International Commercial Term 2000 ( Incoterms 2000)

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International Commercial Terms (INCOTERMS)

ICC Official Rules for Interpretation of Trade Terms *

By Muhammad Hamayuon Bashir [email protected]

* International Chamber of Commerce

Background to the presentation 

The topic of Inco Terms is complicated yet interesting.



Inco Terms are used in the international trade.



Inco Terms are official rules of ICC



To understand Inco Terms it is essential to have a fair idea of international trade.

Activity to move a cargo from one country to other. 

Inland Transportation, Loading & Unloading, Overseas transportation, Storage, documentation, Payment of goods, Clearance, Risk coverage, Handing over taking over of cargo.



Each of the above activity is an independent one and is performed by separate organization who has special manpower and equipment to cater the requirement.



The involvement of various organizations at different level demand for determination of the following:



What will be the point of delivery?



Who will pay the cost at different stages?



How the risk element shall be determined?

Purpose of Incoterms 

Rules for the interpretation of trade terms in foreign trade



Reduce misunderstanding, disputes & litigation.

Scope Rights and obligations of the parties to the contract of sale with respect to the delivery of “tangible” goods sold and NOT including “intangibles” such as computer software etc.

Misconceptions 

Incoterms apply to contract of carriage rather than to the contract of sale.



Incoterms assumed to provide for all the duties which parties may wish to include in a contract of sale.

Structure of Incoterms PART E

PART F

PART C

PART D

DEPARTURE

MAIN CARRIAGE UNPAID

MAIN CARRIAGE PAID

ARRIVAL

EXW

FCA FAS FOB

CFR CIF CPT CIP

DAF DES DEQ DDU DDP

Continued

Structure of Incoterms 

Clause A1

Provision of goods



Clause A2

Licence, authorization & formalities



Clause A3

Contract of carriage and insurance



Clause A4

Delivery



Clause A5

Transfer of risks



Clause A6

Division of costs



Clause A7

Notice to the buyer



Clause A8

Proof of delivery



Clause A9

Checking – packing - marking



Clause A10

Other obligations

EXW

Seller Warehouse and Workshop

BUYE R

Marine Insrnc of Duties goods Taxes Dlvry & to Import the Custms plant Clranc site

SELLE R Port Ware Load Exp house on chrgs Seller Forwar Inland Licethe upon Ocean Fab Load Storag der Freight nce Vesse e & arrival Auth the / Air the Fee l Labor from Goods of Freight Check Goods Termina Govt. on shpmnt Cont. Cstm Export l of Exp the of s Pack Charges Cntry truck Carriage Cleara Mark nce

EXW 

EX WORKS Seller delivers when he places the goods at the disposal of the buyer at the seller’s premises or another named place (i.e. works, factory, warehouse, etc.) not cleared for export and not loaded on any collecting vehicle.



Min obligation for the seller.



Buyer has to bear all costs and risks.

FCA

SELLER’S WAREHOUSE

Marine Insrnc of Duties goods Taxes Dlvry & to Import the Custms plant Clranc site

Port Ware Load Exp house on chrgs Seller Forwar Inland Licethe upon Ocean Fab Load Storag der Freight nce Vesse e & arrival Auth the / Air the Fee l Labor from Goods of Freight Check Goods Termina Govt. on shpmnt Cont. Cstm Export l of Exp the of s Pack Charges Cntry truck Carriage Cleara Mark nce

FCA

FREE CARRIER



Seller delivers the goods, cleared for export, to the carrier nominated by the buyer at the name place.



Carrier means any person who undertake to perform a contract of carriage and include a nominee by the buyer.

FAS

CUSTOMS AREA OF SELLER’S PORT Marine Insrnc of Duties goods Taxes Dlvry & to Import the Custms plant Clranc site

Port Ware Load Exp house on chrgs Seller Forwar Inland Licethe upon Ocean Fab Load Storag der Freight nce Vesse e & arrival Auth the / Air the Fee l Labor from Goods of Freight Check Goods Termina Govt. on shpmnt Cont. Cstm Export l of Exp the of s Pack Charges Cntry truck Carriage Cleara Mark nce

FAS

FREE ALONGSIDE SHIP



Seller delivers when the goods are placed alongside the vessel at the name port of shipment.



FAS term requires the seller to clear the goods for export.

