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©This material is copyrighted to GMLS and may not be distributed without the express written permission of Management Welcome to this Training Course ICC.

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Presentation on theme: "©This material is copyrighted to GMLS and may not be distributed without the express written permission of Management Welcome to this Training Course ICC."— Presentation transcript:

1 ©This material is copyrighted to GMLS and may not be distributed without the express written permission of Management Welcome to this Training Course ICC Rules for the use of Trade Terms or Incoterms® 2010 Rules Presented by: Mark Goodger Ghana: October 2012 Welcome to Incoterms® 2010 Rules Lecture

2 ©This material is copyrighted to GMLS and may not be distributed without the express written permission of Management International Trade is the Lifeblood of our business world

3 ©This material is copyrighted to GMLS and may not be distributed without the express written permission of Management ICC Accredited Training Programme of GMLS This Incoterms® 2010 Rules Training Course is presented by Mark Goodger, a Fully Accredited ICC Accredited Trainer ICC Website:-

4 ©This material is copyrighted to GMLS and may not be distributed without the express written permission of Management OBJECTIVES OF THIS COURSE Upon completion of this Course you will be able to further understand and have insight of: - The ICC Role and the development of Incoterms® 2010 Rules The application of the Incoterms® 2010 Rules The difference between 2000 and Incoterms ® 2010 Rules Correct use and choice of the most appropriate Incoterms® 2010 Rules for the specific transaction The respective roles & responsibilities of the Buyer & the Seller, regarding:- a) Delivery b) Obligations, c) Risks, d) Costs Making recommendations regarding the use of Incoterms® 2010 Rules The legal use of Incoterms® 2010 Rules The impact of a particular Incoterms® 2010 Rules on other 3 rd Party Contracts, Transport Documents, Marine Insurance and Payment instruments and institutions

5 ©This material is copyrighted to GMLS and may not be distributed without the express written permission of Management 5 Banking Requirements Customs Duties Stock Control Shipping Dept Shipping Expertise Marine Insurance Central Control Import Control Costings Forwarding Exports Procurement Department Modes of Transport IMPORT / EXPORT QUESTIONS Other Govt. Departments Freight Agents

6 ©This material is copyrighted to GMLS and may not be distributed without the express written permission of Management RECOMMENDATIONS WHEN USING THE FOLLOWING “Incoterms® 2010 Rules” in Text “Incoterms® 2010 Rules by the International Chamber of Commerce (ICC)”. This is for instance when it is shown on advertising material on websites, articles etc.; The 4 symbols (modes of transport 4 blocks) which should be a full colour, no less than 4.5 cm wide. A High Resolution graphic will be provided with permission; Encourage these whenever visual presentations of the “Incoterms® 2010 Rules are required; “Incoterms® 2010 Rules ” is trademark of the International Chamber of Commerce registered in several countries; Always utilise the registered Trademark symbol with the ® next to the trademark “Incoterms” i.e. “Incoterms® 2010 Rules ” Use Incoterms® 2010 Rules as an adjective and not a noun; Always utilise “Incoterms® 2010 Rules ” with the final “s” at the end;

7 ©This material is copyrighted to GMLS and may not be distributed without the express written permission of Management Incoterms® 2010 Rules : INTRODUCTION Incoterms, or international trade terms, are key elements of international contracts of sale, since they tell the parties what to do with respect to:- The obligations of the parties relevant to Delivery, and Carriage of goods from seller to buyer, and Export and import clearance, and Explanation of the division of costs, risks and obligations of the respective parties.

8 ©This material is copyrighted to GMLS and may not be distributed without the express written permission of Management 8 The purpose and scope of Incoterms® 2010 Rules is to provide a set of Rules for the interpretation of the most commonly used trade terms in foreign trade. The uncertainties can be avoided or at least reduced to a considerable degree. They can be correctly incorporated into sales contracts. Incoterms have always been primarily intended for use where goods are sold for delivery across national borders. Now also applicable to Domestic trade. Incoterms® 2010 Rules MEAN

9 ©This material is copyrighted to GMLS and may not be distributed without the express written permission of Management Since to

10 ©This material is copyrighted to GMLS and may not be distributed without the express written permission of Management 10 WorksCarrierAlongside ShipOn Board Vessel BorderArrivalQuay Destination PlaceBuyers Warehouse THE GLOBAL SUPPLY CHAIN The Global Supply Chain

