(Incoterm)
INternational COmmercial Term
By Prasad Shetty

WHAT DO YOU MEAN BY INCOTERMS?
The INCOTERMS (International Commercial Terms) is a universally recognized set of definitions. international trade terms, developed by the International Chamber of Commerce (ICC) in Paris, It defines the trade contract responsibilities and liabilities between buyer and seller.

Why are they Important?
• The most complex & important tool of international trade is language. Small changes in wording can have major impact on the business agreement. For the avoid this misunderstanding. This is where “INCOTERM” comes into existence. • The INCOTERMS was first published in 1936‐‐and it is revised periodically to keep up with changes in the international trade needs.

NECESSITY
• Costs: who is responsible for the expenses involved in a shipment at a given point in the shipment's journey? • Control: who owns the goods at a given point in the journey? • Liability: who is responsible for paying damage to goods at a given point in a shipment's transit?

What are they?
This terms are divided into four different categories (EFCD)
• E The seller only makes the goods available to the buyer at the seller’s premises. • F The seller delivers the goods to a carrier or place appointed by the buyer. • C The seller has to contract at his costs for carriage and insurance • D The seller must assume most costs, obligations and risks needed to bring the goods to the place of destination

EXW‐(From factory, mill or Warehouse)
EX works menace the seller’s only responsibility is to make the good available at seller's premises The seller is not responsible for loading the goods on vehicle provided by the buyer Buyer is responsible for loading the goods on truck or container at the seller’s premises.

FCA‐Free Carrier
• The Seller delivers the goods, cleared for export, to the carrier selected by the Buyer. Seller loads the goods • Once the carrier pickup is at the seller premises from that point, the buyer bears the cost and risk of moving the goods to destination

FAS‐Free Alongside Ship{+ point of Origin}
• Free Alongside Ship means That the seller delivers when the goods are placed alongside the vessel at the port of shipment • Buyer is responsible for the loading fee, main carriage/ freight, cargo insurance, and other cost and risks.

FOB‐Free on Board
• Free on board means Seller delivers the good on board the ship and clears the goods for export • Buyer is responsible for the all cost, risk and damage to the goods from that point

CFR{+port of destination}‐Cost & Freight
• Cost & fright means that the seller delivers when the goods pass the ships in the port of shipment .seller must pay cost and fright necessary to bring the goods to the port of destination • Buyer is responsible for the cargo insurance and other cost and risk.

CIF‐Cost, Insurance& freight
• Cost insurance and fright means that seller delivers when the goods pass the ship in the port of shipment seller must pay C & F however in CIF seller also has to cover insurance . • Buyer is responsible for the import custom clearance & other cost and risks.

CPT‐Carriage Paid To
• “Carriage paid to…” menace that the seller delivers the goods to the carrier nominated by him but seller in addition pay the cost of carriage necessary to bring the goods to the named destination • Buyer bears all risk and import customs clearance, payment of custom duties and taxes & other cost and risks.

CIP‐(Carriage and Insurance Paid To)
• “Carriage and insurance paid to "Seller delivers the goods to the carrier nominated by him but seller also cover the cargo insurance • Import custom clearance, payment of customs duties & taxes, and other cost and risks is assumed by Buyer.

DDP‐(Delivered Duty paid)
• Delivered duty paid menace that the seller delivers the goods to buyer‐ cleared for Import – To buyer at destination. The seller bears all cost and risks of moving the goods to destination, including the payment of customs duties and taxes

DAP‐Delivered At Place
• Delivered at Place” means that the seller delivers when the goods are placed at the buyer’s disposal on the arriving means of transport ready for unloading at the named place of destination. The seller bears all risks involved in bringing the goods to the named place.

DAT‐Delivered at Terminal
• Delivered at Terminal” means that the seller delivers when the goods, once unloaded from the arriving means of transport, are placed at the disposal of the buyer at a named terminal. • “Terminal” includes any place, whether covered or not, such as a quay, warehouse, container yard or road, rail or air cargo terminal. The seller bears all risks involved in bringing the goods to and unloading them at the terminal at the named port or place of destination.

Need to attached invoice copies

This way, both parties are clear about the costs for which they are responsible.