All companies that work for export or import are faced with such a concept as Incoterms 2010. In this article we will try to give a complete and detailed concept of Incoterms and all terms of delivery (main DAF, CPT, FCA, CIP).
Incoterms (in the English language Incoterms, transcript of International commerce terms) are the rules adopted by the international community, which explain the most widely used trade terms in the field of foreign economic activity. International trade terms represent standard conditions sales contracts between countries, which are defined in advance in an internationally recognized document.
Following from the fact that Incoterms regulate a number of the most significant, fundamental, basic issues that are associated with the organization of shipment of goods and their delivery to the destination, any delivery basis regulates three main "transport" issues, without which the delivery of goods to the destination cannot be implemented. This:
Distribution between the seller and the buyer of transport costs for the delivery of goods (that is, the terms of delivery prescribe what costs and for how long the seller bears, and which, from what moment, is the buyer.
The moment of transition from the seller to the buyer of the risks of damage, loss or accidental loss of cargo.
The date of delivery of the goods, that is, the determination of the moment when the seller actually transfers the goods to the disposal of the buyer or his representative (for example, it can be the transfer of the goods to the transport organization - and, therefore, the fulfillment or non-fulfillment of the first of its obligations in terms of delivery).
Incoterms does not include regulation of the following issues:
According to Incoterms 2010 (incoterms) terms can be divided into the following 4 groups: E, F, C and D. Let's take a closer look at them.
Group E - Departure | Delivery conditions EXW- Ex Works (name of place): goods from the seller's warehouse. |
Group F - Main Carriage Unpaid | Delivery conditions FCA- Free Carrier (named place): The goods are delivered to the buyer's carrier. Delivery conditions FAS- Free Alongside Ship (named port of loading): the goods are delivered to the buyer's ship. Delivery conditions FOB- Free On Board (named port of loading): the goods are loaded onto the buyer's ship. |
Group C - Main Carriage Paid | Delivery conditions CFR- Cost and Freight (named port of destination): the goods are delivered to the buyer's port (without unloading). Delivery conditions CIF- Cost, Insurance and Freight (named port of destination): the goods are insured and delivered to the buyer's port (without unloading). Delivery conditions CPT- Carriage Paid To (named place of destination): The item is delivered to the buyer's carrier at the named place of destination. Delivery conditions CIP- Carriage and Insurance Paid to (named place of destination): the goods are insured and delivered to the buyer's carrier at the named place of destination. |
Group D - Arrival | Delivery conditions DAT- Delivered At Terminal (name of place, terminal) - delivery of goods is carried out in the specified terminal. Delivery conditions DAP- Delivered At Point (name of destination) - delivery is carried out at the specified point. Delivery conditions DDP- Delivered Duty Paid (name of destination) - the goods are delivered to the customer, cleared of duties and risks. |
EXW terms of delivery - ex works
In Incoterms 2010, the term "Free Works" means that the seller of the goods is deemed to have fulfilled his delivery obligations when he places the goods at the disposal of the buyer at his enterprise or at another specified (agreed) place (this can be the seller's warehouse, factory, plant and etc.).
The seller is not responsible for loading the goods onto the vehicle, as well as for customs clearance of the goods and preparation of the relevant documents for export. This is a term that imposes minimum obligations on the seller, and the buyer must bear all costs and risks associated with transporting the goods from the seller's premises to their destination (to the buyer's warehouse). However, if the parties want the seller to take responsibility for loading the goods at the place of dispatch and bear all the risks and costs of such shipment, then this must be clearly stated in the appropriate addendum to the sales contract. This term cannot be used when the buyer is unable to comply, directly or indirectly, with export formalities. In this case, the term FCA shall be used, provided that the seller agrees to bear the costs and risks of shipping the goods.
FCA terms of delivery - Free carrier
The term "Free carrier" means that the seller of the goods will carry out customs clearance and deliver them to the carrier indicated by the buyer to the named place. Please note that the choice of the place of delivery will affect the obligation to load and unload the goods at that place. If the delivery takes place at the seller's premises, the seller is responsible for the shipment. If the delivery is carried out to another place, the seller is not responsible for the shipment of the goods. This term can be used for transportation by any type of transport, including multimodal transport.
Let's explain the concept of "Carrier" - this is any person who, on the basis of a contract of carriage, undertakes to carry out or ensure the carriage of goods by road, air, by railroad, sea or inland waterway transport, or even a combination of all these modes of transport (for example, delivery to the port and after by ship). If the buyer trusts another person (authorized person), who is not a carrier, to accept and check the goods, then the seller is deemed to have fulfilled his obligations to supply (ship) the goods from the moment it was handed over to this person.
