INCOTERMS 2000

MITA

DECEMBER 16, 2004

PURPOSE AND DEFINITIONINCOTERMS 2000, INTERNATIONAL CHAMBER OF COMMERCE

• “THE PURPOSE OF INCOTERMS IS TO PROVIDE A SET OF INTERNATIONAL RULES FOR THE INTERPRETATION OF THE MOST COMMONLY USED TRADE TERMS IN FOREIGN TRADE.”

• “INCOTERMS DEAL WITH A NUMBER OF IDENTIFIED OBLIGATIONS IMPOSED ON THE PARTIES – SUCH AS THE SELLER’S OBLIGATION TO PLACE THE GOODS AT THE DISPOSAL OF THE BUYER OR HAND THEM OVER FOR CARRIAGE OR DELIVER THEM AT DESTINATION – AND WITH THE DISTRIBUTION OF RISK BETWEEN THE PARTIES IN THESE CASES.”

INTERNATIONAL COMMMERCIAL TERMS

INCOTERMS

• CONTRACT OF SALE TERM

• DEFINE RESPONSIBILITIES FOR CARRIAGE AND CLEARANCE OF GOODS

• DEFINE COSTS AND RISKS FOR EXPORTER AND IMPORTER

WHAT INCOTERMS ARE NOT

• THEY ARE NOT PART OF THE CONTRACT FOR CARRIAGE

• THEY ARE NOT USED TO TRANSFER PROPERTY RIGHTS OR TITLE

• THEY ARE NOT USED TO NAME A CARRIER

• THEY ARE NOT USED TO DETERMINE THE THE EFFECT OF BREACH OF CONTRACT CASES

INCOTERMS CONTINUED…

INCOTERMS DETERMINE THE LOCATION AND TIMING OF THE TRANSFER OF RISK BETWEEN THE BUYER AND SELLER AND WHEN THE SELLER HAS FULFILLED THEIR OBLIGATION TO DELIVER THE GOODS TO THE BUYER.

INCOTERM GROUPS

• “E” TERMS - DEPARTURE

• “F” TERMS – MAIN CARRIAGE UNPAID

• “C” TERMS – MAIN CARRIAGE PAID

• “D” TERMS - ARRIVAL

F AND C TERMS VS D TERMS

• F AND C TERMS ARE “SHIPMENT” TERMS

• D TERMS ARE “ARRIVAL” TERMS

“E” AND “F” TERMS AND THEIR FUNCTIONS

• EXW “NAMED PLACE”

• FCA “FREE CARRIER, NAMED PLACE”

• FAS “FREE ALONGSIDE SHIP, NAMED PORT”

• FOB “FREE ON BOARD, NAMED PORT”

“C” TERMS

• CPT “CARRIAGE PAID TO NAMED PLACE OF DESTINATION”

• CIP “CARRIAGE AND INSURANCE PAID TO NAMED PLACE OF DESTINATION”

• CFR “COST AND FREIGHT PAID TO A NAMED PORT OF DESTINATION”

• CIF “COST INSURANCE FREIGHT PAID TO A NAMED PORT OF DESTINATION”

“D” TERMS

• DAF “DELIVERED AT FRONTIER TO A NAMED PLACE”

• DES “DELIVERED EX SHIP TO A NAMED PORT OF DESTINATION”

• DEQ “DELIVERED EX QUAY TO A NAMED PORT OF DESTINATION”

• DDU “DELIVERED DUTY UNPAID TO A NAMED PORT OF DESTINATION”

• DDP “DELIVERED DUTY PAID TO A NAMED PLACE OF DESTINATION”

VARIANT TERMS

AVOID USING TERMS SUCH AS “FOBON DECK,” “FOB WAREHOUSE,” OR “CNF,” “C&F” AND THE LIKE.

THESE TERMS HAVE NO UNIVERSAL

MEANINGUNDER THE INCOTERMS.

DEFINITIONS

• “SHIPPER” REFERS TO THE PARTY TURNING THE GOODS OVER FOR CARRIAGE AND/OR THE PARTY CONTRACTING WITH THE CARRIER.”

• “DELIVERY” REFERS TO THE POINT AND TIME WHEN THE VENDER HAS FULFILLED THE REQUIREMENT TO TURN GOODS OVER TO BUYER (A4) AND ALSO REFERS TO THE POINT AND TIME WHERE THE BUYER HAS RECEIVED GOODS (B4).

