Eastern Mediterranean University BANK406 Corporate Banking Law and Practice CHP 2

Introduction Incoterms ( International Commercial Terms) ● Incoterms, are a set of three-letter standard trade terms most commonly used in international sale contracts for the sale of goods. ● Proposed, updated and copyrighted by the International Chamber Of Commerce (ICC), they serve as a global standards for uniform interpretation of common contract clauses in international trade.

DELIVERY PLACES AND TERMS EXW - (Ex Works) (…named place) ●A transaction in which the seller’s only responsibility is to make ordered goods available to the buyer at the seller’s premises (i.e. factory, warehouse). ● The buyer has to bear all the costs and risks involved in taking the goods from the seller’s premises to destination. The buyer is also responsible from clearing the goods for export and loading on any collecting vehicle. This term represents the minimum obligation for the seller

FCA - (Free Carrier) (…named place) ● The seller delivers the goods, cleared for export, to the carrier nominated by the buyer at the named place. * If delivery occurs at the seller’s premises, the seller is responsible for loading goods on collecting . If delivery occurs at any other place, the seller is not responsible for loading. ● Carrier; means any person who, in a contract of carriage, undertakes to perform or to procure the performance of transport by rail, road, air, sea inland waterway or by a combination of such modes. ● This term may be used irrespective of the mode of transport.

FAS – ( Free Alongside Ship) (…named port of shipment) ● The seller clears the goods for export, transports goods to the port and discharges the goods next to the vessel, within the reach of ships’ crane and derricks. ● This means, the seller is responsible for the cost of transporting and delivering goods alongside the vessel in a port at his/her country. The buyer has to bear all costs and risks of loss or damage to the goods until FAS. ● This term can be used only for sea or inland waterway transport.

FOB – (Free On Board) (…named port of shipment) ● The seller is responsible until goods are loaded on board of a ship. The seller clears the goods for export, transports goods to the port and loads them on the board of a vessel at the named port of shipment. ● This means, the seller is responsible for the cost of transporting and delivering goods on board of a vessel in a port in his/her country. *Technically delivery takes place, when goods pass the ship’s rail in the port of shipment. From thereon all the responsibilities pass on to the buyer. ● This term can be used only for sea or inland waterway transport.

CFR – C&F ( Cost and Freight) (…named port of destination) ● The seller clears the goods for export, transports them to the loading port and loads them on board of a vessel at the named port of shipment. ● The seller must pay all the costs and freight necessary to bring the goods to named port of destination, except insurance. * Delivery takes place, when goods pass the ship’s rail in the port of shipment. From thereon, all responsibilities pass on to the buyer. ● This term can be used only for sea and inland waterway transport.

CIF – (Cost, Insurance and Freight) (…named port of destination) ● The seller clears the goods for export, transports them to the port and loads them on board of a vessel at the named port of shipment. ● The seller must pay the costs and freight of the goods to the named port of destination. Additionally the seller has to procure cargo insurance at minimum coverage against the buyer’s risk of loss or damage to the goods during the transport. * Delivery, between seller and buyer takes place , when goods pass the ship’s rail in loading at the port of shipment. From thereon, all the responsibilities pass on to the buyer. ● This term can be used only for sea and inland waterway transport.

CPT – (Carriage Paid to) (…named place of destination) ● The seller clears the goods for export and delivers the goods to the carrier nominated by him. ● The seller must pay the cost of carriage necessary to bring the goods to the named port of destination (usually the buyer’s warehouse). * The risk of loss or damage is transferred from the seller to the buyer when the goods have been delivered into the carriers custody. * In comparison, C&F term includes transport charges only up to a named port of destination ● This term may be used irrespective of the mode of transport, including multimodal transport.

CIP – (Carriage and Insurance Paid to) (…named place of destination) ● The seller clears the goods for export and delivers the goods to the carrier nominated by him. ● The seller must pay cost of carriage to bring the goods to the named destination (overseas destination) and the seller must procure cargo insurance at minimum coverage against the buyer’s risk of loss or damage to the goods during the carriage. * The risk of loss or damage is transferred from the seller to the buyer when goods are delivered into the carriers custody. ● This term may be used irrespective of the mode of transport, including multimodal transport.

DAF – (Delivered At Frontier) (…named place) ● The seller clears the goods for export, and brings them to the frontier (usually a border location). ● The seller is not responsible for the unloading of the goods from the arriving means of transport. Up to the border, seller is responsible for all risks and expenses associated with the delivery. The costs and risks are transferred to the buyer upon crossing frontier. * The buyer is responsible for import customs formalities and payment of import customs duties and taxes. ● This arrangement is most often used when using ground transport such as truck or rail, to supply the goods.

DES – (Delivered Ex Ship) (…named port of destination) ● The seller clears the goods for export and delivers the goods on board of the ship, not cleared for import, at the named port of destination. ●The seller must bear all costs and risks associated in bringing the goods to the named port of destination. The buyer is responsible for all costs necessary to unload the goods and clear them for import through customs. ● This term can be used only when the goods are to be delivered by sea or inland waterway or multimodal transport on a vessel in the port of destination.

DEQ – (Delivered Ex Quay) (…named port of destination) ● The seller clears the goods for export, brings them to the named port of destination and discharges the goods on the quay (wharf). ● The seller has to bear costs and risks involved in bringing the goods to the named port of destination and discharging the goods on the quay. From thereon, all the responsibilities pass on to the buyer. * The buyer is responsible for import customs formalities and payment of import customs duties and taxes. ● This term can be used only when the goods are to be delivered by sea or inland waterway or multimodal transport on a vessel in the port of destination.

DDU – (Delivered Duty Unpaid) (…named place of destination) ● The seller delivers goods to the buyer at the named place of destination, the goods are not cleared for import or unloaded from any form of transport. ● The buyer is responsible for the costs and risks for unloading, duty and any subsequent delivery beyond the place of destination. ● Duty, includes the responsibility for and risks of the carrying out of customs formalities and the payment of formalities, customs duties, taxes and other charges. ● This term may be used irrespective of the mode of transport.

DDP – (Delivered Duty Paid) (…named place of destination) ● The seller delivers the goods to the buyer, cleared for import and not unloaded from any arriving means of transport at the named place of destination. ● The seller pays for all transportation costs and bears all risks until the goods have been delivered and pays the duty. * EXW represents the minimum and DDP represents the maximum obligation for the seller,.

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