FAS - Free Alongside Ship
In Incoterms, the term "Free Alongside Ship" means that the seller has made delivery when the goods are placed alongside the ship on the quay or on lighters at the named port of shipment. This means that from now on, all costs, risks, loss or damage to the goods must be borne by the buyer. The FAS term also requires the seller to clear the goods for export. If the seller cannot do it himself, he can involve a third-party organization or a customs broker. However, if the parties have agreed that the buyer undertakes the responsibility for customs clearance of the goods for export, then this should be clearly stated in the appropriate addendum to the sales contract.
FOB Terms of Delivery - Free On Board
The international term FOB - "Free On Board" means that the seller made delivery when the goods crossed the ship's rail at the named port of shipment. This means that from now on, all risks, costs, loss or damage to the goods must be borne by the buyer himself. The FOB term requires the seller to clear the goods for export. This term can only be used for the carriage of goods by sea or inland waterway. If the selling party does not intend to deliver the goods across the ship's rail, the FCA term should be used.
CFR - Cost and Freight
In Incoterms 2010, the term CFR - "Cost and Freight" means that the selling party has made delivery when the goods have crossed the ship's rail at the port of shipment. The seller is obliged to pay the costs and freight (freight - payment for the cargo transported on a rented, chartered ship) necessary to deliver the goods to the named port of destination, however, the risk of damage to the goods or its loss, as well as any additional expenses arising after the shipment of the goods are transferred from the seller to the buyer. Under the terms of the CFR term, the seller is responsible for customs clearance of the goods for export and preparation of the entire necessary documentation... If the parties do not intend to deliver the goods across the ship's rail, the CPT term should be used.
CIF - Cost, Insurance and Freight
The term "Cost, Insurance and Freight" means that the seller has made delivery when the goods have crossed the ship's rail at the port of shipment. The selling party is obliged to pay the costs and freight (freight is the payment for the cargo transported on a rented, chartered ship) necessary to deliver the goods to the specified port of destination, BUT the risk of damage to the goods or its loss, as well as any additional costs arising after the shipment of the goods, go from the seller to the buying side. However, under the terms of the CIF term, the seller is also obliged to purchase marine insurance in favor of the buyer against the risk of damage or loss of the goods during transport. Consequently, the selling party is obliged to conclude an insurance contract with an insurance company and pay all necessary insurance premiums. The buyer should understand that under the terms of the CIF term, the seller is required to provide insurance with only minimal coverage. If the buyer wishes to have insurance with a large coverage, he must either specially agree with the seller about this, or he himself must take measures to conclude additional insurance. The decision is made by agreement between both parties.
Under the terms of the CIF term, the seller is responsible for customs clearance of goods for export and preparation of all documents. If the parties do not intend to deliver the goods across the ship's rail, the CIP term should be used.
CPT Terms of Delivery - Freight / Carriage Paid To
In Incoterms, the term "Freight / Carriage Paid To" means that the seller will deliver the goods to the carrier named by him. In addition, the seller is obliged to pay the costs of transporting the goods to the specified destination. This means that the buying party assumes all risks of damage or loss of the goods, as well as other costs after the goods have been handed over to the carrier.
Let us explain the concept of "Carrier" - any person who, on the basis of a contract of carriage, undertakes to carry out or ensure the carriage of goods by road, air, by rail, sea or inland waterway, or even a combination of all these modes of transport (for example, delivery to the port and after by ship).
In the case of transportation to an agreed destination by several carriers, the transfer of risk will occur at the time the goods are transferred to the care of the first of them.
Under the terms of the CPT term, the seller is responsible for customs clearance of the goods and preparation of all necessary documentation for export.
CIP Terms of Delivery - Freight / Carriage and Insurance Paid
The term CIP - "Freight / Carriage and Insurance Paid To" means that the selling party will deliver the goods to a named carrier. In addition, the seller is obliged to pay the costs of transporting the goods to the specified destination. This means that the buying party assumes all risks, losses and any additional costs before the goods are thus delivered. However, under the terms of the CIP, the seller is also obliged to provide insurance against the risks of damage and loss of goods during transport for the benefit of the buyer. Consequently, the seller enters into an insurance contract with the insurance company and pays for all the necessary insurance premiums... The buyer should note that the CIP requires the seller to provide insurance with minimum coverage.
If the buyer wishes to have insurance with a large coverage, he must either specially agree with the seller about this, or he himself must take measures to conclude additional insurance. Both parties must agree and make a decision. Let us explain the concept of "Carrier" - any person who, on the basis of a contract of carriage, undertakes to carry out or ensure the carriage of goods by road, air, by rail, sea or inland waterway, or even a combination of all these modes of transport (for example, delivery to the port and after by ship). In the case of transportation to the destination by several carriers, the transfer of risk will occur at the time of transfer of the goods to the care of the first carrier.
Under the terms of the CIP term, the seller is responsible for customs clearance of the goods and preparation of all necessary documentation for export.