DEFINITIONS CONTINUED

• “CHARGES” REFERS TO THOSE COSTS INCURRED AS A RESULT OF THE IMPORT

• “PORT” REFERS TO THE OCEAN PORT OF LOADING OR OCEAN PORT OF DELIVERY

• “PLACE” REFERS TO THE PLACE OF DELIVERY FOR NON-OCEAN SHIPMENTS

ARBITRATION

• THE INTERNATIONAL CHAMBER OF COMMERCE OFFERS ARBITRATION SERVICES IN CASES OF CONTRACTURAL DISPUTE. ARBITRATION IS AN IMPORTANT TOOL USED TO SETTLE COMMERCIAL PROBLEMS WITHOUT LITITGATION. IF YOU WISH ARBITRATION TO BE USED IN CASE OF DISPUTE IT SHOULD BE WRITTEN INTO THE CONTRACT BEFOREHAND.

INCOTERMS

DESCRIPTIONS…

EXW “EX-WORKS”

• SELLER PREPARES GOODS AND MAKES THEM AVAILABLE FOR SHIPMENT AT THE FACTORY

OR BUYER’S WAREHOUSE. FREIGHT COLLECT.

• SELLER IS RESPONSIBLE FOR ALL EXPORT PACKAGING AND MARKING

• SELLER IS RESPONSIBLE FOR EXECUTING THE COMMERCIAL INVOICE.

• BUYER IS RESPONSIBLE FOR ARRANGING SHIPMENT AND COSTS AND RISKS RELATED TO THE SHIPMENT, USING ANY MODE OF TRANSPORT.

EXW - CAUTIONS

• “EXW” CAN ADD AN ADDITIONAL RISK FOR SHIPMENTS MADE UNDER LETTERS OF CREDIT, ESPECIALLY CONFIRMED LETTERS OF CREDIT

• MAKE SURE YOU FOLLOW UP WITH THE FORWARDER!

FCA “FREE CARRIER”

• SELLER MAKES GOODS AVAILABLE TO BUYER AT NAMED PLACE SUCH AS WAREHOUSE OR AIRPORT. FREIGHT COLLECT.

• SELLER IS RESPONSIBLE FOR EXPORT LICENSES, CLEARANCE AND ANY EXPORT CUSTOMS.

• RESPONIBILITY FOR ANY PRECARRIAGE MUST BE DEFINED IN CONTRACT, USUALLY SELLER’S RISK AND RESPONSIBILITY.

• CAN BE USED WITH ANY MODE OF TRANSPORT.

FAS “FREE ALONGSIDE SHIP”

• SELLER MAKES GOODS AVAILABLE AT NAMED PORT OF SHIPMENT. FREIGHT COLLECT.

• SELLER IS RESPONSIBLE FOR DOMESTIC LEG OF SHIPMENT, PRECARRIAGE.

• SELLER IS RESPONSIBLE FOR EXPORT LICENSES, CLEARANCE, EXPORT CUSTOMS, AND USUALLY PORT AND FORWARDER FEES.

• TO BE USED FOR SEA OR WATERWAY SHIPMENT ONLY.

FOB “FREE ON BOARD”

• SELLER MAKES GOODS AVAILABLE AT NAMED PORT OF SHIPMENT. PLACES GOODS ON BOARD VESSEL “OVER THE SHIP’S RAIL.” FREIGHT COLLECT.

• TO BE USED FOR SEA OR WATERWAY CARRIAGE ONLY, NEVER FOR AIR OR LAND SHIPMENTS.

• SELLER IS RESPONSIBLE FOR PRECARRIAGE, EXPORT LICENSES AND USUALLY PORT OR FORWARDING FEES.

• CHECK, OFTEN TIMES FAS IS A MORE APPROPRIATE INCOTERM.

CFR “COST AND FREIGHT”

• SELLER MAKES GOODS AVAILABLE AT A NAMED PORT OF DESTINATION. FREIGHT PREPAID.

• TO BE USED FOR SEA OR INLAND WATERWAY CARRIAGE ONLY.

• SELLER COVERS COST AND RISK OF MAIN CARRIAGE.

