8/9/2019 Incoterms 2010 Full
1/57
Lawrence TanHead of Trade Advisory, Asia Pacific
Incoterms 2010ICC Publication No.715
8/9/2019 Incoterms 2010 Full
2/57
An Introduction to Incoterms
8/9/2019 Incoterms 2010 Full
3/57
RBS00000
3
A set of international rules for interpretation of the most
commonly used trade terms in foreign trade.
Denoted by three letters that compiled and published by
International Chamber of Commerce (ICC)
International Commercial Terms
INCOTERMS
Stand
for?
What
is it?
Why?
To determine at which point will the risks of loss or damageto the goods be passed on from seller to buyer
To explain how the costs of the goods be divided between
the buyer and seller in connection with delivery of the goods
8/9/2019 Incoterms 2010 Full
4/57
RBS00000
4
INCOTERMS Group
INCOTERMS specify:
Point in the journey at which responsibilit ies passes from the seller to the buyer
The various costs that are associated with every import or export transactions
DAP Delivered at Place
D
DAT Delivered at Terminal
DDP Delivered Duty Paid
FFCA Free Carrier
FOB Free On Board
FAS Free Along SideE EXW Ex-works
C CIP Carriage and Insurance Paid ToCFR Cost and Freight
CIF Cost Insurance and Freight
CPT Carriage Paid To
8/9/2019 Incoterms 2010 Full
5/57
5
Why are Incoterms necessary?
-Distance
-Local practices
-Clarification of
duties and
responsibilities
Buyers premises
Sellers factory
1. Export duty / taxes
6. Import duty / taxes
2. Pre-carriage
3. Loading
5. Unloading
4. Main carriage
7. On-carriage
8. Insurance for thetransport of goods
http://www.dreamstime.com/euro-image3660449http://www.dreamstime.com/euro-image3660449http://www.dreamstime.com/euro-image3660449http://www.dreamstime.com/euro-image3660449http://www.dreamstime.com/euro-image3660449http://www.dreamstime.com/euro-image3660449http://www.dreamstime.com/euro-image3660449http://www.dreamstime.com/euro-image3660449http://www.dreamstime.com/euro-image3660449http://www.dreamstime.com/euro-image3660449http://www.dreamstime.com/euro-image3660449http://www.dreamstime.com/euro-image3660449http://www.dreamstime.com/euro-image3660449http://www.dreamstime.com/euro-image3660449http://www.dreamstime.com/euro-image3660449http://www.dreamstime.com/euro-image3660449http://www.dreamstime.com/euro-image3660449http://www.dreamstime.com/euro-image3660449http://www.dreamstime.com/euro-image3660449http://www.dreamstime.com/euro-image3660449http://www.dreamstime.com/euro-image36604498/9/2019 Incoterms 2010 Full
6/57
6
Incoterms DO NOT
Define a complete contract
Bind other parties beyond seller and buyer
Define transfer of title or ownership
Define payment
Address breach of contract
Fully detail loading and unloading obligations
Apply by default. The use of Incoterms must be
specified in the contract.
8/9/2019 Incoterms 2010 Full
7/57
7
Points to Ponder
Is the use of Incoterms mandatory for all trade transactions?
No. They are used only if agreed upon in the sales contract.
Do Incoterms address ownership of goods?
No. Incoterms do not address ownership of the goods. It only addresses the
risks and responsibilities of parties in relation to the delivery of goods.
Can Incoterms be used for domestic trade?
Yes. Incoterms may be applied to both international and domestic trade.
Where should Incoterms be incorporated in order to be effective?
Sales contract.
Can Incoterms be used for any kind of sales contract?
Yes. They can be used for sale for all sorts of goods except for invisible trade
like software, services etc.