DAP terms of delivery - Delivery in clause
This condition is used instead of DAF, DES and DDU (INCOTERMS 2000).
This term means that the selling party has fulfilled its obligation to deliver when it has provided the buyer with goods that are ready to be unloaded from vehicle arriving at the agreed destination.
The seller bears all risks associated with the delivery of the goods to the agreed destination. The seller is not required to perform customs clearance or pay import duties when importing goods into Russia.
DAT terms of delivery - Delivery at terminal
This condition is used instead of DEQ (INCOTERMS 2000).
This term means that the selling party has fulfilled its obligation to deliver when it has provided the buyer with the goods unloaded from the vehicle at the agreed terminal of the named place of destination. A terminal means any place - air, auto, railway cargo terminal, berth, warehouse, etc. The selling party bears all risks for the delivery of goods and their unloading at the terminal.
The seller is not required to perform customs clearance or pay import duties when importing goods into Russia.
DDP Terms of Delivery - Delivered Duty Paid
It is an international trade term used to indicate the place of arrival. The seller's liability ends after the goods have been delivered to the agreed place in the buyer's country. At the same time, all risks, costs of delivery of goods (taxes, duties, etc.), responsibility for damage or loss of goods, including duties and other payments paid upon import, are borne by the seller until this moment. The seller is also responsible for customs clearance of the goods. Provisions may be added to exempt the seller from paying certain additional formalities; this type of assignment of responsibility can be used regardless of the type of delivery.
You also have the opportunity to download Incoterms 2010, print it and always have it at hand. We have tried to give you complete answers to next questions: what is Incoterms, how it stands, described international rules in the field of foreign trade and told what basic terms of delivery apply.
Incoterms rules have become important part of the everyday language of commerce. The terms are included in sales contracts for goods around the world, define the rules and provide guidance for importers, exporters, lawyers, carriers, insurers and students studying international trade.
RULES FOR ANY KIND OR KINDS OF TRANSPORT
- EXW Ex Works / Ex Works
"Ex Works / Ex Works" means that the seller delivers when he places the goods at the disposal of the buyer on his premises or at another agreed place (ie, factory, warehouse, etc.). The seller is not obliged to load the goods onto any vehicle, nor is he obliged to comply with the formalities required for export, if any.
- FCA Free Carrier
"Free Carrier" means that the seller transfers the goods to the carrier or another person nominated by the buyer at his premises or at another specified location. The parties are strongly encouraged to identify as clearly as possible the item at the named place of delivery, as the risk passes to the purchaser at that item.
- CPT Carriage Paid to
"Carriage Paid to" means that the seller transfers the goods to the carrier or another person nominated by the seller at the agreed place (if such a place is agreed by the parties) and that the seller is obliged to conclude a carriage contract and bear the carriage costs necessary to deliver the goods to the agreed destination.
- CIP Carriage and Insurance Paid to
"Carriage and Insurance Paid to" means that the seller transfers the goods to the carrier or another person nominated by the seller at the agreed place (if such a place is agreed by the parties) and that the seller is obliged to conclude a contract of carriage and bear the carriage costs necessary to deliver the goods to the agreed place of destination. The seller also enters into an insurance contract to cover the risk of loss or damage to the goods during carriage.
- DAT Delivered at Terminal
"Delivered at Terminal" means that the seller delivers when the goods, unloaded from an arriving vehicle, are placed at the disposal of the buyer at the agreed terminal at the named port or place of destination. “Terminal” includes any place, whether closed or not, such as a quay, warehouse, container yard, or road, rail, or air cargo terminal. The seller bears all risks associated with the delivery of the goods and their unloading at the terminal at the named port or place of destination.
- DAP Delivered at Place
"Delivered at Place" means that the seller delivers when the goods are placed at the disposal of the buyer on the arrived vehicle, ready for unloading, at the agreed place of destination. The seller bears all risks associated with the delivery of the goods to the named place.
- DDP Delivered Duty Paid
"Delivered Duty Paid" means that the seller delivers when the goods are delivered to the buyer, cleared of the customs duties required for import, in an arriving vehicle ready for unloading at the named place of destination. The seller bears all costs and the risks associated with the delivery of goods to the place of destination, and is obliged to complete the customs formalities necessary not only for export, but also for import, pay any fees charged for export and import, and complete all customs formalities.
RULES FOR SEA AND INLAND WATER TRANSPORT
- FAS Free Alongside Ship
"Free Alongside Ship" means that the seller has met its delivery obligation when the goods are placed alongside the vessel nominated by the buyer (ie on a quay or on a barge) at the agreed port of shipment. The risk of loss or damage to the goods passes when the goods are positioned along the side of the ship, and from that moment on, the buyer bears all costs.
