INCOTERMS
International Commercial Terms
INCOTERMS are used to specify the most commonly used terms of trade in commercial contracts. The terms are a way to standardise the terminology used in international trade and are periodically updated to reflect the most up to date practices in transport and commerce. They aim to eliminatate doubts between the buyer and seller by stating exactly what charges are included in the sellers price and defining the responsibilities of the parties to the contract of sale for the arrangement of insurance, shipping and packaging.
Incoterms were first introduced in 1936 by the International Chamber of commerce (ICC.) These terms are available in many languages and are accepted internationally. The use of INCOTERMS is entirely voluntary but highly recommended by the ICC and its members.
Summary of Incoterms
| Incoterm | Description |
| EXW | Ex Works
- carriage to be arranged by buyer
- risk transfer from the seller to the buyer when the goods are at the disposal of the buyer
- cost transfer from the seller to the buyer when the goods are at the disposal of the buyer
|
| FCA | Free Carrier
- carriage to be arranged by the seller or the buyer on the buyers behalf
- risk transfer from the seller to the buyer when the goods have been delivered to the carrier at the named place
- cost transfer from the seller to the buyer when the goods have been delivered to the carrier at the named place
|
| FAS | Free Alongside Ship
- carriage to be arranged by the buyer
- risk transfer from the seller to the buyer when the goods have been placed alongside ship
- cost transfer from the seller to the buyer when the goods have been placed alongside ship
|
| FOB | Free On Board
- carriage to be arranged by the buyer
- risk transfer from the seller to the buyer when the goods pass the ship's rail
- cost transfer from the seller to the buyer when the goods pass the ship's rail
|
| CFR | Cost and Freight
- carriage to be arranged by the seller
- risk transfer from the seller to the buyer when the goods pass the ship's rail
- cost transfer at port of destination, buyer paying such costs as are not for the for the seller's account under the contract of carriage
|
| CIF | Cost, Insurance and freight
- carriage and insurance to be arranged by the seller
- risk transfer from the seller to the buyer when the goods pass the ship's rail
- cost transfer at port of destination, buyer paying such costs as are not for the for the seller's account under the contract of carriage
|
| CPT | Carriage Paid To
- carriage to be arranged by the seller
- risk transfer from the seller to the buyer when the goods have been delivered to the carrier
- cost transfer at place of destination, buyer paying such costs as are not for the for the seller's account under the contract of carriage
|
| CIP | Carriage and Insurance Paid
- carriage and insurance to be arranged by the seller
- risk transfer from the seller to the buyer when the goods have been delivered to the carrier
- cost transfer at place of destination, buyer paying such costs as are not for the for the seller's account under the contract of carriage
|
| DAF | Delivered At Frontier
- carriage to be arranged by the seller
- risk transfer from the seller to the buyer when the goods have been delivered at the frontier
- cost transfer from the seller to the buyer when the goods have been delivered at the frontier
|
| DES | Delivered Ex Ship
- carriage to be arranged by the seller
- risk transfer from the seller to the buyer when the goods are placed at the disposal of the buyer on board the ship
- cost transfer from the seller to the buyer when the goods are placed at the disposal of the buyer on board the ship
|
| DEQ | Delivered Ex Quay
- carriage to be arranged by the seller
- risk transfer from the seller to the buyer when the goods are placed at the disposal of the buyer on the quay
- cost transfer from the seller to the buyer when the goods are placed at the disposal of the buyer on the quay
|
| DDU | Delivered Duty Unpaid
- carriage to be arranged by the seller
- risk transfer from the seller to the buyer when the goods are placed at the disposal of the buyer
- cost transfer from the seller to the buyer when the goods are placed at the disposal of the buyer
|
| DDP | Delivered Duty Paid
- carriage to be arranged by the seller
- risk transfer from the seller to the buyer when the goods are placed at the disposal of the buyer
- cost transfer from the seller to the buyer when the goods are placed at the disposal of the buyer
|
source: ICC
Futher information and Printed Copies
The most up to date INCOTERMS are published by the International Chamber of Commerce or ICC. For a more in-depth study of current incoterms, browse the ICC's Incoterms 2000 site.
Incoterms 2000 (ICC publication No. 560) provides a comprehensive guide to the usage of the various terms and the ICC Guide to Incoterms 2000 (ICC publication No 620) provides a more general overview.
To obtain a copy in the UK contact:
ICC United Kingdom
14/15 Belgrave Square
LONDON
SW1X 8PX
Telephone: 020 7 823 2811
e-mail: webmaster@iccwbo.org
Footnote
Incoterms are not the only standardised trade terms in use. There are several others in common use:
- The American Foriegn Trade Definitions (1919)
- The Rules of Warsaw and Oxford (proposed by the International Law Federation 1932)
- The General Conditions for Delivery of Merchandise (1968 - Eastern European)
- Combiterms (1969)
The The American Foriegn Trade Definitions were abandoned in 1980 in favour of Incoterms.