8/9/2019 Incoterms 2010 Full
8/57
Incoterms 2000 v Incoterms 2010
8/9/2019 Incoterms 2010 Full
9/57
9
Summary of Main Changes
Number of terms reduced from 13 to 11
The categories E, F, C and D have been changed to:
Rules for any Mode of Transport (7 terms) and
Rules for Sea and Inland Waterway Transport (4 terms)
The following new Incoterms have been introduced:
DAT
DAP
The following terms in Incoterms 2000 have been removed:
DAF
DES DEQ
DDU
Reference to goods crossing the ships rail has been removed in FOB,
CFR and CIF. Instead, goods are delivered once on board the ship.
8/9/2019 Incoterms 2010 Full
10/57
10
Terms used for any mode of transport
EXW - Ex works
FCA - Free carrier
CIP - Carriage and insurance paid to
CPT - Carriage paid to
DAT - Delivered at terminal
DAP - Delivered at place
DDP - Delivered duty paid
8/9/2019 Incoterms 2010 Full
11/57
8/9/2019 Incoterms 2010 Full
12/57
A Short Explanation of the 11terms in Incoterms 2010
8/9/2019 Incoterms 2010 Full
13/57
13
ICC 2010 Rules for Any Mode or Modes
Rules for any mode(s)
EXW Ex Works
FCA Free Carrier
CPT Carriage Paid To
CIP Carriage & Insurance Paid To
DAT Delivered At Terminal
DAP Delivered At Place
DDP Delivered Duty Paid
8/9/2019 Incoterms 2010 Full
14/57
14
Ex Works - EXW (named place)
Point of r isk transferRisk transfers when the goods are placed at the disposal of the buyer at the
sellers premises or another named place (E.g. Factory, warehouse etc.)
Sellers primary duties Buyers primary duties Documents
Deliver the goods at the
agreed place (usually at their
factory/warehouse)
Take delivery of the goods
at the agreed place Commercial Invoice
Arrange for export and
import clearance Delivery receipt
Pay all cost involved to
bring goods to the finaldestination
Arrange for insurance of
goods
8/9/2019 Incoterms 2010 Full
15/57
RB
S00000
15
EXW Ex-works
Exporter
1.Transport to
dock / carrier
2. Export license
& duties
3. Loading 4. Freight 5. Unloading
6. Import license
& duties
Importer
7.Transport from
dock / carrier
8. Insurance
Exporter: Make goods
available at premises
Exporter: Make goods
available at premisesImporter:(1-8) All
arrangements for
transport / insurance
Importer:(1-8)All
arrangements for
transport / insurance
Typical documents:
Invoice, Deliverys
Receipt
Typical documents:
Invoice, Deliverys
Receipt
Used for any mode of transportUsed for any mode of transport
8/9/2019 Incoterms 2010 Full
16/57
16
EXW - Questions
Who is responsible for loading goods on the vehicle for on-transport?
The Seller is not responsible, unless otherwise agreed by the buyer.
Who is responsible for obtaining Export Clearance?
Buyer.
If no specific point is agreed at the named place, where can the seller
deliver goods?
At any point that is available.
Who is responsible for the packing of goods?
Seller.
Contract requires shipment by air from New Delhi with the importer
bearing export duty and all cost associated with the transport of goods.
How must the incoterm be mentioned?
EXW Sellers Warehouse, New Delhi.
8/9/2019 Incoterms 2010 Full
17/57
17
Free Carrier - FCA (named place of delivery)
Point of r isk transferRisk transfers when the goods have been delivered to the carrier at the named
place (of receipt).
FCA is usually used with a named place (sellers premises, freight forwarder, port
of export) in the sellers country.
