Guide to Incoterms 2010 PDF version.pdf

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A Guide to Incoterms 2010

By Chris Hart: February 2011


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A Guide to Incoterms 2010

Introduction:When considering Incoterms, it must be borne in mind that whilst they have animportant role in international trading transactions, they are only one of the twelvekey points to be considered in the overall Contract of Sale and are therefore notparamount.Their real significance however lies in the fact that they impact not only on the basicContract of Sale but also on the three supporting contracts of Payment, Transportand Insurance.It goes without saying that even if one describes the Incoterms perfectly in the maincontract, there are a host of other issues that must also be addressed in order tominimise trade related risks and costs.Many of these factors are ignored and end up costing South African Importers andExporters a fortune, largely through ignorance of sound freight managementpractice, and through a lack of the ability to determine whether the correct chargeshave in fact been raised in any given freighting transaction.In this document we consider mainly Incoterms and their impact on key factors inthe Contract of Sale and not all of the other important issues that a prudent traderwill manage.

Key Concepts1: An important concept to grasp is that in theory the total risks and costs in anygiven international door to door transactionshouldremain unchanged irrespectiveof the Incoterm used. What Incoterms do is simply to determine where the risks andcosts are divided between the parties under each of the terms. However, because inpractice not all parties in the transport chain share the same motives, sometimes

adding unrealistic margins to cover their own perceived risks, the final delivered costmay vary depending on the knowledge and competitiveness of the parties involved inthe costing exercise. It is therefore wise to get detailed costs for all links in thetransport chain from EXW to DDP.

2: The Incoterms publication simply defines the terms and does not give advice onhow best to proceed in setting up a trading relationship. At first reading the termsare often difficult for traders to understand from the point of view of establishing asound risk/costpolicy.A further complication is that most traders have little in-depth knowledge of theterms or why they have changed so much over the last 25 years.As a result many importers and exporters continue to use totally outmoded termssuch as FOB and CFR (C+F to most people) when much more appropriate terms

FCA and CPT are available.

3: Traders dealing with the USA must note that the Americans have their ownForeign Trade Definitions contained in their Uniform Commercial Code. Many of theirterms whilst appearing to be Incoterms are very different in meaning. It istherefore important to clarify the definition that is being used when dealing in thismarket. It should be noted that there is a growing trend for USA traders to acceptIncoterms when dealing internationally.


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4: In order to be binding under South African and many other legal systems,Incoterms must be incorporated into the Contract of Sale. That means there needs tobe a paragraph in the contract including the wording that (1) Describes the 3 letterIncoterms correctly, (2) States the Port or Place of Loading or Unloading (asapplicable to the term used) (3) States the words Incoterms 2010and (4), mayinclude an amendment to cover a special agreement between the parties. e.g.

Quote:Clause X: Commercial TermsThe prices quoted in this contract are quoted based on the following Incoterms interms of the ICC publication no: 715E(1): FCA(2): Unit 3 Gateway Park, Airport Industria, Western Cape, RSA(3): Incoterms 2010(4): Amendment: Including Delivery to Cape Town Terminal and THC

(This example allows a seller to transfer risks on loading at the factory/warehousewhilst choosing to retain an FOB price structure)

4: As already stated, Incoterms have limited scope, dealing with the transportrelated factors in an international trade transaction. Incoterms specifically deal onlywith the following:

Who clears the goods for Export and Import Who pays for loading and discharging the goods Who pays the freight How risks of loss or damage to the cargo divide Who should insure Any other specific transport related agreements made between the parties

They do not cover:

The contract of Sale in respect of the Goods (Quantity, Quality, Style or Price) Property rights i.e. when/where ownership transfers Common sense commercial practices Handling after the delivery point has been reached The transport alternatives available to the parties Breach of Contract

5: Incoterms deal primarily with the Sellers and Buyers obligations in transportrelated issues. Each of the 11 Incoterms published in 2010 has 10 mirroredobligations. (See detailed Incoterms below). The left side of the page describes the

Sellers and right side the Buyers obligations)


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The 10 Obligations covered in each term are:

The Sellers Obligations The Buyers Obligations

A1: Provide the goods and commercialinvoice in conformity with the contract

B1: Pay the price

A2: Licences, Authorisations , Security

Clearances and Other Formalities (Note: thismeans dealing with customs related issues at origin(A2) and arrival (B2)

B2: Same

A3: Contract of Carriage and Insurance(Note: In only 2 Terms is insurance mandatory

(CIF/CIP)

B3: Same

A4: Delivery B4: Taking Delivery

A5: Transfer of Risks B5: Same

A:6 Allocation of Costs B6: Same

A7: Notice B7: Notice

A8: Delivery Documents B8: Taking Delivery

A9: Checking, Packing, Marking B9: Inspection of Goods

A10: Assistance with Information and

Related Costs

B10: Same

6: Before considering the best Incoterm to use for Imports and Exports to and fromSouth Africa it needs to be emphasised that a lot depends on the relationshipbetween the Buyer and Seller. In a perceived high risk situation (unknown Buyer orSeller), the Contract of Sale needs to incorporate not only Incoterms but also otherkey contractual arrangements (Payment/Carriage/Insurance) that minimise theSellers exposure to unforeseen risks and costs. This would include specifyingConfirmed Letters of Credit support by Credit Insurance as one example.Similarly the Buyer will seek protection by calling for clauses in the Contract thatguarantee shipment, arrival time, quality etc.However, where there is a close association with a mutually high level of trust and alow level of financial risk, completely different Incoterms and other contractualarrangements will normally be appropriate.

8: Incoterms were traditionally divided into two main categories namely BuyersandSellersTerms. Buyersterms include the E and F contracts (EXW,FAS, FOB andFCA) and are given this name because the Buyer or Importer is in control of theContract of Carriage. In the case of the C and D terms (CFR, CIF, CPT, CIP, DAT,DAP and DDP, they are Sellers terms because the seller enters into the contract ofcarriage and has control of the factors such as departure date, routing and arrivaldate.The term to be used is normally determined by the strength of the Buyer versus theSeller in a given transaction. So for example the German chemical industry invariably

uses C terms for their exports because they want the benefits derived from beingin control of the shipping (rates, carrier selection, rebates and price manipulation).

9: Incoterms have two distinct contract types which refer directly to the control ofthe shipment in terms of both risks and costs.The two contract types are:Contracts of DespatchorShipment Contracts (E,F and C terms) and Contracts of Arrival or DeliveryContracts, (D terms).The significance is that under Despatch contracts, the cargo simply has to be handedto the first carrier for the Sellers obligation to Deliverto be fulfilled whereas under


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Arrival contracts, the Seller carries the risks and costs until Deliveryhas beeneffected at the Named Placein the country of destination.

