The point at which
sellers have fulfilled their
obligations so the goods in a legal
sense could be said to have been
delivered to the buyer. They are
shorthand expressions that set out
the rights and obligations of each
party when it comes to transporting
the goods. Following, are the
thirteen terms of sale in
international trade as Terms of Sale
reflected in the recent amendment to
the International Chamber of
Commerce Terms of Trade (INCOTERMS),
effective July 1990: exw, fca, fas,
fob, cfr, cif, cpt, cip, daf, des,
deq, ddu and ddp.
- EXW (Ex Works)
(...Named Place): A Term of Sale
which means that the seller fulfills
the obligation to deliver when he or
she has made the goods available at
his/her premises (i.e., works,
factory, warehouse, etc.) to the
buyer. In particular, the seller is
not responsible for loading the
goods in the vehicle provided by the
buyer or for clearing the goods for
export, unless otherwise agreed. The
buyer bears all costs and risks
involved in taking the goods from
the seller's premises to the desired
destination. This term thus
represents the minimum obligation
for the seller.
- FCA (Free Carrier)
(... Named Place): A Term of Sale
which means the seller fulfills
their obligation when he or she has
handed over the goods, cleared for
export, into the charge of the
carrier named by the buyer at the
named place or point. If no precise
point is indicated by the buyer, the
seller may choose, within the place
or range stipulated, where the
carrier should take the goods into
their charge.
- FAS (Free Alongside
Ship) (...Named Port of Shipment): A
Term of Sale which means the seller
fulfills his obligation to deliver
when the goods have been placed
alongside the vessel on the quay or
in lighters at the named port of
shipment.This means that the buyer
has to bear all costs and risks of
loss of or damage to the goods from
that moment.
- FOB (Free On Board)
(...Named Port of Shipment): An
International Term of Sale that
means the seller fulfills his or her
obligation to deliver when the goods
have passed over the ship's rail at
the named port of shipment. This
means that the buyer has to bear all
costs and risks to loss of or damage
to the goods from that point. The
FOB term requires the seller to
clear the goods for export.
- CFR (Cost and
Freight) (...Named Port of
Destination): A Term of Sale where
the seller pays the costs and
freight necessary to bring the goods
to the named port of destination,
Terms of Sale but the risk of loss
of or damage to the goods, as
(continued) well as any additional
costs due to events occurring after
the time the goods have been
delivered on board the vessel, is
transferred from the seller to the
buyer when the goods pass the ship's
rail in the port of shipment. The
CFR term requires the seller to
clear the goods for export.
- CIF (Cost, Insurance
and Freight) (...Named Place of
Destination): A Term of Sale where
the seller has the same obligations
as under the CFR but also has to
procure marine insurance against the
buyer's risk of loss or damage to
the goods during the carriage. The
seller contracts for insurance and
pays the insurance premium. The CIF
term requires the seller to clear
the goods for export.
- CPT (Carriage Paid
To) (...Named Place of Destination):
A Term of Sale which means the
seller pays the freight for the
carriage of the goods to the named
destination. The risk of loss of or
damage to the goods, as well as any
additional costs due to events
occurring after the time the goods
have been delivered to the carrier,
is transferred from the seller to
the buyer when the goods have been
delivered into the custody of the
carrier. If subsequent carriers are
used for the carriage to the agreed
upon destination, the risk passes
when the goods have been delivered
to the first carrier. The CPT term
requires the seller to clear the
goods for export.
- CIP (Carriage and
Insurance Paid To) (...Named Place
of Destination): A Term of Sale
which means the seller has the same
obligations as under CPT, but with
the addition that the seller has to
procure cargo insurance against the
buyer's risk of loss of or damage to
the goods during the carriage. The
seller contracts for insurance and
pays the insurance premium. The
buyer should note that under the CIP
term the seller is required to
obtain insurance only on minimum
coverage. The CIP term requires the
seller to clear the goods for
export.
- DAF (Delivered At
Frontier) (...Named Place): A Term
of Sale which means the sellers
fulfill their obligation to deliver
when the goods have been made
available, cleared for export, at
the named point and placed at the
frontier, but before the customs
Terms of Sale border of the
adjoining country. (continued)
- DDU (Delivered Duty
Unpaid) (...Named Port of
Destination): A Term of Sale where
the seller fulfills his obligation
to deliver when the goods have been
made available at the named place in
the country of importation. The
seller has to bear the costs and
risks involved in bringing the goods
thereto (excluding duties, taxes and
other official charges payable upon
importation) as well as the costs
and risks of carrying out customs
formalities. The buyer has to pay
any additional costs and to bear any
risks caused by failure to clear the
goods for in time.
- DDP (Delivered Duty
paid) (...Named Port of
Destination): "Delivered Duty Paid"
means that the seller fulfills his
obligation to deliver when the goods
have been made available at the
named place in the country of
importation. The seller has to bear
the risks and costs, including
duties, taxes and other charges of
delivering the goods thereto, clear
for importation. While the EXW term
represents the minimum obligation
for the seller, DDP represents the
maximum.
- DES (Delivered Ex
Ship) (...Named Port of
Destination): A Term of Sale where
the seller fulfills his/her
obligation to deliver when the goods
have been made available to the
buyer on board the ship, uncleared
for import at the named port of
destination. The seller has to bear
all the costs and risks involved in
bringing the goods to the named port
destination.
- DEQ (Delivered Ex
Quay, [Duty Paid]) (...Named Port of
Destination): A Term of Sale which
means the DDU term has been
fulfilled when the goods have been
available to the buyer on the quay
(wharf) at the named port of
destination, cleared for
importation. The seller has to bear
all risks and costs including
duties, taxes and other charges of
delivering the goods thereto.
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