INCOTERMS  RULES

RULES FOR ANY MODE OR MODES OF TRANSPORT

  • EXW EX WORKS
  • FCA FREE CARRIER
  • CPT CARRIAGE PAID TO
  • CIP CARRIAGE AND INSURANCE PAID TO
  • DAT DELIVERED AT TERMINAL
  • DAP DELIVERED AT PLACE
  • DDP DELIVERED DUTY PAID

RULES FOR SEA AND INLAND WATERWAY TRANSPORT

  • FAS FREE ALONGSIDE SHIP
  • FOB FREE ON BOARD
  • CFR COST AND FREIGHT
  • CIF COST INSURANCE AND FREIGHT

Dictionary

EXW—Ex Works. “Ex Works” means that the seller’s only responsibility is to make the goods available at his premises. The buyer bears the full cost and risk involved in bringing the goods from there to the desired destination.

FCA—free carrier. This term has been designed to meet the requirements of modern transport, particularly such “inter-modal” transport as container or ro/ro traffic by trailers and ferries. It is based on the same main principles as FOB except that the seller fulfills his obligations when he delivers the goods into the custody of the carriers at the named point. If no precise point can be mentioned at the time of the contract of sale, the parties should refer to the place or range where the carrier should take the goods into his charge. The risk of cargo loss or damage is transferred from seller to buyer at that time and not at the ship’s rail. “Carrier” means any person by whom or in whose name a contract of carriage by road, rail, air, sea or a combination of modes has been made. When the seller must furnish a document, he duly fulfills this obligation by presenting such a document issued by the person defined as an earner”.

The term is suitable for any mode of transport, including multi-modal transport, and is also relevant to uni-modal transport where the transport is either by air or by rail.

FAS—free alongside ship. Under this term the seller’s obligations are fulfilled when the goods have been placed alongside the ship. This means that the buyer has to bear all costs and risk of loss or damage to the goods from that moment. The buyer contracts with the sea carrier for the carnage of the goods to the destination and pays the freight.

The term is very suitable for transport by sea and inland waterway, e.g., by barges.

FOB—free on board. The seller delivers the goods on board the vessel free of cost to the buyer at a port of shipment named in the sales contract.

The definition of “on board” led to FOB and “delivery on board” being considered to relate to the moment the cargo is placed on the ship’s cargo lifting devices. If the cargo is being lifted by shore cargo-handling equipment, FOB may relate to the moment it actually crosses the ship’s rail.

CFR—cost and freight. The word “cost” only signifies the price for the goods themselves and is quite unnecessary. The important keyword is “freight”. The term is sometimes abbreviated to “C & F” or, “CNF”, where the “N” takes the place of “and”. The term is used with the name of the port of destination.

CIF—cost insurance and freight. This is perhaps the most usual and important term used in sales contracts involving carriage by sea. This term is basically the same as C & F, but with the addition that the seller has to procure insurance against the risk of loss or damage to the goods during the carriage. The seller contracts with the insurer and pays the insurance premiums. These, then, are included in the price for the goods.

CPT—carriage paid to … (the named place of destination). This means that the seller pays the freight for the carriage of goods to the named destination. It is suitable for any mode of transport, in particular for multi-modal transport.

CIP—carriage and insurance paid to … (named destination). The use of this term means that the seller has to ship the goods and procure the insurance against the buyer’s risk of loss or damage during carriage. It is appropriate for transport by any mode including multi-modal transport.

DAF—delivered at frontier. This INCOTERM means that the seller’s obligations are fulfilled when the goods have arrived at the frontier—but before “the customs border” of the country named in the sales contract.

The term is primarily intended to be used when goods are to be carried by rail or road. It is appropriate for transport by any mode including multi-modal transport.

DES—delivered ex ship … (named port of destination). This means that the seller makes the goods available to the buyer in the ship at the destination named in the sales contract. The seller has to bear the full cost and risk involved in bringing the goods there.

DEQ—delivered ex quay … (named port of destination). This INCOTERM means that the seller makes the goods available to the buyer on the quay (wharf) at the destination named in the sales contract. As the seller has to bear the full cost and risk involved in bringing the goods there, the sale “ex quay” implies an arrival contract. It is appropriate for transport by sea and inland waterway.

DDU—delivered duty unpaid … (named place of destination). “Delivered duty unpaid” means that the seller fulfills his obligation to deliver when the goods have been made available at the named place in the country of importation.

DDP—delivered duty paid. While the term “ex works” indicates the seller’s minimum obligation, the term ‘‘delivered duty paid’’ when followed by words naming the buyer’s premises denotes the other extreme-the seller’s maximum obligation.