10: The ideal way of handling risk and cost transfer in todays world of logisticsneeds consideration. Informed traders preferences that are often not in conflictbetween seller and buyer can frequently be defined as:

The Seller Prefers:

The transfer of risks and costs to take place at handover to or by a carrier ata defined point. (on loading:E,F and C or unloadingD)

The term should preferably cater for Multimodal shipment to allow flexibility inthe mode of transport

That there is a guarantee that the export will take place In some cases they want protection from control under the Contract of

Carriage (Do not want to be party to it (E and F)

The Buyer Prefers:

Risks to pass on loading/unloading Multimodal terms To hold the Seller responsible for stowage into the container The goods to be Cleared for Export at origin May want to control the contract of carriage (E andF)

This means that traders moving their cargo in any form of seafreight container or byair should call for one of the multimodal Incoterms generally other than EXW*. Thatmeans: FCA, CPT, CIP, DAT, DAP, DDP, ignoring the remaining 5 terms except inspecial circumstances.*EXW is in fact a multimodal term, but because amongst other things it does notrequire either party to effect customs formalities, it has risks attached to it for

anything other than relationships with the highest level of trust.

The Major Changes in Incoterms2010

Four redundant terms go:

DAF Delivered At FrontierDES Delivered Ex ShipDEQ Delivered Ex QuayDDU Delivered Duty Unpaid

Two more appropriate terms replace them:

DAT Delivered At TerminalDAP Delivered at Place


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Summary of the 11 Incoterms 2010

Incoterms were traditionally grouped in four basic categories:

E- term(EXW) EX Works which provides for the seller to simply make the goodsavailable to the buyer at the sellers own premises

The second group, theF-terms (FCA, FAS and FOB) provide for the seller to deliverthe goods to a carrier nominated by the buyer

C-terms(CFR, CIF, CPT, CIP) provide for the seller to contract the carriage at thebuyers risk

D-terms(DAT, DAP, DDP) cater for the seller to bear risks and costs to bring thegoods to the place of destination agreed between the parties.

However in 2010 the grouping has been changed to reflect the 7 Multimodal termsand the 4 Sea / Inland Waterway terms.

INCOTERMS 2010

Rules for any Mode/Modes of Transport

EXW Ex Works (insert named place of delivery)

FCA Free Carrier (insert named place of delivery)

CPT Carriage Paid To (insert named place of destination)

CIP Carriage and Insurance Paid To insert named place ofdestination)

DAT Delivered at Terminal (insert named terminal at port or place ofdestination)

DAP Delivered at Place (insert named place of destination)

DDP Delivered Duty Paid (insert named place of destination)

Rules for Sea and Inland Waterway Transport

FAS Free Alongside Ship (Insert named port of shipment)

FOB Free on Board (insert named port of shipment)

CFR Cost and Freight (insert named port of destination)

CIF Cost, Insurance and Freight (insert named port of destination)

Note 1: Certain of the terms are designated under Incoterms to be applicableonly to seafreight transit. Even if the term is correctly written, if it is applied tothe incorrect form of transport/mode of shipment, it will deemed to have beenmisused and could compromise protection in the event of an international


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dispute. e.g. FOB is not for air and FCA is better than FOB for containers eventhough FOB has been modified in 2010 to apply to containerisation.

Note 2: The naming of the place is important. There must be as much detail aspossible when stipulating the place. As an example, historically the term Ex

Works Germany was used. This however is too vague and a full physical addressis required.

Why the changes in Incoterms 2010?

Incoterms 2010 focus on the Sellers and Buyers Tasks, Costs and RisksTheir objectives are:

o To simplify, clarify and better explain the terms application

o To relate Incoterms to the Contract of Sale

o To put the definitions in the preamble for each term

o To cater for the increase in Customs Free Zones/Cross Border

Trade/USA International Trade and Domestic Saleso To better define the Delivery Pointso To recognise Customs of the Tradeo

To further adapt to electronic communicationo

To adapt to changes in transport practices e.g. FOB redefinedo To replace redundant terms: DAF/DES/DEQ/DDUo To clarify who pays for Terminal Handling Charges (THC)o To cater for the major emphasis on security complianceo To provide greater clarity on insuranceo To provide forstring sales or sales at seao

To amend the text to make it gender neutral

Tips on Incoterms:

o Remember, Incoterms are not the complete Contract of Saleo Consider what term is appropriate to the type of transaction you plano Consider the right transport method for your circumstanceso

Decide who will organise the transporto

Decide how you will handle insuranceo Consider Customs practiceso Consult the guideline noteso Choose the appropriate Incoterm rule and incorporate it in the contracto Clearly define the port of shipment/arrival and the place of

handover/final receipt


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Incoterms 2010 in Synopsis

Note: Permission to print the text from the ICC publication could not be obtained and thefollowing is therefore only a prcis of the contents of their publication 715E. It is recommendedthat you obtain this publication that is available from the ICC in Johannesburg.The writer accepts no responsibility for errors/omissions or recommendations made in theSynopsis or elsewhere in these notes.

EXW: Detailed Summary

EX WORKS(insert named place of delivery) Incoterms 2010

Guidance Notes:

o

It is a Multimodal Term

o Recommended for Domestic Sales rather than International where FCA ispreferable.

o

Delivery is at Sellers Premises or another Named Place

o Not cleared for Export

o

Represents the minimum obligation for the seller

o Buyer bears all costs and risks involved ex the seller's premises

o

It recommended that the parties define the delivery point clearly as the sellercarries risks and costs to that point

o

If loading is required terms to be agreed. Risks/Costs are for the buyer

o Not for use if Buyer cant clear for Export

o Limited obligation to provide trade information


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EXW

A THE SELLER'S OBLIGATIONS B THE BUYER'S OBLIGATIONS

A1 General obl igat ions o f the sel ler

Provide the goods/invoice/Electronicequivalent if agreed/customary

(This clause repeats throughout the range and issimply a reminder of the basic obligations of the

seller and the buyer)

B1 General obl igat ions of the buyer

The buyer must pay the price percontract and accept electronic docs if

agreed/customary

A2 Licenc es, authorizat ions securi ty

clearances and form ali t ies

No obligation other than assistance atbuyers risk/cost

(Buyers should be aware of the dangers ofaccepting responsibility for the export

process in a foreign country. These includehaving to check export permit requirements,government pre shipment inspections,customs regulations and how best toremove the cargo.If the Seller is unable to assist, provided thedelivery obligation has been met, the Buyerwould be liable to accept the goods )

B2 Licences, authorizat ions and form ali t ies

The buyer must arrange the exportclearance if applicable at his own riskand expense.