Sellers primary duties Buyers primary duties Documents Required
Deliver the goods at the
named place into the custodyof the carrier named by the
buyer
Arrange for carriage of the
goods to the final destination
Commercial invoice
Provide export clearance Arrange for insurance of
goods
Usual document
evidencing delivery of thegoods to the carrier
Arrange for import
clearance
Export license, if
necessary
8/9/2019 Incoterms 2010 Full
18/57
RB
S00000
18
FCA Free CarrierUsed for any mode of transportUsed for any mode of transport
Exporter
1.Transport to
dock / carrier
2. Export license
& duties
3. Loading 4. Freight 5. Unloading
6. Import license
& duties
Importer
7.Transport from
dock / carrier
8. Insurance
Exporter: (1-2) Cleared for
export, delivered to carrier
nominated by importer at
the named place
Exporter: (1-2) Cleared for
export, delivered to carrier
nominated by importer at
the named place
Importer:(3-8) Nominate
carrier, arrange freight
and insurance
Importer:(3-8) Nominate
carrier, arrange freight
and insurance
Typical documents: Commercial
invoice, Usual document
evidencing delivery of the goods to
the carrier, Export license (if
necessary)
Typical documents: Commercial
invoice, Usual document
evidencing delivery of the goods to
the carrier, Export license (if
necessary)
8/9/2019 Incoterms 2010 Full
19/57
19
FCA - Questions
Who is responsible for obtaining Export Clearance?Seller.
Who is responsible for loading goods onto the buyers vehicle?
FCA Sellers premises.
Seller.
FCA named port of export.
Buyer. Delivery is complete once goods are made available at the
named port on the sellers means of transport ready for unloading.
8/9/2019 Incoterms 2010 Full
20/57
20
Point of r isk transferRisk transfers when the goods have been delivered to the carrier at the place of
departure.
Carriage Paid To - CPT (named place of destination)
Sellers primary dut ies Buyers primary dut ies Documents Required
Contract for the carriage
and pay the freight
Arrange to collect goods
from the named destination
Commercial invoice
Provide export clearance Arrange to insure goods Transport document
Pay loading costs Pay the inland transport
cost
Export license, if
necessary
Arrange for import
clearance
8/9/2019 Incoterms 2010 Full
21/57
RBS00000
21
CPT Carriage Paid To Used for all modes of transport. Common formulti-modal transport
Used for all modes of transport. Common for
multi-modal transport
Exporter
1.Transport to
dock / carrier
2. Export license
& duties
3. Loading 4. Freight 5. Unloading
6. Import license
& duties
Importer
7.Transport from
dock / carrier
8. Insurance
Exporter: (1-4) Cleared for
export, delivered the goods to
the carrier, paid freight to the
named place destination
Exporter: (1-4) Cleared for
export, delivered the goods to
the carrier, paid freight to the
named place destination
Importer: (5-8) Arrange for
insurance and unloading,
accept delivery at named
placed of destination
Importer: (5-8)Arrange for
insurance and unloading,
accept delivery at named
placed of destination
Typical documents:
Commercial invoice,
Transport document, Export
license (if necessary)
Typical documents:
Commercial invoice,
Transport document, Export
license (if necessary)
8/9/2019 Incoterms 2010 Full
22/57
22
CPT - Questions
Goods are to be transported from Bangalore to Chennai via road and
then to Singapore via sea. Incoterms used is CPT Singapore. When does
the risk transfer from the Seller to Buyer?
When subsequent carriers are used for the carriage to the agreed destination,
the risk passes once the goods have been delivered to the first carrier.
When the CPT term is used, the seller fulfils its obligation once goods
reach the named place of destination. True of False?
False. The seller fulfils its obligation once goods have been handed over tothe carrier.
8/9/2019 Incoterms 2010 Full
23/57
23
Carriage and Insurance Paid ToCIP (named place of destination)
Point of r isk transferRisk transfers when the goods have been delivered to the carrier at the place of
departure.
Sellers primary duties Buyers primary duties Documents Required
Contract for the carriage
and pay the freight
Accept delivery of the
goods at the named
destination
Commercial invoice.
Provide export clearance Pay the inland transport
cost which is not under the
contract of carriage
Transport document.
