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1990 Incoterms Defined
Incoterms are divided into the
following four basic groups:
C-TERMS
CFR - COST AND FREIGHT (... named port of
destination)
"Cost and Freight" means that the seller must pay the costs
and freight necessary to bring the goods to the named port of destination
but the risk of loss of or damage to the goods, as well as any additional
costs due to events occurring after the time the goods have been delivered
on board the vessel, is transferred from the seller to the buyer when
the goods pass the ship's rail in the port of shipment.
The CFR term requires the seller to clear the goods for export.
This term can only be used for sea and inland waterway transport. When
the ship's rail serves no practical purpose, such as in the case of roll-on/roll-off
or container traffic, the CPT term is more appropriate to use.
CIF - COST, INSURANCE AND FREIGHT (... named port of
destination)
"Cost, Insurance and Freight" means that the seller has the
same obligations as under CFR but with the addition that he has to procure
marine insurance against the buyer's risk of loss of or damage to the
goods during the carriage. The seller contracts for insurance and pays
the insurance premium.
The buyer should note that under the CIF term the seller is only required
to obtain insurance on minimum coverage. The CIF term requires the seller
to clear the goods for export. This term can only be used for sea and
inland waterway transport. When the ship's rail serves no practical purposes
such as in the case of roll-on/ roll-off or container traffic, the CIP
term is more appropriate to use.
CPT - CARRIAGE PAID
TO (... named place of destination)
"Carriage paid to... " means that the seller pays the freight
for the carriage of the goods to the named destination. The risk of loss
of or damage to the goods, as well as any additional costs due to events
occurring after the time the goods have been delivered to the carrier,
is transferred from the seller to the buyer when the goods have been delivered
into the custody of the carrier.
"Carrier" means any person who, in a contract of carriage, undertakes
to perform or to procure the performance of' carriage, by rail, road,
sea, air, inland waterway or by a combination of such modes.
If subsequent carriers are used for the carriage to the agreed destination,
the risk passes when the goods have been delivered to the first carrier.
The CPT term requires the seller to clear the goods for export.
This term may be used for any mode of transport including multimodal transport.
CIP - CARRIAGE
AND INSURANCE PAID TO (... named place of destination)
"Carriage and insurance paid to..." means that the seller has
the same obligations as under CPT but with the addition that the seller
has to procure cargo insurance against the buyer's risk of loss of or
damage to the goods during the carriage. The seller contracts for insurance
and pays the insurance premium.
The buyer should note that under the CIP term the seller is only required
to obtain insurance on minimum coverage. The CIP term requires the seller
to clear the goods for export. This term may be used for any mode of transport
including multimodal transport.
D-TERMS
DAF - DELIVERED
AT FRONTIER (... named place)
"Delivered at Frontier" means that the seller fulfils his obligation
to deliver when the goods have been made available, cleared for export,
at the named point and place at the frontier, but before the customs border
of the adjoining country. The term "frontier" may be used for
any frontier including that of the country of export. Therefore, it is
of vital importance that the frontier in question be defined precisely
by always naming the point and place in the term. The term is primarily
intended to be used when goods are to be carried by rail or road, but
it may be used for any mode of transport.
DES - DELIVERED
EX SHIP (... named port of destination)
"Ex Ship" means that the seller fulfils his obligation to deliver
when the goods have been made available to the buyer on board the ship
uncleared for import at the named port of destination. The seller has
to bear all the costs and risks involved in bringing the goods to the
named port of destination. This term can only be used for sea or inland
waterway transport.
DEQ - DELIVERED
EX QUAY (DUTY PAID) (... named port of destination)
"Delivered Ex Quay (duty paid)" means that the seller fulfils
his obligation to deliver when he has made the goods available to the
buyer on the quay (wharf) at the named port of destination, cleared for
importation. The seller has to bear all risks and costs including duties,
taxes and other charges of delivering the goods thereto.
This term should not be used if the seller is unable directly or indirectly
to obtain the import license.
If the parties wish the buyer to clear the goods for importation and pay
the duty the words duty unpaid,, should be used instead of "duty
paid".
If the parties wish to exclude from the seller's obligations some of the
costs payable upon importation of the goods (such as value added tax (VAT)),
this should be made clear by adding words to this effect: "Delivered
ex quay, VAT unpaid (... named port of destination)".