A3Contracts of carriage and insurance

Contract of carriage

No obligation.

Contract of insurance

No obligation except to provideinformation to get cover

(The implication of this clause is that neitherthe seller nor the buyer are required toexport the goods

Exporters must be aware of the risk of thegoods remaining in the country and maywant to include an amendment "EXWCleared'Common sense dictates that the partiesshould attend to the carriage and insuranceissues by mutual agreement)

B3Contracts of carriage and insurance


No obligation


No obligation


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EXW


A4 Delivery

Deliver at agreed or usual point andwithin agreed time (not loaded)

(The seller literally places the cargo at apoint he determines (unless otherwiseagreed with the buyer), normally at hispremises. The buyer must then arrangepick up and pay all costs includingloading)

B4 Taking delivery

The buyer obligated to take deliveryonce available as agreed and notice

received

A5 Transfer of risks

The seller takes the risk prior todelivery

(This means that until they have been set asideas an export order they are at the seller's risk.Once they have been identified as being placed

ready for collection, they are at the buyer's risk.This includes fire, theft, water damage, and

damage on loading. The only relief would be if theseller failed to give notice)


The buyer bears the risk after delivery,or from when they were identifiable asthe order if the buyer does not notify

seller re pick up point (if applicable)

A6 Al locat ion o f costs

The seller pays costs to delivery

(The seller literally has to pay only forthe packing, basic quality check,

labelling and preparation of an invoice.The buyer pays all other costs including"seller's assistance", loading, exportclearance, wharfage, internationalfreight and domestic clearing andforwarding costs)

B6 Al locat ion o f costs

The buyer pays all subsequent costs,penalties, assistance etc., provided thatthe goods can be identified as thecontracted goods.

A7 Notices to the buyer

The seller must give the buyer adequatenotice to enable him to take delivery

(This is a key clause throughout the

Incoterms. Both parties are required tocommunicate clearly regardingdelivery/pick up. Failure to do soextends the risk and liability for costs ifsomething goes wrong and results inunplanned costs)

B7 Notices to th e sel ler

If entitled to do so the buyer muststipulate the place/time of delivery,giving sufficient time to the seller


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EXW


A8 Delivery Document

No obligation

(This clause highlights the need for thecontracts of Sale, Carriage, Paymentand insurance to work in harmony.If a document of title is needed tosecure payment, clearly EXW is not anappropriate term to use)

B8 Proof o f Delivery

The buyer must supply proof of deliverybeing taken

A9 Checking - packaging - marking

o

The seller pays for checking quality,measuring, weighing, counting asrequired to comply with the contract

o

Packing to be provided unlessagreed otherwise.

o Packing to meet usual standards forthe mode of transport unlessotherwise agreed.

o Packaging is to be markedappropriately.

(The seller's obligations are the same asfor a domestic sale. The buyer must befully aware of any government

regulations regarding pre shipmentinspections)

B9 Inspect ion of good s

The buyer pays for all types of pre-shipment inspection, mandated or not.


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EXW


A10 Assistance with info rmation and relatedcosts

The seller is required to assist the buyer

to obtaindocuments/information/securityinformation required for the exportand/or import of the goods and, wherenecessary, for their transit todestination.

(The seller is required to giveassistance, in obtaining theinformation/documents needed tosecure the export, but is entitled to fullcompensation.

Incoterms do not make insurance arequirement for either party althoughcommon business sense means it mustbe addressed particularly by the buyerwho is at total risk)

B10 Assistance with information and relatedcosts

The buyer must pay all costs and

charges incurred in obtaining thedocuments or equivalent electronicmessages mentioned in A10 andreimburse those incurred by the sellerin rendering his assistance inaccordance therewith


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Note: Permission to print the text from the ICC publication could not be obtained and thefollowing is therefore only a prcis of the contents of their publication 715E. It is recommendedthat you obtain this publication that is available from the ICC in Johannesburg.The writer accepts no responsibility for errors/omissions or recommendations made in the

synopsis or elsewhere in these notes.

FCA: Detailed Summary

FREE CARRIER(insert named place of delivery) Incoterms 2010

Guidance Notes:

o It is a Multimodal term, good for more than 1 transport mode

o The Seller clears for Export

o Delivery is at Sellers Premises (loaded) or another Named Place (notunloaded)

o It recommended that the parties define the delivery point (sellers

place/other) clearly as the buyer carries risks and costs from that point


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FCA


A1 Provide the goods/invoice/electronicequivalent - if agreed/customary

(This clause repeats throughout the range and is

simply a reminder of the basic obligations of theseller and the buyer)

B1 The buyer must pay the price percontract and accept electronic docs ifagreed/customary



The seller clears for export

(The seller under Inco 2010 is requiredto clear for export. In SA this involvesthe Customs Bill of Entry, Cargo Dues,Bank forms and meeting any other Deptof Trade and Industry needs. If astatutory inspection is needed, this is

now arranged and paid by the seller)


The buyer clears for transit clearances/import formalities.

A3 Contracts of carriage and insurance

A: No obligation.If requested by the buyer/ or it iscommercial practice and the buyeragrees, the seller may contract forcarriage on usual terms at the buyer'srisk and expense. Either way the sellermay decline but then must notify thebuyer

B: Contract of insurance

No obligation but must provide info toobtain cover if requested

(Incoterms other than CIF/CIP do notmake insurance a requirement foreither party although common businesssense means it must be addressedparticularly by the buyer who is at totalrisk)

B3 Contracts of carriage and insurance

A: The buyer must contract at his ownexpense for the carriage of the goodsfrom the named place, except when thecontract of carriage is made by theseller


No obligation to the seller


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FCA


A4 Delivery

Delivery is to the carrier/nomineeappointed by buyer at the agreed

place/time.Delivery is completed;o Named place: seller's premises,

when the goods have been loadedon the transport provided by thebuyer.

o Anywhere else, when the goods areavailable to the carrier/nominee ofthe buyer, on the seller's means oftransport but not unloaded.If the buyer does not nominate theplace, the seller can select it.

o Unless otherwise agreed, the seller

selects the manner in which thegoods will be delivered for on-carriage

(In practice in the South Africansituation, two main systems operate.Either a carrier arrives at the seller'spremises with a container for loading orto pick up cargo for subsequent loadingat a depot or at the port/airport.Under this "F" term, the buyer shouldappoint that carrier. Delivery takes

place when the cargo is "on" or "in" thetruck. Thus the seller is responsible forloading.If the seller takes the cargo to thedepot/port/airport on his own vehicle orone used by a pre carrier appointed byit, then delivery takes place on thetruck at the nominated receiving pointand the buyer is responsible foroffloading and receipt into the facility.It is important that the parties agreethe manner of shipment)

B4 Taking delivery

The buyer takes delivery once availableto carrier/nominee as agreed in A4


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FCA




(The seller is on risk until the cargo is"on/in" the truck when loading at hispremises, and just prior to the cargobeing lifted off the truck when deliveryis to the buyer's nominated carrier'spremises)


The buyer bears the risk after deliveryHowever, if the buyer fails to perform re

notice/collection, then the buyer isresponsible for all risks and costsprovided the order can be identified asthe contract goodsThe date that risks/costs transferdepends on the agreement, noticegiven/not given or if no clarity, theexpiry date of delivery period

Subject to B6 the seller pays costs untildelivered under A4

If applicable, seller pays all exportprocessing costs including duties, taxes,and other charges payable upon export.

