Incoterms 2020 are a set of international commercial terms published by the International Chamber of Commerce that define the responsibilities of buyers and sellers for the delivery of goods under sales contracts. The document discusses the history and purpose of Incoterms, provides details on the 11 Incoterms rules for sea and inland transport, and explains aspects like obligations, risks, costs, and documentation requirements for rules like FAS, FOB, CFR, and CIF. Incoterms aim to standardize international trade terms to reduce misunderstandings between trading partners.

1. INCOTERMS 2020
SITE, UIBE

2. 2
Trade Terms — Definition and History
 Frequently, parties to a contract are unaware of the
different trading practices in their respective
countries. This can give rise to misunderstandings,
disputes and litigations, with all the waste of time
and money that this entails.
 By the 1920s, commercial traders had developed a
set of trade terms to describe their rights and
obligations with regard to the sale and transport of
goods. These trade terms consisted of short
abbreviations for lengthy contract provisions.

3. 3
Trade Terms — Definition and History
 Trade terms refer to those terminologies which use simple
words or phases or the acronyms to describe the basic terms
of the transaction, indicating the composition of the price of
traded goods, the place of delivery and/or place and time of
passing of the risk, assigning responsibilities and costs
between the exporter and the importer.
 Trade terms may be expressed in words, such as “Free on
Board”, or their abbreviations, e.g. FOB
 Unfortunately, there was no uniform interpretation of them
in all countries, and therefore misunderstandings often arose
in cross-border transactions.

4. 4
Why INCOTERMS？
 To improve this aspect of international trade, the International
Chamber of Commerce (ICC) first published “Incoterms” in1936.
 “Incoterms” is the abbreviation of International Commercial Terms
(International Rules for the Interpretation of Trade Terms), a set of
uniform rules for the interpretation of international commercial
terms defining the costs, risks, and obligations of buyers and sellers.
 As terms of sale, Incoterms facilitate commerce by promoting
understanding of the specific, respective tasks of trading parties.
 Thus, the uncertainties of different interpretations of such trade
terms in different countries can be avoided or at least reduced to a
considerable degree.

5. 5
Other International Rules
on Trade Terms
 Warsaw Oxford Rules 1932
published by International Law Association in Warsaw
in1928, last revision was made in Oxford in 1932, only
applies to CIF contract
 Revised American Foreign Trade Definitions 1990 by 9
American commercial groups
 originated in 1919, The U.S. Export Quotations and
Abbreviations
 defines 6 trade terms, some of which are defined quite
differently from those in INCOTERMS
 applies mainly in North America

6.  These rules are the result of customary commercial
practice. They are not laws thus do not have any legal
binding forces upon both parties. However, they can be
binding provided their applications are included in the
contract of sale. Also, if a dispute should ever arise
between buyer and seller, these terms provide judges
and arbitrators with a neutral framework for finding a
remedy.
 The parties are strongly advised to include in their
contract in conjunction with the trade term the relative
rules of interpretation.
6

7. 7
Revisions of Incoterms
 As the guardian and originator of Incoterms, ICC has
a responsibility to consult regularly all parties
interested in international trade to keep Incoterms
relevant, efficient and up-to-date.
 First published in 1936, these rules have been
periodically revised to account for changing modes
of transport and document delivery. The current
version is Incoterms 2020.

8. 8
Revisions of Incoterms
 The main reason for successive revisions of Incoterms has
been the need to adapt them to contemporary commercial
practice.
 In 1953, trade term dealing with air transport was introduced.
 In the 1980 revision, trade terms dealing with multimodal transport
and electronic documents were introduced.
 In the 1990 revision, the clauses permitting the seller to provide
proof of delivery by EDI-messages were added.
 The 2000 revision grouped all 13 terms into four categories based
on whether the main freight has been paid or not.
 The 2010 revision reduced the number of terms to 11 and grouped
them into two categories based on the transportation modes.

9. 9
Scope of Incoterms
 It should be stressed that Incoterms only deal with the
relations between two parties – seller and buyer under
contract of sale, no other parties (such as carriers,
brokers, insurer, etc.) and contracts (e.g. Contract of
carriage, contract of insurance, etc.) will be dealt with
 The scope of Incoterms is limited to matters relating
to the obligations of the parties to the contract of sale
with respect to the delivery of goods sold, in the sense
of “tangibles”, not including “intangibles”.

10. 10
Scope of Incoterms
 Incoterms do not deal with
 transfer of property rights in the goods
 relief from obligations and exemptions from liability in
case of unexpected or unforeseeable events; or
 consequences of various breaches of contract
 Incoterms are primarily used for contracts for
international sale. In practice however, at times
they are also incorporated into contracts for the
sale of goods within domestic markets.

