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INCO TERMS

The global economy has given businesses broader access than ever before to markets all over the world. Goods are sold in more countries, in larger quantities, and in greater variety. But as the volume and complexity of global sales increase, so do possibilities for misunderstandings and costly disputes when sale contracts are not adequately drafted.

Incoterms rules do say which party to the sales contract has the obligation to make carriage or insurance arrangements, when the seller delivers the goods to the buyer, and which costs each party is responsible for. Incoterms rules, however, say nothing about the price to be paid or the method of its payment. Neither do they deal with the transfer of ownership of goods, or the consequences of a breach of contract. These matters are normally dealt with through express terms in the contract of sale or in the law governing that contract. The parties should be aware that mandatory local law may override any aspect of the sale contract, including the chosen Incoterms rule.

If you want the Incoterms© 2010 rules to apply to your contract, you should make this clear in the contract, through such words as, "the chosen Incoterms rule including the named place", followed by "Incoterms© 2010".

Two new Incoterms rules, DAT and DAP, have replaced the Incoterms 2000 rules DAF, DES, DEQ and DDU. The number of Incoterms rules has been reduced from 13 to 11.

The Incoterms© 2010 rules are presented in two distinct classes:

Rules for any mode or modes of transport
EXWEx Works
FCAFree Carrier
CPTCarriage Paid To
CIPCarriage and Insurance Paid To
DATDelivered at Terminal
DAPDelivered at Place
DDPDelivered Duty Paid
  
Rules for sea and inland waterway transport
FASFree Alongside Ship
FOBFree On Board
CFRCost and Freight
CIFCost Insurance and Freight

To view our Inco Terms brochure please click here.

The publisher of the Incoterms, the ICC, can be contacted directly for valuable print materials related to the Incoterms. They can be contacted at:

ICC Books USA
1212 Avenues of the Americas
21st Floor
New York, NY 10036
Phone: (212) 603-5066
Fax:    (212) 391-6568
Email: iccbooks@uscib.org


EXW – Ex Works (named place)

"Ex Works" means that the seller delivers when it places the goods at the disposal of the buyer at the seller’s premises or at another named place (i.e. works, factory, warehouse etc.). The seller does not need to load the goods on any collecting vehicle, nor does it need to clear the goods for export, where such clearance is applicable. FCA is usually more appropriate for international trade.

FCA – Free Carrier (named place)

"Free Carrier" means that the seller delivers the goods to the carrier or another person nominated by the buyer at the seller’s premises or another named place. The parties are well advised to specify as clearly as possible the point within the named place of delivery, as the risk passes to the buyer at that point.

CPT – Carriage Paid To (named place)

"Carriage Paid To" means that the seller delivers the goods to the carrier or another person nominated by the seller at an agreed place (if any such place is agreed between the parties) and that the seller must contract for and pay the costs of carriage necessary to bring the goods to the named place of destination.

CIP – Carriage and Insurance Paid To (named place)

"Carriage and Insurance Paid To" means that the seller delivers the goods to the carrier or another person nominated by the seller at an agreed place (if any such place is agreed between the parties) and that the seller must contract for and pay the costs of carriage necessary to bring the goods to the named place of destination. The seller also contracts for insurance cover against the buyer’s risk of loss of or damage to the goods during the carriage.

DAT Delivered At Terminal (named place)

"Delivered At Terminal" means that the seller delivers when the goods, once unloaded from the arriving means of transport, are placed at the disposal of the buyer at a named terminal at the named port or place of destination. "Terminal" includes at any place, whether covered or not, such as a quay, warehouse, container yard or road, rail or air cargo terminal. The seller bears all risks involved in bringing the goods to and unloading them at the terminal at the named port or place of destination.

DAP – Delivered At Place (named place)

"Delivered At Place" means that the seller delivers when the goods are placed at the disposal of the buyer on the arriving means of transport ready for unloading at the named place of destination. The seller bears all risks involved in bringing the goods to the named place.

DDP – Delivered Duty Paid (named place)

"Delivered Duty Paid" means that the seller delivers the goods when the goods are placed at the disposal of the buyer, cleared for import on the arriving means of transport ready for unloading at the named place of destination. The seller bears all the costs and risks involved in bringing the goods to the place of destination and has an obligation to clear the goods not only for export but also for import, to pay any duty for both export and import and to carry out all customs formalities. DDP represents the maximum obligation for the seller.

FAS – Free Alongside Ship (named port of shipment)

"Free Alongside Ship" means that the seller delivers when the goods are placed alongside the vessel (e.g. on a quay or a barge) nominated by the buyer at the named port of shipment. The risk of loss of or damage to the goods passes when the goods are alongside the ship, and buyer bears all cost from that moment onwards.

FOB – Free On Board (named port of shipment)

"Free On Board" means that the seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment or procures the goods already so delivered. The risk of loss of or damage to the goods passes when the goods are on board the vessel, and the buyer bears all costs from that moment onwards.

CFR – Cost and Freight (named port of destination)

"Cost and Freight" means that the seller delivers the goods on board the vessel or procures the goods already so delivered. The risk of loss of or damage to the goods passes when the goods are on board the vessel. The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination. Risk passes and costs are transferred at different places.

CIF – Cost Insurance and Freight (named port of destination)

"Costs, Insurance and Freight" means that the seller delivers the goods on board the vessel or procures the goods already so delivered. The risk of loss of or damage to the goods passes when the goods are on board the vessel. The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination. The seller also contracts for insurance cover against the buyer’s risk of loss of or damage to the goods during the carriage. Risk passes and costs are transferred at different places.

For further information about Incoterms© please contact our local offices http://www.frachtchile.com/offices/offices.php