Incoterms

Incoterms® terms of delivery define the obligations between the parties to sales contracts in relation to the delivery of goods in international trade. As a part of the sales contract, the terms of delivery determine the division of liabilities and obligations between the seller and the buyer.

  • Who bears the risk of loss of or damage to goods?
  • Who is responsible for the costs related to the delivery of goods?
  • Who is responsible for acquiring the documents related to the delivery of goods?
  • Who is responsible for taking out insurance?

Incoterms is a collection of terms of delivery, or rules, issued by the International Chamber of Commerce known and used worldwide. By referring to a specific rule, the seller and the buyer can determine the division of responsibilities in the delivery of goods.

The only rules that include an insurance obligation are CIF and CIP. Because the liability of the carrier of the goods is limited, the risk of possible loss or damage to the goods lies with the buyer or seller. The parties to the sales contract should be aware of their responsibilities and obtain the necessary insurance.

Differences between Incoterms 2010 and Incoterms 2020

The name of the rule DAT (Delivered at Terminal) has been changed to DPU (Delivered at Place Unloaded). The change does not affect the content of the rule. Its purpose is to clarify that the place of destination could be any place and not only a “terminal”.

The rule FCA (Free Carrier) provides that the bill of consignment or the bill of lading can be prepared after the goods have been loaded on board.

The CIP rule includes the seller’s responsibility to insure the delivery under the Institute Cargo Clauses (A). In the previous version of Incoterms 2010, the Institute Cargo Clauses (C) were the required level of cover.

Incoterms broschures

Incoterms 2020

Incoterms 2010

EXW - Ex Works

Seller's responsibilities

  • Places the goods at the buyer’s disposal at an agreed point at the named place of delivery, where the buyer can load the goods on a vehicle on an agreed date or within an agreed period
  • Is responsible for the loss of and damage to the goods and pays all costs associated with the goods up to the point of delivery

Buyer's responsibilities

  • Receives the goods upon delivery
  • Is responsible for the costs associated with the goods and the loss of and damage to the goods after the point of delivery
  • Completes all export and import formalities and pays all duties, taxes and other costs associated with importing or transporting the goods through a country

Insurance

  • the buyer insures the goods for the duration of the transport

Mode of transport

  • This terms of delivery can be used for all modes of transport.
EXW
FCA - Free Carrier

Seller's responsibilities

  • Completes all the necessary export formalities
  • Delivers the goods to a carrier named by the buyer or to another person, either a) at the seller’s premises loaded on a means of transport provided by the buyer or b) at another named place delivered on the seller’s means of transport and ready for unloading by the buyer on an agreed date or within an agreed period
  • Is responsible for the loss of and damage to the goods and pays all costs associated with the goods up to the point of delivery

Buyer's responsibilities

  • Receives the goods upon delivery
  • Is responsible for the costs associated with the goods and the loss of and damage to the goods after the point of delivery
  • Completes all the necessary import formalities and pays all duties, taxes and other costs associated with importing or transporting the goods through a country

Insurance

  • the seller insures the goods until they have been delivered to the carrier, after which the buyer insures them

Mode of transport

  • This terms of delivery can be used for all modes of transport.
FCA
CPT - Carriage Paid To

Seller's responsibilities

  • Completes all the necessary export formalities
  • Delivers the goods to a designated carrier on an agreed date or within an agreed period
  • Concludes a transport agreement under customary terms and conditions and pays carriage to the named place of destination
  • Is responsible for the loss of and damage to the goods and pays all costs associated with the goods up until they have been delivered to a carrier

Buyer's responsibilities

  • Accepts the goods upon delivery and receives the goods from a carrier at the named place of destination
  • Is responsible for the costs associated with the goods and the loss of and damage to the goods after the point of delivery
  • Pays unloading costs, unless it is stated in the transport agreement that they are payable by the seller
  • Completes all the necessary import formalities and pays all duties, taxes and other costs associated with importing or transporting the goods through a country

Insurance

  • the seller insures the goods until they have been delivered to the carrier, after which the buyer insures them

Mode of transport

  • This terms of delivery can be used for all modes of transport.
” ”
CIP - Carriage and Insurance Paid to

Seller's responsibilities

  • Completes all the necessary export formalities
  • Delivers the goods to a designated carrier on an agreed date or within an agreed period
  • Concludes a transport agreement under customary terms and conditions and pays carriage to the named place of destination
  • Is responsible for the loss of and damage to the goods and pays all costs associated with the goods up until they have been delivered to a carrier
  • Takes out cargo insurance for the benefit of the buyer with at least the minimum cover specified in Clause A of the Institute Cargo Clauses or, if the buyer so requires, protection from war and strikes at the buyer’s cost
  • Insures the goods in the currency of the contract, setting an insurable value that exceeds the price stated in the contract by at least 10% and ensuring that the insurance is valid up to the named place of destination, and provides the buyer with the policy or proof of the insurance cover

