INCOTERMS - INTERNATIONAL COMMERCIAL TERMS

 Introduction 

                                    INCOTERMS is also known as the International Commercial Terms, developed by the International Chamber Of Commerce to facilitate the international trade. When global companies enter into contracts to buy and sell goods they are free to negotiate specific terms. These terms include the price, quantity, and characteristics of the goods. Every international contract also contains what is referred to as an incoterms, or international commercial terms. Applying incoterms to sale and purchase contracts makes global trade easier and helps partners in different countries understand one another. When we refer to the seller, it means the seller manufacturer or exporter, and when refer to the buyer, it means the importer. Incoterms are revised periodically. 
                                   These rules form an essential part of the day to day international trade as well as domestic trades and they form an integral part of many sales contracts worldwide. It is important to remember that INCOTERMS is not a generic name for international trade terms but is a trademark used to designate the rules devised by ICC.

 

Elements Of INCOTERMS

 1) EXW (Ex Works)  

               For any transport mode.
               For where there is more than one mode of transport.

Sellers Responsibilities : Make sure that the goods are : Available, Suitably packaged, At the specified place ( Usually the sellers factory or storage).

Buyers Responsibilities : Loading the goods on to a vehicle, Do all export procedures, Taking care of costs for all on ward transport and costs after collecting the goods.

 

 2) FCA (Free Carrier) 
                              

            For any transport mode
            For where there is more than one mode of transport

Sellers Responsibilities: Deliver the goods, Cleared for export to the carrier selected by the buyer. Load the goods if the carrier pickup is at the seller's premises. 

Buyers Responsibilities: After goods have been delivered at the named place, buyer bears the costs and risks of moving the goods to destination. 

3) FAS (Free Alongside Ship) 

 
                          Goods transported by sea or inland waterway.

Sellers Responsibilities : The seller delivers the goods (cleared for export) to the origin point.

Buyers Responsibilities : From that point ; the buyer bears all costs and risks of loss or damage. And he is also responsible for loading the goods. 

4) FOB (Free On Board)
            

                     Goods transported by sea or inland waterway.

Sellers Responsibilities : Delivers the goods on board the ship & clears the goods for export.

Buyers Responsibilities : From that point, the buyer bears all costs and risks of loss or damage.

5) CFR (Cost And Freight) 

                           Goods transported by sea or inland waterway.

Sellers Responsibilities: Clears the goods for export and pays the costs of moving the goods to destination. 

Buyers Responsibilities: Bears all risks of loss or damage once the goods have been loaded on board. 

6) CIF (Cost Insurance Freight) 
                                             

                     Goods transported by sea or inland waterway.

Sellers Responsibilities : Clears the goods for export and pays the costs of moving the goods to destination. Purchase the cargo insurance.

Buyers Responsibilities : Bears all risks of loss or damage once the goods have been loaded on board.

7) CPT (Carriage Paid To)  

                                            Any transport mode. Where there is more than one mode of transport. 

Sellers Responsibilities : Arrange carriage to the named placed. Not responsible for insuring goods to the named placed. 

Buyers Responsibilities : From the time the goods are transferred to the first carrier, the buyer bears the risks of loss or damage. 

8) CIP (Carriage And Insurance Paid To) 

                         Any transport mode. Where there is more than one mode of transport. 

Sellers Responsibilities :  Arranging carriage to the named placed. Insuring the goods.

Buyers Responsibilities : From the time the goods are transferred to the first carrier, the buyer bears the risks of loss or damage. 

9) DAT(Delivered At Terminal) 

                  Any transport mode. Where there is more than one mode of transport. 

Sellers Responsibilities : Delivers when the goods, once unloaded from the arriving means of transport, are placed at buyer's disposal at a named terminal at the named port or place of destination. Bears all risks involved in bringing the goods to and unloading them at the terminal at the named port or place of destination. 

Buyers Responsibilities : Risks transfers from seller to buyer when the goods have been unloaded. Buyer is responsible for import clearance, any applicable local taxes or import duties. 

10) DAP (Delivered At Place) 

                        Any transport mode. Where there is more than one mode of transport. 

Sellers Responsibilities : Responsible for arranging carriage and for delivering the goods (which is ready for unloading from the arriving carriage) at the named place. Bears all risks involved in bringing the goods to the named place. 

Buyers Responsibilities : Risk transfers from the seller to buyer when the goods are available for unloading. Unloading is at buyer's risk. Responsible for import clearance, any applicable local taxes or import duties. 

11) DDP (Delivered Duty Paid) 

                   Any transport mode. Where there is more than one of transport. 

Sellers Responsibilities : Delivers the goods , goods cleared for import to the buyer's at destination. Bears all costs and risks of moving the goods to destination, including the payment of customs duties and taxes.

 
Buyers Responsibilities : Risks transfers from seller to buyer when the goods are avoidable for unloading. This rule places the maximum responsibility on the seller. 
                      
 

               

Conclusion 

                    In above passage we provide the basic details and introductory part of INCOTERMS. The rules of INCOTERMS which is used and followed by all international traders to do the import and export business.