(The seller pays all costs including thecustoms formalities and loading chargesfor cargo collected from his premisesand the pre carriage when delivery is tothe buyer's nominated carrier. Thebuyer pays all other charges)


The buyer pays all costs after deliveryunder A4

Additional costs incurred, eitherbecause the buyer does not nominatethe carrier/nominee or because thecarrier/nominee fails to take the goodsinto his charge at the agreed time, orbecause notice has not been given

The proviso is that the goods have beencontract goods

The buyer pays all costs of import and ifapplicable transit formalities.


At buyers risk/cost the seller must givethe buyer adequate notice that:

o Delivery has been effected per A4or:

o That the carrier/nominee has notcollected the goods in time

(This is a key clause throughoutIncoterms. Both parties are required tocommunicate clearly regardingdelivery/pick up. Failure to do soextends the risk and liability for costs ifsomething goes wrong and results inunplanned costs)

B7 Notices to the sel ler

The buyer must notify the buyer of:o The carrier/nominated agent, giving

sufficient time to the seller toperform

o If required nominate the deliverydate

o State the transport modeo

Nominate the point of delivery


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FCA



The seller provides the deliverydocument at the buyers risk/cost

The seller must assist the buyer toobtain a transport document at buyersrisk/cost


The buyer must accept proof of delivery


o The seller pays for checking quality,measuring, weighing, counting asrequired to comply with the contract

o Packing to be provided unlessagreed otherwise.



(The seller's obligations are the same asfor a domestic sale. The buyer must befully aware of any governmentregulations regarding pre-shipmentinspections)


The buyer pays for all types of pre-shipment inspection, except whenmandated by the authorities.


o The seller is required to assist thebuyer to obtain documents /information /security info requiredfor the import of the goods and,where necessary, for their transit todestination.

o If required, the seller mustreimburse the buyer for costsincurred under B10 B


o The buyer must advise the seller ofany security information requiredand pay all costs incurred inobtaining such information.

o If required the buyer must assist theseller with anyinformation/documents needed tocomplete the export. This at thesellers cost


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CPT: Detailed Summary

CARRIAGE PAID TO (insert named place of destination) Incoterms 2010

Guidance Notes:

o It is a Multimodal Term

o Delivery is at Sellers Premises or another agreed Place

o Seller pays costs to named place at destination

o

Risk transfers at the point of delivery, not destination

o

Unless otherwise agreed risks transfer when handed to first carrier

o Cleared for Export by Seller who has no Import obligations

o It recommended that the parties clearly define both the nominated deliverypoint at origin and the named place at destination clearly as the seller carriesthe costs to that point

o

If unloading is required at destination, the seller pays unless otherwise agreed


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CPT


A1 Provide the goods/invoice/Electronicequivalent if agreed/customary



B1 The buyer must pay the price percontract and accept electronic docs if

agreed/customary

2 Licenc es, authorizat ions securi ty


The seller clears for export and for anytransit through any country

(The seller under Inco 2010 is required to clear

for export/transit. In SA this involves the CustomsBill of Entry, Cargo Dues, Bank forms and meeting

any other Dept of Trade and Industry needs. If a

statutory inspection is needed, this is arrangedand paid by the seller)


The buyer must arrange the importclearance at his own risk and expenseand for any transit cost to anothercountry.



o

Seller arranges the contract to thenamed point at destination on:

o Usual terms

o At Sellers expense

o

Customary routeo If not pre agreed the seller has

discretion

(This leaves the buyer wide open to abuse and itis essential the place/point as well as the

carrier/routing are defined)





No obligation


No obligation except to provideinformation for the buyer to get cover

(South African exporters will find CPT a favourable

term as, in the example of a full container beingloaded at their factory or warehouse, they will

achieve ex works risks and yet be in control of thecargo potentially right up to final destination)

A4 Delivery

Seller delivers by handing to the carrierunder A3 and within the agreed time

B4 Taking delivery

The buyer obligated to take deliveryunder A4 and must receive them at thenamed place at destination


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CPT



The seller takes the risks until deliveredto the carrier unless B5 applies

B5 Transfer of risks

The buyer bears the risk after delivery,or if the buyer fails to give notice under

B7, then risks may transfer on theagreed date/end of period agreed,provided the goods are identifiable asthe order.


o The seller pays all costs up todelivery (except as defined underB6)

o All freight related charges to theplace at destination includingunloading unless excluded from theC o C

o

Customs related charges at origin/intransit


The buyer pays:o

Costs after delivery to the carrier ifnot covered by the contract ofcarriage

o Transit charges if not covered by theC o C

o Unloading charges if not covered by

the C o Co Cost arising from failure to give

notice under B7 provided the goodshave been identified as the contractgoods


o The seller must give the buyernotice of delivery under A4

o The seller must give the buyer anynotice required to receive the goods

(This is a key clause throughout theIncoterms. Both parties are required tocommunicate clearly regardingdelivery/pick up. Failure to do soextends the risk and liability for costs ifsomething goes wrong and results inunplanned costs)


When entitled to do so the buyer muststipulate the place/time of delivery atdestination, giving sufficient time to theseller


If it is practice or the buyer requests it:o The seller must provide the

transport document

o

The document must be dated withinthe agreed period and cover thegoods shipped. It must enable thebuyer to claim the goods atdestination and to sell in transit

o When in negotiable form a full set oforiginals must be given to the buyer


The buyer must accept the transportdocument if it conforms to the contract


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CPT



o The seller pays for checking quality,measuring, weighing, counting as

required to comply with the contract

o Mandatory pre-shipment inspectionsare for the account of the seller

o Packing to be provided unlessagreed otherwise

o Packing to meet usual standards forthe mode of transport unlessotherwise agreed

o Packaging is to be marked

appropriately


The buyer pays for pre-shipmentinspections, not mandated by the

authorities in the country of export


o The seller is required to assist thebuyer to obtain documents /information / security info requiredfor the import of the goods and,where necessary, for their transit todestination

o

If required, the seller mustreimburse the buyer for costsincurred under B10 B



o If required, the buyer must assistthe seller with any information /

documents needed to conclude theexport. This at the sellers cost


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Note: Permission to print the text from the ICC publication could not be obtained and thefollowing is therefore only a prcis of the contents of their publication 715E. It is recommendedthat you obtain this publication that is available from the ICC in Johannesburg.

