INCOTERMS, short for International Commercial Terms, is a set of standardized rules that define the responsibilities and obligations of buyers and sellers in international trade transactions.
Rules for any mode or modes of transport:-
- EXW (Ex Works): The seller's responsibility is to make the goods available at their premises, and the buyer is responsible for all subsequent transportation.
- FCA (Free Carrier): The seller delivers the goods to a carrier or another person nominated by the buyer at a specified place. The risk transfers to the buyer once the goods are delivered to the carrier.
- CPT (Carriage Paid To): The seller is responsible for delivering the goods to a carrier or another person nominated by them. The risk transfers to the buyer when the goods are handed over to the carrier.
- CIP (Carriage and Insurance Paid To): Similar to CPT, the seller also has to procure insurance against the buyer's risk of loss or damage during transportation.
- DAT (Delivered at Terminal): The seller delivers the goods, unloaded, at a named terminal at the destination port or place of destination. The risk transfers to the buyer upon delivery.
- DAP (Delivered at Place): The seller is responsible for delivering the goods, unloaded, at a named place of destination agreed upon with the buyer. The risk transfers to the buyer upon delivery.
- DDP (Delivered Duty Paid): The seller is responsible for delivering the goods, cleared for import, at a named place of destination agreed upon with the buyer. The seller bears all risks and costs, including duties and taxes. Rules for sea and inland waterway transport:
- FAS (Free Alongside Ship): The seller delivers the goods alongside the vessel at the named port of shipment. The risk transfers to the buyer once the goods are placed alongside the ship.
- FOB (Free on Board): The seller is responsible for delivering the goods on board the vessel at the named port of shipment. The risk transfers to the buyer once the goods are on board.
- CFR (Cost and Freight): The seller is responsible for delivering the goods on board the vessel at the named port of shipment.
- CIF (Cost, Insurance, and Freight): Similar to CFR, but the seller also has to procure insurance against the buyer's risk of loss or damage during transportation. iIt's important to note that INCOTERMS do not cover ownership transfer, payment terms, or contractual obligations beyond those related to transportation and delivery of goods. These additional aspects are typically addressed in separate agreements between buyers and sellers.
