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Incoterms
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al terms are a series of pre-defined commercial terms published by the International Chamber of
Commerce (ICC) that are widely used in International commercial transactions or Procurement
processes. A series of three-letter trade terms related to common contractual sales practices, the
Incoterms rules are intended primarily to clearly communicate the tasks, costs, and risks associated with
the transportation and delivery of goods.

The Incoterms rules are accepted by governments, legal authorities, and practitioners worldwide for the
interpretation of most commonly used terms in international trade. They are intended to reduce or
remove altogether uncertainties arising from different interpretation of the rules in different countries.
As such they are regularly incorporated into sales contracts[1] worldwide.

First published in 1936, the Incoterms rules have been periodically updated, with the eighth version—
Incoterms 2010—having been published on January 1, 2011. "Incoterms" is a registered trademark of
the ICC.

Contents
■ 1 Incoterms 2010
■ 1.1 Any mode of transport
■ 1.1.1 EXW – Ex Works
(named place of
delivery)
■ 1.1.2 CPT – Carriage
Paid To (named place of National Incoterms chambers.
destination)
■ 1.1.3 CIP – Carriage and
Insurance Paid to (named place of destination)
■ 1.1.4 DAT – Delivered at Terminal (named terminal at port or place of destination)
■ 1.1.5 DAP – Delivered at Place (named place of destination)
■ 1.1.6 DDP – Delivered Duty Paid (named place of destination)
■ 1.2 Sea and inland waterway transport
■ 1.2.1 FAS – Free Alongside Ship (named port of shipment)
■ 1.2.2 FOB – Free on Board (named port of shipment)
■ 1.2.3 CFR – Cost and Freight (named port of destination)
■ 1.2.4 CIF – Cost, Insurance and Freight (named port of destination)
■ 2 Allocations of costs buyer/seller according to Incoterms 2010[3]
■ 3 Previous terms from Incoterms 2000 eliminated from Incoterms 2010
■ 3.1 DAF – Delivered at Frontier (named place of delivery)
■ 3.2 DES – Delivered Ex Ship (named port of delivery)
■ 3.3 DEQ – Delivered Ex Quay (named port of delivery)
■ 3.4 DDU – Delivered Duty Unpaid (named place of destination)
■ 4 See also
■ 5 References

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■ 6 External links

Incoterms 2010
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).[2] 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

The 7 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. The seller does not load the goods on collecting vehicles
and doesn't clear them for export. If the seller does load the goods, he does so at buyer's risk and cost. If
parties wish seller to be responsible for the loading of the goods on departure and to bear the risk and all
costs of such loading, this must be made clear by adding explicit wording to this effect in the contract of
sale..

FCA-Free Carrier-(named place) "Free Carrier" means that the seller fulfils his obligation to deliver
when he has handed over the goods, cleared for export, into the charge of the carrier named by the buyer
at the named place or point. If no precise point is indicated by the buyer, the seller may choose within
the place or range stipulated where the carrier shall take the goods into his charge. When, according to
commercial practice, the seller's assistance is required in making the contract with the carrier (such as in
rail or air transport) the seller may act at the buyer's risk and expense.

This term may be used for any mode of transport, including multimodal transport. "Carrier" means any
person who, in a contract of carriage, undertakes to perform or to procure the performance of carriage by
rail, road, sea, air, inland waterway or by a combination of such modes. If the buyer instructs the seller
to deliver the cargo to a person, e.g. a freight forwarder who is not a 'carrier', the seller is deemed to
have fulfiled his obligation to deliver the goods when they are in the custody of that person.

"Transport terminal" means a railway terminal, a freight station, a container terminal or yard, a
multipurpose cargo terminal or any similar receiving point.

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"Container" includes any equipment used to unitise cargo, e.g. all types of containers and/or flats,
whether lSO accepted or not, trailers, swap bodies, ro-ro equipment, igloos, and applies to all modes of
transport.