The writer accepts no responsibility for errors/omissions or recommendations made in thesynopsis or elsewhere in these notes.

CIP: Detailed Summary

CARRIAGE AND INSURANCE PAID TO (insert named place of destination)Incoterms 2010

Guidance Notes:


o

Delivery is at Sellers Premises or another agreed Place

o Seller pays costs to named place at destination

o The seller provides minimum insurance unless otherwise agreed

o Risk transfers at the point of delivery, not destination

o Unless otherwise agreed risks transfer when handed to first carrier


o

It recommended that the parties clearly define both the nominated deliverypoint at origin and the named place at destination clearly as the seller carriesthe costs to that point

o

If unloading is required at destination, the seller pays unless otherwise agreed


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CIP



(This clause repeats throughout the

range and is simply a reminder of thebasic obligations of the seller and thebuyer)





(The seller under Inco 2010 is requiredto clear for export/transit. In SA thisinvolves the Customs Bill of Entry,Cargo Dues, Bank forms and meetingany other Dept of Trade and Industryneeds. If a statutory inspection isneeded, this is arranged and paid bythe seller)




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CIP



A: Contract of carriageo Seller arranges the contract to the

named point at destination on:o Usual termso

At Sellers expenseo Customary routeo If not pre agreed the seller has

discretion to select thecarrier/routing

(This leaves the buyer wide open to abuse and it

is essential the place/point as well as thecarrier/routing are defined)

B: Contract of insuranceo Seller to provide minimum cover

(Clauses C) with an insurer of good

repute and must allow buyer/otherswith insurable interest to processclaims

o On request and at buyers cost,seller is to increase the cover to Aor B clauses

o Cover will extend from point of deliveryto the named point at destination at thecontract cost plus 10% in the currencyof the contract

o The seller must deliver the policy to thebuyer

o The seller must assist with additionalinformation if required for the buyer toextend cover

(Note the danger here of leaving theprovision of insurance with the seller.Will it in fact be a company of repute withrepresentation in SA? Will cover beadequate when taking into account SAduty/other charges?)


Contract of carriageA: No obligation

B: Contract of insuranceNo obligation except to provideinformation for the buyer to get cover

A4 Delivery

Seller delivers by handing to the carrierunder A3 and within the agreed time

B4 Taking delivery

The buyer obligated to take deliveryunder A4 and must receive them at the

named place at destination


25/5825

CIP



The seller takes the risks until deliveredto the carrier unless the buyer fails to

give notice under B7


The buyer bears the risk after delivery,or if the buyer fails to give notice under

B7, then risks may transfer on theagreed date/end of period agreed,provided the goods are identifiable asthe order.



o All freight related charges to theplace at destination includingunloading

o Customs related charges at origin/in

transit


The buyer pays:o



o Unloading charges if not covered by

the C o Co Costs arising from failure to give

notice under B7 provided the goodshave been identified as the contractgoods

o Extra Insurance cover if taken


o The seller must give the buyernotice of delivery under A4

o

The seller must give the buyer anynotice required to receive the goods






transport documento The document must be dated within

the agreed period and cover thegoods shipped. It must enable thebuyer to claim the goods atdestination and to sell in transit





26/5826

CIP



o The seller pays for checkingquality, measuring, weighing,

counting as required to complywith the contract

o Mandatory pre-shipmentinspections are for the accountof the seller

o


o

Packing to meet usual standardsfor the mode of transport unlessotherwise agreed.




authorities in the country of export.


o The seller is required to assist thebuyer to obtain documents /information / security info requiredfor the import of the goods and,where necessary, for their transit to

destination.

o If required, the seller mustreimburse the buyer for costsincurred under B10 B.


o The buyer must advise the sellerof any security informationrequired and pay all costsincurred in obtaining suchinformation.

o If required, the buyer mustassist the seller with anyinformation / documents neededto conclude the export. This atthe sellers cost


27/5827



DAT: Detailed Summary

DELIVERED AT TERMINAL (insert named terminal at port or place of destination)Incoterms 2010

Guidance Notes:


o Delivery occurs when the goods are unloaded from the arriving carrier at anamed Terminal at the named port/place

o Terminal means any place, covered or not such as a quay, warehouse,container yard or road air or rail terminal

o Seller pays costs and carrier the risks to the named terminal at destination

o

Neither party has to insure, but both must provide information if requested todo so

o

Cleared for Export by Seller who has no Import obligations

o It recommended that the parties clearly define the nominated delivery pointat destination and that the seller enters into a contract of carriage thatmatches the choice precisely as the seller carries the risks/costs to that point


28/5828

DAT

A THE SELLER'S OBLIGATIONS B THE BUYER'S OBLIGATIONSA1 Provide the goods/invoice/electronic

equivalent if agreed/customary

(This clause repeats throughout therange and is simply a reminder of thebasic obligations of the seller and thebuyer)




The seller clears for export and for any

transit through any country



The buyer must arrange the import

formalities at its own risk and expense


A: Contract of carriage

o Seller contracts the carriage to thenamed terminal at the agreedport/place at destination. If nothingis agreed, the seller selects theterminal/port/place:


o Seller has no obligation to the buyero The seller must assist with additional

information if required for the buyer totake cover

(Clearly the seller is at risk to the point ofdelivery and common sense would leave theseller exposed if it failed to insure)



A: No obligation




29/5829

DAT


A4 Delivery

Seller must unload the goods on arrivaland deliver by placing them at the

disposal of the buyer at the namedterminal / port / place on the agreeddate / within the agreed period

B4 Taking delivery


agreed place at destination


The seller takes the risks until deliveredat the agreed place under A4


o The buyer bears the risk afterdelivery

o

If the buyer fails to pre clearthrough customs/get release or

o If it fails to give notice under B7,then risks may transfer on theagreed date/end of period

agreed, provided the goods areidentifiable as the order.



o

All freight related charges to theplace at destination includingunloading

o Customs related charges at origin /in transit

(Note the insurance risk after delivery

at terminal. The buyer needs toconsider that aspect)