• GOODS MUST PASS OVER SHIP’S RAIL AT PORT OF DESTINATION.

• DO NOT USE “CNF” OR “C&F”

CIF “COST INSURANCE AND FREIGHT”

• SELLER MAKES GOODS AVAILABLE AT A NAMED PORT OF DESTINATION. FREIGHT PREPAID.

• SELLER COVERS COSTS OF MAIN CARRIAGE AND INSURANCE COVERAGE.

• GOODS MUST PASS OVER SHIP’S RAIL AT PORT OF DESTINATION.

• USED FOR SEA OR INLAND WATERWAY SHIPMENTS.

CPT “CARRIAGE PAID TO”

• SELLER MAKES GOODS AVAILABLE AT NAMED PLACE OF DESTINATION. FREIGHT PREPAID.

• CAN BE USED WITH ANY MODE OF TRANSPORT, AIR, SEA OR LAND.

• SELLER COVERS COST OF MAIN CARRIAGE.

• SELLER PAYS CHARGES AT FOREIGN PORT OR AIRPORT.

CIP “CARRIAGE AND INSURANCE PAID TO”

• SELLER MAKES GOODS AVAILABLE AT NAMED PLACE OF DESTINATION FREIGHT AND INSURANCE PREPAID.

• CAN BE USED WITH ANY MODE OF TRANSPORT, AIR, LAND OR SEA.

• SELLER COVERS COST AND INSURANCE FOR MAIN CARRIAGE.

• SELLER PAYS CHARGES AT FOREIGN PORT OR AIRPORT, IF ANY.

DAF “DELIVERED AT FRONTIER”

• SELLER MAKES GOODS AVAILABLE AT A NAMED PLACE ON THE BORDER OR FRONTIER. FREIGHT PREPAID.

• TYPICALLY USED FOR RAIL OR ROAD TRANSPORT.

• SELLER DOES NOT COVER CHARGES OF FOREIGN PORT OR AIRPORT.

• SELLER COVERS COST OF MAIN CARRIAGE.

DES “DELIVERED EX SHIP”

• SELLER MAKES GOODS AVAILABLE AT A NAMED PORT OF DESTINATION. FREIGHT PREPAID.

• USED FOR SEA ON INLAND WATERWAY SHIPMENTS.

• SELLER DOES NOT COVER CHARGES OF FOREIGN PORT.

• SELLER COVERS COST OF MAIN CARRIAGE

DEQ “DELIVERED EX QUAY”

• SELLER MAKES GOODS AVAILABLE ON A DOCK AT THE NAMED PORT OF DESTINATION. FREIGHT PREPAID.

• USED FOR SEA OR INLAND WATERWAY SHIPMENTS.

• SELLER MUST COVER UNLOADING CHARGES AND CHARGES AT PORT.

• SELLER COVERS COST OF MAIN CARRIAGE.

DDU “DELIVERED DUTY UNPAID”

• SELLER MAKES GOODS AVAILABLE TO A NAMED PLACE IN DESTINATION COUNTRY. FREIGHT PREPAID.

• CAN BE USED FOR ANY MODE OF TRANSPORT.

• DUTIES AND TAXES AT DESTINATION ARE PAID BY IMPORTER.

• SELLER IS RESPONSIBLE FOR CUSTOMS’ CLEARANCE.

• SELLER COVERS COSTS OF MAIN CARRIAGE.

DDP “DELIVERED DUTY PAID”

• SELLER MAKES GOODS AVAILABLE AT NAMED PLACE IN DESTINATION COUNTRY. FREIGHT PREPAID.

• DDP ECOMPASSES THE GREATES RISK AND RESPOSIBILITY FOR THE SELLER.

• SELLER CLEARS GOODS THRU CUSTOMS AND PAYS ALL DUTIES AND TAXES.

• ENTAILS FOREIGN EXCHANGE RISK.

OTHER CONSIDERATIONS

• USING THE CORRECT INCOTERM IS IMPORTANT IN ORDER TO AVOID CONTRACTURAL DISPUTES.

• INCOTERMS ARE RECOGNIZED INTERNATIONALLY.

• PAY ATTENTION TO CHARTER PARTY B/LS AS THEIR USE OF INCOTERMS MAY DIFFER.

THANK YOU