1. INCOTERMS 2010 by the International Chamber of Commerce
International Business Transactions SSL MSG IB 2015/2016
Monika Grottel PhD

2. INCOTERMS 2010 What the ICC is? INCOTERMS – what does it mean?
The history of INCOTERMS
How to use the INCOTERMS?
Main features of INCOTERMS rules
Rules for any mode(s) of transport
Rules for sea and inland waterway transport

3. Is it law, regulation or optional convention?
THE RULE
Is it law, regulation or optional convention?

4. A RULE (by the English Language Dictionary}
official instructions, often written down, which tell us what we are allowed to do and we are not in a particular place or situation;
the course of action that you should take in order to do something properly or to achieve a particulat goal;
a statement that describes the way that things usually happen in a system;
the way of behaving or taking part in something that most people agree is right and acceptable.

5. THE RULE
the course of action that you should take in order to do something – GUIDELINE
the way of behaving or taking part in something – CONVENTION
is right
acceptable
most people agree with it

6. One of the first initiatives of the International Chamber of Commerce (ICC) to facilitate international trade was to explore the understanding of trade terms in the 1920s and to publish the firts results of their study in 1923:
6 common trade terms, used by 13 different countries

7. What the ICC is? The International Chamber of Commerce (ICC)
the largest, most representative business organization in the world
a world network of national committees keeps the ICC International Secretariat in Paris

8. INCOTERMS what does it mean?
International Commercial Terms
a series of pre-defined commercial terms published by the International Chamber of Commerce (ICC)
widely used in international commercial transactions

9. INCOTERMS what does it mean?
a set of three-letters trade terms reflecting bussiness –to-bussines practice in contracts for the sale of goods
the Incoterms rules describe mainly the tasks, costs and risks involved in the delivery of goods from sellers to buyers

10. The history of INCOTERMS
1921 – the Incoterms rules began development with the forming of the idea by the International Chamber of Commerce
1928 – second published study with interpretation of trade terms used in more than 30 countries
1936 – the first set of the Incoterms rules was published
the first set remained in use for almost 20 years

11. The history of INCOTERMS
1953 – the second publication
additional amendments and expansions followed in 1967, 1976, 1980, 1990 and 2000
January 1, 2011 – the eighth and current version of the Incoterms rules – Incoterms 2010 – was published

12. How to use the INCOTERMS?
if we want the Incoterms 2010 to apply to our contract of sale, we have to make it clear in the contract, through such words: „CIF Hamburg, Incoterms 2010”
the chosen Incoterms rule can work only, if the parties of contract name a place or port and specify this place or port as precisley as possible:
„FCA 38 Cours Albert1er, Paris, France Incoterms 2010”

13. How to chose the appropriate INCOTERMS rule?
The chosen Incoterms rule has to be appropriate:
to the goods,
to the means of their transport
to whether the parties intend to put additional obligations, such as obligation to organize carriage or insurance, on the seller or on the buyer

14. How to use the INCOTERMS?
Remember that Incoterms rules dont give you a complete contract of sale!

15. INCOTERMS rules do say!
which party to the sales contract has the obligation to make carriage or insurance arrangements
when the seller delivers the goods to the buyer
which costs each party is responsible for

16. INCOTERMS rules say nothing about!
the price to be paid and the method of the payment
transfer of ownership of the goods
consequences of a breach of contract

17. Main features of INCOTERMS rules
the 11 Incoterms rules are presented in two classes:
rules for any modes of transport
rules for sea and inland waterway transport

18. Main features of INCOTERMS rules
Incoterms rules have been used in international sale contracts, where goods pass across national borders
in various areas of the world have made border formalities between different countries less significant

19. Main features of INCOTERMS rules
Guidance Notes
before each Incoterms rule you will find a Guidance Note
Guidance Notes explain the fundamentals of each Incoterms rule: when it should be used, when risk passes, how costs are allocated between seller and buyer

20. Variants of INCOTERMS rules
sometimes the parties want to alter an Incoterms rule
Incoterms 2010 rules don’t prohibit such alteration
there are dangers in so doing
in order to avoid any unwelcome surprises, the parties of contract would need to make the indended effect of such alterations extremely clear in their contract

21. Terms used in the INCOTERMS 2010
the seller’s obligations and the buyer’s obligations can be carried out personally by the seller or by the buyer, or sometimes through intermediaries such as carriers, freight forwarders or other persons nominated by the seller or the buyer for a specific purpose

22. Terms used in the INCOTERMS 2010
CARRIER – the party with whom carriage is contracted
CUSTOMS FORMALITIES – may include documentary, security, information or physical inspection obligations
DELIVERY – this concept is used to indicate where the risk of loss of or damage to the goods passes from the seller to the buyer

23. Terms used in the INCOTERMS 2010
DELIVERY DOCUMENT – a document used to prove that the delivery has occured: a transport document or corresponding electronic record
PACKAGING:
the packaging of the goods to comply with any requirements under the contract of sale
the packaging of the goods so that they are fit for transportation