The buyer pays:o Costs after delivery to the terminal /

port / placeo

Costs arising from failure to givecustoms clear/ get release atdestination or:

o To give notice under B7 providedthe goods have been identified asthe contract goods

o

All import related clearance anddelivery charges


o The seller must give the buyernotice to enable it to take delivery ofthe goods

(This is a key clause throughout theIncoterms. Both parties are required tocommunicate clearly regardingdelivery/pick up. Failure to do soextends the risk and liability for costs if

something goes wrong and results inunplanned costs)


When entitled to do so the buyer muststipulate the place/time of delivery atthe agreed terminal, giving sufficienttime to the seller


o

The seller must provide the buyerwith a document/s to enable thebuyer to claim the goods atdestination


The buyer must accept the deliverydocument if it conforms to the contract


30/5830

DAT



o The seller pays for checking

quality, measuring, weighing,counting as required to complywith the contract


o


o




The buyer pays for pre-shipment

inspections, not mandated by theauthorities in the country of export.


o The seller is required to assist thebuyer to obtain documents /information / security info required

for the import of the goods and fortheir transit to destination.

o If required, the seller mustreimburse the buyer for costsincurred under B10 point 2


o The buyer must advise the sellerof any security informationrequired and pay all costs

incurred in obtaining suchinformation.



31/5831



DAP: Detailed Summary

DELIVERED AT PLACE (insert named place of destination) Incoterms 2010

Guidance Notes:

o


o Delivery occurs when the goods are availablenot unloaded from the arrivingvehicle at the named place

o Seller pays the costs and carries the risks to the named place at destination

o Neither party has to insure, but both must provide information if requested todo so


o

It recommended that the parties clearly define the nominated delivery pointat destination and that the seller enters into a contract of carriage thatmatches the choice precisely as the seller carries the risks/costs to that point

o

If the buyer wants the good delivered cleared the DDP term should be used


32/5832

DAP


A1 Provide the goods/invoice/electronicequivalent if agreed/customary








The buyer must arrange the importformalities at its own risk and expense


A: Contract of carriage

o Seller contracts the carriage to thenamed place at the agreed

destination. If nothing is agreed, theseller selects the point at the namedplace


o Seller has no obligation to the buyero The seller must assist with additional

information if required for the buyer totake cover

(Clearly the seller is at risk to the point ofdelivery and common sense would leave the

seller exposed if it failed to insure)



A: No obligation



A4 Delivery

Seller must deliver the goods by placingthem at the disposal of the buyer on thearriving vehicle ready for unloading atthe named place on the agreed date /within the agreed period

B4 Taking delivery

The buyer obligated to take deliveryunder A4 and must receive them at theagreed place at destination


33/5833

DAP



The seller takes the risks until delivered

at the agreed place under A4


o The buyer bears the risk after

deliveryo If the buyer fails to pre clear

through customs/get release oro If it fails to give notice under B7,

then risks may transfer on theagreed date/end of periodagreed, provided the goods areidentifiable as the order.



o

All freight related charges to theplace at destination includingunloading if included in the C o C

o Customs related charges at origin /in transit

(Note the insurance risk after deliveryat the place. The buyer needs toconsider that aspect)


The buyer pays:o Costs after delivery at the named

place

o

The cost of unloading if not in theC o C

o Costs arising from failure to givecustoms clear/ get release atdestination or:

o To give notice under B7 providedthe goods have been identified asthe contract goods

o All import related clearance anddelivery charges


o

The seller must give the buyernotice to enable it to take delivery ofthe goods





o





34/5834

DAP



o The seller pays for checkingquality, measuring, weighing,

counting as required to complywith the contract


o


o







o The seller is required to assist thebuyer to obtain documents /information / security info requiredfor the import of the goods and fortheir transit to destination.






35/5835



DDP: Detailed Summary

DELIVERED DUTY PAID (insert named place of destination) Incoterms 2010

Guidance Notes:

o


o Delivery occurs when the goods are available cleared for Import butnotunloaded from the arriving vehicle at the named place

o

Seller pays the costs and carries the risks to the named place at destination

o Neither party has to insure, but both must provide information if requested todo so

o

Cleared for Export and for Import at Destination by the Seller

o It recommended that the parties clearly define the nominated delivery pointat destination and that the seller enters into a contract of carriage thatmatches the choice precisely as the seller carries the risks/costs to that point

o If unloading costs form part of the contract of carriage, the seller cannotrecover them unless agreed with the buyer

o

If the seller cannot arrange the import clearance this term should not beused. Similarly if the intention is for the buyer to clear for import, DAP shouldbe used

o

Unless otherwise agreed the seller is responsible for VAT and Duty

o This term represents the maximum risk to the seller


36/5836

DDP


A1 Provide the goods/invoice/electronicequivalent if agreed/customary





The seller clears for export, for transitthrough any country and for clearanceat Destination

(The seller under Inco 2010 is requiredto clear for export/transit/import. In SAthis involves the Customs Bill of Entry,VAT/duty, Cargo Dues, and all landsidecharges. If a statutory inspection isneeded, this is arranged and paid bythe sellerThe big risk here is for the seller toreclaim Vat and Duty unless registeredas a vendor in RSA)

B2 Licences, author izat ions and form ali t ies

The buyer must assist the seller at thelatters risk and expense with anyinformation required to effect theimport


A: Contract of carriageo Seller contracts the carriage to the

named place at the agreeddestination. If nothing is agreed, theseller selects the point at the namedplace


o Seller has no obligation to the buyero

The seller must assist with additionalinformation if required for the buyer totake cover

(Clearly the seller is at risk to the point ofdelivery and common sense would leave theseller exposed if it failed to insure)


Contract of carriageA: No obligation




37/5837

DDP


A4 Delivery

Seller must deliver the goods by placingthem at the disposal of the buyer on the

arriving vehicle ready for unloading atthe named place on the agreed date /within the agreed period

B4 Taking delivery


agreed place at destination


The seller takes the risks until deliveredat the agreed place under A4


o The buyer bears the risk afterdelivery

o

If the buyer fails to pre clearthrough customs/get release or

o If it fails to give notice under B7,then risks may transfer on theagreed date/end of period

agreed, provided the goods areidentifiable as the order.



o

All freight related charges to theplace at destination includingunloading if included in the C o C

o Customs related charges at origin /in transit and at destination

(Note the insurance risk after delivery at terminal.The buyer needs to consider that aspect)


The buyer pays:o Costs after delivery at the named

placeo

The cost of unloading if not in theC o C

o Costs arising from failure tocustoms clear/ get release atdestination or:

o To give notice under B7 provided

the goods have been identified asthe contract goods


o The seller must give the buyernotice to enable it to take delivery ofthe goods

(This is a key clause throughout theIncoterms. Both parties are required tocommunicate clearly regardingdelivery/pick up. Failure to do soextends the risk and liability for costs if

something goes wrong and results inunplanned costs)




o





38/5838

DDP



o The seller pays for checking

quality, measuring, weighing,counting as required to complywith the contract

o Mandatory pre-shipmentinspections are for the accountof the seller in both the countryof export and import


o Packing to meet usual standardsfor the mode of transport unlessotherwise agreed.



