International Commerce Terms (INCOTERMS)
International Chamber of Commerce (ICC) recommends that "Incoterms 2010" be referred to specifically whenever the terms are used, together with a location.
For example, the term "Delivered at Frontier" (DAF) should always be accompanied by a reference to an exact place and the frontier to which delivery is to be made.
Here are three examples of correct use of Incoterms:
- FCA Shanghai Incoterms 2010
- FOB Manchester Incoterms 2010
- DDU Zygo Ltd., 35 Beach Station Road, Felixstowe, UK. Incoterms 2010
Rules for any mode or modes of transport
Departure: Main carriage not paid by seller
Ex Works
EXW (...named place of delivery)
Under EXW, the seller minimizes his risk by only making the goods available at his own premises
Free Carrier
FCA (...named place of delivery)
Unless otherwise agreed, the seller arranges and pays for the pre-carriage
up to the point of delivery.
Departure: Main carriage paid by seller
Carriage Paid to
CPT (...named place of destination)
Seller contracts for main carriage up to named place/point of
destination.
Carriage and Insurance Paid to
CIP (...named place of destination)
In addition to the obligations under CPT, the seller also
contracts for insurance up to the named place/point of destination.
Arrival
Delivered at Terminal
DAT (...named terminal at port or place of destination)
Seller undertakes to place the goods at the disposal of the
buyer unloaded from the arriving means of transport at the agreed place/point of
destination.
Delivered at Place
DAP (...named place of destination)
Seller undertakes to place the goods at the disposal of the
buyer ready for unloading by the buyer at the agreed place/point of destination.
Delivered Duty Paid
DDP (...named place of destination)
Seller undertakes to place the goods at the disposal of the
buyer ready for unloading by the buyer at the agreed place/point of destination
and to clear the goods for import and pay duty and other official charges
(unless otherwise agreed).
Rules for sea and inland waterway transport
Main carriage not paid by seller
Free Alongside Ship
FAS (...named port of
shipment)
Seller undertakes to place the goods alongside the ship nominated
by the buyer.
Free on Board
FOB (...named port of
shipment)
Seller undertakes to place the goods on board the ship nominated
by the buyer.
Main carriage paid by seller
Cost and Freight
CFR (...named port of destination)
Seller arranges and pays for the contract of carriage to the
named port of destination.
Cost, Insurance and Freight
FOB (...named port of
destination)
In addition to obligations under CFR, the seller also contracts
for insurance up to the named port of destination.
The above does not spell out the obligations of buyer and seller that are essential to correct use of Incoterms. This information may be obtained by consulting the full published texts of the
Incoterms 2010 rule book or the ICC Guide to Incoterms 2010.
