Incoterms

 

INCOTERMS : This is an abbreviation of "International Commercial TERMS" and they define the reciprocal obligations of seller and buyer for an international purchase/sales contract. Incoterms define the respective responsibilities of the parties but do not define the moment at which the property or goods are transferred.

Incoterms set the division of costs and risks.

 

The 4 main Incoterm groups

 

Group E : EX

 

EXW (Ex Work) : The seller’s obligations are fulfilled when the goods are available in their premises (workshop, factory, warehouse, etc.). The buyer takes on all fees and risks relating to the movement and delivery of the goods from the seller’s premises to the required destination. This term represents the minimum obligation for a seller.

 

Groupe F : Free

 

FCA (Free Carrier) :the seller’s delivery obligations are fulfilled when the goods, cleared for export, are given to the haulier at the designated location. The buyer chooses the means of transportation and the haulier and pays for the main transport. Transfer of risks and fees occurs when the haulier takes charge of the goods.

 

FAS (Free Alongside Ship) : the seller’s delivery obligation is fulfilled when the goods have been placed alongside the ship on the quay at the designated port. The buyer must take on all costs and risks of loss or damage the goods may undergo. The FAS term means that the seller must pay all relevant fees to clear the goods for export.

 

FOB (Free On Board) : the seller’s delivery obligation is fulfilled when the goods are placed on board the ship at the designated port. The seller has paid the relevant fees to clear the goods for export. The buyer chooses the ship and pays for shipping. Transfer of fees and risks occurs when the goods pass the ship’s rail at the loading port.

 

Groupe C : Cost ou Carriage

 

CFR (Cost and Freight) : the seller must choose the ship and pay the necessary fees and transport to bring the goods to the designated destination port. All formalities relating to export are the seller’s responsibility. Transfer of risk is as per FOB above.

 

CIF (Cost Insurance and Freight) : the seller has the same obligations as per CFR above but must also provide maritime insurance to cover any damage or loss of goods during transport. The goods will travel, via maritime or river transport, at the buyer’s risk once the goods have passed the ship’s rail at the loading port.

 

CPT (Carriage Paid To) : the seller chooses the mode of transportation and pays for transport of the goods to the designated destination. Fees relating to clearing the goods for export must be paid by the seller. When the goods are handed over to the main haulier, all risks are transferred from the seller to the buyer.

 

CIP (Carriage and Insurance Paid to) : the seller has the same obligations as per CPT above, but must also provide insurance against risk of loss or damage the goods may incur during transportation. The seller will pay all fees to clear the goods for export.

 

Groupe D : Delivered

 

DAT (Delivered At Terminal) : description to be supplied.

 

DAP (Delivered At Place) : description to be supplied.

 

DDP (Delivered Duty Paid) : contrary to the EXW factory, this term designates the maximum obligation for the seller. The seller must undertake everything, including paying import fees and the payment of relevant fees and taxes. Transfer of fess and risks occurs upon delivery to the buyer. Unloading fees and risks fall to the buyer.

 

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