Contract for cargo
insurance and pay premium
Arrange for import
clearance
Export license, if
necessary
Pay loading costs Insurance document
8/9/2019 Incoterms 2010 Full
24/57
RBS00000
24
CIP Carriage and Insurance Paid To Used for all modes of transport. Common formulti-modal transport
Used for all modes of transport. Common for
multi-modal transport
Exporter
1.Transport to
dock / carrier
2. Export license
& duties
3. Loading 4. Freight 5. Unloading
6. Import license
& duties
Importer
7.Transport from
dock / carrier
8. Insurance
Exporter: (1-4, 8) Cleared for
export, delivered the goods to
the carrier, paid freight to the
named place of destination and
insured the goods
Exporter: (1-4, 8) Cleared for
export, delivered the goods to
the carrier, paid freight to the
named place of destination and
insured the goods
Importer: (5-7) Arrange
for unloading, accept
delivery at named
placed of destination
Importer: (5-7)Arrange
for unloading, accept
delivery at named
placed of destination
Typical documents:
Commercial invoice,
Transport document,
Insurance Policy, Export
license (if necessary)
Typical documents:
Commercial invoice,
Transport document,
Insurance Policy, Export
license (if necessary)
8/9/2019 Incoterms 2010 Full
25/57
25
CIP - Questions
What is the percentage of insurance coverage that must be obtained
by the seller?
Seller is required to only obtain MINIMUM insurance coverage (110% of
the contract value) unless otherwise agreed with the buyer.
Shipment to be effected from New York to Tokyo. Incoterms given in
the contract is CIP New York. Has the term been given correctly?
No. CIP must be followed by a named place of destination. Therefore theright way to indicate this term will be CIP Tokyo, Japan.
8/9/2019 Incoterms 2010 Full
26/57
26
Delivered at Terminal - DAT (named destination terminal)
Point of r isk transferRisk transfers once the goods are unloaded from the arriving means of transport
and placed at the disposal of the buyer at a named terminal, port or place of
destination.
Sellers primary dut ies Buyers primary duties Documents Required
Contract for the carriage
and pay the freight
Arrange for Import
clearance
Commercial invoice
Provide export clearance Pay the inland transport
cost
Document needed for
taking delivery
Pay loading costs
Arrange to unload goodsat the named terminal
Terminal includes quays, warehouses, container yard or road, rail or air terminal.
8/9/2019 Incoterms 2010 Full
27/57
27
DAT Delivered at Terminal (named destination terminal)
Used for any mode of transportUsed for any mode of transport
Exporter
1.Transport to
dock / carrier
2. Export license
& duties
3. Loading 4. Freight 5. Unloading
6. Import license
& duties
Importer
7.Transport from
dock / carrier
8. Insurance
Exporter: (1-5,8) Deliver goods onthe terminal (includes quays,
warehouses, container yard or
road, rail or air terminal) at
destination port, arrange carriage &
insurance
Exporter: (1-5,8) Deliver goods onthe terminal (includes quays,
warehouses, container yard or
road, rail or air terminal) at
destination port, arrange carriage &
insurance
Importer: (6-7) Accept
delivery on the terminal
Importer: (6-7)Accept
delivery on the terminal
Typical documents:
Commercial invoice,
Document needed for
taking delivery
Typical documents:
Commercial invoice,
Document needed for
taking delivery
8/9/2019 Incoterms 2010 Full
28/57
28
DAT - Questions
The buyer realises that goods are to be transported from Chennai toLondon via Sea and London to Leeds via train. The Incoterm 2010 used isDAT London freight station. Who is responsible for the following:Carriage of goods from London to Leeds
Buyer
Unloading goods from the sea vessel at LondonSeller
Loading goods on the train at LondonBuyer
Unloading goods at LeedsBuyer
Insurance of goodsThe buyer and seller are not obliged to obtain insurance. However the seller willbe responsible for any loss / damage to the goods until goods are unloaded atLondon. From then on, the buyer will be responsible.
