been made available and cleared foe export at the named point at the frontier. This term is used when a land route is used for transport of goods 10. DES (Delivered Ex-ship named port of destination) Similar to CIF except that the sellers obligation is make the goods available to the buyer on board the ship

 11.

DEQ (Delivered Ex-goods Quay fully paid named port of destination) The sellers obligation is to make the goods available to the buyer on the quay at the port of destination named in the contract of sale. The seller has to pay unloading charges, complete import formalities and pay taxes and dties

 12.

DDU (Delivered duty unpaid named place of destination) under this term the sellers obligation is to deliver the goods at the named place in the country of buyer. The seller has to bear all risks and expenses for completing customs formalities etc but not the duty and taxes. All costs risk to be borne upto that place. The taxes are to be paid by importer but import formalities are to be completed by the exporter

 13.

DDP (Delivered duty paid) In this term the sellers obligation is to deliver the goods at the named place in the country of the buyer. The seller has to bear all risks and expenses including duties, taxes and clearance costs.