Incoterms 2000

INCOTERMS 2000
 ICC (International Chamber of Commerce) Official

Rules for the Interpretation of Trade terms.
 Purpose is to provide a set of international rules for
the interpretation of the most commonly used trade
terms.
 10 categories describing where risks lie between
seller and buyer
 International Commercial Terms (INCOTERMS)
Incoterms – Purpose and Scope
 Pricing terms, shipping terms, sales

terms
 Apply to international trade
 Define the rights and obligation of the
parties to the contract of sale with
respect to the delivery of goods sold.
Incoterms – Purpose and Scope
 Does not include “intangibles.”

 Do not provide for all the duties which
parties may include in a sales contract.
 Does not include breach of contract.
Incoterms – Who needs to know?
 Importers
 Exporters
 Insurers
 Bankers
Incoterms 2000
 The “E”-term is the term in which the

seller’s obligation is at its minimum.
EXW
EX WORKS (…named place)
 Seller delivers when goods placed at
disposal of buyer
 Minimum obligation for the seller.
Incoterms 2000
 The “F” –terms require the seller to

deliver goods for carriage as instructed
by the buyer.
 FCA
 FAS
 FOB
FCA
FREE CARRIER (named place)
 Seller delivers when goods, cleared for
export, to the carrier nominated by the buyer
at a named place.
 Term may be used irrespective of the mode
of transport.
 Seller obligated to load goods on arriving
vehicle if it arrives at the seller’s premises.
 Seller not obliged to unload goods from his
vehicle.
FAS -FREE ALONGSIDE SHIP
(…named port of shipment)
export, are placed alongside the vessel
 The buyer bears all costs and risks of
loss or damage to the goods from that
moment.
 Terms can be used for sea or inland
waterway transport only.
 Seller obliged to clear goods for export.
FOB – FREE ON BOARD
(…named port of shipment)
export, pass the ship’s rail at the named port
of shipment.
 The buyer bears all costs and risks of loss or
damage to the goods from that point.
 Term can be used for sea or inland waterway
transport only.
 If intent is not to deliver goods across the
ship’s rail, use FCA
Incoterms 2000
 The “C” –terms require the seller to

contract for carriage at his expense – to
a specified point.
 CFR
 CIF
 CPT
 CIP
CFR – COST AND FREIGHT
(…named port of destination)
 Seller delivers when goods, cleared for export,
pass the ship’s rail at the named port of shipment.
 The seller pays the costs and freight necessary to
bring goods to port of destination, but the buyer
bears the risk of loss and additional costs
occurring after delivery.
 Term can be used for sea or inland waterway
transport.
 If intent is not to deliver goods across the ship’s
rail, use CPT
CIF – COST, INSURANCE AND
FREIGHT (…named port of destination)
 Seller delivers when goods, cleared for export, pass the ship’s rail at the named
port of shipment.
 The seller pays the costs and freight necessary to bring goods to port of
destination, but the buyer bears the risk of loss and additional costs occurring
after delivery.
 The seller procures marine insurance, against buyer’s risk of loss. Seller
is required to obtain insurance only on minimum cover.
 Term can be used for sea or inland waterway transport.
 If intent is not to deliver goods across the ship’s rail, use CIP.
CPT – CARRIAGE PAID TO
(…named place of destination)
 Seller delivers the goods, cleared for export, to the carrier.
 The seller pays the costs of carriage necessary to bring goods
to named destination, but the buyer bears the risk of loss and
additional costs occurring after delivery.
 Term may be used irrespective of mode of transport.
CIP – CARRIAGE AND INSURANCE
PAID TO (…named place of destination)
 Seller delivers the goods, cleared for export, the the carrier.
 The seller pays the costs of carriage to named destination, but the
buyer bears the risk of loss and additional costs occurring after delivery.
 The seller procures insurance against buyer’s risk of loss. Seller is
required to obtain insurance only on a minimum cover.
Incoterms 2000
 The “D” –terms require the seller to take the goods all
the way to destination at the border or within the
country of import.
 DAF
 DES
 DEQ
 DDU
 DDP
DAF – DELIVERED AT
FRONTIER (…named place)
 Seller delivers goods, cleared for export, at disposal
of buyer on arriving means of transport.
 Not unloaded, not cleared for import at point at
frontier before customs border of adjoining country.
 Term may be used irrespective of the mode of
transport when goods are delivered at a land frontier.
 If delivery is to take place in the port of destination,
DES or DEQ should be used.
DES – DELIVERED EX SHIP
 Seller delivers goods at disposal of buyer on board
the ship.
 Not cleared for import at the named port of
destination.
 Seller bears all costs and risks to bring goods to the
named port before discharging.
 Term used only for delivery by sea.
 If the seller is to bear the costs of discharging the
goods, DEQ should be used.
DEQ – DELIVERED EX QUAY
 Seller delivers goods, not cleared for import, at
disposal of buyer on the quay at the named port of
destination.
 Seller bears all costs and risks to bring goods to the
named port of destination and discharging the goods
on the quay.
 Term used only for delivery by sea.
DDU – DELIVERED DUTY UNPAID
(…named place of destination)
 Seller delivers goods to the buyer, not cleared for
import, and not unloaded, at the named place of
destination.
 Seller bears all costs and risks (except duty) to bring
goods to the named place of destination.
 If delivery is to take place at the port, quay or on
board a vessel, DES or DEQ should be used.
DDP – DELIVERED DUTY PAID (…
named place of destination)
 Seller delivers goods to the buyer, cleared for import,
and not unloaded, at the named place of destination.
 Seller bears all costs and risks, including import duty,
to bring goods to the named place of destination.
If delivery is to take place at the port, quay or on
board a vessel, DES or DEQ should be used.
Mode of Transport and Appropriate
Incoterm - Any Mode of Transport
 EXW
 FCA
 CPT
 CIP
 DAF
 DDU
 DDP
Mode of Transport and Appropriate
Incoterm – Maritime and Inland
Waterway Transport Only
 FAS
 FOB
 CFR
 CIF
 DES
 DEQ
Bill of Lading and Electronic Commerce
 Bill of Lading – Three important functions

– Proof of delivery of the goods on board the vessel
– Evidence of the contract of carriage; and
– A means of transferring rights to the goods
Non-negotiable Transport Documents
Instead of Bills of Lading
 Bills of lading replaced by non-negotiable documents
– Sea waybills
– Liner waybills
– Freight receipts

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INCOTERMS 2000

 ICC (International Chamber of Commerce) Official

 Pricing terms, shipping terms, sales

 Does not include “intangibles.”

 The “E”-term is the term in which the

 The “F” –terms require the seller to

 The “C” –terms require the seller to

 Bill of Lading – Three important functions

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