8/9/2019 Incoterms 2010 Full
29/57
29
Delivered at Place - DAP (named place of destination)
Point of r isk transferRisk transfers once goods are placed at the disposal of the buyer on the arriving
means of transport ready for unloading at the named place of destination.
Sellers primary duties Buyers primary duties Documents Required
Contract for the carriage
and pay the freight
Arrange to unload goods
from the arriving means of
transport
Commercial invoice
Provide export clearance Arrange for Import
clearance
Document needed for
taking delivery
Pay the inland transport
cost
8/9/2019 Incoterms 2010 Full
30/57
30
DAP Delivered at Place (named place of destination)
Used for any mode of transportUsed for any mode of transport
Exporter
1.Transport to
dock / carrier
2. Export license
& duties
3. Loading 4. Freight 5. Unloading
6. Import license
& duties
Importer
7.Transport from
dock / carrier
8. Insurance
Importer: (6) Accept
delivery at destination,
pay import duty
Importer: (6)Accept
delivery at destination,
pay import duty
Typical documents:
Commercial invoice,
Document needed for
taking delivery
Typical documents:
Commercial invoice,
Document needed for
taking delivery
Exporter: (1-5,7-8) Deliver goods
at named place of destination,
not cleared for import
Exporter: (1-5,7-8) Deliver goods
at named place of destination,
not cleared for import
8/9/2019 Incoterms 2010 Full
31/57
31
DAP - Questions
Can DAP be used for shipment via rail?
Yes
Who is responsible for payment of import custom duties?
Buyer
Contract states DAP Jakarta, Indonesia and calls for 1) Invoice, 2) Bill of
Lading, 3) Insurance policy. Is the contract framed correctly?
No. Buyer must not request for an insurance policy (unless otherwise agreedand mentioned in the sales contract) as the seller is not obligated to insure
goods. (It must remembered that it is in the sellers best interest to arrange for
insurance till the point of destination.)
In a DAP contact, how should freight charges be mentioned in the
transport document?
Transport document must indicate that freight has been PREPAID.
8/9/2019 Incoterms 2010 Full
32/57
32
Delivered Duty Paid - DDP (named place of destination)
Point of r isk transferRisk transfer from the seller to the buyer when the goods are placed at the disposal
of the buyer with duty paid by seller.
Sellers primary duties Buyers primary duties Documents Required
Deliver goods at named
place of destination
Take delivery of the goods
from the named place of
destination
Commercial invoice
Arrange export and import
clearance
Document needed for
taking delivery
Provide documents forbuyer to take delivery
Import license, ifnecessary
8/9/2019 Incoterms 2010 Full
33/57
RBS
00000
33
DDP Delivered Duty Paid (named place of destination)
Used for any mode of transportUsed for any mode of transport
Exporter
1.Transport to
dock / carrier
2. Export license
& duties
3. Loading 4. Freight 5. Unloading
6. Import license
& duties
Importer
7.Transport from
dock / carrier
8. Insurance
Importer: Accept delivery
at the name placed of
destination
Importer: Accept delivery
at the name placed of
destination
Typical documents:
Commercial invoice,
Document needed for
taking delivery, Import
license (if necessary)
Typical documents:
Commercial invoice,
Document needed for
taking delivery, Import
license (if necessary)
Exporter: (1-8) Deliver goods at
named place of destination,
cleared for import including
payment of import duties
Exporter: (1-8) Deliver goods at
named place of destination,
cleared for import including
payment of import duties
DDP Q i
8/9/2019 Incoterms 2010 Full
34/57
34
DDP - Questions
Who is responsible for unloading of goods at the named place ofdestination?Buyer
ICC 2010 R l f S & I l d W t
8/9/2019 Incoterms 2010 Full
35/57
35
ICC 2010 Rules for Sea & Inland Waterway
Marine Rules
FAS Free Alongside Ship
FOB Free On BoardCFR Cost and Freight
CIF Cost Insurance & Freight
F Al id Shi FAS ( d t f l di )
8/9/2019 Incoterms 2010 Full
36/57
36
Free Alongside Ship - FAS (named port of loading)
Point of r isk transferRisk transfers when the goods have been placed alongside the ship (e.g. On a
quay or a barge) at the named port of loading.
