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Incoterms

It is a set of trade terms and abbreviations used in international trade. These terms are used in international trade transactions to determine responsibilities and transport costs between seller and buyer. Incoterms provide standardised rules and terms to avoid disputes and uncertainties between parties.

Incoterms are regulated and updated by the International Chamber of Commerce (ICC). Incoterms include terms that are usually specified on a product's sales contract or invoice, and these terms cover important issues such as the transfer of goods, transport costs, customs clearance and risk transfer.

EXW

Ex Works is when the seller places the goods at the disposal of the buyer at the seller's premises or at another designated place (i.e. factory, warehouse, etc.). The seller does not need to load the goods on any collection vehicle. He is also not required to clear them for export where this type of authorisation is valid.

FCA

The seller delivers the goods to the carrier or other person appointed by the buyer at the seller's place of business or at another specified place. It is advisable for the parties to specify the point within the specified place of delivery as clearly as possible, since at this point the risk passes to the buyer.

CPT

The seller delivers the goods to the carrier or another person appointed by the seller at an agreed place (if such a place has been agreed between the parties). The seller must contract and pay the transport costs necessary to bring the goods to the specified destination.

CIP

The CIP rule (Carriage and Insurance Paid to) is basically an insurance extension of the CPT Incoterms® rule. All obligations and responsibilities for the buying and selling parties remain the same as in the CPT rule, but the CIP rule requires the selling party to take out transport insurance.


In addition to the carriage of goods from its own premises to the destination designated by the buyer party, under the CIP rule, the selling party is obliged to take out transport insurance for the entire journey required by the contract of carriage.

CPT

The seller delivers the goods to the carrier or another person appointed by the seller at an agreed place (if such a place has been agreed between the parties). The seller must contract and pay the transport costs necessary to bring the goods to the specified destination.

DAP

The seller delivers the goods when they are placed at the buyer's disposal in the transport vehicle, which arrives ready for unloading at the specified destination. The Seller assumes all risks associated with bringing the goods to the specified place.

DDP

The seller delivers the goods when the goods are placed at the buyer's disposal, having been customs cleared for importation in the transport vehicle, which arrives ready for unloading at the specified destination. The seller bears all costs and risks associated with bringing the goods to the destination. To clear the goods through customs not only for export but also for import, they are obliged to pay all kinds of taxes for both export and import and to carry out all customs clearance procedures.

FAS

The seller delivers when the goods are placed alongside the vessel (e.g. on a berth or barge) designated by the buyer at the specified port of loading. The risk of loss or damage to the goods passes while the goods are alongside the ship. The buyer bears all costs from that moment on.

FOB

The seller delivers the goods on board the vessel designated by the buyer at the specified port of loading or supplies the goods so delivered. The risk of loss or damage to the goods passes while the goods are on board. The buyer bears all costs from that moment on.

CFR

The seller delivers the goods on board or provides the delivered goods. The risk of loss or damage to the goods passes while the goods are on board. The seller must contract for and pay the costs and freight necessary to bring the goods to the specified port of destination.

CIF

The seller delivers the goods on board or provides the delivered goods. The risk of loss or damage to the goods passes while the goods are on board. The seller must contract for and pay the costs and freight necessary to bring the goods to the specified port of destination. The seller also contracts for the buyer's insurance cover against the risk of loss or damage to the goods in transit. The buyer should note that under CIF the seller is only required to take out insurance to the extent of the minimum cover. If the buyer wishes to have more insurance protection, he will either have to agree so explicitly with the seller or make his own extra insurance arrangements.

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