5

INCOTERMS 2000

ICC (International Chamber of Commerce) Official Rules for the

Interpretation of Trade terms.
Purpose is to provide a set of international rules for the interpretation of the
most commonly used trade terms.
10 categories describing where risks lie between seller and buyer
International Commercial Terms (INCOTERMS)

INCO TERMS PURPOSE & SCOPE

Pricing terms, shipping terms, sales terms

Applies to international trade
Define the rights and obligation of the parties to the contract of sale
with respect to the delivery of goods sold.
 5
INCOTERMS Scope Contd..

Does not include intangibles.

Do not provide for all the duties which parties may include in a sales
contract.
Does not include breach of contract.

INCOTERMS Who needs to know??

Importers
Exporters
Insurers
Bankers
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Four Groups of Incoterms

Less More
Control 1) E group Control

2) F group
Seller Buyer
3) C group
More Less
Control
4) D group Control
The E-term is the term in which the sellers 5
obligation is at its minimum.

EXW
EX WORKS (named place)
Seller delivers when goods placed at disposal of buyer
Minimum obligation for the seller.
SELLER BUYER

Seller/ Export Delivered at Loading Onboard Discharging Delivery at Import Buyer/

Exporter Documents named place Port of Ship Port of named place of Documents Importer
Premises Formalities of: Shipment Rail Arrival destination: Formalities Premises
Frontier/ Plane Frontier/
Terminal/ Ships Ships Terminal/Quay
Quay Rail Rail
Sellers Buyers Risks
Risks

Sellers Buyers Cost

Cost
The F terms require the seller to deliver goods 5
for carriage as instructed by the buyer.

FCA Free Carrier

FAS Free Alongside Ship
FOB Free on Board
 FCA Free Carrier 5
(named place)

Seller delivers when goods, cleared for export, to the carrier nominated by
the buyer at a named place.
Term may be used irrespective of the mode of transport.
Seller obligated to load goods on arriving vehicle if it arrives at the sellers
premises.
Seller not obliged to unload goods from his vehicle.
SELLER BUYER

Seller/ Export Delivered at Loading Onboard Discharging Delivery at Import Buyer/

Exporter Documents named place Port of Ship Port of named place of Documents Importer
Premises Formalities of: Shipment Rail Arrival destination: Formalities Premises
Frontier/ Plane Frontier/
Terminal/ Ships Ships Terminal/Quay
Quay Rail Rail
Sellers Risks Buyers Risks

Sellers Cost Buyers Cost

 FAS Free Alongside Ship 5
(named port of shipment)

Seller delivers when goods, cleared for export, are placed alongside the
vessel
Seller obliged to clear goods for export.
The buyer bears all costs and risks of loss or damage to the goods from that
moment.
Terms can be used for sea or inland waterway transport only.
SELLER BUYER

Seller/ Export Delivered at Loading Onboard Discharging Delivery at Import Buyer/

Exporter Documents named place Port of Ship Port of named place of Documents Importer
Premises Formalities of: Shipment Rail Arrival destination: Formalities Premises
Frontier/ Plane Frontier/
Terminal/ Ships Ships Terminal/Quay
Quay Rail Rail
Sellers Risks Buyers Risks

Sellers Cost Buyers Cost

 FOB Free on Board 5
(named port of shipment)

Seller delivers when goods, cleared for export, pass the ships rail at the
named port of shipment.
The buyer bears all costs and risks of loss or damage to the goods from that
point.
Term can be used for sea or inland waterway transport only.
If intent is not to deliver goods across the ships rail, use FCA
SELLER BUYER

Seller/ Export Delivered at Loading Onboard Discharging Delivery at Import Buyer/

Exporter Documents named place Port of Ship Port of named place of Documents Importer
Premises Formalities of: Shipment Rail Arrival destination: Formalities Premises
Frontier/ Plane Frontier/
Terminal/ Ships Ships Terminal/Quay
Quay Rail Rail
Sellers Risks Buyers Risks

Sellers Cost Buyers Cost

The C terms require the seller to contract for 5
carriage at his expense to a specified point.

