When negotiating an international sales contract, both parties need to pay as much attention to the terms of sale as to the sales price. To make it as clear as possible, an international set of trade terms (INCOTERMS) has been adopted by most countries that defines exactly the responsibilities and risks of both the buyer and seller including while the merchandise is in transit.
The following chart summarizes the responsibilities of both the buyer and seller for each of the current 13 INCOTERMS. In addition, a definition for each term is included at the bottom of the page. |
Origin Terms
EXW - Ex-Works, named place where shipment is available to the buyer, not loaded.
The seller will not contract for any transportation.
International Carriage NOT Paid by Seller
FCA - Free Carrier, unloaded at the seller's dock OR a named place where shipment is available to the international carrier or agent, not loaded.
This term can be used for any mode of transport.
FAS - Free Alongside Ship, named ocean port of shipment.
Ocean shipments that are NOT containerized.
FOB - Free On Board vessel, named ocean port of shipment.
This term is used for ocean shipments only where it is important that the goods pass the ship's rail.
International Carriage Paid by the Seller
CFR - Cost and Freight, Named ocean port of destination.
This term is used for ocean shipments that are not containerized.
CIF - Cost, Insurance and Freight, named ocean port of destination.
This term is used for ocean shipments that are not containerized.
CPT - Carriage Paid To, named place or port of destination.
This term is used for air or ocean containerized and roll-on roll-off shipments.
CIP - Carriage and Insurance Paid To, named place or port of destination.
This term is used for air or ocean containerized and roll-on roll-off shipments.
Arrival At Stated Destination
DAF - Delivered At Frontier, named place of destination, by land, not unloaded.
This term is used for any mode of transportation but must be delivered by land.
DES - Delivered Ex-Ship, named port of destination, not unloaded.
This term is used for ocean shipments only.
DEQ - Delivered Ex-Quay, named port of destination, unloaded, not cleared.
This term is used for ocean shipments only.
DDU - Delivered Duty Unpaid, named place of destination, not unloaded, not cleared.
This term is used for any mode of transportation.
DDP - Delivered Duty Paid, named place of destination, not unloaded, cleared.
This term is used for any mode of transportation.
"INCOTERMS 2000" is one in a series of short articles published by International Business Training, a division of InterMart, Inc. These articles are designed to help businesses and individuals succeed in the global marketplace.
For more information about a variety of import and export publications, self-study courses and seminars designed specifically for small and mid-sized companies, visit web page at www.i-b-t.net.
|