- FOB Free on Board
"Free on Board" means that the seller delivers the goods on board a vessel nominated by the buyer at the named port of shipment, or arranges for the goods so delivered. The risk of loss of or damage to the goods passes when the goods are on board and from that moment the buyer bears all costs.
- CFR Cost and Freight
"Cost and Freight" means that the seller delivers the goods on board the ship or delivers the goods so delivered. The risk of loss or damage to the goods passes when the goods are on board. The seller is obliged to conclude a contract and pay all costs and freight necessary to deliver the goods to the named port of destination.
- CIFCostInsurance and Freight /Cost, insurance and freight
"CostInsurance and Freight / Cost, insurance and freight "means that the seller delivers the goods on board the ship or delivers the goods so delivered. The risk of loss or damage to the goods passes when the goods are on board. The seller is obliged to conclude a contract and pay all costs and freight necessary to deliver the goods to the named port of destination.The seller also enters into an insurance contract to cover the risk of loss or damage to the goods during carriage.
Incoterms 2010- at its core is a collection of unified international terms used to denote delivery terms(the term is more commonly used - delivery basis). Main advantage Incoterms 2010, in the universality of its application and the unambiguous interpretation of the terms used, which simplifies mutual understanding between the parties to a foreign economic transaction.
Incoterms terms 2010 determine whether shipping, insurance and customs duties are included in the selling price of the product. Thus, they share the responsibility of both the exporter and the importer, where the responsibility of each participant begins and ends. After the name of the term by Incoterms 2010 in the contract or invoice, it is necessary to indicate the place of transfer of risks from the exporter to the importer (read - transfer of the goods).
Like most other international documents, the official text Incoterms 2010 set out on English language... The notorious "translation difficulties" sometimes make it difficult to understand its text. Therefore, in this article we will try to present the essence of Incoterms 2010 and decipher its basic concepts.
Everything delivery conditions v Incoterms 2010 are designated by abbreviations of three letters, but this does not mean that each letter implies the same word. Most often, difficulties arise with terms containing the letter "F". If it appears at the beginning, it means "Free" - the product is free from obligations to pay export duties for conditions FCA, FAS, FOB by Incoterms 2010; if in the middle or at the end of "Freight" - freight paid to the specified point for conditions CIF, CFR by Incoterms 2010.
For ease of perception, we have arranged the terms Incoterms 2010 in the order in which they are most often used during price negotiations.
Universal terms of Incoterms 2010
EXW (Ex Works) - from the factory ...
The first price to get, which is usually not difficult, is the cost of the goods in the supplier's warehouse. In fact, this is the well-known term "self-pickup", I think it makes no sense to explain its meaning in detail. Often when noting conditions EXW by Incoterms 2010 use the term "Free Factory". The word "Franco" (Franco), which often confuses beginners foreign economic activity... In fact, this is the same as the aforementioned term "Free". This is the most convenient option for the exporter. deliveries.
FCA (Free Carrier) - free from the carrier ...
The goods are transferred to the specified place, possibly even at the supplier's warehouse, but the exporter pays export duties and organizes loading onto the vehicle. This option deliveries perfect if, for example, you have your own transport for transportation or a more profitable transportation option than your partner.
CPT (Carriage Paid To) - carriage paid to ...
The exporter's price includes the cost of transportation (freight) to a certain place... In this case, all risks associated with delivery are removed from the exporter at the time of transfer to the carrier, if several transshipments are expected, then to the first carrier. Therefore, you will need to independently resolve issues related to goods insurance to reduce the risk of loss and damage to goods during transportation.
CIP (Carriage and Insurance Paid) - carriage and insurance paid until ...
The same conditions that CPT, but at the same time the exporter pays for the insurance of the cargo, that is, assumes all risks up to the arrival of the goods to the importer at the agreed place, most often in the territory of the importer's country.
DAP (Delivered At Point) - delivery to the point ...
One of the commonly used terms Incoterms 2010, mainly due to the fact that it allows a clear separation of the responsibilities of the supplier and the buyer. In the previous edition Incoterms 2000 the closest term in meaning was DAF (Delivered At Frontier) - delivery to the border, that is, the place of its crossing. V Incoterms 2010 the concept of the border has been clarified to a “point”, the end point at which the goods are transferred from the exporter to the importer, since customs clearance can take place not only directly at the border. Therefore, he received such distribution.
DAT (Delivered At Terminal) - delivery to the terminal ...
This term is also very clear from the point of view of the distribution of responsibility - the supplier pays all costs, including loading, export duties and insurance on his side of the border, and the buyer is obliged to pay on his side. Unlike DAP, where, for example, the name of the nearest big city, when specifying delivery basis Dat by Incoterms 2010 better to use the title settlement or the port where the customs terminal is located.
DDP (Delivered, Duty Paid) - delivered, duties paid ...
