| Group E - Departure |
| EXW |
Ex Works: Long held as the most preferable term for those new-to-export because it represents the minimum liability to the seller. The buyer bears all costs and risks involved in taking the goods from the seller's premises to the desired destination. The seller's obligation is to make the goods available at his premises (works, factory, warehouse) and provide export information to the seller. This term can be used across all modes of transport. |
| Group F - Main carriage unpaid |
| FCA |
Free Carrier: The seller's obligation is to hand over the goods, cleared for export, into the charge of the carrier named by the buyer at the named place or point. If no precise point is indicated by the buyer, the seller may choose within the place or range stipulated where the carrier shall take the goods into his charge. When the seller's assistance is required in making the contract with the carrier the seller may act at the buyers risk and expense. This term can be used across all modes of transport. |
| FAS |
Free Alongside Ship: The seller has fulfilled his obligation when goods have been placed alongside the vessel at the port of shipment. The buyer is responsible for all costs and risks of loss or damage to the goods from that moment. The buyer is also required to clear the goods for export. This term should only be used for sea or inland waterway transport. |
| FOB |
Free On Board: Once the goods have passed over the ship's rail at the port of export the buyer is responsible for all costs and risks of loss or damage to the goods from that point. The seller is required to clear the goods for export. This term should only be used for sea or inland waterway transport. |
| Group C - Main carriage paid |
| CFR |
Cost and Freight: The seller must pay the costs and freight required in bringing the goods to the named port of destination. The risk of loss or damage is transferred from seller to buyer when the goods pass over the ship's rail in the port of shipment. The seller is required to clear the goods for export. This term should only be used for sea or inland waterway transport. |
| CIF |
Cost, Insurance and Freight: The seller has the same obligations as under CFR however he is also required to provide insurance against the buyer's risk of loss or damage to the goods during transit. The seller is required to clear the goods for export. This term should only be used for sea or inland waterway transport. |
| CPT |
Carriage Paid To: The seller pays the freight for the carriage of goods to the named destination. The risk of loss or damage to the goods occurring after the delivery has been made to the carrier is transferred from the seller to the buyer. This term requires the seller to clear the goods for export and can be used across all modes of transport. |
| CIP |
Carriage and Insurance Paid To: The seller has the same obligations as under CPT but has the responsibility of obtaining insurance against the buyer's risk of loss or damage of goods during the carriage. The seller is required to clear the goods for export however is only required to obtain insurance on minimum coverage. This term requires the seller to clear the goods for export and can be used across all modes of transport. |
| Group D - Arrival |
| DAT |
Delivered at Terminal: Seller delivers when the goods, once unloaded from the arriving means of transport, are placed at the disposal of the buyer at a named terminal at the named port or place of destination. "Terminal" includes quay, warehouse, container yard or road, rail or air terminal. Both parties should agree the terminal and if possible a point within the terminal at which point the risks will transfer from the seller to the buyer of the goods. If it is intended that the seller is to bear all the costs and responsibilities from the terminal to another point, DAP or DDP may apply. |
| DAP |
Delivered at Place: Seller delivers the goods when they are placed at the disposal of the buyer on the arriving means of transport ready for unloading at the named place of destination. Parties are advised to specify as clearly as possible the point within the agreed place of destination, because risks transfer at this point from seller to buyer. If the seller is responsible for clearing the goods, paying duties etc., consideration should be given to using the DDP term. |
| DDP |
Delivered Duty Paid: The seller is responsible for delivering the goods to the named place in the country of importation, including all costs and risks in bringing the goods to import destination. This includes duties, taxes and customs formalities. This term may be used irrespective of the mode of transport. |
| INCOTERMS DO NOT ... |
|---|
- Determine ownership or transfer title to the goods, nor evoke payment terms.
- Apply to service contracts, nor define contractual rights or obligations (except for delivery) or breach of contract remedies.
- Protect parties from their own risk or loss, nor cover the goods before or after delivery.
- Specify details of the transfer, transport, and delivery of the goods.
- Container loading is NOT considered packaging, and must be addressed in the sales contract.
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| Terminal Handling Charges |
|---|
| The Incoterms 2010 rules seek to clarify the allocation of terminal handling costs between the parties. This is in response to difficulties that have arisen where such costs, although sometimes included in the carriage costs paid by the buyer, have nevertheless been charged to the buyer by the carrier or terminal operator. The new rules are intended to reduce the risk of the buyer being charged twice for terminal handling costs. |
| Insurance |
|---|
| Minor changes have been made in Incoterms 2010 to those rules that require a party to obtain insurance (CIF and CIP). It is important to note that Incoterms 2010 still requires the seller to obtain only the minimum cover under Institute Cargo "C" Clauses, or equivalent, on a CIF or CIP transaction. In many cases, the buyer will want to include in the contract an express requirement for the more extensive Institute Cargo "A" Clauses. For other terms, there are new provisions requiring the parties to exchange information regarding insurance. |
| Electronic Communication |
|---|
| Incoterms 2000 provided that certain specified documents could be replaced with Electronic Data Interchange (EDI) messages where the parties agreed to do so. Incoterms 2010 now allow for paper communication to be replaced with an "equivalent electronic record or procedure" where the parties so agree or where customary. The reference to custom is significant as it means that in certain cases parties will be unable to refuse electronic communication, such as email. |
| Security |
|---|
| Heightened international concern about security has resulted in increased clearance requirements relating to the movement of goods. In response, Incoterms 2010 includes provisions that allocate responsibility for obtaining or assisting to obtain clearances between the buyer and seller. |
| String Sales |
|---|
| In the sale of commodities it is common for cargo to be sold, perhaps several times, during transit. Incoterms 2000 included obligations for a seller to "ship" the goods but this did not accurately reflect the position of a seller in the middle of a string of transactions who was unable to "ship" goods that had already been shipped by the first seller. Incoterms 2010 now provides an option, where relevant, to allow the seller to procure goods that have been shipped as an alternative to the obligation to ship the goods. |
| Domestic and International Trade |
|---|
| Although Incoterms have traditionally been used in international sale contracts, the ICC has noted that in certain parts of the world trade blocs (such as the EU) have made border formalities between different countries less significant. In addition, there has also been a greater trend towards using Incoterms for purely domestic sale contracts, including in the United States. With this in mind, Incoterms 2010 formally recognises that the rules are available for both domestic and international sale contracts and, where appropriate, the rules state that the obligation to comply with export / import formalities exists only where applicable. |
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