This term can only be used for sea or inland waterway transport.
DDU - DELIVERED
DUTY UNPAID (... named place of destination)
"Delivered duty unpaid" means that the seller fulfils his obligation
to deliver when the goods have been made available at the named place
in the country of importation. The seller has to bear the costs and risks
involved in bringing the goods thereto (excluding duties, taxes and other
official charges payable upon importation) as well as the costs and risks
of carrying out customs formalities. The buyer has to pay any additional
costs and to bear any risks caused by his failure to clear the goods for
import in time.
If the parties wish the seller to carry out customs formalities and bear
the costs and risks resulting therefrom, this has to be made clear by
adding words to this effect.
If the parties wish to include in the seller's obligations some of the
costs payable upon importation of the goods (such as value added tax (VAT)),
this should be made clear by adding words to this effect: Delivered duty
unpaid, VAT paid, (... named place of destination) ,,.
This term may be used irrespective of the mode of transport.
DDP - DELIVERED
Duty PAID (... named place of destination)
"Delivered duty paid" means that the seller fulfils his obligation
to deliver when the goods have been made available at the named place
in the country of importation. The seller has to bear the risks and costs,
including duties, taxes and other charges of delivering the goods thereto,
cleared for importation. Whilst the DDU should be used.
If the parties wish to exclude from the seller's obligations some of the
costs payable upon importation of the goods (such as value added tax (VAT)),
this should be made clear by adding words to this effect: "Delivered
duty paid, VAT unpaid (...named place of destination)".
This term may be used irrespective of the mode of transport.
E-TERMS
EXW - EX WORKS
(... named place)
"Ex works" means that the seller fulfils his obligation to deliver
when he has made the goods available at his premises (i.e. works, factory,
warehouse, etc.) to the buyer. In particular, he is not responsible for
loading the goods on the vehicle provided by the buyer or for clearing
the goods for export, unless otherwise agreed. The buyer bears all costs
and risks involved in taking the goods from the seller's premises to the
desired destination. This term thus represents the minimum obligation
for the seller. This term should not be used when the buyer cannot carry
out directly or indirectly the export formalities. In such circumstances,
the FCA term should be used.
F-TERMS
FCA - FREE CARRIER
(... named place)
"Free Carrier" means that the seller fulfils his obligation
to deliver when he has handed 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, according to commercial practice, the seller's assistance
is required in making the contract with the carrier (such as in rail or
air transport) the seller may act at the buyer's risk and expense.
This term may be used for any mode of transport, including multimodal
transport.
"Carrier" means any person who, in a contract of carriage, undertakes
to perform or to procure the performance of carriage by rail, road, sea,
air, inland waterway or by a combination of such modes. If the buyer instructs
the seller to deliver the cargo to a person, e.g. a freight forwarder
who is not a "carrier", the seller is deemed to have fulfilled
his obligation to deliver the goods when they are in the custody of that
person.
"Transport terminal", means a railway terminal, a freight station,
a container terminal or yard, a multi-purpose cargo terminal or any similar
receiving point.
"Container" includes any equipment used to unitise cargo, e.g.
all types of containers and/or flats, whether ISO accepted or not, trailers,
swap bodies, ro-ro equipment, igloos, and applies to all modes of transport.
FAS - FREE ALONGSIDE
SHIP (... named port of shipment)
"Free Alongside Ship" means that the seller fulfils his obligation
to deliver when the goods have been placed alongside the vessel on the
quay or in lighters at the named port of shipment.
This means that the buyer has to bear all costs and risks of loss of or
damage to the goods from that moment. The FAS term requires the buyer
to clear the goods for export. It should not be used when the buyer cannot
carry out directly or indirectly the export formalities.
This term can only be used for sea or inland waterway transport.
FOB - FREE
ON BOARD (... named port of shipment)
"Free on Board" means that the seller fulfils his obligation
to deliver when the goods have passed over the ship's rail at the named
port of shipment. This means that the buyer has to bear all costs and
risks of loss of or damage to the goods from that point.
The FOB term requires the seller to clear the goods for export.
This term can only be used for sea or inland waterway transport. When
the ship's rail serves no practical purpose, such as in the case of roll-on/roll-off
or container traffic, the FCA term is more appropriate to use.
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