INCOTERMS

Today we try to know ''INCOTERMS ''. Its is very informative issue for international trading issue. So, as well as here we showing basic or shortly mentioned for understanding.

INCOTERMS 

The Incoterms or International Commercial Terms are a series of pre-defined commercial terms 
published by the International Chamber of Commercial (ICC) relating to international commercial law. They are widely used in international commercial transactions or procurement processes and their use is encouraged by trade councils, courts and international lawyers. A series of three-letter trade terms related to common contractual sales practices, the Incoterms rules are intended primarily to clearly communicate the tasks, costs, and risks associated with the global or international transportation and delivery of goods. Incoterms inform sales contracts defining respective obligations, costs, and risks involved in the delivery of goods from the seller to the buyer, but they do not themselves conclude a contract, determine the price payable, currency or credit terms, govern contract law or define where title to goods transfers.

The Incoterms rules are accepted by governments, legal authorities, and practitioners worldwide for the interpretation of most commonly used terms in international trade. They are intended to reduce or remove altogether uncertainties arising from different interpretation of the rules in different countries. As such they are regularly incorporated into sales contracts worldwide.

"Incoterms" is a registered tradmark of the ICC.

The first work published by the ICC on international trade terms was issued in 1923, with the first edition known as Incoterms published in 1936. The Incoterms rules were amended in 1953, 1967, 1976, 1980, 1990, and 2000, with the eighth version— Incoterms 2010 — having been published on January 1, 2011. The ICC has begun consultations on a new revision of Incoterms, to be called incoterms 2020.

Incoterms in government regulations

In some jurisdictions, the duty costs of the goods may be calculated against a specific Incoterm: for example in Bangladesh duty is calculated against the CIF value of the goods and in South Africa the duty is calculated against the FOB value of the goods. Because of this it is common for contracts for exports to these countries to use these Incoterms, even when they are not suitable for the chosen mode of transport. If this is the case then great care must be exercised to ensure that the points at which costs and risks pass are clarified with the customer.

Defined terms in Incoterms

• There are certain terms that have special meaning within Incoterms, and some of the more important ones are defined below
• Delivery: The point in the transaction where the risk of loss or damage to the goods is transferred from the seller to the buyer
• Arrival: The point named in the Incoterm to which carriage has been paid Free: Seller has an obligation to deliver the goods to a named place for transfer to a carrier.
• Carrier: Any person who, in a contract of carriage, undertakes to perform or to procure the performance of transport by rail, road, air, sea, inland waterway or by a combination of such modes
• Freight Forwarder A firm that makes or assists in the making of shipping arrangements;
• Terminal: Any place, whether covered or not, such as a dock, warehouse, container yard or road, rail or air cargo terminal
• To clear for export: To file Shipper’s Export Declaration and get export permit.

Definition of Incoterm EXW

• This term represents the seller's minimum obligation, since he only has to place the goods at the disposal of the buyer. The buyer must carry out all tasks of export & import clearance. Carriage & insurance is to be arranged by the buyer.

FCA - Free Carrier

• This term means that the seller delivers the goods, cleared for export, to the carrier nominated by the buyer at the named place. Seller pays for carriage to the named place.

FAS - Free Alongside Ship

• This term means that the seller delivers when the goods are placed alongside the vessel at the named port of shipment. The seller is required to clear the goods for export. The buyer has to bear all costs & risks of loss or damage to the goods from that moment. This term can be used for ocean transport only.

FOB - Free On Board

• This term means that the seller delivers when the goods pass the ship's rail at the named port of shipment. This means the buyer has to bear all costs & risks to the goods from that point. The seller must clear the goods for export. This term can only be used for ocean transport. If the parties do not intend to deliver the goods across the ship's rail, the FCA term should be used.

CFR - Cost and Freight

• This term means the seller delivers when the goods pass the ship's rail in the port of shipment. Seller must pay the costs & freight necessary to bring the goods to the named port of destination, BUT the risk of loss or damage, as well as any additional costs due to events occurring after the time of delivery are transferred from seller to buyer. Seller must clear goods for export. This term can only be used for ocean transport.

CIF - Cost, Insurance, Freight

• The seller delivers when the goods pass the ship's rail in the port of shipment. Seller must pay the cost & freight necessary to bring goods to named port of destination. Risk of loss & damage same as CFR. Seller also has to procure marine insurance against buyer's risk of loss/damage during the carriage. Seller must clear the goods for export. This term can only be used for ocean transport.

CIP - Carriage and Insurance Paid

• This term is the same as CPT with the exception that the seller also has to procure insurance against the buyer's risk of loss or damage to the goods during the carriage. This term may be used for any mode of transportation.

 

CPT - Carriage Paid Terms

• This term means that the seller delivers the goods to the carrier nominated by him but the seller must in addition pay the cost of carriage necessary to bring the goods to the named destination. The buyer bears all costs occurring after the goods have been so delivered. The seller must clear the goods for export. This term may be used irrespective of the mode of transport (including multi modal).

 

DAF - Delivered At Frontier

• This term means that the seller delivers when the goods are placed at the disposal of the buyer on the arriving means of transport not unloaded, cleared for export but not cleared for import, at the named point & place at the frontier - but before the customs border of the adjoining country. To be used when delivering to a land frontier.

 

DES - Delivered Ex Ship

• Seller delivers when goods are placed at the disposal of the buyer on board the ship, not cleared for import at the named port of destination. The seller bears all costs & risks in bringing the goods to the named port before discharging. This term can only be used when the goods are to be delivered by ocean.

 

DEQ - Delivered Ex Quay

• This terms is the same as DES with the exception that the seller is responsible to place the goods at the disposal of the buyer, not cleared for import, on the quay (wharf) at the named port of destination. Seller bears all costs & risks as in DES plus discharging the goods on the quay. This term can only be used in ocean transport.

 

• DDU - Delivered Duty Unpaid

       This term means the seller delivers the goods to the buyer, not cleared for import, and not           unloaded from arriving means of transport at the named place of destination. The seller               bears all costs & risks involved in bringing the goods to the named place other than "duty"          (which includes the responsibility for customs formalities & payment of those formalities,               duties & taxes) for import into the country of destination. Buyer is responsible for payment           of all customs & duties & taxes.
 

DDP - Delivered Duty Paid

• This term represents maximum obligation to the seller. This term should not be used if the seller is unable to directly or indirectly to obtain the import license. The terms means the same as the DDU term with the exception that the seller also will bear all costs & risks of carrying out customs formalities including the payment of duties, taxes & customs fees.

DAT – Delivered at Terminal (named terminal at port or place of destination

• Seller pays for carriage to the terminal, except for costs related to import clearance, and assumes all risks up to the point that the goods are unloaded at the terminal.

DAP - Delivered At Place (named place of destination

• Seller pays for carriage to the named place, except for costs related to import clearance, and assumes all risks prior to the point that the goods are ready for unloading by the buyer.