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Incoterms. Introduction Universally recognised set of definitions of international trade terms Recognised by courts and other authorities Define the trade.

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Presentation on theme: "Incoterms. Introduction Universally recognised set of definitions of international trade terms Recognised by courts and other authorities Define the trade."— Presentation transcript:

1 Incoterms

2 Introduction Universally recognised set of definitions of international trade terms Recognised by courts and other authorities Define the trade contract responsibilities and liabilities between buyer and seller Updated regularly to keep pace with changes and developments in international trade

3 Introduction Devised an published by the ICC WBO ICC introduced Incoterms in 1936 Incoterms groups E, F, C and D and in all 13 main terms E: Departure EXW- Ex Works F: Main carriage unpaid FCA- Free Carrier FAS- Free Alongside Ship FOB- Free On Board C: Main carriage paid CFR- Cost and Freight CIF- Cost, Insurance and Freight CPT- Carriage Paid To CIP- Carriage and Insurance Paid To D: Arrival DAF- Delivered At Frontier DES- Delivered Ex Ship DEQ- Delivered Ex Quay DDU- Delivered Duty Unpaid DDP- Delivered Duty Paid

4 Introduction Purpose of Incoterms Designed for Parties to a Contract Provides a set of international rules for foreign trade Reduces uncertainties Avoids different interpretations in different countries Additional costs and time can be avoided

5 Introduction THE SELLER’S OBLIGATIONS A1Provision of goods in conformity with the contract A2Licenses, authorizations and formalities A3Contract of carriage and insurance A4Delivery A5Transfer of risks A6Division of costs A7Notice to the buyer A8Proof of delivery, transport document or equivalent electronic message A9Checking – packaging – marking A10 Other obligations

6 Introduction THE BUYER’S OBLIGATIONS B1Payment of the price B2Licenses, authorizations and formalities B3Contract of carriage B4Taking delivery B5Transfer of risks B6Division of the costs B7Notice to the seller B8Proof of delivery, transport document of equivalent electronic message B9Inspection of goods B10 Other obligations

7 Introduction Scope of Incoterms Incoterms is limited: To rights and obligations of the parties to contract of sale with respect to the delivery of the goods sold. Do not deal with the consequences of breach of contract Primarily intended for use where goods are sold for delivery across national boundaries, hence international commercial terms Can be used in contracts for sale of goods directly.

8 Introduction Scope of Incoterms Incoterms is limited: To rights and obligations of the parties to contract of sale with respect to the delivery of the goods sold. Do not deal with the consequences of breach of contract Primarily intended for use where goods are sold for delivery across national boundaries, hence international commercial terms Can be used in contracts for sale of goods directly.

9 Introduction Structure Group EDeparture EXW Ex Works (.....… named place) Group FMain carriage unpaid FCA Free Carrier (....… named place) FAS Free Alongside Ship ( ….named port of shipment) FOB Free On Board ( named port of shipment)

10 Introduction Structure Group CMain carriage paid CFR Cost and Freight ( named port of destination) CIF Cost, Insurance & Freight (.....named port of destination) CPT Cost Paid To ( named port of destination) CIP Carriage and Insurance paid to (…….named place of destination) Group DArrival DAF Delivered at Frontier(.....………………….....named place) DES Delivered Ex Ship ( named port of destination) DEQ Delivered Ex Quay (....…....named port of destination) DDU Delivered Duty Unpaid (…...named place of destination) DDP Delivered Duty Paid ( named place of destination)

11 Introduction The Terms The “E” Term is the term in which seller’s obligation is at its minimum The “F” Term require the seller to deliver as instructed by the buyer The “C” Term require the seller to contract for carriage at his expense The “D” Term signifies arrival contracts

12 Introduction Any mode of transport Group EEXW Ex Works (… named place) Group FFCA Free Carrier(… named place) Group C CPT Cost Paid To ( named port of destination) CIP Carriage and Insurance paid to ( named place of destination) Group D DAF Delivered at Frontier ( named place) DDU Delivered Duty Unpaid ( named place of destination) DDP Delivered Duty Paid ( named place of destination)

13 Introduction Mode of transport and the appropriate Incoterm Maritime and inland waterway transport only Group F FAS Free Alongside Ship(..… named port of shipment) FOB Free On Board(… named port of shipment) Group C CFR Cost and Freight ( named port of destination) CIF Cost, Insurance & Freight ( named port of destination) Group D DES Delivered Ex Ship ( named port of destination) DEQ Delivered Ex Quay ( named port of destination)

14 EXW - Ex Works Goods available only at seller’s premises. Buyer: loads the goods on truck or container at the seller’s premises, and takes into account the subsequent costs and risks.

15 FCA - Free Carrier Delivery at the specified point of departure: the seller’s premises or a named cargo terminal / railroad station Buyer: main carriage/freight, cargo insurance and other costs and risks

16 FAS - Free Alongside Ship Seller: places the goods alongside the ship at the named port, loaded at his expense. Buyer: pays loading fee, main carriage/freight, cargo insurance and other costs risks.

17 FOB - Free On Board Delivery of goods on board the vessel at the port of origin is at the seller’s expense. Buyer is responsible for loading fee, main carriage/freight, cargo insurance and other costs risks.

18 CFR - Cost and Freight Seller: pays the costs and freight to bring the goods to the port of destination. Risk: transferred once the goods have crossed the ship’s rail.

19 CIF - Cost Insurance and Freight Used exactly the same way as CFR except that Seller: must in addition procure and pay for insurance for the cargo insurance and delivery of goods to the port of destination Buyer: responsible for the import customs clearance & other costs and risks

20 CPT - Carriage Paid To Seller delivers the goods at the named place of destination at his expense. Buyer assumes the cargo insurance, import customs clearance, payment of customs duties and taxes, and other costs and risks. Risk transferred at the delivery of goods

21 CIP - Carriage & Insurance Paid To Seller delivers the goods on the ship. On board, the risk is transferred to the buyer. Buyer is accountable for the import customs clearance, payment of customs duties and taxes, and other costs and risks until goods reach their final destination.

22 DAF - Delivered At Frontier Delivery of goods is done at the specified point at the frontier at the seller's expense. Buyer is responsible for the import customs clearance, payment of customs duties and taxes. The transfer of risk is made at the frontier

23 DES - Delivered Ex Ship Seller assumes expenses linked to the delivery of goods. At the arrival of the ship, the risk is transferred to the buyer. Buyer is accountable for the unloading fee, import customs clearance, payment of customs duties and taxes, cargo insurance, and other costs

24 DEQ - Delivered Ex Quay Delivery of goods is done to the quay of the port at the seller's expense. He is also responsible for the import customs clearance and payment of customs duties and taxes at the buyer's end. Buyer assumes the cargo insurance and other costs and risks

25 DDU - Delivered Duty Unpaid Delivery of goods and the cargo insurance to the final destination, which is often the project site or buyer's premises, is done at the seller's expense. Buyer is responsible for the import customs clearance and payment of customs duties and taxes

26 DDP - Delivered Duty Paid Seller is responsible for most of the expenses, which include the cargo insurance, import customs clearance, and payment of customs duties and taxes at the buyer's end, and the delivery of goods to the final point at destination, which is often the project site or the buyer's premises. It is a “door to door” delivery. Risk is transferred when the goods are delivered

27 Conclusion Incoterms cannot be applied by themselves to a variety of situations, of medium of transports, technologies.... They must be supplemented by additional details adapted to these particular case. Define the geographical points where the transfers of risks and expenses will take place.


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