A. The seller must

A.1. Provision of goods in conformity with the contract

Provide the goods and the commercial invoice, or its equivalent electronic message in conformity with
the contract of sale and any other evidence of conformity which may be required by the contract

A.2. Licences, authorisations and formalities

Obtain at his own risk and expense any export licence or other official authorisation and carry out all
customs formalities necessary for the exportation of the goods.

A.3. Contract of carriage and insurance

a) Contract of carriage

No obligation. However, if requested by the buyer or if it is commercial practice and the buyer does not
give an instruction to the contrary in due time, the seller may contract for carriage on usual terms at the
buyer's risk and expense. The seller may decline to make the contract and, if he does, shall promptly
notify the buyer accordingly.

b) Contract of insurance

No obligation.

A.4. Delivery

Deliver the goods into the custody of the carrier or another person (e.g. a freight forwarder) named by
the buyer, or chosen by the seller in accordance with A.3. a), at the named place or point (e.g. transport
terminal or other receiving point) on the date or within the period agreed for delivery and in the manner
agreed or customary at such point. If no specific point has been agreed, and if there are several points
available, the seller may select the point at the place of delivery which best suits his purpose. Failing
precise instructions from the buyer, the seller may deliver the goods to the carrier in such a manner as
the transport mode of that carrier and the quantity and/or nature of the goods may require.

Delivery to the carrier is completed :

i) In the case of rail transport when the goods constitute a wagon load (or a container load carried by
rail) the seller has to load the wagon or container in the appropriate manner. Delivery is completed when
the loaded wagon or container is taken over by the railway or by another person acting on its behalf.

When the goods do not constitute a wagon or container load, delivery is completed when the seller has
handed over the goods at the railway receiving point or loaded them into a vehicle provided by the
railway.

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ii) In the case of road transport when loading takes place at the seller's premises, delivery is completed
when the goods have been loaded on the vehicle provided by the buyer.

When the goods are delivered to the carrier's premises, delivery is completed when they have been
handed over to the road carrier or to another person acting on his behalf.

iii) In the case of transport by inland waterway when loading takes place at the seller's premises or at a
harbour, delivery is completed when the goods have been loaded on the carrying vessel provided by the
buyer.

When the goods are delivered to the carrier's premises, delivery is completed when they have been
handed over to the inland waterway carrier or to another person acting on his behalf.

??) In the case of sea transport when the goods constitute a full container load(FCL), delivery is
completed when the loaded container is taken over by the sea carrier.

When the container has been carried to an operator of a transport terminal acting on behalf of the carrier,
the goods shall be deemed to have been taken over when the container has entered into the premises of
that terminal.

When the goods are less than a container load(LCL), or are not to be containerized, the seller has to
carry them to the transport terminal. Delivery is completed when the goods have been handed over to the
sea tarrier or to another person acting on his behalf.

v) In the case of air transport, delivery is completed when the goods have be handed over to the air
carrier or to another person acting on his behalf.

vi) In the case of unnamed transport, delivery is completed when the goods have been handed over to
the carrier or to another person acting on his behalf named by the buyer or chosen by the seller in
accordance with A.3.a).

vii) In the case of multimodal transport, delivery is completed when the goods have been handed over as
specified in i)-vi). as the case may be.

A.5. Transfer of risks

Subject to the provisions of B.5., bear all risks of loss of or damage to the goods until such time as they
have been delivered in accordance with A.4.

A.6. Division of Costs

Subject to the provisions of B.6.

- pay all costs relating to the goods until such time as they have been delivered the carrier in accordance
with A.4.;

- pay the costs of customs formalities as well as all duties, taxes, and other official charges payable upon
exportation.

A.7. Notice to the buyer

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Give the buyer sufficient notice that the goods have been delivered into the custody of the carrier.
Should the carrier fail to take the goods into his charge at the time agreed, the seller must notify the
buyer accordingly.

