INCOTERMS ® 2010 Rules

The Incoterms® 2010 rules (International Commercial Terms) were developed by the International Chamber of Commerce (ICC) as a uniform set of rules to clarify the costs, risks and obligations of buyers and sellers in international commercial transactions.

Refer to the ICC Web site for information about these terms and their definitions, which are copyrighted by the ICC.

Abbreviation and short description of delivery terms:

EXW Ex works (EXW) named place (seller’s location) – An Incoterms® rule under which the price that the seller quotes applies only at the point of origin. The buyer takes possession of the shipment at the point of origin and bears all costs and risks associated with transporting the goods to the destination. This Incoterms® rule is regarded as the most open-ended. There is generally nothing specific regarding delivery and there is a mutually convenient pickup time for exporter and importer agreed upon. Used for any mode of transport.

FCA Free Carrier At (FCA) named place (seller’s country) – An Incoterms® rule under which seller delivers goods, cleared for export, to the buyer-designated carrier at a named location. Used for any mode of transport. Seller must load goods onto the buyer's carrier. The key document signifying transfer of responsibility is receipt by carrier to exporter.

FAS Free Alongside Ship (FAS) named vessel at loading port – An Incoterms® rule used only for maritime trade (transport by vessel) Under this arrangement, the supplier agrees to deliver the goods in proper condition alongside the vessel. The buyer assumes all subsequent risks and expenses after delivery to the pier. This term can only be used for waterway transportation.

FOB Free On Board (FOB) named vessel at loading port – An Incoterms® rule used only for maritime trade (transport by vessel) under which responsibility for the shipment transfers from exporter to importer when shipment is loaded aboard the vessel. Seller must load the goods onto the ship. The documentation of delivery is the ocean bill of lading or sea waybill. This term can only be used for waterway transportation.

CFR Cost & Freight (CFR) named port of destination - An Incoterms® rule under which goods are considered to be "delivered" (and buyer assumes risk of loss) when they pass the ship's rail in the port of shipment. The seller is responsible for clearing the goods for export and for costs and freight to bring the goods to the destination port. This term can only be used for waterway transportation.

CIF Cost, Insurance & Freight (CIF) named port of destination – This Incoterms® rule is similar to Cost & Freight (CFR) where goods are considered to be "delivered" (and buyer assumes risk of loss) when they pass the ship's rail in the port of shipment. The seller is responsible for clearing the goods for export and for costs and freight to bring the goods to the destination port. Under CIF the seller must also obtain marine insurance against buyer's risk of loss or damage in transit. This term can only be used for waterway transportation.

CPT Carriage Paid To (CPT) named place of destination – An Incoterms® rule used for any mode of transportation. Buyer assumes title and risk of loss when goods are delivered to the carrier. Seller pays shipping to destination. CPT delivery takes place when the exporter hands over goods to the carrier. The exporter is given bill of lading or equivalent document (air waybill, sea waybill, multi-modal bill of lading).

CIP Carriage Insurance Paid (CIP) named place of destination – An Incoterms® rule under which seller delivers goods to seller-designated carrier, pays cost of carriage to named destination and must obtain insurance to cover buyer’s risk of loss in transit. Buyer bears risk of loss and any additional costs after seller’s delivery to carrier, protected by seller’s insurance. Used for any mode of transportation; same as CPT, but seller pays for insurance and names buyer as beneficiary.

DAT Delivered at Terminal (DAT) named place of destination – An Incoterms® rule under which seller delivers goods to a named terminal in the destination country. Buyer is responsible for import clearance and any further in-country carriage.

DAP Delivered at Place (DAP) named place of destination – An Incoterms® rule under which seller delivers goods to the buyer’s facility or another named location (other than a terminal) in the destination country. Buyer is responsible for import clearance and any further in-country carriage.

DDP Delivered Duty Paid (DDP) named place of destination – An Incoterms® rule under which seller (exporter) is responsible for all costs involved in delivering the goods to a named place of destination and for clearing customs in the country of import. Seller provides literally door-to-door delivery, including customs clearance in the port of export and the port of destination. Thus, seller bears the entire risk of loss until goods are delivered to the buyer's premises. Full term is "DDP named place of destination." Delivery takes place when exporter places goods at disposal of importer in city of delivery. There is no corresponding transportation document, although bill of lading is usually used. Used for any mode of transportation. Seller bears all risk and customs responsibilities until the goods are delivered to a specified location and clear import customs. Buyer assumes risk and title when the goods are delivered to the buyer's specified location.

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