CFR Cost and Frieght

CIF Cost, Insurance and Frieght
CPT Cost Paid To
CIP Carriage and Insurance Paid To
 CFR COST AND FREIGHT 5
(named port of destination)

Seller delivers when goods, cleared for export, pass the ships rail at the
named port of shipment.
The seller pays the costs and freight necessary to bring goods to port of
destination, but the buyer bears the risk of loss and additional costs
occurring after delivery.
Term can be used for sea or inland waterway transport.
If intent is not to deliver goods across the ships rail, use CPT
SELLER BUYER

Seller/ Export Delivered at Loading Onboard Discharging Delivery at Import Buyer/

Exporter Documents named place Port of Ship Port of named place of Documents Importer
Premises Formalities of: Shipment Rail Arrival destination: Formalities Premises
Frontier/ Plane Frontier/
Terminal/ Ships Ships Terminal/Quay
Quay Rail Rail
Sellers Risks Buyers Risks

Sellers Cost Buyers Cost

 CIF Cost, Insurance and Freight 5
(named port of destination)

Seller delivers when goods, cleared for export, pass the ships rail at the named port
of shipment.
The seller pays the costs and freight necessary to bring goods to port of destination,
but the buyer bears the risk of loss and additional costs occurring after delivery.
The seller procures marine insurance, against buyers risk of loss. Seller is
required to obtain insurance only on minimum cover.
Term can be used for sea or inland waterway transport.
If intent is not to deliver goods across the ships rail, use CIP.
SELLER BUYER

Seller/ Export Delivered at Loading Onboard Discharging Delivery at Import Buyer/

Exporter Documents named place Port of Ship Port of named place of Documents Importer
Premises Formalities of: Shipment Rail Arrival destination: Formalities Premises
Frontier/ Plane Frontier/
Terminal/ Ships Ships Terminal/Quay
Quay Rail Rail
Sellers Buyers Risks
Risks

Sellers Buyers Cost

Costs
 CPT Carrige Paid To 5
(named place of destination)

Seller delivers the goods, cleared for export, to the carrier.

The seller pays the costs of carriage necessary to bring goods to named
destination, but the buyer bears the risk of loss and additional costs
occurring after delivery.
Term may be used irrespective of mode of transport.

SELLER BUYER

Seller/ Export Delivered at Loading Onboard Discharging Delivery at Import Buyer/

Exporter Documents named place Port of Ship Port of named place of Documents Importer
Premises Formalities of: Shipment Rail Arrival destination: Formalities Premises
Frontier/ Plane Frontier/
Terminal/ Ships Ships Terminal/Quay
Quay Rail Rail
Sellers Risks Buyers
Risks

Sellers Cost Buyers

Costs
 CIP Carriage and Insurance Paid To 5
(named place of destination)

Seller delivers the goods, cleared for export, the the carrier.
The seller pays the costs of carriage to named destination, but the buyer bears the
risk of loss and additional costs occurring after delivery.
The seller procures insurance against buyers risk of loss. Seller is required to obtain
insurance only on a minimum cover.
Term may be used irrespective of mode of transport.

SELLER BUYER

Seller/ Export Delivered at Loading Onboard Discharging Delivery at Import Buyer/

Exporter Documents named place Port of Ship Port of named place of Documents Importer
Premises Formalities of: Shipment Rail Arrival destination: Formalities Premises
Frontier/ Plane Frontier/
Terminal/ Ships Ships Terminal/Quay
Quay Rail Rail
Sellers Risks Buyers Risks

Sellers Cost Buyers Cost

 5

The D terms require the seller to take the

goods all the way to destination at the border or
within the country of import.