11 ©This material is copyrighted to GMLS and may not be distributed without the express written permission of Management 11 It is important to ensure that where the parties intend to incorporate Incoterms® 2010 Rules into their contract of sale, an express reference is always made to the current version of Incoterms® 2010 Rules Failure to refer to the current version may then result in disputes as to whether the parties intended to incorporate that version or an earlier version as a part of their contract Merchants wishing to use Incoterms® 2010 Rules should therefore clearly specify that their contract is governed by “Incoterms® 2010 Rules” INCORPORATION OF Incoterms® 2010 Rules INTO CONTRACTS OF SALE

12 ©This material is copyrighted to GMLS and may not be distributed without the express written permission of Management Incoterms® 2010 Rules Spell DANGER

13 ©This material is copyrighted to GMLS and may not be distributed without the express written permission of Management 13 Incorporate correctly into Contract of Sale Choose the applicable & appropriate Incoterms® 2010 Rules, followed by the named place specified in detail. Specify Place/Port clearly / Point Check Guidance Notes Know the Difference between NAMED PLACE vs PLACE OF DELIVERY Understand Risks and Cost division Variants (BE CLEAR ) HOW TO USE Incoterms® 2010 Rules

14 ©This material is copyrighted to GMLS and may not be distributed without the express written permission of Management Classification of the Incoterms® 2010 Rules The 11 Incoterms® 2010 Rules are presented in two distinct classes:- RULES FOR ANY MODE OR MODES OF TRANSPORT:- ExW -EX WORKS FCA -FREE CARRIER CPT -CARRIAGE PAID TO CIP -CARRIAGE AND INSURANCE PAID TO DAT -DELIVERED AT TERMINAL (NEW) DAP -DELIVERED AT PLACE (NEW) DDP -DELIVERED DUTY PAID RULES FOR SEA AND INLAND WATERWAY TRANSPORT:- FAS -FREE ALONGSIDE SHIP FOB -FREE ON BOARD CFR -COST AND FREIGHT CIF -COST INSURANCE AND FREIGHT

15 ©This material is copyrighted to GMLS and may not be distributed without the express written permission of Management Main features of the New Incoterms® 2010 Rules 2 NEW Incoterms® 2010 Rules – DAT & DAP – these have replaced the Incoterms 2000 Rules DAF, DES, DEQ & DDU; Classification of the 11 Incoterms® 2010 Rules Rules for domestic and international trade Guidance Notes Electronic communication Insurance cover Security-related clearances and information required for such clearances – Global Supply Chain Security Terminal handling charges String sales Variants of Incoterms Rules

16 ©This material is copyrighted to GMLS and may not be distributed without the express written permission of Management 2 NEW Incoterms® 2010 Rules – DAT & DAP The number of Incoterms Rules has been reduced from 13 to 11. This has been achieved by substituting two new Rules that may be used irrespective of the agreed mode of transport – DAT, Delivered at Terminal, and DAP, Delivered at Place – for the Incoterms 2000 Rules DAF, DES, DEQ and DDU. Under both new Rules, delivery occurs at a named destination: in DAT, at the buyer’s disposal unloaded from the arriving vehicle (as under the former DEQ rule); in DAP, likewise at the buyer’s disposal, but ready for unloading (as under the former DAF, DES and DDU Rules). The named terminal in DAT may well be in a port, and DAT can therefore safely be used in cases where the Incoterms 2000 rule DEQ once was. Likewise, the arriving “vehicle” under DAP may well be a ship and the named place of destination may well be a port: consequently, DAP can safely be used in cases where the Incoterms 2000 rule DES once was. These new Rules, like their predecessors, are “delivered”, with the seller bearing all the costs (other than those related to import clearance, where applicable) and risks involved in bringing the goods to the named place of destination.

