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Incoterms

What is Incoterms
Incoterms - International Commercial Terms are terms valid for the transport of goods, which provide payments for transportation, risks and responsibilities between the carrier, the buyer and the seller. They are used in international sales contracts.

INCOTERMS - International Commercial Terms are terms valid for the transport of goods, which provide payments for transportation, risks and responsibilities between the carrier, the buyer and the seller. They are used in international sales contracts. They were created by the International Chamber of Commerce (ICC) and they determine the obligations of the parties in the supply of goods (costs and risks). Practical use is such that on the groups of Incoterms rules they refer directly to the contracts in international trade. From a management perspective, Incoterms is a business standard that is accepted by governments, legal authorities and commercial companies worldwide.

INCOTERMS 2010 defines the following rules:

  • Group E (Departure) - the goods are transported directly to the buyer from the seller’s manufacture, the buyer is responsible for it further
    • EXW (Ex Works) - named place
  • Group F (Main carriage not paid by seller) - the seller is asked to supply goods to the carrier designated by the buyer
    • FCA (Free Carrier) - named place
    • FAS (Free Alongside Ship) - named port of shipment
    • FOB (Free on Board) - ex ship - named port of shipment
  • Group C (Main carriage paid by seller)
    • CFR (Cost and Freight) - named port of destination
    • CIF (Cost, Insurance and Freight) - named port of destination
    • CPT (Carriage Paid To) - named place of destination
    • CIP (Carriage and Insurance Paid to) - named place of destination
  • Group D (Arrival) - the seller bears all costs and risks associated with the haulage route
    • DAP (Delivered at Place)
    • DAT (Delivered at Terminal)
    • DDP (Delivered Duty Paid)

Among the most commonly used Incoterms rules include EXW, FOB, CIF, DAP and CPT. The first version of Incoterms was introduced by International Chamber of Commerce ICC, in 1936. Since then, the Incoterms Terms have been updated six times to keep pace with the development of the international trade.

INCOTERMS 2010 are currently in force since 2011. Comparing to the previous version (Incoterms 2000) the rules DAF, DES, DEQ and DDU expire and they are replaced by two new ones:

  • DAP (Delivered at Place) - replace of DDU
  • DAT (Delivered at Terminal) - replace of DAF, DES and DEQ

Incoterms is a registered trademark of the ICC.

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Last update: 10.12.2012
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