Sellers primary duties Buyers primary duties Documents Required
Deliver the goods
alongside the shipnominated by the buyer
Arrange for the Contracts
of carriage and insurance
Commercial invoice
Provide export clearance Arrange for import
clearance
Usual document
evidencing delivery of the
good to the carrier
Pay unloading costs Export license, if
necessary
FAS
8/9/2019 Incoterms 2010 Full
37/57
RBS
00000
37
FAS Free Alongside ShipUsed for sea & inland waterway transportUsed for sea & inland waterway transport
Exporter
1.Transport to
dock / carrier
2. Export license
& duties
3. Loading 4. Freight 5. Unloading
6. Import license
& duties
Importer
7.Transport from
dock / carrier
8. Insurance
Exporter: (1-2) Cleared for
export, placed the goods
alongside the vessel at the
named port of shipment (on a
quay or a barge)
Exporter: (1-2) Cleared for
export, placed the goods
alongside the vessel at the
named port of shipment (on a
quay or a barge)
Importer:(3-8) Nominate
carrier, arrange freight
and insurance
Importer:(3-8) Nominate
carrier, arrange freight
and insurance
Typical documents:Commercial invoice, Usual
document evidencing
delivery of the good to the
carrier, Export license (if
necessary)
Typical documents:Commercial invoice, Usual
document evidencing
delivery of the good to the
carrier, Export license (if
necessary)
FAS Questions
8/9/2019 Incoterms 2010 Full
38/57
38
FAS - Questions
What documents can the Buyer call for under an FAS contract?Invoice and proof that goods have been delivered along side the ship.
The seller is responsible for loading goods on board the ship in an FAScontract. True of False?False.
Free on Board FOB (named port of loading)
8/9/2019 Incoterms 2010 Full
39/57
39
Free on Board - FOB (named port of loading)
Point of r isk transferRisk transfers when the goods are placed on board the vessel at the named port of loading
Sellers primary duties Buyers primary duties Documents Required
Deliver the goods on
board the vessel
Arrange for contracts of
carriage and insurance
Commercial invoice
Provide export clearance Arrange for import
clearance
Customary clean receipt
Provide clean on board
receipt (bill of lading)
Pay unloading costs Export license, if
necessary
Pay loading cost
FOB
8/9/2019 Incoterms 2010 Full
40/57
RBS00000
40
FOB Free On Board (named port of loading)
Used for sea & inland waterway transportUsed for sea & inland waterway transport
Exporter
1.Transport to
dock / carrier
2. Export license
& duties
3. Loading 4. Freight 5. Unloading
6. Import license
& duties
Importer
7.Transport from
dock / carrier
8. Insurance
Exporter: (1-3) Cleared for
export, goods are loaded
on the vessel at the named
port of shipment
Exporter: (1-3) Cleared for
export, goods are loaded
on the vessel at the named
port of shipment
Importer: (4-8) Nominate
carrier, arrange freight
and insurance
Importer: (4-8) Nominate
carrier, arrange freight
and insurance
Typical documents:
Commercial invoice,
Customary clean receipt,
Export license (if necessary)
Typical documents:
Commercial invoice,
Customary clean receipt,
Export license (if necessary)
FOB Questions
8/9/2019 Incoterms 2010 Full
41/57
41
FOB - Questions
Goods shipped via a container have been l ifted by the crane and moved
past the ships rail when the goods are accidentally dropped. Who bears
the risk of damage?
Seller. Buyer will be responsible only once the goods have been placed on boardthe ship.