Means that the buyer receives the goods at the specified point, with payment of both export and import duties (released for free circulation in the importing country), without any obligations to the carrier or insurers. If you do not want to burden yourself with any logistic and customs procedures, this is just what you need. Most of the buyers who contact us receive this price c. It is most convenient for comparing prices in the domestic market.
The above conditions Incoterms 2010 are universal from the point of view of the vehicle on which the delivery will be carried out: road, rail and air transport, sea or river ships as well as mixed transport. The following are terms that only apply to sea and river transport.
Incoterms 2010 conditions for sea, river transport
Delivery by water is still the cheapest, but it is long-lasting both in terms of distance and time, and has specific features associated with the responsibility of the sea (river) carrier. In addition, it includes a number of specific procedures related to the loading and unloading of the vessel, handling and storage of goods in the port.
FAS (Free Alongside Ship) - freely along the side of the ship ...
From the name itself, it follows that the duties of the exporter end after the delivery of the goods to the port of loading. The expression “alongside the ship” means that the goods are in port and have passed export customs clearance. The buyer only has to pay for the loading on the ship, the cost of transportation (freight), insurance, unloading, import duties. Since the exporter's obligations are fulfilled at the time of delivery to the port, all costs at the port of departure, including in the event of a delay in sending the goods, are borne by the buyer. Not very bright prospects, right? Therefore, in business practice, they often use FOB, CFR or CIF.
FOB (Free On Board) - free on board ...
The goods are considered transferred to the buyer from the moment they are loaded on board the ship, essentially the same as FAS, but with loading on the ship and payment of costs at the port of departure. Very common delivery basis in sea transport, however, it has a number of serious difficulties for the importer. At delivery FOB by Incoterms 2010 be very careful when choosing a carrier. From the moment the goods are loaded onto the ship until they are received at the port of destination, the risk of loss and damage to the goods lies with the carrier. In disputable cases, especially if you have to defend your point of view in court, difficulties may arise if the carrier, for example, is a foreign company.
CFR (Cost and Freight) - cost and freight ...
It is mainly used for river transport and transportation on short distances... The cost includes payment of export duties, loading in port and freight, but does not include insurance and unloading. Accordingly, the risk of loss of goods occurs at the time of loading the vessel. CFR on Incoterms 2010 implies that the buyer pays for the insurance of the cargo himself, respectively, the risks during the transportation of the goods also partially fall on the buyer. Especially if this insurance is not issued at all.
CIF (Cost, Insurance and Freight) - cost, insurance and freight ...
Very convenient for all parties to the transaction delivery basis... Seller pays all costs except unloading and import duties. The obligations of the exporter terminate at the time of loading on the ship, for the importer they arise at the time of unloading, and all risks while the goods are on the ship are insured by the exporter.
For more detailed information on any terms of delivery, I highly recommend reading the article on the site wikipedia.org or write to us (do not forget to include the return address).
Incoterms- international rules for the interpretation of commercial terms and expressions most often found in foreign trade contracts. Produced by the International Chamber of Commerce. The first was Incoterms 1936. Then changes and additions were made in 1953, 1967, 1976, 1980, 1990, 2000 and 2010. in order to create a collection of rules that are generally consistent with international trade practice. If, when concluding contracts (foreign trade), the parties refer to the conditions stipulated in Incoterms, this removes the problems caused different interpretations trading rules different countries and the interpretation of terms and helps to avoid misunderstandings and disputes.
Each term defines the division of risk and responsibility between the buyer and the seller, other conditions, among which the most important:
- securing export and import licenses;
- clarification of the content and type of contractual documents;
- determination of the term, type and conditions of insurance;
- packaging of goods;
- payment for "verification" operations and more.
Incoterms define the rights, obligations and responsibilities of exporters and importers regarding the adjustment of payments for the delivery of goods in international trade transactions.
The principle of division of responsibility is based on the definition for each term of the point where the goods should be delivered from the seller to the buyer at the expense of the seller. Usually at this "critical point" the responsibility for onward transport of the goods and the assumption of the cost and risk of onward delivery is transferred from the seller to the buyer.
Basic principles regulated in terms of Incoterms:
- distribution between the seller and the buyer of transport costs for the delivery of the goods, that is, determining what costs and for how long the seller bears, and which, from what moment, the buyer.
- the moment of transfer from the seller to the buyer of the risks of damage, loss or accidental destruction of the cargo.
- the date of delivery of the goods, that is, the determination of the moment when the seller actually transfers the goods to the disposal of the buyer or his representative - for example, a transport organization - and, consequently, the fulfillment or non-fulfillment of the first of its obligations in terms of delivery.
