Incoterms
The Incoterms rules or International Commercial Terms are a series of pre-defined commercial terms published by the International Chamber of Commerce (ICC) that are widely used in International commercial transactions or procurement processes.
Delivery terms Incoterms 2010
In modern transport systems goods are not always inspected at points where the risk is transferred according to Incoterms 2010. To avoid dispute in cases where loss or damage has incurred along the transport chain, it is advisable to agree to terms and delivery where one party bears the risk for the goods during the entire transport.
When making an agreement based on Incoterms, it is advisable to state the terms of delivery agreed in the contract of sale and commercial invoices e.g. "FOB Gothenburg, Incoterms 2010". This prevents problems with interpretation which may arise in countries that have their own definitions of delivery terms. If recommends the use of Incoterms for international shipments and strongly advises against forming own delivery terms.
- FCA
- FAS
- FOB
- CFR
- CIF
- CPT
- CIP
- DAP
- DAT
- DDP
EXW - Ex Works
(named place; ex factory ex mill, ex warehouse etc)
The buyer is at risk when the goods have been placed at his disposal at agreed time and place.
Recommendation on insurance: The buyer may insure the transportation if the buyer so desires. The Buyer bears the risk during the whole transportation.
The seller delivers the goods: when it places the goods at the disposal of the buyer at the seller’s premises or at another named place (i.e.,works, factory, warehouse, etc.).
FCA - Free Carrier
(named place)
The buyer is at risk when the goods have been delivered to the first carrier or terminal at agreed time and place.
Recommendation on insurance: Both the buyer and the seller may insure their respective legs of the transportation, if they so desire.
The seller delivers the goods: to the carrier or another person nominated by the buyer at the seller’s premises or another named place. The parties are well advised to specify as clearly as possible the point within the named place of delivery, as the risk passes to the buyer at that point.
FAS - Free alongside ship
(named port of shipment - sea and waterway transports only)
The buyer is at risk when the goods have been delivered alongside the ship at the port of shipment.
Recommendation on insurance: Both the buyer and the seller may insure their respective legs of the transportation, if they so desire.
The seller delivers the goods: when the goods are placed alongside the vessel (e.g., on a quay or a barge) nominated by the buyer at the named port of shipment. The risk of loss of or damage to the goods passes when the goods are alongside the ship, and the buyer bears all costs from that moment onwards.
FOB - Free on board
(named port of shipment - sea and waterway transports only)
The buyer is at risk when the goods have been delivered onboard the ship at the port of shipment.
Recommendation on insurance: Both the buyer and the seller may insure their respective legs of the transportation, if they so desire.
The seller delivers the goods: on board the vessel nominated by the buyer at the named port of shipment or procures the goods already so delivered. The risk of loss of or damage to the goods passes when the goods are on board the vessel, and the buyer bears all costs from that moment onwards.
CFR - Cost and freight
(named port of destination - sea and waterway transports only)
The buyer is at risk when the goods have been delivered onboard the ship at the port of shipment.
Recommendation on insurance: Both the buyer and the seller may insure their respective legs of the transportation, if they so desire.
The seller delivers the goods: on board the vessel or procures the goods already so delivered. The risk of loss of or damage to the goods passes when the goods are on board the vessel. The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination.
CIF - Cost, insurance and freight
(named port of destination - sea and waterway transports only)
The buyer is at risk when the goods have been delivered onboard the ship at the port of shipment.
Recommendation on insurance: Insurance must be covered by the seller (in favour of the buyer) to the port of destination complying with at least Institute Cargo Clauses (C) or similar clauses (further transports by the buyer if the buyer so desires)
The seller delivers the goods: on board the vessel or procures the goods already so delivered. The risk of loss of or damage to the goods passes when the goods are on board the vessel. The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination.
The seller also contracts for insurance cover against the buyer’s risk of loss of or damage to the goods during the carriage. The buyer should note that under CIF the seller is required to obtain insurance only on minimum cover. Should the buyer wish to have more insurance protection, it will need either to agree as much expressly with the seller or to make its own extra insurance arrangements.
CPT - Carriage paid to
(named place of destination)
The buyer is at risk when the goods have been delivered to the first carrier or terminal.
Recommendation on insurance: The buyer may insure the transportation if the buyer so desires.
The seller delivers the goods: to the carrier or another person nominated by the seller at an agreed place (if any such place is agreed between parties) and that the seller must contract for and pay the costs of carriage necessary to bring the goods to the named place of destination.
CIP - Carriage and insurance paid to
(named place of destination)
The buyer is at risk when the goods have been delivered to the first carrier.
Recommendation on insurance: Insurance must be covered by the seller (in favour of the buyer) to the place of destination complying with at least Institute Cargo Clauses (C) or similar clauses (further transports by the buyer if the buyer so desires).
The seller delivers the goods: to the carrier or another person nominated by the seller at an agreed place (if any such place is agreed between parties) and that the seller must contract for and pay the costs of carriage necessary to bring the goods to the named place of destination.
DAP - Delivered at place
(named place of destination)
The buyer is at risk when the goods have been placed at his disposal at agreed place of destination ready for unloading.
Recommendation on insurance: Both the buyer and the seller may insure their respective legs of the transportation, if they so desire.
The seller delivers the goods: when the goods are placed at the disposal of the buyer on the arriving means of transport ready for unloading at the named place of destination. The seller bears all risks involved in bringing the goods to the named place.
DAT - Delivered at terminal
(named terminal at port or place of destination)
The buyer is at risk when the goods have been placed at his disposal at agreed terminal unloaded.
Recommendation on insurance: The seller may insure the transportation to the terminal, if the seller so desires (further transportations by the buyer, if the buyer so desires).
The seller delivers the goods: 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 a place, whether covered or not, such as a quay, warehouse, container yard or road, rail or air cargo terminal. 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.
DDP - Delivered duty paid
(named place of destination)
The buyer is at risk when the goods have been placed at his disposal at agreed place of destination cleared for import and with duties paid ready for unloading.
Recommendation on insurance: The seller may insure the transportation if the seller so desires. The seller bears the risk during the whole transportation.
The seller delivers the goods:when the goods are placed at the disposal of the buyer, cleared for import on the arriving means of transport ready for unloading at the named place of destination. The seller bears all the costs and risks involved in bringing the goods to the place of destination and has an obligation to clear the goods not only for export but also for import, to pay any duty for both export and import and to carry out all customs formalities.