24. Rules for any mode(s) of transport
EXW
FCA
CPT
CIP
DAT
DAP
DDP

25. EXW Ex Works (named place of delivery)
the seller delivers, when it places the goods at the disposal of the buyer at the seller’s premises or at another named place (works, factory, warehouse..)
represents the minimum obligation for the seller

27. EXW the seller’s obligations
to provide the goods and the commercial invoice in confirmity with the contract of sale
to deliver the goods by placing them at the disposal of the buyer at the agreed point, at the named place of delivery, not loaded on any collecting vehicle, on the agreed date
no obligation to make a contract of carriage and a contract of insurance

28. EXW the seller’s obligations
to bear the risks of loss of or damage to the goods until they have been delivered to the agreed point
to pay all costs relating to the goods until they have been delivered
at its own expense, to package the goods
to provide the buyer , at the buyer’s request, risk and expense, assistance in obtaining any export licence, other official authorization necessary for the export of the goods

29. EXW the buyer’s obligations
to pay the price of the goods as provided in the contract of sale
to take the delivery of the goods if it has been complied with the contract of sale
to pay all costs relating to the goods from the time they have been delivered

30. EXW the buyer’s obligations
to obtain any export and import licences and other official authorization and carry out all customs formalities for the export of the goods
to pay all duties, taxes and other charges, costs of carrying out customs formalities payable upon export
to bear all risks of loss of or damage to the goods from the time they have been delivered

31. FCA Free Carrier (named place of delivery)
the seller hands over the goods, cleared for export, into the disposal of the first carrier (named by the buyer) at the named place
the seller pays for carriage to the named point of delivery
risk passes when the goods are handed over to the first carrier

33. FCA the seller’s obligations
to delivere the goods to the carrier or another person nominated by the buyer at the agreed point and at the agreed date
to obtain, at its own risk and costs, any export licence and other official authorization and carry out all customs formalities necessary for the export of goods

34. FCA the seller’s obligations
no obligation to make contract of carriage
no obligation to make a contract of insurance
to bear all risks of loss of or damage to the goods until they have been delivered to the first carrier nominated by the buyer
to pay all costs relating to the goods until they have been delivered

35. FCA the buyer’s obligations to pay the price of the goods
to obtain, at its own risk and costs, any import licence and other official authorization and carry out all customs formalities necessary for the import of goods and for their transport through any country

36. FCA the buyer’s obligations
to contract at its own expense for the carriage of the goods from the named place of delivery
to bear all risks of loss of or damage to the goods from the time they have been delivered
to pay all costs relating to the goods from the time they have been delivered

37. CPT Carriage Paid To (named place of destination)
the seller pays for carriage
risk transfers to buyer upon handing goods over to the first carrier and NOT when the goods reach the place of destination

39. CPT the seller’s obligations
to contract, on its expense, for the carriage of the goods from the agreed point of delivery to the named place of destination
no obligation to make a contract of insurance
to deliver the goods by handing them over to the contracted carrier

40. CPT the seller’s obligations
to bear all risks of loss of or damage to the goods until they have been delivered to the first carrier
to pay all costs relating to the goods until they have been delivered
to pay the freight, including costs of loading the goods and any charges for unloading at the place of destination, costs of customs formalities necessary for export

41. CPT the buyer’s obligations to pay the price of the goods
to bear all risks of loss of or damage to the goods from the time they have been delivered to the first carrier

42. CIP Carriage and Insurance Paid To (named place of destination)
seller pays for carriage and insurance to the named destination point
seller contracts for insurance cover against the buyer’s risk of loss of or damage to the goods during the carriage

43. CIP seller is required to obtain insurance only on minimum cover
risk passes when the goods are handed over to the first carrier

45. CIP the seller’s obligations
to deliver the goods by handing them over to the first carrier
to contract for the carriage of the goods to the named place of destination
to bear all risks of loss of or damage to the goods until they have been delivered to the first carrier

46. CIP the seller’s obligations
must obtain at its own expense cargo insurance
must provide the buyer with the insurance policy or any other evidence of insurance cover

47. CIP the buyer’s obligations to pay the price of the goods
to bear all risks of loss of or damage to the goods from the time they have been delivered to the first carrier

48. DAT
Delivered at Terminal (named terminal at port or place of destination)
seller delivers when the goods are unloaded from the arriving means of transport, are placed at the disposal of the buyer at a named terminal of destination

49. DAT
seller pays for carriage to the terminal, except for costs related to import clearance
seller assumes all risks up to the point that the goods are unloaded at the terminal

53. DAT the seller’s obligations
to contract at its own expense for the carriage of the goods to the named terminal at the agreed port or place of destination
must unload the goods from the arriving means of transport and then deliver them by placing them at the disposal of the buyer at the named terminal on the agreed date

54. DAT the seller’s obligations
to bear all risks of loss of or damage to the goods until they have been delivered to the agreed terminal
to pay costs of customs formalities in export, all duties, taxes, charges payable upon export and the costs for their transport through any country

55. DAT the buyer’s obligations to pay the price of the goods
to bear all risks of loss of or damage to the goods from the time they have been delivered to the agreed terminal
to pay costs of customs formalities in import, all duties, taxes, charges payable upon import and the costs for their transport through the country to the own store