Buyer's responsibilities

  • Accepts the goods upon delivery and receives the goods from a carrier at the named place of destination
  • Is responsible for the costs associated with the goods and the loss of and damage to the goods after the point of delivery
  • Pays all costs associated with the goods during their transport to the place of destination and the unloading costs, unless it is stated in the transport agreement that they are payable by the seller
  • Completes all the necessary import formalities and pays all duties, taxes and other costs associated with importing or transporting the goods through a country
  • At the seller’s request, provides the seller with the information required for obtaining more comprehensive insurance cover

Insurance

  • the seller insures the goods up to the designated destination in accordance with Institute Cargo Clauses (A) or corresponding terms and conditions. At the buyer’s request and expense, the seller must also insure the goods against war and strikes.

Mode of transport

  • This terms of delivery can be used for all modes of transport.
” ”
DPU - Delivered at Place Unloaded

Seller's responsibilities

  • Completes all the necessary export formalities
  • Concludes a transport agreement under customary terms and conditions and pays carriage to the named terminal
  • Delivers the goods by placing them at the buyer’s disposal unloaded from the means of transport at the named place of destination on an agreed date or within an agreed period
  • Is responsible for the loss of and damage to the goods and pays all costs associated with the goods up to the point of delivery

Buyer's responsibilities

  • Receives the goods upon delivery
  • Is responsible for the costs associated with the goods and the loss of and damage to the goods after the point of delivery
  • Completes all the necessary import formalities and pays all duties, taxes and other costs associated with importing or transporting the goods through a country

Insurance

  • the seller insures the goods up to the destination.

Mode of transport

  • This terms of delivery can be used for all modes of transport.
” ”
DAP - Delivered At Place

Seller's responsibilities

  • Completes all the necessary export formalities
  • Concludes a transport agreement under customary terms and conditions and pays freight up to the named place of destination and unloading costs payable by the seller under the transport agreement
  • Delivers the goods by making them ready for unloading by the buyer from the arriving means of transport at an agreed point at the named place of destination on an agreed date or within an agreed period
  • Is responsible for the loss of and damage to the goods and pays all costs associated with the goods up to the point of delivery

Buyer's responsibilities

  • Receives the goods upon delivery
  • Is responsible for the costs associated with the goods and the loss of and damage to the goods after the point of delivery
  • Pays all costs associated with unloading the goods from the arriving means of transport at the named place of destination, unless it is stated in the transport agreement that they are payable by the seller
  • Completes all the necessary import formalities and pays all duties, taxes and other costs associated with importing or transporting the goods through a country

Insurance

  • the seller insures the goods up to the destination.

Mode of transport

  • This terms of delivery can be used for all modes of transport.
” ”
DDP - Delivered Duty Paid

Seller's responsibilities

  • Pays the costs of customs formalities required for export and import
  • Concludes a transport agreement under customary terms and conditions and pays freight up to the named terminal and unloading costs payable by the seller under the transport agreement
  • Delivers the goods by making them ready for unloading by the buyer from the arriving means of transport at an agreed point at the named place of destination on an agreed date or within an agreed period
  • Is responsible for the loss of and damage to the goods and pays all costs associated with the goods up to the point of delivery

Buyer's responsibilities

  • Receives the goods upon delivery
  • Is responsible for the costs associated with the goods and the loss of and damage to the goods after the point of delivery
  • Pays all costs associated with unloading the goods from the arriving means of transport at the named place of destination, unless it is stated in the transport agreement that they are payable by the seller

Insurance

  • the seller insures the goods until they reach the buyer.

Mode of transport

  • This terms of delivery can be used for all modes of transport.
” ”
FAS - Free Alongside Ship

Seller's responsibilities

  • Completes all the necessary export formalities
  • Delivers the goods by placing them at the buyer’s disposal at the named loading place at the named port alongside a vessel named by the buyer on an agreed date or within an agreed
    period and in accordance with the practices of the port
  • Is responsible for the loss of and damage to the goods and pays all costs associated with the goods up to the point of delivery

Buyer's responsibilities

  • Receives the goods when they have been placed alongside a vessel at the named port of shipment
  • Is responsible for the costs associated with and the loss of and damage to the goods after the point of delivery or if the buyer is unable to receive the goods at an agreed time or if a vessel named by the buyer does not arrive in time
  • Concludes, at its own cost, an agreement for transporting the goods from the named port of shipment, unless the seller concludes a transport agreement
  • Completes all the necessary import formalities and pays all duties, taxes and other costs associated with importing or transporting the goods through a country

Insurance

  • the seller insures the goods until they reach the side of the vessel, after which the buyer insures them.

