INCOTERMS mean International Commercial Terms. These terms prepared by "The International Chamber of Commerce (ICC)". First the INCOTERMS were published by the ICC in 1936. These terms are accepted and used throughout the world as simple and reliable terminology for avoiding misunderstanding between buyer and seller. The purpose of INCOTERMS is to provide a set of International rules for the interpretation of the important terms used in Foreign Trade Contracts i.e. Export & Import. It is a set of uniform rules codifying the interpretations of trade terms defining the rights and obligations of both the buyer and seller in an international transaction. It defines the commercial, legal and insurance responsibilities of the exporter & importer during an international trade. The INCOTERMS 2010 publication came in to effect on 1st January, 2011.
There are mainly 13 (thirteen) INCOTERMS. These are:
1. EXW = Ex Works
Seller’s duties: i. Only deliver the goods at his factory premises.
ii. If the parties wish the seller to be responsible for the loading of the goods on departure and to bear the risks and all the costs of such loading, this should be made clear by adding explicit wording to this effect in the contract of sale.
Buyer’s duties: i. Take delivery of the goods at the seller’s factory.
ii. All cost & risk at his own.
2. FCA = Free Carrier
Seller’s duties: i. Deliver the goods at the named point into the custody of the carrier mentioned by the importer.
Buyer’s duties: i. Contract for the carriage and pay the freight.
A. FOR = Free on Rail
Seller’s duties: i. Responsibility up to loading the wagon.
Buyer’s duties: i. Pay the freight.
ii. Delivered the goods from Railway.
B. FOT = Free on Truck
Seller’s duties: i. Deliver the goods to the truck.
ii. Truck receipt prepared and advance copy despatch to the buyer.
iii. Pay loading cost according to the custom of the port not include in the freight.
Buyer’s duties: i. Nominate Carrier, Pay the freight, Pay un-loading cost.
ii. Freight paid upto destination point.
iii. Delivered the goods from the truck.
C. FOB Airport = Free on Board
Seller’s duties: i. Deliver the goods to the Air Carrier at the Air port of departure.
Buyer’s duties: i. Accept delivery of the goods at the Air port of departure.
ii. Pay the Air Freight.
3. FAS = Free Alongside Ship
Seller’s duties: i. Deliver the goods alongside the ship.
ii. Provide on “alongside” receipt.
Buyer’s duties: i. Contract for the carriage.
ii. Pay the freight.
4. FOB = Free on Board :
Seller’s duties: i. Deliver the goods on board.
ii. Provide a clean on board receipt.
Buyer’s duties: i. Accept delivery of the goods at the Airport of arrival.
ii. Pay the freight.
5. CFR = Cost & Freight :
Seller’s duties: i. Contract for the carriage.
ii. Pay the freight to the named destination.
iii. Deliver the goods on board.
iv. Pay loading costs.
v. Provide clean on board bill of lading.
vi. Pay unloading cost.
Buyer’s duties: i. Receive the goods at the port of destination.
ii. Pay the duty, sale tax, DSC & I.P. Fees etc.
iii. Pay the load conveyance/carrier charge upto buyers’ godown.
6. CIF = Cost Insurance and Freight :
Seller’s duties: i. Contract for the Carriage.
ii. Pay the freight to the port of destination.
iii. Contract for the insurance of the goods.
iv. Pay the insurance premium.
v. Provide clean on board Bill of lading and cargo insurance policy or certificate.
vi. Pay loading cost.
vii. Pay un-loading cost.
Buyer’s duties: i. Accept delivery and receive the goods as per B/L, invoice and insurance policy.
ii. Pay the duty & sale taxes etc.
iii. Pay the local carriage charges.
7. CPT = Freight Carriage paid to :
Seller’s duties: i. Contract for the carriage and pay the all freight to the final destination.
ii. Deliver the goods into the custody of the first carrier.
iii. Furnish to the buyer the usual transport documents.
Buyer’s duties: i. Accept delivery and receive the goods.
ii. From that named point pay local conveyance Charges upto his custody.
8. CIP = Freight Carriage and Insurance paid :
Seller’s duties: i. Contract for the carriage.
ii. Pay the freight to the named point of destination.
iii. Deliver the goods into the custody of the first carrier.
iv. Pay export taxes and fees.
v. Contract for insurance of the goods and pay the insurance premium.
Buyer’s duties: i. Take delivery of the goods.
9. DAF = Delivered at Frontier :
Seller’s duties: i. Deliver the goods upto custom border.
ii. Up to this point sellers will pay all freight.
Buyer’s duties: i. Take delivery of the goods from that point.
ii. Pay duty and other taxes.
iii. Pay for carriage.
10. DES = Delivered Es Ship :
Seller’s duties: i. Deliver the goods on board the ship at the port of destination.
Buyer’s duties: i. Take delivery of the goods from the ship at the port of destination.
ii. Pay un-loading costs.
iii. Pay duty and others taxes.
11. DEQ = Delivered Ex Quay :
Seller’s duties: i. Deliver the goods on the quay at the port of destination.
ii. Pay unloading costs.
iii. Pay duties, Taxes and other charges if required.Buyer’s duties: i. Take delivery of the goods from the quay at the port of destination.
12. DDU = Delivered Duty Unpaid :
Seller’s duties: The sellers has to bear the costs and risks involved in bringing the goods there to excluding duties, taxes and other official charges payable upon importation as well as the costs and risks of carrying out customs formalities.Buyer’s duties: The buyer has to pay any additional costs and to bear any risks caused by his failure to clear the goods for import in time.
13. DDP = Delivered Duty Paid :
Seller’s duties: i. Deliver the goods to the named place.
ii. All freight paid by the seller.
iii. Pay the duty, Taxes & other charges.
iv. Clear the goods from the port of destination.
Buyer’s duties: i. Receive the goods at the named place of their godown.
