Incoterms (International commercial terms) - are an internationally recognised set of trade term definitions developed by the International Chamber of Commerce (ICC). The terms define the trade contract responsibilities and liabilities between a buyer and a seller.
Classification of Incoterms
The Incoterms are divided into four principal categories: E, F, C and D.
- Category E (Departure), which contains only one trade term, i.e. EXW (Ex Works).
- Category F (Main Carriage Unpaid), which contains three trade terms: FCA, FAS, FOB.
- Category C (Main Carriage Paid), which contains four trade terms: CPT, CIP, CFR, CIF.
- Category D (Arrival), which contains three trade terms: DAP, DPU, DDP.
EXW (Ex Works) – delivery from the factory
The sole task of the seller is to provide access to the product in a place accessible to the buyer (factory, place of manufacturing, warehouse, etc.). The buyer is responsible for all costs and risks - he must arrange loading of the cargo himself, has to clear customs. EXW rules provide for the least liability of the seller.
FCA (Free Carrier) – free carrier
The seller's task is to clear customs and deliver the goods to a previously agreed place. If cargo is damaged or lost before the delivery of goods - the seller is responsible for it. If a buyer requests to present delivery note documents for the goods, the seller must present them.
FAS (Free Alongside Ship) – franco at the ship
The seller's task is to deliver the goods to the ship berth, at the ship side. The seller assumes responsibility and pays all costs until the goods are delivered to the ship. The buyer is responsible for export and import customs procedures.
FOB (Free on Board) – franco on board the ship
The seller's task is to deliver the goods on board the ship to the designated port of shipment. The seller bears risk and bears transport costs, including customs export procedures. Once the goods have been placed on board, the responsibility and subsequent costs pass to the buyer.
CPT (Carriage Paid To) – transport is paid to…
The seller's task is to deliver the goods on board the ship to the designated port of shipment. The seller bears risk and bears transport costs, including customs export procedures. Once the goods have been placed on board, the responsibility and subsequent costs pass to the buyer.
CIP (Carriage and Insurance Paid To) – transportation and insurance are paid to…
The seller's task is to clear the goods and deliver them to a previously agreed place, covering the delivery costs as well as additional insurance costs. The seller is obliged to purchase at least the minimum insurance, so for an additional sense of security, we recommend that the buyer insures his cargo with us. If cargo is damaged or if additional expenses are incurred before the delivery of cargo, the seller is responsible for it, after receiving the goods - the buyer. If a buyer requests to present delivery note documents for the goods, the seller must present them.
CFR (Cost and Freight) – cost and transport
The seller's task is to deliver the goods to the consignee's port, covering transportation costs. The seller is responsible for the customs export procedures and the buyer for the insurance. As long as the goods are on board, the buyer is responsible for damage to the goods.
CIF (Cost Insurance and Freight) – price, insurance and freight
The seller's task is to deliver the goods to the recipient's port, paying for transportation and freight. The seller also performs export customs procedures and pays for cargo insurance. If additional cargo insurance is required, the buyer is responsible for it.
DAP (Delivered at Place) – delivered to the place
The seller's task is to deliver the goods to a previously agreed location, taking up the risk and covering all transportation costs. The buyer is responsible for import customs procedures and other costs from the moment the goods are delivered to the specified place and ready for unloading. The buyer is responsible for unloading.
DPU (Delivered Named Place Unloaded) – delivery without unloading
The seller's task is to deliver the goods to a previously agreed place or destination. The seller assumes responsibility and covers costs associated with transportation, customs procedures, etc. This is the only rule that requires the seller to also unload the goods at the destination address.
DDP (Delivered Duty Paid) – delivered with paid customs duty
The seller's task is to deliver the goods to a place chosen and agreed by the buyer in advance. The seller pays both transportation costs and customs duties and additional costs. This rule stipulates that the seller assumes responsibility throughout the shipment, including for the readiness of cargo for loading, damage to the cargo and formalities.