The rules for the transfer of ownership from the seller to the buyer, as well as the consequences of failure by the parties to fulfill their obligations under the contract for the sale of goods, including the grounds for the release of the parties from liability, which is regulated by the applicable law or the Vienna Convention, remain outside the scope of Incoterms.
the main objective Incoterms- universality and unambiguity in describing the obligations of both parties to a trade agreement, and the main task is to determine a situation in which it is considered that the seller has fulfilled his obligations so that the goods can be considered delivered.
Incoterms include 11 terms. Basic delivery terms are optional. When using Incoterms, contracts should indicate exactly what edition the interpretation of terms is considered, for example: EXW Incoterms-80, or FCA Incoterms-90.
The content of Incoterms in various revisions changes, for example, in Incoterms 2010, in comparison with Incoterms 2000, the term DAP was introduced instead of the excluded DAF (delivered at frontier, delivery to the border), DES (delivered ex ship, delivery on board the ship at the port of destination) and DDU ( delivered, duty unpaid, delivery to the specified place without customs clearance), and instead of DEQ (delivered ex quey, delivery to the port), the more general term DAT was introduced.
Each defined term is a three-letter abbreviation, the first letter indicates the point of transition of obligations from the seller to the buyer:
E- at the place of departure (English departure);
F- at the terminals of departure of the main carriage, the main carriage is not paid (English main carriage unpaid);
C- at the arrival terminals of the main carriage, the main carriage is paid (English main carriage paid);
D- from the buyer, full delivery (English arrival).
Incoterms 2010 defines 11 terms, 7 of them are applicable to any mode of transport of the main transportation.
Terms of delivery EXW Incoterms 2010
Terms of delivery EXW Incoterms 2010- "Ex Works" (named place) - "Ex Works" (named place) means that the seller is deemed to have fulfilled his delivery obligations when he places the goods at the disposal of the buyer at his establishment or at another specified place (for example: at the plant , factory, warehouse, etc.). The seller is not responsible for the loading of the goods on the vehicle provided by the buyer, nor for the payment of customs duties, nor for the customs clearance of the exported goods, unless otherwise agreed. On an EXW basis, the buyer bears all risks and all costs of moving the goods from the seller's premises to the named destination.
EXW delivery basis imposes minimum obligations on the seller and the buyer must bear all costs and risks associated with transporting the goods from the seller's premises to their destination. However, if the parties want the seller to take responsibility for loading the goods at the place of dispatch and bear all the risks and costs of such shipment, then this must be clearly stated in the appropriate addendum to the sales contract. The EXW term cannot be used when the buyer is unable to comply, directly or indirectly, with export formalities. In this case, the term FCA shall be used, provided that the seller agrees to bear the costs and risks of shipping the goods.
Buyer of goods EXW term should be used with caution as the seller has no obligation to the buyer to load the goods. If the seller actually loads the goods, this is done at the buyer's expense and risk. If the seller is loading at his own risk and expense, the term FCA is appropriate.
It should also be borne in mind that the seller is only obliged to provide the buyer of the goods for export on EXW terms, only assistance in customs clearance of the goods for export, the seller is not obliged to organize the implementation of customs procedures for the export of goods. Therefore, the buyer is not advised to use basis EXW if he cannot ensure the fulfillment of export customs formalities for the export of goods.
Terms of delivery FCA Incoterms 2010
Terms of delivery FCA Incoterms 2010- "Free Carrier" ("Free Carrier" named place name) means that the seller will hand over the goods released in customs regime export to the buyer's designated carrier at the named place. It should be noted that the choice of the place of delivery will affect the obligations to load and unload the goods at that place. If delivery takes place at the seller's premises or at another agreed place, the seller is responsible for loading the goods. It is recommended to most clearly define the point of delivery, since the risk passes from the seller to the buyer at this point.
FCA term can be used for transportation by any type of transport, including mixed transport. The word "Carrier" means any person who, on the basis of a contract of carriage, undertakes to carry out or ensure the carriage of goods by rail, road, air, sea and inland waterway or a combination of these modes of transport. If the buyer trusts another person, who is not a carrier, to accept the goods, then the seller is deemed to have fulfilled his obligations to deliver the goods from the moment it was handed over to this person.
Delivery basis FCA Incoterms 2010
Terms of delivery CPT Incoterms 2010
Terms of delivery CPT Incoterms 2010- “Carriage Paid To” (named named place of destination) means that the seller will transfer the goods, released under the customs regime of export, to the carrier named by him. In addition, the seller is obliged to pay the costs of transporting the goods to the specified destination. This means that the buyer assumes all risks of loss or damage to the goods, as well as other costs after the goods have been handed over by the seller to the carrier, and not when the goods have reached their destination. The term CPT contains two critical points, as risk and cost move in two different places.
CPT term can be used for transportation by any type of transport, including mixed transport. The word "carrier" means any person who, on the basis of a contract of carriage, undertakes to provide himself or organize the carriage of goods by rail, road, air, sea and inland waterway or a combination of these modes of transport. In the case of transportation to an agreed destination by several carriers, the transfer of risk will occur at the time the goods are transferred to the care of the first of them.