FO B

LOADING AREA OF THE SELLER’S PORT Marine Insrnc of Duties goods Taxes Dlvry & to Import the Custms plant Clranc site

Port Ware Load Exp house on chrgs Seller Forwar Inland Licethe upon Ocean Fab Load Storag der Freight nce Vesse e & arrival Auth the / Air the Fee l Labor from Goods of Freight Check Goods Termina Govt. on shpmnt Cont. Cstm Export l of Exp the of s Pack Charges Cntry truck Carriage Cleara Mark nce

FOB

FREE ON BOARD



Seller delivers when the goods pass the ship’s rail at the named port of shipment.



The FOB term requires the seller to clear the goods for export.



The buyer has to bear all costs and risks of loss of or damage to the goods from that point.



This term can be used only for sea or inland waterway transport.

CFR

BUYER’S PORT

Marine Insrnc of Duties goods Taxes Dlvry & to Import the Custms plant Clranc site

Port Ware Load Exp house on chrgs Seller Forwar Inland Licethe upon Ocean Fab Load Storag der Freight nce Vesse e & arrival Auth the / Air the Fee l Labor from Goods of Freight Check Goods Termina Govt. on shpmnt Cont. Cstm Export l of Exp the of s Pack Charges Cntry truck Carriage Cleara Mark nce

CFR

COST AND FREIGHT (….named port of destination)



Seller delivers when the goods pass the ship’s rail in the port of shipment.



Seller to pay the costs and freight for named port of destination



the risk of loss of or damage to the goods, as well as any additional costs due to events occurring after the time of delivery, are transferred from the seller to the buyer.

CIF

BUYER’S PORT

Port chrgs on Duties arrival Taxes Dlvry at & to buyer Import the port Custms plant Clranc site

Marine Ware Load Exp Insrnc house on Seller Forwar Inland Liceof the Ocean Fab Load Storag der Freight nce goods Vesse e & Auth the / Air the Fee l Labor from Goods Freight Check Goods Termina Govt. on Cont. Cstm Export l of Exp the of s Pack Charges Cntry truck Carriage Cleara Mark nce

CIF

COST INSURANCE & FREIGHT (….named port of destination)



Seller to pay the costs, freight and marine insurance during the carriage.



Seller to get insurance on min. cover. for greater cover, buyer to get his extra arrangement.



Seller to clear the goods for export.

CPT

UNLOADING AREA OF THE BUYER’S PORT Marine Insrnc of Duties goods Taxes Dlvry & to Import the Custms plant Clranc site

Port Ware Load Exp house on chrgs Seller Forwar Inland Licethe upon Ocean Fab Load Storag der Freight nce Vesse e & arrival Auth the / Air the Fee l Labor from Goods of Freight Check Goods Termina Govt. on shpmnt Cont. Cstm Export l of Exp the of s Pack Charges Cntry truck Carriage Cleara Mark nce

CP T 

CARRIAGE PAID TO (…named port of destination)

The seller deliver the goods to the carrier nominated by him



The seller must in addition pay the cost of carriage necessary to bring the goods to the name destination.



Buyer bears all risks and any other costs occurring after the goods have been so delivered.

CIP

UNLOADING AREA OF THE BUYER’S PORT Dlvry Port Ware Load Exp to house on chrgs Seller Forwar Inland LicePlant the upon Ocean Fab Load Storag der Freight nce Site Duties Vesse e & arrival Auth the / Air Taxes Marine the Fee l Labor from Goods & Insrnc of Freight Check Goods Termina Govt. on of shpmnt Cont. Import Cstm Export l goods of Exp the of Custms s Pack Charges Cntry truck Carriage Clranc Cleara Mark nce

CIP

CARRIAGE AND INSURANCE PAID TO (….named port of destination)



Seller delivers the goods to the carrier nominated by him.



Seller must in addition pay the cost of carriage necessary to bring the goods to the named destination.



The seller also has to procure insurance.

DAF

FRONTIER OF THE COUNTRY OF SELLER

Marine Insrnc of Duties goods Taxes Dlvry & to Import the Custms plant Clranc site

Port Ware Load Exp house on chrgs Seller Forwar Inland Licethe upon Ocean Fab Load Storag der Freight nce Vesse e & arrival Auth the / Air the Fee l Labor from Goods of Freight Check Goods Termina Govt. on shpmnt Cont. Cstm Export l of Exp the of s Pack Charges Cntry truck Carriage Cleara Mark nce

DAF

FRONTIER OF THE COUNTRY OF BUYER

Marine Insrnc of Duties goods Taxes Dlvry & to Import the Custms plant Clranc site

Port Ware Load Exp house on chrgs Seller Forwar Inland Licethe upon Ocean Fab Load Storag der Freight nce Vesse e & arrival Auth the / Air the Fee l Labor from Goods of Freight Check Goods Termina Govt. on shpmnt Cont. Cstm Export l of Exp the of s Pack Charges Cntry truck Carriage Cleara Mark nce

DA F

DELIVERED AT FRONTIER (….named places)

Seller delivers the goods when the goods are placed at the disposal of the buyer on the arriving means of transport, not unloaded, not cleared for import at the named point and place at the frontier, but before the customs border of the adjoining country.

