Incoterms

1. Incoterms

2. Introduction • Universally recognised set of definitions of international trade terms • Recognised by courts and other authorities • Define the trade contract responsibilities and liabilities between buyer and seller • Updated regularly to keep pace with changes and developments in international trade

3. Introduction • Devised an published by the ICC • WBO ICC introduced Incoterms in 1936 • Incoterms 2012 • 4 groups E, F, C and D and in all 13 main terms

4. Introduction Purpose of Incoterms • Designed for Parties to a Contract • Provides a set of international rules for foreign trade • Reduces uncertainties • Avoids different interpretations in different countries • Additional costs and time can be avoided

5. Introduction THE SELLER’S OBLIGATIONS A1 Provision of goods in conformity with the contract A2 Licenses, authorizations and formalities A3 Contract of carriage and insurance A4 Delivery A5 Transfer of risks A6 Division of costs A7 Notice to the buyer A8 Proof of delivery, transport document or equivalent electronic message A9 Checking – packaging – marking A10 Other obligations

6. Introduction THE BUYER’S OBLIGATIONS B1 Payment of the price B2 Licenses, authorizations and formalities B3 Contract of carriage B4 Taking delivery B5 Transfer of risks B6 Division of the costs B7 Notice to the seller B8 Proof of delivery, transport document of equivalent electronic message B9 Inspection of goods B10 Other obligations

7. Introduction Scope of Incoterms Incoterms is limited: • To rights and obligations of the parties to contract of sale with respect to the delivery of the goods sold. • Do not deal with the consequences of breach of contract • Primarily intended for use where goods are sold for delivery across national boundaries, hence international commercial terms • Can be used in contracts for sale of goods directly.

8. Introduction Scope of Incoterms Incoterms is limited: • To rights and obligations of the parties to contract of sale with respect to the delivery of the goods sold. • Do not deal with the consequences of breach of contract • Primarily intended for use where goods are sold for delivery across national boundaries, hence international commercial terms • Can be used in contracts for sale of goods directly.

9. Introduction Structure • Group E Departure EXW Ex Works (.....…........named place) • Group F Main carriage unpaid FCA Free Carrier (....….........named place) FAS Free Alongside Ship (........….named port of shipment) FOB Free On Board (............named port of shipment)

10. Introduction Structure • Group C Main carriage paid CFR Cost and Freight (...........named port of destination) CIF Cost, Insurance & Freight (.....named port of destination) CPT Cost Paid To (...........named port of destination) CIP Carriage and Insurance paid to (…… .named place of destination) • Group D Arrival • DAF Delivered at Frontier (.....………………….....named place) • DES Delivered Ex Ship (...........named port of destination) • DEQ Delivered Ex Quay (....…....named port of destination) • DDU Delivered Duty Unpaid (…...named place of destination) • DDP Delivered Duty Paid (.........named place of destination)

11. Introduction The Terms • The “E” Term is the term in which seller’s obligation is at its minimum • The “F” Term require the seller to deliver as instructed by the buyer • The “C” Term require the seller to contract for carriage at his expense • The “D” Term signifies arrival contracts

12. Introduction Any mode of transport Group E EXW Ex Works (…...............named place) Group F FCA Free Carrier (…................named place) Group C CPT Cost Paid To (............named port of destination) CIP Carriage and Insurance paid to (..........named place of destination) Group D DAF Delivered at Frontier (............named place) DDU Delivered Duty Unpaid (..........named place of destination) DDP Delivered Duty Paid (..........named place of destination)

13. Introduction Mode of transport and the appropriate Incoterm Maritime and inland waterway transport only • Group F • FAS Free Alongside Ship (..…..........named port of shipment) • FOB Free On Board (…............named port of shipment) • Group C • CFR Cost and Freight (............named port of destination) • CIF Cost, Insurance & Freight (............named port of destination) • Group D • DES Delivered Ex Ship (............named port of destination) • DEQ Delivered Ex Quay (............named port of destination)

14. EXW - Ex Works Goods available only at seller’s premises. Buyer: loads the goods on truck or container at the seller’s premises, and takes into account the subsequent costs and risks.

15. FCA - Free Carrier Delivery at the specified point of departure: the seller’s premises or a named cargo terminal / railroad station Buyer: main carriage/freight, cargo insurance and other costs and risks

16. FAS - Free Alongside Ship Seller: places the goods alongside the ship at the named port, loaded at his expense. Buyer: pays loading fee, main carriage/freight, cargo insurance and other costs risks.

17. FOB - Free On Board Delivery of goods on board the vessel at the port of origin is at the seller’s expense. Buyer is responsible for loading fee, main carriage/freight, cargo insurance and other costs risks.

18. CFR - Cost and Freight Seller: pays the costs and freight to bring the goods to the port of destination. Risk: transferred once the goods have crossed the ship’s rail.

19. CIF - Cost Insurance and Freight Used exactly the same way as CFR except that Seller: must in addition procure and pay for insurance for the cargo insurance and delivery of goods to the port of destination Buyer: responsible for the import customs clearance & other costs and risks

20. CPT - Carriage Paid To Seller delivers the goods at the named place of destination at his expense. Buyer assumes the cargo insurance, import customs clearance, payment of customs duties and taxes, and other costs and risks. Risk transferred at the delivery of goods

21. CIP - Carriage & Insurance Paid To Seller delivers the goods on the ship. On board, the risk is transferred to the buyer. Buyer is accountable for the import customs clearance, payment of customs duties and taxes, and other costs and risks until goods reach their final destination.

22. DAF - Delivered At Frontier Delivery of goods is done at the specified point at the frontier at the seller's expense. Buyer is responsible for the import customs clearance, payment of customs duties and taxes. The transfer of risk is made at the frontier

23. DES - Delivered Ex Ship Seller assumes expenses linked to the delivery of goods. At the arrival of the ship, the risk is transferred to the buyer. Buyer is accountable for the unloading fee, import customs clearance, payment of customs duties and taxes, cargo insurance, and other costs

24. DEQ - Delivered Ex Quay Delivery of goods is done to the quay of the port at the seller's expense. He is also responsible for the import customs clearance and payment of customs duties and taxes at the buyer's end. Buyer assumes the cargo insurance and other costs and risks

25. DDU - Delivered Duty Unpaid Delivery of goods and the cargo insurance to the final destination, which is often the project site or buyer's premises, is done at the seller's expense. Buyer is responsible for the import customs clearance and payment of customs duties and taxes

26. DDP - Delivered Duty Paid Seller is responsible for most of the expenses, which include the cargo insurance, import customs clearance, and payment of customs duties and taxes at the buyer's end, and the delivery of goods to the final point at destination, which is often the project site or the buyer's premises. It is a “door to door” delivery. Risk is transferred when the goods are delivered

27. Conclusion • Incoterms cannot be applied by themselves to a variety of situations, of medium of transports, technologies.... • They must be supplemented by additional details adapted to these particular case. • Define the geographical points where the transfers of risks and expenses will take place.