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INCOTERMS
Presenter: Romana NargusClass Roll No: A-1
Exam Roll No: 462
MBA (Banking & Finance)
Session2009-2011
Presented ToProf: Dr Khair-uz-Zaman
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Incoterm is formed from phrase i-e internationalcommercial term.
Incoterms are a set of international rules forinterpretation of trade terms developed by theICC for the ist time in 1936.
OBJECTIVE:In order to remove the source of friction ininternational trade leading to disputes.
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Incoterms has been revised and updated to keep pacewith changing trend in IT.
The 1980 version catered for the revolutionarychanges in the transportation industry brought aboutby containerization.
It covered transportation from exporters warehouseto importers warehouse through the term knownmulti-modal transport.
The 1990 version recognizes the increasing use of
electronic data interchange and amended the MMT toFCA (free carrier named place),
CPT (carriage paid named place and destination)
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CIP (carriage and insurance paid to named place
and destination) .
In international trade transactions, goods
movement would be:
1. From sellers place to international
transporters place, e.g Peshwar to Karachi.
2. From sellers transporters place to buyers
transporters place karachi port to Hull port.3. From port to buyers place of business.
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Any international trade transaction will involve:
Arrangement and payment of goods from theplace of seller to the place of buyer.
Coverage of risk if the transaction is notcarried out as per agreed terms.
Compensation for the loss of or damage to the
goods during transit.
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There are 13 :
1. Ex-Works (EXW): Sellers responsibility isto deliver the goods at his own premises. Theseller is not responsible for loading the
goods on vehicles brought in by the buyer.
2. FCA: Free Carrier (named place): Delivery ofgoods at a named place, container terminal. Thesellers obligation is to bear all risks and costsuntil the goods are delivered into the custody ofthe carrier named by the buyer at the named
place or point.
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3. FAS (Free Alongside Ship-named port): the
sellers obligation is to bear all risks and costsuntil the goods have been placed alongside the
ship on the quay at the named port of shipment.
Karachi sea port provide Dock Receipt.
4. FOB (Free On Board): goods to cross ships
rail and be loaded on board a named ship. The
seller obligation is to bear all risks and cost until
the goods are loaded on board a ship named in
the contract
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5. Cost & Freight (c & f):
The sellers obligation is to bear all risks andcosts including freight to bring the goods to the
named destination until the goods pass the
ships rail in the port of shipment. The sellerwill complete export customs formalities,
payment of duties, freight and loading.
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6. (CIF Cost, Insurance & Freight):
The sellers obligation is to supply goods andcommercial invoice, carriage of goods to the
named port of destination, procure at his own
expenses and in a transferable form, a policy ofcargo insurance and bear all risks of loss of or
damage to the goods until such time as they
have passed the ships rail at the port of
shipment.
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7. CPT (Carriage To Paid named place of
destination):
The sellers obligation is to pay the freight forthe carriage of goods to the named destination
and bear the risk until the goods are delivered
into the custody of the carrier.
8. CIP (Carriage & Insurance Paid to the named
place and destination):
CPT + to procure cargo insurance against the
risk of loss of or damage to the goods during the
carriage. i=invoice value +10%
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9. DAF (Delivered At Frontier named place):
The sellers obligation is until the time the
goods have been made available and cleared foeexport at the named point at the frontier. This
term is used when a land route is used for
transport of goods.
10. DES (Delivered Ex-Ship named port of
destination):
Similar to CIF except that the sellers obligation
is make the goods available to the buyer on
board the ship.
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11. DEQ (Delivered Ex-goods Quay fully paid
named port of destination):
The sellers obligation is to make the goodsavailable to the buyer on the quay at the port of
destination named in the contract of sale. The
seller has to pay unloading charges, completeimport formalities and pay taxes and duties.
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12. DDU (Delivered Duty Unpaid named place
of destination):
Under this term the sellers obligation is todeliver the goods at the named place in the
country of buyer. The seller has to bear all risks
and expenses for completing customsformalities etc but not the duty and taxes. All
costs risk to be borne upto that place. The taxes
are to be paid by importer but import formalities
are to be completed by the exporter.
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13. DDP (Delivered Duty Paid):
In this term the sellers obligation is to deliver
the goods at the named place in the country ofthe buyer. The seller has to bear all risks and
expenses including duties, taxes and clearance
costs.
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Thank you for your kindAttention !
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