Incoterms

PRESENTS

Purpose of INCOTERMS
(INternational COmmercial TERMS)


1920 Study by the International Chamber of Commerce (ICC) - Headquarters in Paris, France

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Study confirmed:
 Countries have different Trading Practices  Trade terms understood differently by different countries  Lead to
 Misunderstandings  Disputes and Litigation  Waste of time and Money

 Need foruniformity of interpretation

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INCOTERMS


Most commonly used commercial trade terms

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INCOTERMS Revision History


“INCOTERMS 1936”
 First set of rules

–Updated periodically
Industry

Practices Documentation Transportation
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INCOTERM Updates


Amendments made to original
 1953 - Thorough revision  1967 - Delivered terms added  1976 - Terms for goods carriedby air added

 1980 - Addition of FRC now FCA and CIP
 1990 - EDI & multimodal considerations  2000 - Clarify, minor changes from 1990 version

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Buyer/Seller Need to Know & INCOTERMS Define


Who arranges clearance of goods for export/import
Who pays costs of loading and unloading goods How risk of loss/damage is divided








Who arranges insurance
Who isresponsible for arranging carriage from seller to buyer
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Various Contracts
  

Contract of Sale
– Buyer and Seller Agreement

Contract of Carriage
– Carrier contract to transport goods

Contract of Insurance
– Contract with Insurance Underwriter to provide loss and damage coverage



Contract for Financing
– Contract with lending institution to finance production and/or paymentof goods
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CONTRACTS OF CARRIAGE

Rail and Truck Bills of Lading

Ocean Bill of Lading

© STAR USA, INC. 419-281-4100

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INCOTERMS
Part of Sales Contract


SALES CONTRACT

Sales Contract Determines
– Quantity and quality of merchandise – Price to be paid



Trade terms deal with
– Questions related to delivery of merchandise

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13 INCOTERMS
           

EXW FCA FAS FOB CFR CIF CPT CIP DAF DES DEQ DDU DDP

Ex Works Free Carrier Free Alongside Free on Board Cost and Freight Cost, Insurance and Freight Carriage Paid To Carriage and Insurance Paid To Delivered At Frontier Delivered Ex Ship Delivered Ex Quay Delivered Duty Unpaid Delivered Duty Paid
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Structure of INCOTERMS


Grouped into Four Categories

 

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Group EGroup F Group C Group D
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10 Headings - Mirror Image
A. Seller Obligations…
A1 Provide goods in conformity
with contract A2 Arrange & Pay Export Clearance A3 Contract of carriage & insurance A4 Delivery A5 Transfer of risks A6 Division of costs A7 Notice to buyer A8 Proof of Delivery, Transport Doc... A9 Checking-Packaging-Marking A10 Other

B. Buyer Obligations…
B1 Pay the Price perContract
B2 Arrange & Pay Import License B3 Contract of carriage & insurance B4 Delivery B5 Transfer of risks B6 Division of costs B7 Notice to Seller B8 Proof of Delivery,Transport Doc... B9 Pre-shipment Inspection Costs B10 Other

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Group E - Departure


EXW - Ex Works (…named place)

• Seller’s obligations minimal

• Place goods at disposal of buyer at Seller’s premises • Noresponsibility to load vehicle • Europe versus United States • Truck driver’s load own vehicles

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Group F - Main Carriage Unpaid
FCA Free Carrier (…named place)  FAS Free Alongside Ship (…named port of
 shipment) 

FOB Free On Board
shipment)

(…named port of

• Seller delivers goods for carriage -

buyer provides instructions
Main Carriage refers to the primary carrier. •Generally, carrier that transports product from one country to another
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Group C - Main Carriage Paid
   

CFR Cost and Freight
○ (…named port of destination)

CIF Cost, Insurance and Freight
○ (…named port of destination)

CPT Carriage Paid To
○ (…named place of destination)

CIP Carriage and Insurance Paid To
○ (…named place of destination)

• Seller contracts carriage to...