INCOTERMS-2010
What are Incoterms? The Incoterms rules are an internationally recognized standard and are used worldwide in international and domestic contracts for the sale of goods. Incoterms were originally developed by the ICC (International Chamber of Commerce) in Paris in 1936, and since then undergone numerous revisions. Incoterms rules provide internationally accepted definitions and rules of interpretation for most common commercial terms.
The rules have been developed and maintained by experts and practitioners brought together by ICC and have become the standard in international business rules setting. Launched in mid-september 2010, Incoterms 2010 came into effect on 1 January 2011. They help traders avoid misunderstandings by clarifying the tasks, costs and risks involved in the delivery of goods from sellers to buyers.
All contracts made under INCOTERMS 2000 remain valid even after 2011. Moreover, although we recommend using Incoterms 2010 after 2011, parties to a contract for the sale of goods can agree to choose any version of the Incoterms rules after 2011. It is important however to clearly specify the chosen version INCOTERMS 2010, INCOTERMS 2000 or any earlier version.
INCOTERMS-2000 EXW - Ex Works ( named place) FCA - Free Carrier ( named place) FAS - Free Alongside Ship ( named port of shipment) FOB - Free On Board ( named port of shipment) CFR - Cost and Freight ( named port of destination) CIF - Cost, Insurance and Freight ( named port of destination) CPT - Carriage Paid To ( named place of destination) CIP - Carriage and Insurance Paid To ( named place of destination) DAF- Delivered at Frontier DES Delivered Ex ship DEQ- Delivered Ex Quay DDU - Delivered Duty Un Paid ( named port of destination) DDP - Delivered Duty Paid ( named port of destination)
The 11 Incoterms 2010 are: EXW - Ex Works ( named place) FCA - Free Carrier ( named place) FAS - Free Alongside Ship ( named port of shipment) FOB - Free On Board ( named port of shipment) CFR - Cost and Freight ( named port of destination) CIF - Cost, Insurance and Freight ( named port of destination) CPT - Carriage Paid To ( named place of destination) CIP - Carriage and Insurance Paid To ( named place of destination) DAT - Delivered at Terminal ( named terminal at port or place of destination) DAP - Delivered at Place ( named place of destination) DDP - Delivered Duty Paid ( named port of destination)
The eighth published set of pre-defined terms, Incoterms 2010 defines 11 rules, reducing the 13 used in Incoterms 2000 by introducing two new rules ("Delivered at Terminal", DAT; "Delivered at Place", DAP) that replace four rules of the prior version ("Delivered at Frontier", DAF; "Delivered Ex Ship", DES; "Delivered Ex Quay", DEQ; "Delivered Duty Unpaid", DDU).In the prior version, the rules were divided into four categories, but the 11 pre-defined terms of Incoterms 2010 are subdivided into two categories based only on method of delivery. The larger group of seven rules applies regardless of the method of transport, with the smaller group of four being applicable only to sales that solely involve transportation over water.
Any Mode of Transport EXW Ex Works (named place of delivery) FCA - Free Carrier (named place of delivery) CPT Carriage Paid To (named place of destination) CIP Carriage and Insurance Paid to (named place of destination) DAT Delivered at Terminal (named terminal at port or place of destination) DAP Delivered at Place (named place of destination) DP Delivered Duty Paid (named place of destination) Sea and inland waterway transport FAS Free Alongside Ship (named port of shipment) FOB Free on Board (named port of shipment) CFR Cost and Freight (named port of destination) CIF Cost, Insurance and Freight (named port of destination)
Any mode of transport The 7( Seven) rules defined by Incoterms 2010 for any mode(s) of transportation are: EXW Ex Works (named place of delivery) :The seller makes the goods available at his/her premises. The buyer is responsible for uploading. This term places the maximum obligation on the buyer and minimum obligations on the seller. The Ex Works term is often used when making an initial quotation for the sale of goods without any costs included. EXW means that a seller has the goods ready for collection at his premises (works, factory, warehouse, plant) on the date agreed upon. The buyer pays all transportation costs and also bears the risks for bringing the goods to their final destination.
FCA Free Carrier (named place of delivery) :The seller delivers goods, cleared for export, to the buyerdesignated carrier at a named location. This is used for any mode of transport. The seller must load goods onto the buyer's carrier. The key document signifying transfer of responsibility is receipt by carrier to exporter. CPT Carriage Paid To (named place of destination) : The seller pays for carriage. Risk transfers to buyer upon handling goods over to the first carrier at place of shipment in the country of export. This term is used for all kind of shipments.