Mode of transport

  • This terms of delivery can be used only for sea and inland waterway transport.
FAS
FOB - Free On Board

Seller's responsibilities

  • Completes all the necessary export formalities
  • Delivers the goods by placing them on a vessel named by the buyer at a loading place possibly named by the buyer at the named port of loading on an agreed date within an agreed period and in accordance with the practices of the port
  • Is responsible for the loss of and damage to the goods and pays all costs associated with the goods up to the point of delivery

Buyer's responsibilities

  • Receives the goods when they have been placed on a vessel named by the buyer at the named loading place at the named port of shipment or when the seller demonstrates that the goods have been delivered in this way in accordance with the practices of the port
  • Is responsible for the costs associated with and the loss of and damage to the goods after the point of delivery or if the buyer is unable to receive the goods at an agreed time or if a vessel named by the buyer does not arrive in time
  • Concludes, at its own cost, an agreement for transporting the goods from the named port of shipment, unless the seller concludes a transport agreement
  • Completes all the necessary import formalities and pays all duties, taxes and other costs associated with importing or transporting the goods through a country

Insurance

  • the seller insures the goods until they reach the vessel, after which the buyer insures them.

Mode of transport

  • This terms of delivery can be used only for sea and inland waterway transport.
FOB
CFR - Cost and Freight

Seller's responsibilities

  • Completes all the necessary export formalities
  • Concludes a transport agreement for the use of a vessel suitable for the goods sold under customary terms and conditions and using a customary route up to the port of destination or an agreed place at the port
  • Pays freight and unloading costs payable by the seller under the transport agreement
  • Delivers the goods by placing them on a vessel on an agreed date or within an agreed period and in accordance with the practices of the port
  • Is responsible for the loss of and damage to the goods and pays all costs associated with the goods up to the point of delivery

Buyer's responsibilities

  • Receives the goods when they have been placed on a vessel at the port of shipment or when the seller demonstrates that the goods have been delivered in this way in accordance with the practices of the port
  • Is responsible for the costs associated with the goods and the loss of and damage to the goods after the point of delivery
  • Pays all costs associated with the goods during their transport to the port of destination and the unloading costs, unless it is stated in the transport agreement that they are payable by the seller
  • Completes all the necessary import formalities and pays all duties, taxes and other costs associated with importing or transporting the goods through a country

Insurance

  • the seller insures the goods until they reach the vessel, after which the buyer insures them.

Mode of transport

  • This terms of delivery can be used only for sea and inland waterway transport.
” ”
CIF - Cost, Insurance and Freight

Seller's responsibilities

  • Completes all the necessary export formalities
  • Concludes a transport agreement for the use of a vessel suitable for the goods sold under customary terms and conditions and using a customary route up to the port of destination or an agreed place at the port
  • Pays freight and unloading costs payable by the seller under the transport agreement
  • Delivers the goods by placing them on a vessel on an agreed date or within an agreed period and in accordance with the practices of the port
  • Is responsible for the loss of and damage to the goods and pays all costs associated with the goods up to the point of delivery
  • Takes out cargo insurance for the benefit of the buyer with at least the minimum cover specified in Clause C of the Institute Cargo Clauses or, if the buyer so requires, more comprehensive cover and/or protection from war and strikes at the buyer’s cost
  • Insures the goods in the currency of the contract, setting an insurable value that exceeds the price stated in the contract by at least 10% and ensuring that the insurance is valid up to the named port of destination, and provides the buyer with the policy or proof of the insurance cover

Buyer's responsibilities

  • Receives the goods when they have been placed on a vessel at the port of shipment or when the seller demonstrates that the goods have been delivered in this way in accordance with the practices of the port
  • Is responsible for the costs associated with the goods and the loss of and damage to the goods after the point of delivery
  • Pays all costs associated with the goods during their transport to the port of destination and the unloading costs, unless it is stated in the transport agreement that they are payable by the seller
  • Completes all the necessary import formalities and pays all duties, taxes and other costs associated with importing or transporting the goods through a country
  • At the seller’s request, provides the seller with the information required for obtaining insurance cover

Insurance

  • the seller insures the goods until they reach the designated destination harbour in accordance with Institute Cargo Clauses C or corresponding minimum terms and conditions. At the buyer’s request and expense, the seller must also insure the goods against war and strikes

Mode of transport

  • This terms of delivery can be used only for sea and inland waterway transport.
” ”