CHAPTER VI INTERNATIONAL TRADE TERMS American Foreign Trade Definitions of 1990 Incoterms of 2010

Functions of International Trade Terms Quotation at a fixed location Delivery point of the goods Passage of title to the goods Passage of risk of loss of or damage to the goods

American Foreign Trade Definitions of 1990 Understand but don’t use them in international trade EXW (Point of Origin): EX Factory or Warehouse FOB (Free On Board) FOB (name inland carrier at named inland point of departure) FOB (same plus Freight Prepaid to named point of exportation) FOB (same plus Freight Allowed to (name point of exportation) Freight collect

American Foreign Trade Definitions of 1990 FOB (Free On Board) FOB (named inland carrier at named point of exportation) FOB Vessel (at named port of shipment) FOB (at named inland point in country of importation

American Foreign Trade Definitions of 1990 FAS Vessel (Free Alongside Vessel) Delivery to alongside the ocean carrier C & F (Cost & Freight) Cost of goods plus all freights to port of importation CIF (Cost, Insurance & Freight) Cost of goods plus marine insurance premium plus all freights to port of importation DEQ Duty Paid (named port of importation) CIF plus import duty & customs clearance Also called “Ex Dock Duty Paid”

Incoterms of 2010 Acronym of International Commercial Terms Incoterms 2010 replaced Incoterms 2000 as of 1/1/2011 DAT replaced DAF, DES, DEQ DDP replaced DDU

Incoterms of 2010 Group I: Rules for Any Mode or Modes of Transport EXW, FCA, CPT, CIP, DAT, DAP, DDP

Incoterms of 2010 EXW (EX Works) at a named place of origin Seller makes the goods available to buyer Seller is not responsible for loading Buyer is responsible for all expenses and risks from a named place of origin Buyer clears goods for export Represents minimum obligation of seller

Incoterms of 2010 FCA (Free Carrier) at a named place Seller delivers goods to carrier or another person nominated by buyer without unloading If delivery occurs at seller’s premises, seller loads goods on buyer’s mode of transport Seller clears the goods for export.

Incoterms of 2010 CPT (Carriage Paid To) to a named place of destination Seller delivers the goods to carrier or another person nominated by seller at agreed place. Seller's responsibilities stop when goods have been delivered to carrier. If several carriers are used, delivery obligation is fulfilled when goods are delivered to first carrier Seller clears the goods for export. Seller pays the freight.

Incoterms of 2010 CIP (Carriage & Insurance Paid ) to a named place of destination Seller delivers the goods to carrier or another person nominated by seller at agreed place. Seller's responsibilities stop when the goods have been delivered into the custody of the carrier. Seller clears the goods for export. Seller pays the freight & insurance premium. Seller is obligated to obtain only minimum insurance coverage.

Incoterms of 2010 DAT (Delivered AT Terminal) at port or place of destination Seller must place the goods at the disposal of the buyer, not cleared for import, on the terminal at the named port or place of destination. Seller has to bear all costs and risks involved in bringing the goods to the named terminal and unloading them from the arriving means of transport. Buyer is required to clear the goods for import and pay for all import customs formalities Can be changed to DAT Duty Paid

Incoterms of 2010 DAP (Delivered AT PLACE) at a named place of destination Seller delivers the goods to the named place in the country of importation, not cleared for import and not unloaded. Seller bears all the costs and risks to the named place of import excluding duties, taxes and other charges related to importation. Buyer clears the goods for import.

Incoterms of 2010 DDP (Delivered Duty Paid) at a named place of destination Seller delivers the goods to the named place in the country of importation. Seller bears all the costs and risks to the named place including duties, taxes and other charges to the named place in the country of importation. Seller clears the goods for import. Represents maximum obligation of seller

Incoterms of 2010 Group II: Rules for Sea and Inland Waterway Transport FAS, FOB, CFR, CIF

Incoterms of 2010 FAS (Free Alongside Ship) at a named port of shipment Seller places the goods alongside vessel nominated by buyer. Seller clears the goods for export. Loading goods on board vessel is buyer’s responsibility Buyer pays ocean freight & marine insurance Used only for sea or inland waterway transport

Incoterms of 2010 FOB (Free On Board) at a named port of shipment Seller loads the goods on board vessel. Seller's risks stop when goods pass ship's rail. Seller clears the goods for export. Buyer pays freight & marine insurance Used only for sea or inland waterway transport

Incoterms of 2010 CFR (Cost & Freight) to a named port of destination Seller loads the goods on board the vessel. Seller's risks stop when goods pass ship's rail. Seller clears the goods for export. Seller pays freight. Buyer pays marine insurance. Used only for sea or inland waterway transport

Incoterms of 2010 CIF (Cost, Insurance & Freight) to a named port of destination Seller loads the goods on board the vessel. Seller's risks stop when goods pass ship's rail. Seller clears the goods for export. Seller pays insurance premium & freight Seller is obligated to obtain only minimum marine insurance coverage. Used only for sea or inland waterway transport

INCOTERMS 2010 Group I EXW EX WORKS (...named place) FCA FREE CARRIER (...named place) CPT CARRIAGE PAID TO (...named place of destination) CIP CARRIAGE AND INSURANCE PAID TO (...named place of destination) DAT DELIVERED AT TERMINAL (...named port or place of destination) DAP DELIVERED AT PLACE (...named place of destination) DDP DELIVERED DUTY PAID (...named place of destination)

INCOTERMS 2010 Group II FAS FREE ALONGSIDE SHIP (...named port of shipment) FOB FREE ON BOARD (...named port of shipment) CFR COST AND FREIGHT (...named port of destination) CIF COST, INSURANCE AND FREIGHT (...named port of destination)