Cost and Freight CFR (named port of discharge)
8/9/2019 Incoterms 2010 Full
42/57
42
Cost and Freight CFR (named port of discharge)
Point of r isk transferRisk transfers when the goods are placed on board the vessel at the named port of loading.
Sellers primary duties Buyers primary duties Documents Required
Contract for the carriage
and pay freight
Accept delivery of the
goods upon arrival of the
vessel at destination port
Commercial invoice
Deliver goods on board
the vessel
Pay unloading costs Transport document
Provide export clearance Contract of insurance Export license, if
necessary
Pay loading costs Arrange for import
clearance
CFR C t d F i ht ( d t f di h )
8/9/2019 Incoterms 2010 Full
43/57
RBS00000
43
CFR Cost and Freight (named port of discharge)
Used for sea & inland waterway transportUsed for sea & inland waterway transport
Exporter
1.Transport to
dock / carrier
2. Export license
& duties
3. Loading 4. Freight 5. Unloading
6. Import license
& duties
Importer
7.Transport from
dock / carrier
8. Insurance
Exporter: (1-4) Cleared for
export, delivered the goods
on board the vessel and
paid freight to the named
port of destination
Exporter: (1-4) Cleared for
export, delivered the goods
on board the vessel and
paid freight to the named
port of destination
Importer: (5-8) Arrange
insurance and
unloading, accept
delivery at port of
destination
Importer: (5-8)Arrange
insurance and
unloading, accept
delivery at port of
destination
Typical documents:
Commercial invoice,
Transport document. Export
license (if necessary)
Typical documents:
Commercial invoice,
Transport document. Export
license (if necessary)
CFR - Questions
8/9/2019 Incoterms 2010 Full
44/57
44
CFR Questions
Contact details as follows:
Port of Loading: India
Port of Discharge: Japan
Documents required: Invoice, Inspection Cert and Air Waybill
indicating Freight Collect Incoterms: CFR India.
Identify what is wrong with the contract details.
CFR must be followed with a port of discharge.
CFR must be used for Sea shipment only. Hence the contract must not call for
an Air Waybill.
Transport document must indicate Freight Prepaid in a CFR contract.
Cost Insurance and Freight CIF (named port of
8/9/2019 Incoterms 2010 Full
45/57
45
Cost Insurance and Freight CIF (named port ofdischarge)
Point of r isk transferRisk transfers when the goods are placed on board the vessel at the named port of
loading.
Sellers primary dut ies Buyers primary dut ies Documents Required
Contract for the carriage
and pay the freight
Accept delivery of the
goods upon arrival of the
vessel at destination port
Commercial invoice
Deliver the goods on board
the vessel
Pay unloading costs Transport document
Provide export clearance Arrange for import
clearance
Export license, if
necessary
Contract for cargo
insurance and pay the
premium
Insurance document
Pay loading costs
CIF Cost Insurance and Freight (named port of discharge)
8/9/2019 Incoterms 2010 Full
46/57
RBS0
0000
46
CIF Cost, Insurance and Freight (named port of discharge)
Used for sea & inland waterway transportUsed for sea & inland waterway transport
Exporter
1.Transport to
dock / carrier
2. Export license
& duties
3. Loading 4. Freight 5. Unloading
6. Import license
& duties
Importer
7.Transport from
dock / carrier
8. Insurance
Exporter: (1-4, 8) Cleared for
export, delivered the goods on
board the vessel, paid freight to
the named port of destination
and insured the goods
Exporter: (1-4, 8) Cleared for
export, delivered the goods on
board the vessel, paid freight to
the named port of destination
and insured the goods
Importer: (5-7) Arrange
unloading, accept
delivery at port of
destination
Importer: (5-7)Arrange
unloading, accept
delivery at port of
destination
Typical documents:
Commercial invoice,
Transport document,
Insurance policy, Export
license (if necessary)
Typical documents:
Commercial invoice,
Transport document,
Insurance policy, Export
license (if necessary)
CIF - Questions
8/9/2019 Incoterms 2010 Full
47/57
47
CIF Questions
Terms: CIF Calcutta with final destination being Delhi. Who bears the risk of loss to damage of goods when transported from
Calcutta to Delhi?