The buyer has no obligation to pay pre-

shipment inspections, mandated by theauthorities in the country of export orimport.


o The seller is required to assist thebuyer to obtain documents /information / security info required

for the transport of the goods fromthe named place to their finaldestination.



o The buyer must advise the sellerof any security informationrequired and pay all costs

incurred in obtaining suchinformation.

o If required, the buyer mustassist the seller with anyinformation / documents neededto conclude the export/transitand import at destination. Thisat the sellers cost


39/5839



FAS

FREE ALONGSIDE SHIP(insert named port of shipment) Incoterms 2010

Guidance Notes:

o It is a sea/inland waterway term only

o

Delivery takes place when the goods are available alongside the vesselnominated by the buyer on the quay or on a barge at the named port ofshipment.

o The buyer has to bear all costs and risks of loss of or damage to the goods

from that time.

o It recommended that the parties define the loading point and port clearly asthe buyer carries risks and costs from that point

o Seller must deliver or procure the goods already delivered (i.e. haveownership) thus providing for a string sale (sale at sea transaction)

o

Containerised cargo is delivered to a terminal, not alongside the ship and thisterm should not be used in this case. Instead FCA is the preferred term

o

The FAS term requires the seller to clear the goods for export but is not

responsible for the import clearance.


40/5840

FAS


A1 Provide the goods/invoice/electronicequivalent - if agreed/customary







(The seller under Inco 2010 is requiredto clear for export. In SA this involvesthe Customs Bill of Entry, Cargo Dues,Bank forms and meeting any other Deptof Trade and Industry needs. If astatutory inspection is needed, this is

now arranged and paid by the seller)


The buyer clears for transit clearances/import formalities.


A: No obligation.If requested by the buyer/ or it iscommercial practice and the buyeragrees, the seller may contract forcarriage on usual terms at the buyer'srisk and expense. Either way the sellermay decline but then must notify thebuyer



(Incoterms other than CIF/CIP do notmake insurance a requirement foreither party although common businesssense means it must be addressedparticularly by the buyer who is at totalrisk)


A: The buyer must contract at his ownexpense for the carriage of the goodsfrom the named port, except when thecontract of carriage is made by theseller




41/5841

FAS


A4 Delivery

Delivery is to the carrier/nomineeappointed by buyer at the agreedplace/time.Delivery is completed;o Alongside the buyers nominated

ship/loading point/port or byprocuring the goods alreadydelivered.

o If the buyer does not nominate theplace, the seller can select it.

o

Must perform within agreed timescale/custom of the port

B4 Taking delivery

The buyer takes delivery once availableto carrier/nominee as agreed in A4




The buyer bears the risk after delivery.However, if the buyer fails to perform re

o Noticeo Loading of Cargoo

Nominated vessels arrival ontime

o Early closure for loading

Then the buyer is responsible for allrisks and costs so caused

o

provided the order can beidentified as the contract goods

o The date that risks/costs transferdepends on the agreement,notice given/not given or if noclarity, the expiry date ofdelivery period


42/5842

FAS



Subject to B6 the seller pays costs untildelivered under A4*

If applicable, seller pays all exportprocessing costs including duties, taxes,and other charges payable upon export.

*The seller pays all costs including thecustoms formalities and loading chargesfor cargo collected from his premisesand the pre carriage/unloading whendelivery is to the buyer's nominatedcarrier. The buyer pays all othercharges)


The buyer pays all costs after deliveryunder A4Additional costs incurred, eitherbecause the buyer does not nominatethe carrier/nominee or because thecarrier/nominee fails to take the goodsinto his charge at the agreed time, orbecause notice has not been given

The proviso is that the goods have beencontract goods

The buyer pays all costs of import and ifapplicable transit formalities.


At buyers risk/cost the seller must givethe buyer adequate notice that:



(This is a key clause throughoutIncoterms. Both parties are required tocommunicate clearly regarding

delivery/pick up. Failure to do soextends the risk and liability for costs ifsomething goes wrong and results inunplanned costs)

B7 Notices to the sel ler

The buyer must notify the buyer of:o

The carrier/nominated agent, givingsufficient time to the seller toperform

o If required nominate the deliverydate

o State the transport modeo Nominate the point of delivery


The seller provides the usual deliverydocument at the buyers risk/cost

The seller must assist the buyer toobtain a transport document at buyersrisk/cost


The buyer must accept proof of delivery


43/5843

FAS



o The seller pays for checking quality,measuring, weighing, counting asrequired to comply with the contract




(The seller's obligations are the same asfor a domestic sale. The buyer must be

fully aware of any governmentregulations regarding pre-shipmentinspections)



B10 Assistance with info rmation and relatedcosts

o The seller is required to assist thebuyer to obtain documents /information / security info requiredfor the transport of the goods fromthe named place to their finaldestination.




o

If required, the buyer mustassist the seller with anyinformation / documents neededto conclude the export/transitand import at destination. Thisat the sellers cost


44/5844



FOB: Detailed Summary

FREE ON BOARD(insert named port of shipment) Incoterms 2010

Guidance Notes:

o It is a unimodal term, good for sea/inland waterway only

o

Seller clears for Export

o Buyer clears for Import

o Delivery is on board the vessel or on procurement of goods already delivered

o

FCA is more appropriate for containerised cargo where a terminal is the usualdelivery point

o

It recommended that the parties define the delivery point (sellersplace/other) clearly as the buyer carries risks and costs from that point


45/5845

FOB

A THE SELLER'S OBLIGATIONS B THE BUYER'S OBLIGATIONSA1 Provide the goods/invoice/electronic

equivalent - if agreed/customary




A2 Licences, authorizat ions securi ty



(The seller under Inco 2010 isrequired to clear for export. In SA thisinvolves the Customs Bill of Entry,Cargo Dues, Bank forms and meetingany other Dept of Trade and Industryneeds. If a statutory inspection isneeded, this is now arranged and paidby the seller)

B2 Licenc es, authorizat ions and form ali t ies

The buyer clears for transitclearances/ import formalities.


