INCOTERMS
International Commercial Terms
and Their Definitions

What Are INCOTERMS?
Three-letter trade terms used in international/domestic sale of goods
contracts
Terms are developed and maintained by experts brought together by
the International Chamber of Commerce (ICC)

What Do INCOTERMS Do?
INCOTERMS offer rules that outline transfer of goods responsibilities
for sellers and buyers.
They assign transportation costs and responsibilities connected with
the delivery of goods between importers and exporters.
They reduce misunderstandings among traders, which reduces trade
disputes and lawsuits.

What Do INCOTERMS 2010 Categories Do?
They’re used in international and domestic contracts to simplify
the drafting of contracts and prevent misunderstandings by
clearly stipulating obligations of buyers and sellers.

Incoterms for any Mode of Transport
EXW, FCA, CPT, CIP, DAT, DDP=Place of delivery
Incoterms for Sea and Inland Waterway
Transport
FAS, FOB, CFR, CIF=Place of destination

INCOTERMS for Any
Mode of Transport

Ex Works (EXW)
The seller delivers the goods where a buyer directs them. The seller doesn’t need to
load goods on any collecting vehicle or clear the goods for export.
Free Carrier (FCA)
The seller delivers the goods where a buyer directs them. The parties specify where to
place the goods at the location, then the risk passes to the buyer.

Carriage Paid To (CPT)
The seller delivers goods to the carrier and pays the costs of carriage necessary to
bring the goods to the destination.
Carriage and Insurance Paid To (CIP)
The seller delivers goods to the carrier and must contract for and pay costs of any
carriage necessary to deliver the goods.

Delivered at Terminal (DAT)
Once the seller delivers goods, they are placed at the terminal. The seller then bears
all the risk involved with bringing and unloading goods to their destination.
Delivered At Place (DAP)
The seller unloads goods and bears all risks involved with bringing the goods to the
named place.

Delivered Duty Paid (DDP)
Seller delivers goods and bears all costs/risks involved in delivering goods.
Seller has obligation to clear goods for exporting and importing.
Seller pays any duty for both export and import during customs formalities.

INCOTERMS for Sea
and Inland Waterway

Free Alongside Ship (FAS)
Seller delivers goods alongside a vessel nominated by the buyer at port. The risk of
loss or damage to the goods disappears when goods are alongside the ship and the
buyer bears all costs from that moment forward.
Free On Board (FOB)
Seller delivers goods on board the vessel nominated by the buyer at port. The risk of
loss or damage to the goods disappears when goods are on board the vessel and the
buyer bears all costs from that moment forward.

Cost and Freight (CFR)
The seller delivers goods on board the vessel or procures the goods already delivered.
The risk of loss or of damage to the goods disappears when goods are on board the
vessel. The seller must contract for and pay the costs and freight necessary to bring
goods to the named port of destination.
Cost, Insurance, and Freight (CIF)
Same description as above only specified insurance is listed for the goods.

Can You Use INCOTERMS 2000?
The International Chamber of Commerce and all contracts made under Incoterms
2000 remain applicable even after 2011.
Parties involved in a sales contract can agree to use any adaptation of Incoterms after
2011 but ther version must be stated in the sales contract.
Note: INCOTERMS cannot be used to determine ownership of goods. This should be
clarified within the contract precisely.

With more than 25 years of experience working with
clients on behalf of customs imports worldwide, we are
prepared to coordinate customs clearance at the border.
1.800.274.2329
http://www.afcinternationalllc.com
custombrokerage@afcexpress.com
Reference:
Reference: http://www.afcinternationalllc.com/blog/incoterms-international-commercial-terms/