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information and bring you the international trade practices as they pertain to a private
|Incoterms (“International Commercial Terms") 2000
Incoterms are international rules and commonly used terms that are accepted worldwide in international
trading contracts. Without the Incoterms 2000 terms can be misunderstandings, disputes and litigation
will come to rise.
The first version introduce by ICC was incoterms 1936 in 1936. ICC expert lawyers and trade
practitioners have updated them six times to keep pace with the development of international trade. The
latest edition of Incoterms, which came into force on 1 January 2000. Unless parties decide otherwise,
earlier versions of Incoterms - like Incoterms 1990 - are still binding if incorporated in contracts that are
unfulfilled and date from before 1 January 2000.
Correct use of Incoterms goes a long way to providing the legal certainty upon which mutual confidence
between business partners must be based. To be sure of using them correctly, trade practitioners need
to consult the full texts of Incoterms 2000 (“International Commercial Terms")
Understanding The 13 Incoterms International Terms
• Ex Works (EXW)
• Free Carrier, (Named Place:) Seller's Premises or Named Place of Origin (FCA)
• Free Alongside Ship, (Named Port of Shipment) (FAS)
• Free on Board, (Named Port of shipment) (FOB)
• Cost and Freight, (Port of Destination) (CFR)
• Cost, Insurance and Freight, (Port of Destination) (CIF)
• Carriage Paid To, (Named Place of Destination) (CPT)
• Carriage and Insurance Paid To, (Named Place of Destination) (CIP)
• Delivered at Frontier, (Named Place of Destination) (DAF)
• Delivered Ex Ship, (Named Place of Destination) (DES)
• Delivered Ex Quay, (Named Place of Destination) (DEQ)
• Delivered Duty Unpaid, (Named Place of Destination) (DDU)
• Delivered Duty Paid, (Named Place of Destination) (DDP)
EXW – Ex Works (named place)
The seller makes the goods available at his premises. The buyer is responsible for all
This term may be the easiest to administer, however may not be in the seller's best interests.
There is no control over the final destination of the goods. It may be possible for the seller to
negotiate better freight rates than the buyer. A vehicle arriving to take delivery of the seller's
goods under EXW may not be suitable for carriage.
FCA – Free Carrier (named place)
The seller hands over the goods, cleared for export, into the custody of the first carrier
(named by the buyer) at the named place. This term is suitable for all modes of transport,
including carriage by air, rail, road, and containerized / multi-modal transport.
FAS – Free Alongside Ship (named loading port)
The seller must place the goods alongside the ship at the named port. The seller must
clear the goods for export; this changed in the 2000 version of the Incoterms. Suitable for
maritime transport only.
FOB – Free On Board (named loading port)
The classic maritime trade term. The seller must load the goods on board the ship
nominated by the buyer, cost and risk being divided at ship's rail. The seller must clear the
goods for export. Maritime transport only.
CFR – Cost and Freight (named destination port)
Seller must pay the costs and freight to bring the goods to the port of destination. However,
risk is transferred to the buyer once the goods have crossed the ship's rail. Maritime
CIF – Cost, Insurance and Freight (named place of destination)
The seller pays the cost of shipment up to the ship. The seller pays the insurance cargo
freight cost up to destination port.
The seller is required to arrange for the carriage of goods by sea to a port of destination, CPT – Carriage Paid To (named place of destination)
and provide the buyer with the documents necessary to obtain the goods from the carrier.
Seller is required to clear the goods for export.
The supplier is paid when the documents are turned over to the buyer at the port of loading.
The risk passes when the goods pass the ships rail at the time of delivery.
The general/containerised/multimodal equivalent of CFR. The seller pays for carriage to t
he named point of destination, but risk passes when the goods are handed over to the first
CIP – Carriage and Insurance Paid (To) (named place of destination)
The containerized transport/multimodal equivalent of CIF. Seller pays for carriage and
insurance to the named destination point, but risk passes when the goods are handed over
to the first carrier.
DAF – Delivered At Frontier (named place)
This term can be used when the goods are transported by rail and road. The seller pays
for transportation to the named place of delivery at the frontier. The buyer arranges for
customs clearance and pays for transportation from the frontier to his factory. The passing
of risk occurs at the frontier.
DES – Delivered Ex Ship (named port)
Where goods are delivered ex ship, the passing of risk does not occur until the ship has
arrived at the named port of destination and the goods made available for unloading to
the buyer. The seller pays the same freight and insurance costs as he would under a CIF
arrangement. Unlike CFR and CIF terms, the seller has agreed to bear not just cost, but
also Risk and Title up to the arrival of the vessel at the named port. Costs for unloading
the goods and any duties, taxes, etc… are for the Buyer. A commonly used term in
shipping bulk commodities, such as coal, grain, dry chemicals - - - and where the seller
either owns or has chartered, their own vessel.
DEQ – Delivered Ex Quay (named port)
This is similar to DES, but the passing of risk does not occur until the goods have been
unloaded at the port of destination.
DDU – Delivered Duty Unpaid (named destination place)
This term means that the seller delivers the goods to the buyer to the named place of
destination in the contract of sale. The goods are not cleared for import or unloaded
from any form of transport at the place of destination. The buyer is responsible for the costs
and risks for the unloading, duty and any subsequent delivery beyond the place of
destination. However, if the buyer wishes the seller to bear cost and risks associated
with the import clearance, duty, unloading and subsequent delivery beyond the place of
destination, then this all needs to be explicitly agreed upon in the contract of sale.
DDP – Delivered Duty Paid (named destination place)
This term means that the seller pays for all transportation costs and bears all risk until the
goods have been delivered and pays the duty. Also used interchangeably with the term
"Free Domicile". The most comprehensive term for the buyer.
|Certificate of Origin
|Precarriage Bill of Lading
|Other Governmental (EPA/FDA
|Main Carriage Bill of Lading
|On-Carriage Bill of lading
|DOCUMENTS: Responsibility for Preparation
Seller = S
Buyer = B
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