Delivery basis CPT Incoterms 2010 imposes on the seller the obligation to fulfill export customs procedures for the export of goods, however, the seller is not obliged to fulfill customs formalities for the import of goods, to pay import customs duties or perform other import customs procedures upon import.
Terms of delivery CIP Incoterms 2010
Terms of delivery CIP Incoterms 2010- "Carriage and Insurance Paid to" (named place of destination) means that the seller will transfer the goods, released under the export customs regime, to the carrier named by him. In addition, the seller is obliged to pay the costs of transporting the goods to the specified destination. This means that the buyer assumes all risks and any additional costs after the seller has handed over the goods to the carrier and not when the goods reach their destination. However, on a CIP delivery basis, the seller is also obligated to provide insurance against the risks of loss and damage to the goods during carriage for the benefit of the buyer. Consequently, the seller enters into an insurance contract and pays insurance premiums. The buyer should note that the CIP requires the seller to provide insurance with minimum coverage. If the buyer wants to have insurance with a large coverage, he must either specially agree with the seller about this, or he himself must take measures to conclude additional insurance. The term CIP contains two critical points, as risk and cost move in two different places.
CIP term can be used for transportation by any type of transport, including mixed transport. The word "carrier" means any person who, on the basis of a contract of carriage, undertakes to provide himself or organize the carriage of goods by rail, road, air, sea and inland waterway or a combination of these modes of transport. In the case of transportation to the destination by several carriers, the transfer of risk will occur at the time of transfer of the goods to the care of the first carrier.
Delivery basis CIP Incoterms 2010 imposes on the seller the obligation to carry out export customs procedures for the export of goods, however, the seller is not obliged to complete customs formalities for the import of goods, pay import customs duties or perform other import customs procedures upon import.
Terms of delivery DAT Incoterms 2010
Terms of delivery DAT Incoterms 2010- “Delivered At Terminal” means that the seller is considered to have fulfilled his obligations when the goods released under the export customs regime are unloaded from the arrived vehicle and placed at the disposal of the buyer at the agreed terminal of the specified destination. The term "terminal" in the DAT delivery basis means any place, incl. air / auto / railway cargo terminal, pier, warehouse, etc. The DAT terms of delivery impose on the seller all costs and risks associated with transporting and unloading the goods at the terminal, including (where applicable) any fees for export from the country of destination.
DAT term
Delivery basis DAT Incoterms 2010 imposes on the seller the obligation to carry out export customs procedures for the export of goods, however, the seller is not obliged to complete customs formalities for the import of goods, pay import customs duties or perform other import customs procedures upon import.
Terms of delivery DAP Incoterms 2010
Terms of delivery DAP Incoterms 2010- “Delivered At Point” (named named place of destination) means that the seller has fulfilled his obligation to deliver when he has provided the buyer with the goods released under the customs regime of export and ready for unloading from a vehicle arriving at the named place destination. DAP's terms of delivery impose on the seller all costs and risks associated with transporting the goods to the destination, including (where applicable) any fees for export from the country of destination.
DAP term can be used for the carriage of goods by any type of transport, including mixed transport. The word "carrier" means any person who, on the basis of a contract of carriage, undertakes to provide himself or organize the carriage of goods by rail, road, air, sea and inland waterway or a combination of these modes of transport.
Delivery basis DAP Incoterms 2010 imposes on the seller the obligation to carry out export customs procedures for the export of goods, however, the seller is not obliged to complete customs formalities for the import of goods, pay import customs duties or perform other import customs procedures upon import. If the parties intend to impose on the seller all the risks and costs of fulfilling import customs formalities for the import of goods, it is advisable to use the term DDP.
Terms of delivery DDP Incoterms 2010
Terms of delivery DDP Incoterms 2010- “Delivered Duty Paid” (named named place of destination) means that the seller will deliver the goods, cleared for export and import, and ready to be unloaded from the arrived vehicle at the disposal of the buyer at the named place of destination. The seller must bear all costs and risks associated with the transport of the goods, including any fees for export from the country of destination and for import into the country of destination. The word "fees" here refers to the responsibility and risks for customs clearance, as well as for the payment of customs formalities, customs duties, taxes and other fees.
DDP term can be used for the carriage of goods by any type of transport, including mixed transport. The word "carrier" means any person who, on the basis of a contract of carriage, undertakes to provide himself or organize the carriage of goods by rail, road, air, sea and inland waterway or a combination of these modes of transport.
DDP delivery terms cannot be applied if the seller, directly or indirectly, cannot ensure the fulfillment of import customs procedures for the import of goods. If the parties have agreed to exclude from the seller's obligations some of the costs payable upon import (such as value added tax - VAT), this should be clearly specified in the sales contract.