A: No obligation.If requested by the buyer/ or it iscommercial practice and the buyeragrees, the seller may contract for

carriage on usual terms at the buyer'srisk and expense. Either way the sellermay decline but then must notify thebuyer



(Incoterms other than CIF/CIP do notmake insurance a requirement for

either party although commonbusiness sense means it must beaddressed particularly by the buyerwho is at total risk)


A: The buyer must contract at his ownexpense for the carriage of the goodsfrom the named place, except whenthe contract of carriage is made by theseller




46/5846

A4 Delivery

Delivery is to the carrier/nomineeappointed by buyer at the agreedplace/time.Delivery is completed;o On board the vessel at the named

port/loading point oro By procuring the goods already

deliveredo Within the agreed time frameo If no port/place is nominated, the

buyer has discretion to choose

(The term procurement is new andallows for string sales or sales at sea)

B4 Taking delivery

The buyer takes delivery onceavailable to carrier/nominee as agreedin A4



(The seller is on risk until the cargo is"on boardthe ship)


The buyer bears the risk after deliveryHowever, if the buyer fails to performre notice/collection, then the buyer isresponsible for all risks and costsprovided the order can be identified asthe contract goodsThe date that risks/costs transferdepends on the agreement, noticegiven/not given or if no clarity, theexpiry date of delivery period

Subject to B6 the seller pays costsuntil delivered under A4

If applicable, seller pays all exportprocessing costs including duties,taxes, and other charges payableupon export.

(The seller pays all costs including thecustoms formalities and loadingcharges for cargo collected from hispremises and the pre carriage whendelivery is to the buyer's nominatedcarrier. The buyer pays all other

charges)


The buyer pays all costs after deliveryunder A4Additional costs incurred, eitherbecause the buyer does not nominatethe carrier/nominee or because thecarrier/nominee fails to take the goodsinto his charge at the agreed time, orbecause notice has not been given

The proviso is that the goods havebeen identified as the contract goods

The buyer pays all costs of import and

if applicable transit formalities.


At buyers risk/cost the seller mustgive the buyer adequate notice that:



The buyer must notify the buyer of:o The carrier/nominated agent,

giving sufficient time to the sellerto perform

o If required nominate the delivery


47/5847


(This is a key clause throughoutIncoterms. Both parties are requiredto communicate clearly regarding

delivery/pick up. Failure to do soextends the risk and liability for costsif something goes wrong and results inunplanned costs)

dateo State the transport modeo Nominate the point of delivery


The seller provides the deliverydocument at the buyers risk/cost

If this is not a transport document,the seller must assist the buyer toobtain a transport document at

buyers risk/cost


The buyer must accept proof ofdelivery


o The seller pays for checkingquality, measuring, weighing,counting as required to complywith the contract


o Packing to meet usual standards

for the mode of transport unlessotherwise agreed.

o

Packaging is to be markedappropriately.

(The seller's obligations are the sameas for a domestic sale. The buyermust be fully aware of anygovernment regulations regardingpre-shipment inspections)

B9 Inspect ion of goo ds



48/5848

A10

Assistance with info rmation and related

costs

o The seller is required to assist thebuyer to obtain documents /information /security info requiredfor the import of the goods and,where necessary, for their transitto destination.

o If required, the seller mustreimburse the buyer for costsincurred under B10 B

B10

Assistance with info rmation and related

costs


o

If required the buyer must assistthe seller with anyinformation/documents needed tocomplete the export. This at thesellers cost


49/5849



CFR: Detailed Summary

COST AND FREIGHT(insert named port of shipment) Incoterms 2010

Guidance Notes:

o It is a unimodal term, good for sea/inland waterway only

o Seller clears for Export

o Buyer clears for Import

o Delivery is on board the vessel or on procurement of goods already delivered

o

Risks transfer on loading

o The Seller contracts the transport to destination at the Buyers risk

o

CPT is more appropriate for containerised cargo where a terminal is the usualdelivery point

o It recommended that the parties define the delivery point (port/pier) clearlyas the buyer carries risks from that point and ultimately carries the costs

o Unloading costs at destination cannot be recovered from the Buyer if part ofthe contract of carriage


50/5850

CFR









(The seller under Inco 2010 is requiredto clear for export/transit. In SA thisinvolves the Customs Bill of Entry,

Cargo Dues, Bank forms and meetingany other Dept of Trade and Industryneeds. If a statutory inspection isneeded, this is arranged and paid bythe seller)





o

Seller arranges the contract to thenamed port/point at destination on:

o

Usual termso At Sellers expense

o Customary route/vessel

o If not pre agreed the seller hasdiscretion

(This leaves the buyer wide open toabuse and it is essential the place/pointas well as the carrier/routing aredefined)





No obligation



A4 Delivery

Seller delivers when the cargo is boardthe ship or when the pre loaded cargo isprocured within the agreedtime/customary manner

B4 Taking delivery

The buyer obligated to take deliveryunder A4 and must receive them at thenamed place at destination


51/5851

CFR



The seller takes the risks until the cargo

is on board


The buyer bears the risk after delivery,

or if the buyer fails to give notice underB7, then risks may transfer on theagreed date/end of period agreed,provided the goods are identifiable asthe order.



o All freight related charges to theplace at destination includingunloading if included in the C o C

o

Customs related charges at origin/intransit


The buyer pays:o



o

Unloading charges if not covered bythe C o C

o Cost arising from failure to givenotice under B7 provided the goodshave been identified as the contractgoods


o

The seller must give the buyernotice of delivery under A4

o The seller must give the buyer anynotice required to receive the goods






transport documento

The document must be dated withinthe agreed period and cover thegoods shipped. It must enable thebuyer to claim the goods atdestination and to sell in transit





52/5852

CFR



o The seller pays for checking quality,measuring, weighing, counting as

required to comply with the contract

o Mandatory pre-shipment inspectionsare for the account of the seller



o Packaging is to be marked

appropriately.





o The seller is required to assist thebuyer to obtain documents /information / security info requiredfor the import of the goods and,where necessary, for their transit todestination.

o

If required, the seller mustreimburse the buyer for costsincurred under B10 B.



o If required, the buyer must assistthe seller with any information /

documents needed to conclude theexport. This at the sellers cost


53/5853



CIF: Detailed Summary

COST, INSURANCE AND FREIGHT (insert named port of destination) Incoterms2010

Guidance Notes:

o It is a Unimodal Term for Sea/Inland waterway only

o Delivery on board the nominated vessel/procurement of goods pre-loaded atthe agreed port/place

o

Seller pays costs to named port at destination

o The seller provides minimum insurance unless otherwise agreed

o Risk transfers at the point of delivery, not destination

o Unless otherwise agreed risks transfer when ha

Guide to Incoterms 2010 PDF version.pdf

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