DE S

UNLOADING AREA OF THE BUYER’S PORT Marine Insrnc of Duties goods Taxes Dlvry & to Import the Custms plant Clranc site

Port Ware Load Exp house on chrgs Seller Forwar Inland Licethe upon Ocean Fab Load Storag der Freight nce Vesse e & arrival Auth the / Air the Fee l Labor from Goods of Freight Check Goods Termina Govt. on shpmnt Cont. Cstm Export l of Exp the of s Pack Charges Cntry truck Carriage Cleara Mark nce

DE S 



DELIVERED EX SHIP (….named port of destination)

Seller delivers when the 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 has to bear all the costs and risks involved in bringing the goods to the named port of destination before discharging.

DEQ

UNLOADING AREA OF THE BUYER’S PORT

Marine Dlvry Port Ware Load Exp to nsrnc house on chrgs Seller Forwar Inland Licethe the of upon Ocean Duties Fab Load Storag der Freight nce plant Vesse e & goods Taxes arrival Auth the / Air the Fee site l & Labor from Goods of Freight Check Goods Termina Govt. on Import shpmnt Cont. Cstm Export l of Exp the Custms of s Pack Charges Cntry Clranc truck Carriage Cleara Mark nce

DE Q

DELIVERED EX QUAY (….named port of destination)



Seller delivers when the goods are placed at the disposal of the buyer not cleared for import on the quay (wharf) at the named port of destination.



The seller has to bear costs and risks involved in bringing the goods to the named port of destination and discharging the goods on the quay (wharf).



The DEQ term requires the buyer to clear the goods for import and to pay for all formalities, duties, taxes and other charges upon import.

DD U

Customs Clearance Area for Storage, Appraisement & Release to the importer WEST WHARF

UNLOADING AREA OF THE BUYER’S PORT Marine Insrnc of Duties goods Taxes Dlvry & to Import the Custms plant Clranc site

Port Exp Ware Load house on Inland Licechrgs Forwar Seller the Freight upon Ocean der nce Fab Load Storag Vesse e & arrival Fee Auth the / Air the l from Labor Goods of Freight Termina Check Goods Govt. on l shpmnt Cont. Cstm Export of Exp Charges the of s Pack Cntry truck Carriage Cleara Mark nce

DDU

DELIVERED DUTY UNPAID (….named place of destination)



Seller delivers the goods to the buyer, not cleared for import, and not unloaded from any arriving means of transport at the named place of destination.



The seller has to bear the costs and risks involved in brining the goods thereto, other than, where applicable, any “duty” (which term includes the responsibility for and the risks of the carrying out of customs formalities, and the payment of formalities, customs duties, taxes and other charges) for import in the country of destination.



Such duty has to be borne by the buyer as well as any costs and risks caused by his failure to clear the goods for import in time.

DDP

Customs Clearance Area for Storage, Appraisement & Release to the importer WEST WHARF UNLOADING AREA OF THE BUYER’S PORT Marine Insrnc of Duties goods Taxes Dlvry & to Import the Custms plant Clranc site

Port Ware Load Exp house on chrgs Seller Forwar Inland Licethe upon Ocean Fab Load Storag der Freight nce Vesse e & arrival Auth the / Air the Fee l Labor from Goods of Freight Check Goods Termina Govt. on shpmnt Cont. Cstm Export l of Exp the of s Pack Charges Cntry truck Carriage Cleara Mark nce

DDP

DELIVERED DUTY PAID (….named place of destination)



Seller delivers the goods to the buyer, cleared for import, and not unloaded from any arriving means of transport at the named place of destination.



The seller has to bear all the costs and risks involved in brining the goods thereto including, where applicable, any “duty” (which term includes the responsibility for and the risks of the carrying out of customs formalities and the payment of formalities, customs duties, taxes and other charges) for import in the country of destination.

Thank You

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