While the EXW term imposes minimum obligations on the seller, the DDP delivery basis term imposes the maximum obligations on the seller. If the parties intend to impose on the buyer all the risks and costs of fulfilling import customs formalities for the import of goods, it is advisable to use the term DAP.
Also, Incoterms-2010 defines 4 terms that are applicable exclusively to sea transport and transport of territorial waters:
Terms of delivery FAS Incoterms 2010
Terms of delivery FAS Incoterms 2010- “Free Alongside Ship” means that the seller has delivered when the goods are placed alongside the vessel at the quay or on lighters at the named port of shipment. The risk of loss or damage to the goods passes from the seller when the goods are positioned along the side of the ship, from which point the buyer bears all costs. When placing the goods in a container, it is typical for the seller to hand over the goods to the carrier at the terminal rather than by placing on board the ship, in such cases the term FCA should be used.
FAS term
Delivery basis FAS Incoterms 2010 imposes on the seller the obligation to carry out export customs procedures for the export of goods, however, the seller is not obliged to complete customs formalities for the import of goods, pay import customs duties or perform other import customs procedures upon import. However, if the parties want the buyer to take on the responsibility for customs clearance of the goods for export, then this must be clearly stated in the appropriate addendum to the sales contract.
Terms of delivery FOB Incoterms 2010
Terms of delivery FOB Incoterms 2010- "Free On Board" indicated port of shipment means that the seller has made delivery when the goods have crossed the ship's rail (on board) at the named port of shipment. The risk of loss or damage to the goods passes from the seller when the goods are on board, from which point the buyer bears all costs. When placing the goods in a container, it is typical for the seller to hand over the goods to the carrier at the terminal rather than by placing on board the ship, in such cases the term FCA should be used.
FOB term can only be used for the carriage of goods by sea or inland waterway.
Delivery basis FOB Incoterms 2010 imposes on the seller the obligation to carry out export customs procedures for the export of goods, however, the seller is not obliged to complete customs formalities for the import of goods, pay import customs duties or perform other import customs procedures upon import.
Terms of delivery CFR Incoterms 2010
Terms of delivery CFR Incoterms 2010- “Cost and Freight” indicated port of destination means that the seller has made delivery when the goods have crossed the ship's rail (on board the ship) at the port of shipment. The seller must pay the costs and freight required to deliver the goods to the named port of destination, and the risk of loss or damage to the goods, as well as any additional costs, pass from the seller to the buyer after the goods have been placed on board the ship at the port of shipment. When placing the goods in a container, it is typical for the seller to hand over the goods to the carrier at the terminal rather than by placing on board the ship, in such cases the term FCA should be used.
Under the CFR delivery basis, the buyer assumes all risks of loss or damage to the goods, as well as other costs after the seller hand over the goods to the carrier, not when the goods reach their destination. There are two critical points in the CFR term as risk and cost move in two different places.
CFR term can only be used for the carriage of goods by sea or inland waterway.
Mandates the seller to comply with export customs procedures for the export of goods, however, the seller is not obliged to complete customs formalities for the import of goods, pay import customs duties or perform other import customs procedures upon import.
CFR term Incoterms 2010 can only be used for the carriage of goods by sea or inland waterway. If the parties do not intend to deliver the goods across the ship's rail, the CPT term should be used.
Delivery basis CFR Incoterms 2010 imposes on the seller the obligation to carry out export customs procedures for the export of goods, however, the seller is not obliged to complete customs formalities for the import of goods, pay import customs duties or perform other import customs procedures upon import.
Terms of delivery CIF Incoterms 2010
Terms of delivery CIF Incoterms 2010- “Cost, Insurance and Freight” (indicated port of destination) means that the seller has made delivery when the goods have crossed the ship's rail (on board the ship) at the port of shipment. The seller must pay the costs and freight required to deliver the goods to the named port of destination, but the risk of loss or damage to the goods, as well as any additional costs incurred after the goods have been shipped, pass from the seller to the buyer.
CIF delivery basis also imposes on the seller the obligation to purchase marine insurance in favor of the buyer against the risk of loss and damage to the goods during carriage. Consequently, the seller is obliged to conclude an insurance contract and pay insurance premiums. The buyer should note that the CIF delivery terms require the seller to provide insurance with only minimal coverage. If the buyer wants to have insurance with a large coverage, he must either specially agree with the seller about this, or he himself must take measures to conclude additional insurance.
CIF term can only be used for the carriage of goods by sea or inland waterway. If the parties do not intend to deliver the goods on board the vessel, the CIP term should be used.
Delivery basis CIF Incoterms 2010 imposes on the seller the obligation to carry out export customs procedures for the export of goods, however, the seller is not obliged to complete customs formalities for the import of goods, pay import customs duties or perform other import customs procedures upon import.
