A list of 13 standard terms for foreign trade contracts listing the respective responsibilities of buyer and seller, covering collection/delivery, risk and cost responsibilities, they are internationally agreed rules for the interpretation of export terms used in overseas trade, formulated by the International Chamber of Commerce.
Incoterms are a set of uniform rules codifying the interpretation of trade terms defining the rights and obligations of both buyer and seller in an international transaction.
They are hence a basis of the transfer of responsibility from seller to buyer at a convenient place where goods can be inspected.
Hence “FOB”,”C&F”and “CIF” arrange for this to occur upon loading on board the vessel.
With containers inspection at ship side is not possible so that :FOB”,CFR etc are inappropriate .
The international chamber Of commerce( ICC) have accordingly drafted three combined transport equivalents which they advise to use when availing of combined transport services in order to avoid disputes, they are FCA ,CPT and CIP which transfer responsibility from sellers to buyers at the inland point at which the carrier takes charge of the goods.
Incoterms can be divided into recommended usages by mode of carriage the division recommended by the (ICC) is:
- All modes (i.e combined transport) -EXW,FCA,CPT,CIP.,DAF,DDU,DDB
- Conventional port to port sea carriage only - FAS,FOB,CFI,CIF,DAS,DEQ
||Ex Work (Named Place)
||Free Carier (Named Place)
||Free Alongside Ship( Named Port Of Shipment)
||Free On Board (Named Port Of Shipmenty)
||Cost And Freight (Named Port Of Destination)
||Cost Insurance And Freight( Named Port Of Destination)
||Carrier Paid To (Named Point Of Destination)
||Carriage And Insurance Paid To (Named Point Of Destination)
|| Delivered At Frontier (Named Point)
||Delivered Ex Ship (Named Port Of Destination)
||Delivered Ex Quay Duty Paid(Named Port Of Destination)
||Delivered Duty Unpaid( Named Point Of Destination)
||Delivered Duty Paid (Named Point)