17 ©This material is copyrighted to GMLS and may not be distributed without the express written permission of Management 17 Specify Party obliged to make insurance and carriage arrangements Say nothing about price and method Don’t deal with Transfer of Ownership Be aware of Mandatory Local Law Don’t deal with Breach of Contract WHAT DO THEY DO AND WHAT DON’T THEY DO IN THE CONTRACT OF SALE

18 ©This material is copyrighted to GMLS and may not be distributed without the express written permission of Management There is a relation between Incoterms® 2010 Rules and Contracts of Carriage Contracts of Carriage Contracts of Insurance Contracts of Insurance Contracts of Payment Contracts of Payment Contract of Sale incorporating Incoterms

19 ©This material is copyrighted to GMLS and may not be distributed without the express written permission of Management 19 EXPORT CLEARANCE IMPORT CLEARANCE COUNTRY OF EXPORTCOUNTRY OF IMPORT ON-CARRIAGEPRE-CLEARANCEMAIN CARRIAGE RISKCOST FCA ExW CPT CIP + INSURANCE THE SELLER COST/RISK IS MAXIMISED BECAUSE HE MUST MAKE THE GOODS AVAILABLE UPON ARRIVAL AT THE AGREED DESTINATION

20 ©This material is copyrighted to GMLS and may not be distributed without the express written permission of Management Incoterms® 2010 Rules OVERVIEW AT A GLANCE RULES FOR ANY MODE OF TRANSPORT Ex Works - represents Min obligation for Seller Named place must be included i.e. (ExW, ABC Stores, 34 Pongola Road, Durban) ExW Free Carrier means the Seller delivers the goods to the carrier or another person nominated by the Buyer Named place must be included i.e. (FCA, Globewide Forwarders, 106 Point road, Durban) FCA Carriage paid to - means that the Seller delivers the goods to the carrier or another person nominated by the Seller at an agreed place Named place must be included i.e. (CPT 1 Amherst Street, E40-281, Cambridge, MA 02142) CPT Named place must be included i.e. (CIP 1 Amherst Street, E40-281, Cambridge, MA 02142) Carriage & Insurance Paid to – means that the Seller delivers the goods to the carrier or another person nominated by the Seller at an agreed place and that the Seller must contract for and pay the costs of carriage necessary to bring the goods to the named place of destination. CIP Replaces the old DAF, DES, DEQ & DDU Terms Named place must be included i.e. (DAT, Duxburry Container Terminal, Felixstowe) Delivered at Terminal means that the Seller delivers when the goods, once loaded from the arriving means of transport, are placed at the disposal of the Buyer at the named terminal at the named port or place of destination. DAT Replaces the old DAF, DES, DEQ & DDU Terms Named place must be included i.e. (DAP., 1 Amherst Street, E40-281, Cambridge, MA 02142) Delivered at Place means that the Seller delivers when the goods are placed at the disposal of the Buyer on the arriving means of transport ready for unloading at the named place of destination. DAP Named place must be included i.e. (DDP,, 1 Amherst Street, E40-281, Cambridge, MA 02142) Delivered Duty Paid means that the Seller delivers the goods when the goods are placed at the disposal of the Buyer, cleared for import on the arriving means of transport ready for unloading at the named place of destination. DDP Delivery

21 ©This material is copyrighted to GMLS and may not be distributed without the express written permission of Management Incoterms® 2010 Rules OVERVIEW AT A GLANCE RULES FOR SEA & INLAND WATERWAY TRANSPORT Free Alongside Ship means that the Seller delivers when the goods are placed alongside the vessel nominated by the Buyer at the named port of shipment Named place must be included i.e. (FAS, Berth 106, Durban Harbour) FAS Free on Board means that the Seller delivers the goods on board the vessel nominated by the Buyer at the named port of shipment or procures the goods already so delivered. Named place must be included i.e. (FOB, “Maeve”, Durban Port) FOB Cost and Freight means that the Seller delivers the goods on board the vessel or procures the goods already so delivered Named place must be included i.e. (CFR, Hamburg Port) CFR Cost, Insurance and Freight means that the Seller delivers the goods on board the vessel or procures the goods already so delivered. Named place must be included i.e. (CIF, Hamburg Port) CIF Delivery

22 ©This material is copyrighted to GMLS and may not be distributed without the express written permission of Management 22 It is particularly important to note that the term “delivery” is used in two different senses in Incoterms® 2010 Rules :- Firstly, to determine when the seller has fulfilled his delivery obligation Secondly, the term “delivery” is also used in the context of the buyer’s obligation to take or accept delivery of the goods “Delivery” means first that the buyer “accepts” the nature of the terms This obligation is important so as to avoid unnecessary charges for storage of the goods until they have been incurred by the buyer Delivery has multiple meanings in trade law & practice, but in Incoterms® 2010 Rules, it is used to indicate where the risk of loss of or damage to the goods passes from the seller to the buyer Default point DELIVERY

