WEEK 13-14 Flashcards
(25 cards)
short for “international commercial terms”,
incoterms
are a set of uniform international terms of sale published by the International Chamber of Commerce (ICC).
incoterms
They are adhered to by most national governments and are in wide use for cross-border transactions.
incoterms
Each individual Incoterm specifies at what point _____ is transferred from Seller to Buyer, how the ___ and __ are to be shared by Seller and Buyer, and the Seller’s documentary ___
- risk
- expenses of transportation
- insurance
- obligations.
define which party is responsible for government requirements (ie, export and import regulations)
incoterms
What Incoterms do:
- Indicate each party’s costs, risks & obligations with regard to the delivery of the goods
- When and where delivery is to be completed
- Which Party must comply with what government requirements
- What are the modes and terms of carriage
What Incoterms do:
- What are the delivery terms, and what is required as proof of delivery
- Where and when risk of loss is transferred from Seller to Buyer
- How transport costs are to be be shared between Buyer and Seller
What Incoterms Don’t Do: Incoterms are not sufficient on their own to express the full intent of the Parties. They will not:
- Define contractual rights and obligations, such as price, quantity, etc., other than for delivery
- Specify details of the transfer, transport and delivery of the goods
- Determine how title to the goods will be transferred
What Incoterms Don’t Do: Incoterms are not sufficient on their own to express the full intent of the Parties. They will not:
- Protect a Party from his/her own risk
- Cover the goods before or after delivery
- Define remedies for breach of contract
Cost/Risk Elements: To Be Shared Between Seller and Buyer
- Goods: Provision For, Payment For
- Licenses and Customs Formalities
- Carriage and Insurance
- Delivery
- Risk Transfer
- Costs
Cost/Risk Elements: To Be Shared Between Seller and Buyer
- Notices
- Proof of Delivery, Transport Documents
- Checking, Packing Marking
- Inspections
- Payment
Type of Incoterms: The minimum obligation of a seller under Incoterms. The seller agrees to make the goods available to the buyer at the seller’s premises (named place).
EXW (Ex Works)
Type of Incoterms: The seller delivers the goods, cleared for export, to a carrier and location that is named by the buyer.
FCA (Free Carrier)
Type of Incoterms: Used only for sea or inland waterway. The seller is required to deliver the goods alongside the ship at the pier or quay. From that point forward, the buyer bears all costs and risks. The seller is required to clear the goods for export (a reversal from previous Incoterms versions).
FAS (Free Alongside Ship)
Type of Incoterm: Used only for sea or inland waterway. Shipped goods are placed on board the ship by the seller at the specific port of shipment named in the sales agreement, purchase order, or contract. The seller is required to clear the goods for export. All costs and risks from the point where the cargo crosses the ship’s rail (is lifted from the quay or pier onto the vessel) passes to the buyer.
FOB (Free on Board)
Type of Incoterms: Used only for sea or inland waterway. Seller delivers when goods pass the ship’s rail in the port of shipment. The seller is required to clear the goods for export. The title and risks change at the ship’s rail, just as in FOB terms , but the cost allocation is different.
CFR (Cost and Freight)
Type of Incoterms: Used only for sea or inland waterway. Seller delivers when goods pass the ship’s rail in the port of shipment and must pay costs and freight to the port destination. The seller is required to clear the goods for export. In its simplest form, ____ is CFR plus Insurance.
CIF (Cost, Insurance, and Freight)
Type of Incoterms: Used for intermodal transportation. The seller delivers goods to a carrier named by the seller and must pay cost of carriage of goods to the destination. The buyer bears all risks and costs after delivery of goods.
CPT (Carriage Paid To)
Type of Incoterms: Used for intermodal transportation. The seller delivers goods to a carrier named by the seller and must pay cost of carriage of goods to the destination. The buyer bears all risks and costs after delivery of goods. The seller has to procure minimum insurance coverage for buyer’s risks of loss or damage of goods during carriage.
CIP (Carriage and Insurance Paid To)
type of incoterms: Seller delivers when the goods are placed at the disposal of the buyer on arriving means of transport—not unloaded, and cleared for export, but not cleared for import—at the named point and place at a land frontier. The seller bears all costs and risks up to this point, but is not responsible for customs clearance, duty or taxes.
DAF (Delivered at Frontier/ Place)
Type of Incoterms: Used only for sea or inland waterway. Seller delivers when the goods are placed at the disposal of the buyer on board the ship not cleared for import at the named destination. The seller bears all costs and risks and title up to the arrival of the vessel at the named port. Costs for unloading the goods and any duties or taxes, is the Buyer’s responsibility. Essentially a term for bulk commodities.
DES (Delivered ate Ex Ship)
Type of Incoterms: Used only for sea or inland waterway. Seller delivers when the goods are placed at the disposal of the buyer on the quay (wharf) not cleared for import at the named destination. The seller bears all costs and risks and title up to the arrival of the vessel at the named port and discharging the goods on the quay. Clearing the goods for import and the costs for unloading the goods and any duties or taxes, is the Buyer’s responsibility. Essentially a term for bulk commodities.
DEQ (Delivered Ex Quay)
Type of Incoterms: Requires that the seller delivers the goods to the buyer not cleared for import and not unloaded at the point or place named in the sales agreement. The seller bears all costs and risks up to this location.
DDU (Delivered Duty Unpaid)
Type of Incoterms: The seller (maximum obligation) agrees to pay all costs and risks, including customs clearance fees and payment of import duties, up to the named place of destination. Buyers and Sellers sometimes agree that taxes such as VAT or Excise or Luxury TAX are not included in these terms. In such cases, additional words should be added, such as “Delivered Duty Paid to Any Town, Any Country, excluding VAT and/or other taxes.
DDP (Delivered Duty Paid)
