The International Chamber of Commerce has developed an International Commercial Terms (Incoterms) which are accepted by governments and legal authorities globally. Incoterms are pre-defined commercial terms intended to clarify and remove uncertainties arising from interpretations of rules and laws which may differ by country.
We have summarized the below table with the 11 types of the 2010 Incoterms. We have further provided some more descriptions for the 5 most common Incoterms and ones we most frequently use.
|Loading On Vessel||Buyer||Buyer||Buyer||Seller||Seller||Seller||Seller||Seller||Seller||Seller||Seller|
|Charges On Arrival At Dest.||Buyer||Buyer||Buyer||Buyer||Buyer||Buyer||Seller||Seller||Buyer||Seller||Seller|
|Duty, Taxes & Customs||Buyer||Buyer||Buyer||Buyer||Buyer||Buyer||Buyer||Buyer||Buyer||Buyer||Seller|
|Delivery To Destination||Buyer||Buyer||Buyer||Buyer||Buyer||Buyer||Buyer||Buyer||Buyer||Seller||Seller|
"Ex-works" means that the seller delivers when he places the goods at the disposal of the buyer at the seller’s premises or another named place ( i.e. works, factory, warehouse, etc. ) not cleared for export and not loaded on any collecting vehicle.
This term thus represents the minimum obligation for the seller, and the buyer has to bear all costs and risks involved in taking the goods from the seller’s premises.
FREE CARRIER (FCA)
"Free Carrier" means that the seller delivers the goods, cleared for export, to the carrier nominated by the buyer at the named place. It should be noted that the chosen place of delivery has an impact on the obligations of loading and unloading goods at that place.
If delivery occurs at any other place, the seller is not responsible for unloading. This term may be used irrespective of the mode of transport, including multi-modal transport.
FREE ON BOARD (FOB)
"Free on Board" means that the seller delivers when the goods pass the ship’s rail at the named port of shipment. This means that the buyer has to bear all costs and risks of loss of or damage to the goods from that point.
The FOB term requires the seller to clear the goods for export. This item can be used only for sea or inland waterway transport. If the parties do not intend to deliver the goods across the ships rail, the FCA term should be used.
COST, INSURANCE AND FREIGHT (CIF)
"Cost, Insurance and Freight" means that the seller delivers when the goods pass the ship’s rail in the port of the shipment. The seller must pay the costs and freight necessary to bring the goods to the named port of destination.
The risk of loss of or damage to the goods, as well as any additional costs due to events occurring after the time of delivery, are transferred from the seller to the buyer.
DELIVERY DUTY PAID (DDP)
"Delivered Duty Paid" means that the seller delivers the goods to the buyer, cleared for import, and not unloaded from any arriving means of transport at the named place of destination.
The seller has to bear all the costs and risks involved in bringing the goods thereto including, where applicable, and “duty” ( which term includes the responsibility for and the risks of the carrying out of custom formalities and the payment of formalities, custom duties, taxes and other charges) for import in the country of destination.