56. DAP Delivered at Place (named place of destination)
seller delivers when the goods are on the arriving means of transport, ready for unloading at a named place of destination
seller pays for carriage to the named place, except for costs related to import clearance,
seller assumes all risks prior to the point that the goods are ready for unloading by the buyer

58. DAP the seller’s obligations
must deliver the goods by placing them at the disposal of the buyer on the arriving means of transport ready for unloading at the agreed point, at the named place of destination on the agreed time
must contract at its own expense for the carriage of the goods to the named place of destination

59. DAP the seller’s obligations
to bear all risks of loss ofor damage to the goods until they have been delivered to the named place
to pay costs of customs formalities in export, all duties, taxes, charges payable upon export and the costs for their transport through any country

60. DAP the buyer’s obligations to pay the price of the goods
to bear all risks of loss of or damage to the goods from the time they have been delivered to the place
to pay all costs of unloading necessary to take delivery of the goods from the arriving means of transport at the named place of destination

61. DAP the buyer’s obligations
to pay costs of customs formalities in import, all duties, taxes, charges payable upon import of the goods

62. DDP Delivered Duty Paid (named place of destination)
seller is responsible for delivering the goods to the named place in the country of the buyer
seller pays all costs in bringing the goods to the destination including import duties and taxes
DDP places maximum obligations on the seller and minimum obligations on the buyer

65. DDP the seller’s obligations
must deliver the goods by placing them at the disposal of the buyer on the arriving means of transport ready for unloading at the agreed point, at the named place of destination on the agreed time

66. DDP the seller’s obligations
to pay costs of customs formalities in export and import, all duties, taxes, charges payable upon export and import of the goods, and the costs for their transport through any country

67. DDP the buyer’s obligations to pay the price of the goods
to bear all risks of loss of or damage to the goods from the time they have been delivered to the place
to pay all costs of unloading necessary to take delivery of the goods from the arriving means of transport at the named place of destination

68. Rules for sea and inland waterway transport
FAS
FOB
CFR
CIF

69. FAS Free Alongside Ship (named port of shipment)
seller must place the goods alongside the ship at the named port and clear the goods for export
suitable only for maritime transport but NOT for multimodal sea transport in containers
is typically used for heavy-lift or bulk cargo

71. FAS the seller’s obligations
to deliver the goods by placing them alongside the ship nominated by the buyer at the loading point
to bear all risks of loss of or damage to the goods until they have been placed alonside the ship
to pay costs of customs formalities in export, all duties, taxes, charges payable upon export

72. FAS the buyer’s obligations to pay the price of the goods
must contract at its own expense for the carriage of the goods from the named port of shipment
to pay costs of customs formalities in import, all duties, taxes, charges payable upon import of the goods

73. FAS the buyer’s obligations
to bear all risks of loss of or damage to the goods from the time they have been placed alongside the ship nominated by the buyer at the loading point

74. FOB Free on Board (named port of shipment)
seller must load the goods on board the vessel nominated by the buyer
cost and risk are passes when the goods are actually on board of the vessel (this rule is new!) and the buyer bears all costs from that moment
the seller must clear the goods for export

76. FOB the seller’s obligations
to deliver the goods by placing them on board the vessel nominated by the buyer at the loading point, at the named port of shipment
to bear all risks of loss of or damage to the goods until they have been placed on board
to pay costs of customs formalities in export, all duties, taxes, charges payable upon export

77. FOB the buyer’s obligations to pay the price of the goods
must contract at its own expense for the carriage of the goods from the named port of shipment
to bear all risks of loss of or damage to the goods from the time they have been placed on the board

78. FOB the buyer’s obligations
to pay costs of customs formalities in import, all duties, taxes, charges payable upon import of the goods

79. CFR Coast and Freight (named port of destination)
seller must pay the costs and freight to bring the goods to the port of destination
risk is transferred to the buyer once the goods are loaded on the vessel!!
maritime transport only and insurance for the goods is NOT included.

81. CFR the seller’s obligations
must deliver the goods by placing them on board the vessel
must contract for the carriage of the goods to the named port of destination
to bear all risks of loss of or damage to the goods until they have been placed on board

82. CFR the seller’s obligations
to pay costs of customs formalities in export, all duties, taxes, charges payable upon export

83. CFR the buyer’s obligations to pay the price of the goods
to bear all risks of loss of or damage to the goods from the time they have been placed on the board
to pay costs of customs formalities in import, all duties, taxes, charges payable upon import of the goods

84. CIF Cost Insurance and Freight (named port of destination)
the same as CFR except that the seller must in addition procure and pay for the insurance
maritime transport only

86. How to use the INCOTERMS?
EXW, FCA, DAT, DAP, DDP, FAS, FOB – the named place is the place where delivery takes place and where risk passes from the seller to the buyer
CPT, CIP, CFR, CIF – the named place differs from the place of delivery. The named place is the place of destination to which carriage is paid

87. How to use the INCOTERMS?
is a registered trademark of the ICC, registered in several countries

89. INCOTERMS 2010