A.8. Proof of delivery, transport document or equivalent electronic message

Provide the buyer at the seller's expense, if customary, with the usual document in proof of delivery of
the goods in accordance with A.4.

Unless the document referred to in the preceding paragraph is the transport document, render the buyer
at the latter's request, risk and expense, every assistance in obtaining a transport document for the
contract of carriage (for example, a negotiable bill of lading, a non-negotiable sea waybill, an inland
waterway document, an air waybill, a railway consignment note, a road consignment note. or a
multimodal transport document). When the seller and the buyer have agreed to communicate
electronically, the document referred to in the preceding paragraph may be replaced by an equivalent
electronic data interchange(EDI) message.

A.9. Checking-packaging-marking

Pay the costs of those checking operations (such as checking quality, measuring, weighing, counting)
which are necessary for the purpose of delivering the goods to the carrier.

Provide at his own expense packaging (unless it is usual for the particular trade to send the goods of the
contract description unpacked) which is required for the transport of the goods, to the extent. that the
circumstances relating to the transport (e.g. modalities, destination) are made known to the seller before
the contract of sale is concluded. Packaging is to be marked appropriately.

A.10. Other obligations

Render the buyer at the latter's request, risk and expense, every assistance in obtaining any documents or
equivalent electronic messages (other than those mentioned in A.8) issued or transmitted in the country
of delivery and/or of origin which the buyer may require for the importation of the goods and, where
necessary, for their transit through another country.

Provide the buyer, upon request, with the necessary information for procuring insurance.

B. The buyer must

B.1. Payment of the price

Pay the price as provided in the contract of sale,

B.2. Licences, authorisations and formalities

Obtain at his own risk and expense any import licence or other official authorisation and carry out all
customs formalities for the importation of the goods and, where necessary, for their transit through
another country.

B.3. Contract of carriage

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Contract at his own expense for the carriage of the goods from the named place, except as provided for
in A.3.a).

B.4. Taking delivery

Take delivery of the goods in accordance with A.4.

B.5. Transfer of risks

Bear all risks of loss of or damage to the goods from the time they have been delivered in accordance
with A.4.

Should he fail to give notice in accordance with B.7., or should the carrier named by him fail to take the
goods into his charge, bear all risks of loss of or damage to the goods from the agreed date or the expiry
date of any period stipulated for delivery provided, however, that the goods have been duly appropriated
to the contract, that is to say, clearly set aside or otherwise identified as the contract goods.

B.6. Division of Costs

Pay all costs relating to the goods from the time when they have been delivered in accordance with A.4.

Pay any additional costs incurred, either because he fails to name the carrier, or the carrier named by
him fails to take the goods into his charge at the agreed time, or because he has failed to give appropriate
notice in accordance with B.7. provided, however, that the goods have been duly appropriated to the
contract, that is to say, clearly set aside or otherwise identified as the contract goods.

Pay all duties, taxes and other official charges as well as the costs of carrying out customs formalities
payable upon importation of the goods and, where necessary, for their transit through another country.

B.7. Notice to the seller

Give the seller sufficient notice of the name of the carrier and, where necessary, specify the mode of
transport, as well as the date or period for delivering the goods to him and, as the case may be, of the
point within the place where the goods should be delivered to the carrier.

B.8. Proof of delivery, transport document or equivalent electronic message

Accept the proof of delivery in accordance with A.8.

B.9. Inspection of goods

Pay, unless otherwise agreed, the costs of pre-shipment inspection except when mandated by the
authorities of the country of exportation.

B.10. Other obligations

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Pay all costs and charges incurred in obtaining the documents or equivalent electronic messages
mentioned in A.l0 and reimburse those incurred by the seller in rendering his assistance in accordance
therewith and in contracting for carriage in accordance with A.3. a). Give the seller appropriate
instructions whenever the seller's assistance in contracting for carriage is required in accordance with
A.3.a).

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. Import clearance = import
duty and VAT and not the Import Customs Clearance.

