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Incoterms

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Incoterms

Incoterms define the responsibilities of buyer and seller for delivery of goods under sales contracts. Incoterms 2000 (Publication Number 560) is the authoritative text for determining how costs and risks are allocated to the parties. These terms are regularly incorporated into sales contracts worldwide. Incoterms 2000 contains the official ICC (International Chamber of Commerce) text of the thirteen trading terms.  These terms are effective January 1, 2000.

 

September 2010 - Incoterms 2010 will be available and will come in to effect January 1, 2011.

 

To obtain a copy, contact:

 

Canadian Chamber of Commerce / ICC Canada’s Bookstore
420-360 Albert Street

Ottawa, ON K2B 7W1

www.chamber.ca

Tel: 613.238.4000 (ext. 265)

RO/RO and Container Terminology

Terms in the following section apply to any mode of transport including multimodal. These terms are also used for roll-on/roll-off and containerized ocean freight. Where the subterm (... named place/port of ...) or (... named place) is inserted after an INCOTERM, that placename must be specified and becomes a legal part of the term.

For terms relating to Marine (Sea) transport in forms other than Ro/Ro or Container, see Ocean Terminology.

EXW Ex Works
This represents the minimum risk and cost for the supplier and the maximum risk and cost for the buyer. The seller fulfills his obligation to deliver when the goods are made available to the buyer at the named place (factory, warehouse, etc.). The seller is not responsible for loading the goods on the vehicle provided by the buyer (consignee), or for clearing the goods for export, unless otherwise agreed.
FCA Free Carrier (...named place)
The seller fulfills his obligation to deliver when the goods are cleared for export, to the carrier named by the buyer at the named place or point. If the buyer instructs the seller to deliver the cargo to a person (i.e., freight forwarder who is not a carrier), the seller is deemed to have fulfilled his obligation to deliver the goods when they are in custody of the named person.
CPT Carriage Paid To (... named place of destination)
The seller pays the freight for carriage of goods to the named destination. This risk of loss or damage to the goods, as well as any additional costs due to events 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 at the place of shipment. Insurance, if desired, is paid by the buyer.
CIP Carriage and Insurance Paid To (...named place of destination)
The seller has the same obligations as under CPT but with the addition that the seller must obtain minimum insurance (cost 10%). The duration of the insurance is from delivery to the first carrier until the named port of destination Liability and costs are transferred to the buyer upon arrival of the goods at the named place of destination.
DAF Delivered at Frontier (...named place)
The seller must bear all costs and liability risks through delivery of the goods at the named place at the frontier, before the customs border of the adjoining country, cleared for export. The buyer has to pay all duties, taxes, other official charges and customs formality charges upon importation, as well as freight costs and insurance. The term "frontier" may be used for any frontier including that of the country of export. Therefore, it is of vital importance that the frontier in question be defined precisely by always naming the point and place in the term.
DDU Delivered Duty Unpaid (...named place of destination)
The seller fulfills his obligation to deliver when the goods have been made available at the named place in the country of importation. Liability transfers to the buyer at the same time as the transfer of costs. The buyer has to pay all duties, taxes, other official charges and customs formalities due upon importation.
DDP Delivered Duty Paid (...named place of destination)
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 bears all risks and costs, including duties and taxes and other charges of delivering the goods cleared for importation. This may include all charges up to and including delivery at the buyer's location. Whilst the EXW term represents the minimum obligation for the seller, DDP represents the maximum obligation.

Ocean Terminology

Terms defined in the following section apply only to Marine (Sea) movement, other than Roll-On/Roll-Off and Containerized Cargo. Where the subterm (... named place/port of ...) or (... named place) is inserted after an INCOTERM, that placename must be specified and becomes a legal part of the term.

For terms relating to containerized or multi-modal freight, whether carried by ship or barge, see Ro/Ro Terminology.

EXW Ex Works
This represents the minimum risk and cost for the supplier and the maximum risk and cost for the buyer. The seller fulfills his obligation to deliver when the goods are made available to the buyer at the named place (factory, warehouse, etc.). The seller is not responsible for loading the goods on the vehicle provided by the buyer (consignee), or for clearing the goods for export, unless otherwise agreed.
FAS Free Alongside Ship (...named port of shipment)
The seller fulfills his obligation to deliver when the goods have been placed alongside the vessel on the quay at the named port of shipment (export). This means that the buyer assumes all costs and risks of loss or of damage to the goods from that moment. The FAS term requires the buyer to clear the goods for export.
FOB Free On Board (...named port of shipment)
The seller fulfills his obligation to deliver the goods when the goods have passed over the ship's rail at the named port of shipment. This means that the buyer assumes all costs and risks of loss of or damage to the goods from that point. The term FOB requires the seller to clear the goods for export. North American sellers and buyers tend to use the term "FOB" inappropriately. This term can only be used for sea or inland waterway transport. When the ship's rail serves no practical purpose, such as in the case of roll-on/roll-off or container traffic, the FCA term is more appropriate to use.
CFR Cost And Freight (...named port of destination)
The seller must pay all costs and freight charges until the goods arrive at the named port of destination, including any unloading costs levied by the shipping line at the port of discharge. Liability and risk costs are transferred from the seller to the buyer when the goods pass the ship's rail at the named port of shipment (export). The term CFR requires the seller to clear the goods for export. This term can only be used for sea and inland waterway transport. When the ship's rail serves no practical purpose, such as in the case of roll-on/roll-off or container traffic, the CPT term is more appropriate to use.
CIF Cost, Insurance and Freight (...named port of destination)
The seller has the same obligations to fulfill as under CFR but must also obtain and pay for marine insurance against the buyer's risk of loss of or damage to the goods during the carriage. The seller is only required to obtain minimum insurance coverage (cost of goods 10%). Seller's insurance coverage ends at the port of discharge. Seller's costs exclude duties and taxes. The seller must also clear the goods for export.
DES Delivered Ex Ship (...named port of destination)
The seller fulfills his obligation upon placement of the goods at disposal of the buyer ready for discharge (uncleared for import) on board the ship at the named port of destination. The seller must bear all costs and risks involved in bringing the goods to the named port of destination. Duties and taxes are the responsibility of the buyer. Costs and liability are transferred to the buyer at the named place of discharge.
DEQ Delivered Ex Quay (Duty Paid) (...named port of destination)
The seller fulfills his obligation to deliver when the goods are made available on the quay (wharf) to the buyer at the named port of discharge. The seller bears all risks and costs including duties and taxes and other charges at the destination port until goods are made available to the buyer.
DDU Delivered Duty Unpaid (...named place of destination)
The seller fulfills his obligation to deliver when the goods have been made available at the named place in the country of importation. Liability transfers to the buyer at the same time as the transfer of costs. The buyer has to pay all duties, taxes, other official charges and customs formalities due upon importation.
DDP Delivered Duty Paid (...named place of destination)
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 bears all risks and costs, including duties and taxes and other charges of delivering the goods cleared for importation. This may include all charges up to and including delivery at the buyer's location. Whilst the EXW term represents the minimum obligation for the seller, DDP represents the maximum obligation.