Incoterms rules history

The Incoterms or International Commercial Terms are a series of pre-defined commercial terms published by the International Chamber of Commerce (ICC) relating to international commercial law. They are widely used in international commercial transactions or procurement processes and their use is encouraged by trade councils, courts and international lawyers. A series of three-letter trade terms related to common contractual sales practices, the Incoterms rules are intended

1 Comments

Introduction to Incoterms 2020

Incoterms are universally recognised rules. They guide buyers and sellers when formulating and fulfilling a contract for the shipment of goods. A careful study of Incoterms 2020 will repay the effort by enabling more favourable trade terms. It allows the manufacturer and buyer to open the doors to more effective trade finance. The latest version of

4 Comments

EXW | Fx Works – Incoterms 2020

Ex Works (EXW) is the Incoterms 2020 rule used to describe the delivery of goods by the seller at their place of business, normally in their factory, offices or warehouse. The seller does not need to then load items onto a truck or ship, and the remainder of the shipment is the responsibility of

FCA | Free Carrier – Incoterms 2020

The FCA (Free Carrier) rule requires the seller to deliver the goods to the buyer or its carrier either at the seller’s premises loaded onto the collecting vehicle or delivered to another premises (typically a forwarder’s warehouse, airport or container terminal) not unloaded from the seller’s vehicle. The seller must carry out any export

1 Comments

CPT | Carriage Paid To – Incoterms 2020

The CPT (Carriage Paid To) – Incoterms 2020 rule requires the seller to deliver the goods to its carrier but does not indicate whether that is either at the seller’s premises loaded onto the collecting vehicle or delivered to another premises not unloaded from the seller’s vehicle. The seller must carry out any export

CIP | Carriage and Insurance Paid To – Incoterms 2020

CIP (or Carriage and Insurance Paid To) – Incoterms 2020 is an Incoterm where the seller is responsible for the delivery of goods to an agreed destination in the buyers country, and must pay for the cost of this carriage. The sellers risk however, ends once they have placed the goods on the ship,

DPU | Delivered at Place Unloaded – Incoterms 2020

This is a new rule for Incoterms 2020. While it is often stated as simply being a change of name from the previous DAT (Delivered At Terminal) it is in fact just that little bit more. DAT itself was introduced 2010 as an expansion of DEQ (Delivered Ex Quay) to cover any mode of

1 Comments

DAP | Delivered at Place – Incoterms 2020

DAP requires the seller to deliver to a place named by a buyer, typically the buyer’s premises. The buyer is responsible for unloading the means of transport. The seller has to carry out any export formalities and the buyer has to carry out any import formalities. Like with CPT and CIP the seller contracts

1 Comments

DDP | Delivered Duty Paid – Incoterms 2020

This rule DDP | Delivered Duty Paid – Incoterms 2020 should be used with great care as the seller might need to be a registered entity both for import and VAT/GST in the buyer’s country, a fairly unlikely scenario. If the seller finds itself unable to be the importer or to be able to

3 Comments

FAS | Free Alongside Ship – Incoterms 2020

The FAS (Free Alongside Ship) – Incoterms 2020 rule goes back to the days of sailing ships, and requires the seller to place the goods alongside the vessel nominated by the buyer. FAS is rarely used these days but still might be appropriate typically in shipments of heavy machinery which is brought to the

3 Comments

FOB | Free On Board – Incoterms 2020

FOB (Free on Board) is the most commonly-used trade term but in practice it is used without reference to any version of the Incoterms® rules. In such cases it is then up to the seller and buyer to agree in their contract on what they mean when they use these three letters. This trade

4 Comments

CFR | Cost and Freight – Incoterms 2020

CFR (Cost and Freight) is one of the most commonly-used trade terms after FOB but in practice it is used without reference to any version of the Incoterms® rules, including Incoterms 2020. In such cases it is then up to the seller and buyer to agree in their contract on what they mean when

2 Comments

CIF | Cost Insurance and Freight – Incoterms 2020

The CIF – Incoterms 2020 is identical to CFR except in one aspect. Even though the risk transfers to the seller upon loading the goods on board the vessel, in CIF the seller is obliged to take out the minimum level of insurance cover for the buyer’s risk. This will be at Institute Cargo

6 Comments