Buyer
Who is responsible for insurance of goods?
Seller must insure goods up to the point agreed with the buyer.
FAS, FOB, CFR & CIF - NOT FOR CONTAINERS
8/9/2019 Incoterms 2010 Full
48/57
48
, ,
The above marine terms are intended for cargo that the seller can deliver
alongside or onto the vessel. Historically this was how all cargo was
delivered.
Today containerized cargo is tendered to a carriers container or rail yardwell before arriving at the vessel.
In these instances the FCA, CPT or CIP terms are more appropriate.
8/9/2019 Incoterms 2010 Full
49/57
Sales Contract and Incoterms
Sales Contract
8/9/2019 Incoterms 2010 Full
50/57
50
Introduction
In any trade transaction, there are 2 different
parties entering into a contract.
In order for the contract to be enforceable, one
party must offer(Offeror) and the other partymust accept (Acceptor).
What is an Offer?
The Buyer receives the quotation and if hedecided to buy, then he places an order.
Such order is known as an OFFER.
What is an Acceptance?
When Seller accepts the offer, it becomes a
Contract of Sale which will be binding &
enforceable in law by both parties.
Various Forms
Acknowledgement of order
Proforma Invoice
Purchase Order
Indents
Sales Contract
Sales Contract
8/9/2019 Incoterms 2010 Full
51/57
51
Terms
Type of credit sight or usance L/C
Tenor - if usance : state the period
Shipment / Delivery date - it is advisable to insert a clause stating that the
shipment/delivery date is given in good faith and that it may have to be amended due
to circumstances beyond the control of the Seller.
Expiry date
Latest L/c issuing date
Advising bank (if possible)
Documents requirement (if any )
Charges are for whose A/C - especially for usance L/C, who should pay the discount
charges and acceptance commission.
Sales Contract
8/9/2019 Incoterms 2010 Full
52/57
52
Indicate clearly that the Contract is subject to INCOTERM
When drawing up Sales Contract, Seller & Buyer should specifically refer to one of the ICC
Incoterms.
The Objectives are 2 Folds namely :(i) To define the respective responsibilities
of Buyer & Seller. (Refer to Incoterms)
(ii) To eliminate any possibility of misunderstanding & subsequent dispute .
There are many different trade terms e.g. Revised American Foreign Trade Definitions(USA) & The Combiterms (Sweden)
Incoterms only relate to trade used in Sales Contract and they do not deal with
terms which may be used in contract of carriage, particularly as terms of various
charter-parties will differ.
Summary of Marine Trade Terms
8/9/2019 Incoterms 2010 Full
53/57
53
ON CARRIAGE
Cost of
Goods
Loading Unloading
Import Duties &Transportation to
Buyer (or named
point)Freight
Charges
Transportation to
port of shipment
PRE-CARRIAGE MAIN CARRIAGE
Export
Clearance
Sellers Risk
Sellers Cost
At port of
shipment
At port of
destination
FAS
FOB
CFR
CIF
+ Insurance
Summary of Other Trade Terms
8/9/2019 Incoterms 2010 Full
54/57
54
ON CARRIAGE
Cost of
Goods
Loading Unloading Import Duties &
Transportation to
BuyerFreight
Charges
Transportation toport of shipment
PRE-CARRIAGE MAIN CARRIAGE
Export
Clearance
Sellers Risk
Sellers Cost
At named
place
At place of
destination
FCA
CPT
CIP
+ Insurance
Summary
8/9/2019 Incoterms 2010 Full
55/57
55
8/9/2019 Incoterms 2010 Full
56/57
56
Q & A
8/9/2019 Incoterms 2010 Full
57/57
Top Related