INCOTERMS OR TRADE TERMS

                       INCO-TERMS ( INTERNATIONAL TRADE TERMS)

·         First published by the ICC in 1936

·         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.

·         13 categories describing where risks lie between seller and buyer

·         International Commercial Terms (INCOTERMS) are also referred as shipping terms, delivery terms or sometimes as trade terms.

Background - Introduction

·         Inco terms are the most commonly accepted terms of sale in international business

·         Inco terms have been adopted by most countries

·         Defines the responsibilities and risks for transactions.

·         To help parties to avoid misunderstandings, with all the waste of time and money that this entails                                                          

·         They are used as part of the overall sales agreement.

Organization of Incoterms 2000

Incoterms are divided into four (4) categories:

“E” term – Seller makes the goods available to the buyer at the seller’s premises or other place named by the seller

“F” terms – Seller is responsible to deliver the goods to the export shipment point and carrier designated by the buyer

“C” terms – Seller is responsible for contracting carriage of goods to the place of destination, but does not assume risk of loss or damage to goods, or additional costs due to events occurring after shipment

“D” terms – Seller is responsible for all costs and risks associated with delivering goods to the named place in the country of destination

The Structure of Incoterms

Group E                departure

                                EXW       Ex Works (… named place)

Group F                Main carriage unpaid

                                FCA        Free Carrier (…named place)

                                FAS        Free Alongside Ship (…named port of shipment)

                                FOB        Free On Board (…named port of shipment)

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 Insurance Paid To (…named place of destination)

Group D               Arrival

                                DAF        Delivered at Frontier (…named place)

                                DES        delivered Ex Ship (…named port of destination)

                                DEQ       delivered Ex Quay (…named port of destination)

                                DDU       Delivered Duty Unpaid (…named place of destination)

                                DDP       Delivered Duty Paid (…named place of destination)

 Inco terms Classified

All modes of transport including multi-modal

EXW – Ex Works

FCA – Free Carrier

CPT – Carriage Paid To

CIP – Carriage and Insurance Paid To

DAF – Delivered at Frontier

DDU – Delivered Duty Unpaid

DDP – Delivered Duty Paid

Sea and inland waterway transport only

FAS – Free Alongside Ship

FOB – Free Onboard

CFR – Cost and Freight

CIF – Cost, Insurance, and Freight

DES – Delivered Ex Ship DEQ – Delivered Ex Quay

For more information about Inco terms please contact www.exportgenius.in