CIP Carriage and Insurance Paid to (named place of destination) : The containerized transport/multimodal equivalent of CIF. Seller pays for carriage and insurance to the named destination point, but risk passes when the goods are handed over to the first carrier. DAT Delivered at Terminal (named terminal at port or place of destination) : Seller pays for carriage to the terminal, except for costs related to import clearance, and assumes all risks up to the point that the goods are unloaded at the terminal.
DAP Delivered at Place (named place of destination) : Seller pays for carriage to the named place, except for costs related to import clearance, and assumes all risks prior to the point that the goods are ready for unloading by the buyer. DDP Delivered Duty Paid (named place of destination) : Seller is responsible for delivering the goods to the named place in the country of the buyer, and pays all costs in bringing the goods to the destination including import duties and taxes. The seller is not responsible for unloading. This term is often used in place of the non-incoterm "Free In Store (FIS)". This term places the maximum obligations on the seller and minimum obligations on the buyer.
Sea and inland waterway transport The four rules defined by Incoterms 2010 for international trade where transportation is entirely conducted by water are: FAS Free Alongside Ship (named port of shipment) : The seller must place the goods alongside the ship at the named port. The seller must clear the goods for export. Suitable only for maritime transport but NOT for multimodal sea transport in containers (see Incoterms 2010, ICC publication 715). This term is typically used for heavy-lift or bulk cargo.
FOB Free on Board (named port of shipment) : The seller must load the goods on board of the vessel by the buyer. Cost and risk are divided when the goods are actually on board of the vessel. The seller must clear the goods for export. The term is applicable for maritime and inland waterway transport only but NOT for multimodal sea transport in containers (see Incoterms 2010, ICC publication 715). The buyer must instruct the seller the details of the vessel and the port where the goods are to be loaded. It means the seller pays for transportation of goods to the port of shipment, loading cost. The buyer pays cost of marine freight transportation, insurance, uploading and transportation cost from the arrival port to destination. The passing of risk occurs when the goods pass the ship's rail at port of shipments.
CFR Cost and Freight (named port of destination) Seller must pay the costs and freight to bring the goods to the port of destination. However, risk is transferred to the buyer once the goods are loaded on the vessel. Insurance for the goods is NOT included. This term is formerly known as CNF (C&F, or C+F). Maritime transport only. CIF Cost, Insurance and Freight (named port of destination) Exactly the same as CFR except that the seller must in addition procure and pay for the insurance. Maritime transport only.
LIMITATIONS OF INCOTERMS : INCOTERMS DO NOT... Determine ownership or transfer title to the goods, nor evoke payment terms. Apply to service contracts, nor define contractual rights or obligations (except for delivery) or breach of contract remedies. Protect parties from their own risk or loss, nor cover the goods before or after delivery. Specify details of the transfer, transport, and delivery of the goods. Container loading is NOT considered packaging, and must be addressed in the sales contract. Remember, Incoterms are not law
BOOKS & REFERENCES :
Uniform Rules for Collections No. 522 The ICC Uniform rules for collections were first published by the ICC in 1956. Revised versions were issued in 1967 and 1978. This present revision was adopted by the Council of the ICC in June 1995. It is issued with the title ICC Uniform Rules for Collections as ICC Publication No 522. 1995 Revision in force as of January 1, 1996
A : GENERAL PROVISIONS AND DEFINITIONS ARTICLE 1 Application of URC 522 ARTICLE 2 Definition of Collection ARTICLE 3 Parties to a Collection B : FORM AND STRUCTURE OF COLLECTIONS ARTICLE 4 Collection Instruction
C : FORM OF PRESENTATION ARTICLE 5 Presentation ARTICLE 6 Sight/Acceptance ARTICLE 7 Release of Commercial Documents ARTICLE 8 Creation of Documents D : LIABILITIES AND RESPONSIBILITIES ARTICLE 9 Good faith and Reasonable care ARTICLE 10 Documents vs. Goods/Services/Performances ARTICLE 11 Disclaimer For Acts of an Instructed Party ARTICLE 12 Disclaimer on Documents Received ARTICLE 13 Disclaimer on Effectiveness of Documents ARTICLE 14 Disclaimer on Delays, Loss in Transit and Translation ARTICLE 15 Force Majeure
E : PAYMENT ARTICLE 16 Payment Without Delay ARTICLE 17 Payment in Local Currency ARTICLE 18 Payment in Foreign Currency ARTICLE 19 Partial Payments F: INTEREST CHARGES AND EXPENSES ARTICLE 20 Interest ARTICLE 21 Charges and Expenses G : OTHER PROVISIONS ARTICLE 22 Acceptance ARTICLE 23 Promissory Notes and Other Instruments ARTICLE 24 Protest ARTICLE 25 Case-of-Need ARTICLE 26 Advises