INCOTERMS
The Incoterms is a group of definitions created by the International Chamber of Commerce. They came into force in 1990 and were renewed in the year 2000. They grant the business community clear concepts in order to limit the responsibilities of both the buyer and the seller in the operations between different states.
This terminology balances and conditions the terms of the purchase and sales operations so as to make it possible to exchange goods between businessmen from different countries. With the common usage of such vocabulary, the responsibilities and rights of both parties will be protected whenever they have to settle possible controversies. The publication of these concepts is done by the International Chamber of Commerce and what follows is a brief summary of the same and its updated version done in 2010.
EXW (Ex Works)
Title and risk pass to buyer including payment of all transportation and insurance cost from the seller's door. Used for any mode of transportation.
FCA (Free Carrier)
Title and risk pass to buyer including transportation and insurance cost when the seller delivers goods cleared for export to the carrier. Seller is obligated to load the goods on the Buyer's collecting vehicle; it is the Buyer's obligation to receive the Seller's arriving vehicle unloaded.
FAS (Free alongside Ship)
Title and risk pass to buyer including payment of all transportation and insurance cost once delivered alongside ship by the seller. Used for sea or inland waterway transportation. The export clearance obligation rests with the seller.
FOB (Free on Board)
Risk pass to buyer including payment of all transportation and insurance cost once delivered on board the ship by the seller. Used for sea or inland waterway transportation.
CFR (Cost and Freight)
Title, risk and insurance cost pass to buyer when delivered on board the ship by seller who pays the transportation cost to the destination port. Used for sea or inland waterway transportation.
CIF (Cost, insurance and freight)
Title and risk pass to buyer when delivered on board the ship by seller who pays transportation and insurance cost to destination port. Used for sea or inland waterway transportation.
CPT (Carriage paid to)
Title, risk and insurance cost pass to buyer when delivered to carrier by seller who pays transportation cost to destination. Used for any mode of transportation.
CIP (carriage and insurance paid to)
Title and risk pass to buyer when delivered to carrier by seller who pays transportation and insurance cost to destination. Used for any mode of transportation.
DAT (Delivered at terminal, named port terminal or named place of destination)
The seller must deliver the merchandise, placing it at the buyer’s disposal at a designated terminal either at the port or at the place of destination on the date or within the time-limit period established, and the seller is obliged to take care of the export customs clearance. However, he is under no obligation of performing the import customs clearance.
DAP (Delivered at named place of destination)
The seller has to deliver the merchandise and place it at the buyer’s disposal into the inland freight transportation carrier ready to be unloaded at the designated place of destination. He has to take care of the export customs clearance; however, he is under no obligation of performing the import customs clearance.
DDP (Delivered Duty Paid)
Title and risk pass to buyer when seller delivers goods to named destination point cleared for import. Used for any mode of transportation. The seller has, in this case, the maximum obligation; he is responsible for all transfer charges and risks until the merchandise is delivered to the buyer. The import customs clearance is also under his charge.