DAF Delivered At Frontier

DES Delivered Ex Ship
DEQ Delivered Ex Quay
DDU Delivery Duty Unpaid
DDP Delivery Duty Paid
 DAF Delivered at Frontier 5
(named place)

Seller delivers goods, cleared for export, at disposal of buyer on arriving means of
transport.
Not unloaded, not cleared for import at point at frontier before customs border of
adjoining country.
Term may be used irrespective of the mode of transport when goods are delivered at
a land frontier.
If delivery is to take place in the port of destination, DES or DEQ should be used.
DAF
SELLER BUYER

Seller/ Export Delivered at Loading Onboard Discharging Delivery at Import Buyer/

Exporter Documents named place Port of Ship Port of named place of Documents Importer
Premises Formalities of: Shipment Rail Arrival destination: Formalities Premises
Frontier/ Plane Frontier/
Terminal/ Ships Ships Terminal/Quay
Quay Rail Rail
Sellers Risks Buyers Risks

Sellers Cost Buyers Cost

 DES Delivered EX Ship 5
(named port of destination)

Seller delivers goods at disposal of buyer on board the ship.

Not cleared for import at the named port of destination.
Seller bears all costs and risks to bring goods to the named port before discharging.
Term used only for delivery by sea.
If the seller is to bear the costs of discharging the goods, DEQ should be used.
SELLER BUYER

Seller/ Export Delivered at Loading Onboard Discharging Delivery at Import Buyer/

Exporter Documents named place Port of Ship Port of named place of Documents Importer
Premises Formalities of: Shipment Rail Arrival destination: Formalities Premises
Frontier/ Plane Frontier/
Terminal/ Ships Ships Terminal/Quay
Quay Rail Rail
Sellers Risks Buyers Risks

Sellers Cost Buyers Cost

 DEQ Delivered EX Quay 5
(named port of destination)

Seller delivers goods, not cleared for import, at disposal of buyer on the quay at the
named port of destination.
Seller bears all costs and risks to bring goods to the named port of destination and
discharging the goods on the quay.
Term used only for delivery by sea.
DEQ
SELLER BUYER

Seller/ Export Delivered at Loading Onboard Discharging Delivery at Import Buyer/

Exporter Documents named place Port of Ship Port of named place of Documents Importer
Premises Formalities of: Shipment Rail Arrival destination: Formalities Premises
Frontier/ Plane Frontier/
Terminal/ Ships Ships Terminal/Quay
Quay Rail Rail
Sellers Risks Buyers Risks

Sellers Cost Buyers Cost

 DDU Delivered Duty Unpaid 5
(named place of destination)

Seller delivers goods to the buyer, not cleared for import, and not unloaded, at the
named place of destination.
Seller bears all costs and risks (except duty) to bring goods to the named place of
destination.
Term may be used irrespective of mode of transport.
If delivery is to take place at the port, quay or on board a vessel, DES or DEQ should
be used. SELLER BUYER

Seller/ Export Delivered at Loading Onboard Discharging Delivery at Import Buyer/

Exporter Documents named place Port of Ship Port of named place of Documents Importer
Premises Formalities of: Shipment Rail Arrival destination: Formalities Premises
Frontier/ Plane Frontier/
Terminal/ Ships Ships Terminal/Quay
Quay Rail Rail
Sellers Risks Buyers Risks

Sellers Cost Buyers Cost

 DDP Delivered Duty Paid 5
(named place of destination)

Seller delivers goods to the buyer, cleared for import, and not unloaded, at the named
place of destination.
Seller bears all costs and risks, including import duty, to bring goods to the named
place of destination.
Term may be used irrespective of mode of transport. If delivery is to take place at the
port, quay or on board a vessel, DES or DEQ should be used.
SELLER BUYER

Seller/ Export Delivered at Loading Onboard Discharging Delivery at Import Buyer/

Exporter Documents named place Port of Ship Port of named place of Documents Importer
Premises Formalities of: Shipment Rail Arrival destination: Formalities Premises
Frontier/ Plane Frontier/
Terminal/ Ships Ships Terminal/Quay
Quay Rail Rail
Sellers Risks Buyers Risks

Sellers Cost Buyers Cost