23 ©This material is copyrighted to GMLS and may not be distributed without the express written permission of Management Guidance Notes Before each Incoterms® 2010 Rules term you will find a Guidance Note (View the attached file by clicking on the Light Bulb icon below in the E-Learning CD) Guidance Notes explain the fundamentals of each Incoterms ® 2010 Rules Term The Guidance Notes are not part of the actual Incoterms® 2010 Rules They are intended to help the user accurately and efficiently steer towards the appropriate Incoterms rule for a particular transaction. EX W FO B D DP CI P DA T

24 ©This material is copyrighted to GMLS and may not be distributed without the express written permission of Management The Mirror Concept in Incoterms® 2010 Rules As in the Incoterms® 2010 Rules, the Seller’s and Buyer’s obligations are presented in mirror fashion, reflecting under column A the Seller’s obligations and under column B the Buyer’s obligations. These obligations can be carried out personally by the Seller or the Buyer or sometimes, subject to terms in the contract or the applicable law, through intermediaries such as Carriers, Freight Forwarders or other persons nominated by the Seller or the Buyer for a specific purpose. The text of the Incoterms® 2010 Rules is meant to be self-explanatory. However, in order to assist users, the text sets out guidance as to the sense in which selected terms are used throughout the document.

25 ©This material is copyrighted to GMLS and may not be distributed without the express written permission of Management A1 General obligations of Seller A2 Licenses, authorisations security clearances and other formalities A3 Contracts of carriage and insurance A4 Delivery A5 Transfer of Risk A6 Allocation of costs A7 Notices to the Buyer A8 Delivery document A9 Checking-packaging-marking A10 Assistance with information and related costs B1 General obligations of Buyer B2 Licenses, authorisations security clearances and other formalities B3 Contracts of carriage and insurance B4 Taking delivery B5 Transfer of Risk B6 Allocation of costs B7 Notices to the Seller B8 Proof of delivery B9 Checking-packaging-marking B10 Assistance with information and related costs SELLER & BUYER OBLIGATIONS

26 ©This material is copyrighted to GMLS and may not be distributed without the express written permission of Management 26 DDP A THE SELLER'S OBLIGATIONSB THE BUYER'S OBLIGATIONS A1 General obligations of the seller The seller must provide the goods and the commercial invoice in conformity with the contract of sale and any other evidence of conformity that may be required by the contract. Any document referred to in A1-A10 may be an equivalent electronic record or procedure if agreed between the parties or customary. B1 General obligations of the buyer The buyer must pay the price of the goods as provided in the contract of sale. Any document referred to in B1-B10 may be an equivalent electronic record or procedure if agreed between the parties or customary. A2 Licences, authorizations, security clearances and other formalities Where applicable, the seller must obtain, at its own risk and expense, any export and import licence and other official authorization and carry out all customs formalities necessary for the export of the goods, for their transport through any country and for their import. B2 Licences, authorizations, security clearances and other formalities Where applicable, the buyer must provide assistance to the seller, at the seller’s request, risk and expense, in obtaining any import licence or other official authorization for the import of the goods.

27 ©This material is copyrighted to GMLS and may not be distributed without the express written permission of Management Risks Transit Risk:- -Theft -Damage -Other losses due to fire, water, etc Passing of Risk:- -At Origin -At Destination

28 ©This material is copyrighted to GMLS and may not be distributed without the express written permission of Management Responsibilities Origin Costs:- -Manufacture & Supply -Packing -Compliance / Documentation -Transportation -Port Handling -Insurance Main Carriage Costs:- -Freight -Loading / Discharging Destination Costs:- -Port Handling -Clearing -Unpacking & Transport -Insurance -Payment

29 ©This material is copyrighted to GMLS and may not be distributed without the express written permission of Management CONCLUSION (acknowledgement) The ICC has been writing and publishing the Incoterms Rules for more than 70 years, providing importers, exporters, lawyers, transporters and insurers and students in the International Trade arena with the Rules and guidance reflecting the latest developments in the trading environment. The ICC (International Chamber of Commerce), the World Business Organisation based in Paris, is the global leader in the development of standards, Rules and reference guides for International Trade. The ICC are – Merchants of Trade and Peace !!

30 ©This material is copyrighted to GMLS and may not be distributed without the express written permission of Management For further information on this and other Training Courses offered by GMLS, please contact us on:- Website: Office Mobile: Tel: or Fax: or


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