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.

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FOB – Free on Board (named port of shipment)

The seller must load the goods on board a vessel designated 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, and there is no reference to, or provision for,
the use of a carrier or forwarder. This term has been greatly misused over the last three decades ever
since Incoterms 1980 explained that FCA should be used for container shipments.

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.

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Allocations of costs buyer/seller according to Incoterms 2010[3]

Carriage
Loading Loading
Carriage Unloading (Sea Unloading
Export- charges on truck Carriage
Incoterm to port of truck in Freight/Air charges in
Customs in port Insurance in port to place of
2010 of port of Freight) to port of
declaration of of destination
export export port of import
export import
import
EXW Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer
FCA Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer No
FAS Seller Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer
FOB Seller Seller Seller Seller Buyer Buyer Buyer Buyer Buyer
CPT Seller Seller Seller Seller Seller Buyer Buyer Buyer Buyer
CFR Seller Seller Seller Seller Seller Seller Buyer Buyer Buyer
CIF

(By Sea Seller Seller Seller Seller Seller Seller Seller Buyer Buyer
only)

CIP Seller Seller Seller Seller Seller Seller Seller Buyer Buyer
DAT Seller Seller Buyer
DAP Seller Seller Seller Seller Seller Seller Seller Seller Seller
DDP Seller Seller Seller Seller Seller Seller Seller Seller Seller

Previous terms from Incoterms 2000 eliminated from Incoterms

2010
DAF – Delivered at Frontier (named place of delivery)

This term can be used when the goods are transported by rail and road. The seller pays for transportation
to the named place of delivery at the frontier. The buyer arranges for customs clearance and pays for
transportation from the frontier to his factory. The passing of risk occurs at the frontier.

DES – Delivered Ex Ship (named port of delivery)

Where goods are delivered ex ship, the passing of risk does not occur until the ship has arrived at the
named port of destination and the goods made available for unloading to the buyer. The seller pays the
same freight and insurance costs as he would under a CIF arrangement. Unlike CFR and CIF terms, the
seller has agreed to bear not just cost, but also Risk and Title up to the arrival of the vessel at the named
port. Costs for unloading the goods and any duties, taxes, etc. are for the Buyer. A commonly used term
in shipping bulk commodities, such as coal, grain, dry chemicals; and where the seller either owns or has
chartered, their own vessel.

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DEQ – Delivered Ex Quay (named port of delivery)

This is similar to DES, but the passing of risk does not occur until the goods have been unloaded at the
port of discharge.

DDU – Delivered Duty Unpaid (named place of destination)

This term means that the seller delivers the goods to the buyer to the named place of destination in the
contract of sale. A transaction in international trade where the seller is responsible for making a safe
delivery of goods to a named destination, paying all transportation expenses but not the duty. The seller
bears the risks and costs associated with supplying the goods to the delivery location, where the buyer
becomes responsible for paying the duty and other customs clearing expenses.

See also
■ Commercial law
■ International trade
■ International trade law
■ Uniform Commercial Code
■ United Nations Convention on Contracts for the International Sale of Goods

References
1. ^ "ICC Guide to Incoterms® 2010" (http://www.iccbooks.com/Product/ProductInfo.aspx?id=657). ICC.
Retrieved January 29, 2013.
2. ^ "From the introduction of Incoterms 2010" (http://www.iccwbo.org/Incoterms/index.html?id=40772). ICC.
Retrieved May 16, 2011.
3. ^ http://4.bp.blogspot.com/-G-ODrVPMHjE/UX7NszyATLI/AAAAAAAAAA0/-
ZJHENkIyT8/s1600/Incoterms-2010-chart.gif

External links
■ Official website (http://www.iccwbo.org/incoterms)

Retrieved from "http://en.wikipedia.org/w/index.php?title=Incoterms&oldid=566813151"

Categories: International trade Commercial item transport and distribution
International commerce terms

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