Rohit Pareek (31)Prashna Bhattarai (32)

IntroductionUniversally recognised set of definitions of

international trade termsRecognised by courts and other authorities Define the trade contract responsibilities and

liabilities between buyer and seller Updated regularly to keep pace with changes and

developments in international trade

Introduction

Devised an published by the ICC

WBO ICC introduced Incoterms in 1936

Incoterms 2012

EXW- Ex Works

FCA- Free Carrier

FAS- Free Alongside Ship

FOB- Free On Board

CFR- Cost and Freight

CIF- Cost, Insurance and Freight

CPT- Carriage Paid To

CIP- Carriage and Insurance Paid To

DDP- Delivered Duty Paid

DAP: Delivery At Place

IntroductionPurpose of Incoterms

Designed for Parties to a ContractProvides a set of international rules for foreign tradeReduces uncertaintiesAvoids different interpretations in different countriesAdditional costs and time can be avoided

IntroductionLimitation

• To rights and obligations of the parties to contract of sale with respect to the delivery of the goods sold.

• Do not deal with the consequences of breach of contract• Primarily intended for use where goods are sold for

delivery across national boundaries, hence international commercial terms.

• Can be used in contracts for sale of goods directly.

Types of Incoterms:1) Ex-works: Goods available only at seller’s premises. Buyer: loads the goods on truck or container at the

seller’s premises, and takes into account the subsequent costs and risks.

2) Free Carrier (FCA):Buyer: main carriage/freight, cargo insurance and other

costs and risks.

Types of Incoterms:3)Free Alongside Ship (FAS):Seller: places the goods alongside the ship at the named

port, loaded at his expense. Buyer: pays loading fee, main carriage/freight, cargo

insurance and other costs risks.

4) Free on Board (FOB):Delivery of goods on board the vessel at the port of

origin is at the seller’s expense. Buyer is responsible for loading fee, main carriage/

freight, cargo insurance and other costs risks.

Types of Incoterms:5) Cost and Freight (CFR):Seller: pays the costs and freight to bring the goods to the port

of destination. Risk transferred once the goods have crossed the ship’s rail.

6) Cost Insurance and Freight (CIF):Used exactly the same way as CFR except that Seller: must in addition procure and pay for insurance for the

cargo insurance and delivery of goods to the port of destination

Buyer: responsible for the import customs clearance & other costs and risks

Types of Incoterms:7) Carriage Paid To (CPT): Seller delivers the goods at the named place of destination at his expense. Buyer assumes the cargo insurance, import customs clearance, payment of customs duties and taxes, and other costs and risks.

8) Carriage and Insurance Paid To (CIP):Seller delivers the goods on the ship. On board, the risk is transferred to the buyer. Buyer is accountable for the import customs clearance, payment of customs duties and taxes, and other costs and risks until goods reach their final destination.

Types of Incoterms:9) Delivery Duty Paid (DDP):Seller is responsible for most of the expenses andit is a “door to door” delivery. Risk is transferred when the

goods are delivered.

10) Delivery at Place (DAP):

Seller pays for carriage to the named place, except for costs related to import clearance.