11. 11
Use of Incoterms
 Incoterms are not implied into contracts for the sale of goods. If
the traders desire to use Incoterms, they must specifically
include them in the contract. Further, the contract should
expressly refer to the rules of interpretation as defined in the
latest revision, i.e., Incoterms 2020, and they should ensure the
proper application of the terms by additional contract provisions.
 Incoterms are not “laws.” In case of a dispute, courts and
arbitrators will look at: 1) the sales contract, 2) who has
possession of the goods, and 3) what payment, if any, has been
made.

12. 12
Structure of Incoterms 2020
Rules for any
mode or modes of
transport
EXW (Ex Work) (…named place of delivery)
FCA (Free Carrier) (…named place of delivery)
CPT (Carriage Paid To) (…named place of destination)
CIP (Carriage and Insurance Paid To) (…named place of destination)
DAP (Delivered at Place) (…named place of destination)
DPU (Deliver at Place Unloaded) ( ... named place of destination )
DDP (Delivered Duty Paid) (…named place of destination)
Rules for sea and
inland waterway
traspornt
FAS (Free Alongside Ship) (…named port of Shipment)
FOB (Free on Board) (…named port of Shipment)
CFR (Cost and Freight ) (…named port of destination)
CIF (Cost, Insurance and Freight) (…named port of destination)
There are 11 trade terms, which are presented into 2 distinct classes

13. 13
The seller’s obligations The buyer’s obligations
A1. General obligations B1. General obligations
A2. Delivery B2. Taking delivery
A3. Transfer of risks B3. Transfer of risks
A4. Carriage B4. Carriage
A5. Insurance B5. Insurance
A6. Delivery / Transport document B6. Proof of Delivery
A7. Export / Import clearance B7. Export / Import clearance
A8. Checking / Packaging/ Marking B8. Checking / Packaging/ Marking
A9. Allocation of costs B9. Allocation of costs
A10. Notices B10. Notices
Under the Incoterms 2020, all obligations related to a given trade term are
grouped under 10 headings, with the obligations for the seller and the buyer
under each heading stated and mirrored with respect to the same subject matter.

14. Rules for Sea and
Inland Waterway Transport
 FAS—Free Alongside Ship (named port of
shipment)
 FOB—Free On Board (named port of
shipment)
 CFR—Cost and Freight (named port of
destination)
 CIF—Cost, Insurance and Freight paid to
(named port of destination)
14

15. 15
FAS - Free Alongside Ship
(... named port of shipment)
 “Free Alongside Ship” means that the seller delivers when the
goods are placed alongside the vessel (e.g., on a quay or a
barge) nominated by the buyer at the named port of shipment.
 The seller has to deliver near the vessel’s tying-up berth, so that the
goods may be loaded by the ship’s own tackle or shore crane or by
other means
 Where the ship is berthed alongside a wharf or quay, the goods have
to be placed ashore near her anchorage; where the ship cannot enter
the port or is anchored in the stream, the seller has to provide and pay
for lighters which will take the consignment alongside the ship
 The risk of loss of or damage to the goods passes when the
goods are alongside the ship, and the buyer bears all costs
from that moment onwards.

16. 16
FAS - Free Alongside Ship
(... named port of shipment)
 Buyer must:
 Nominate carrier
 Contract for the carriage and pay the freight
 The parties are well advised to specify as clearly as possible
the loading point at the named port of shipment, as the costs
and risks to that point are for the account of the seller and
these costs and associated handling charges may vary
according to the practice of the port.
 If no specific point has been indicated by the buyer, the seller may
select the point within the named port of shipment that best suits its
purpose.
 If the parties have agreed that delivery should take place
within a period, the buyer has the option to choose the date
within that period.

17. 17
FAS - Free Alongside Ship
(... named port of shipment)
 The obligation to notify
 The seller must, at the buyer’s risk and expense,
give the buyer sufficient notice either that the goods
have been delivered or that the vessel has failed to
take the goods within the time agreed.
 The buyer must give the seller sufficient notice of
the vessel name, loading point and, where necessary,
the selected delivery time within the agreed period.

18. 18
FAS - Free Alongside Ship
(... named port of shipment)
 FAS requires the seller to clear the goods for export,
where applicable.
 This rule is to be used only for sea and inland
waterway transport.
 Where the goods are in containers, it is typical for
the seller to hand the goods over to the carrier at a
terminal and not alongside the vessel. In such
situations, the FAS rule would be inappropriate, and
the FCA rule should be used.

19. 19
FOB - Free on Board
(... named port of shipment)
 “Free on Board” means that the seller delivers the
goods on board the vessel nominated by the buyer at
the named port of shipment or procure the goods
already so delivered.
 The risk of loss of or damage to the goods passes when the
goods are on board the vessel, and the buyer bears all
costs from that moment onwards.
 Buyer
 Nominate carrier
 Contract for the carriage and pay the freight

20. 20
FOB - Free on Board
(... named port of shipment)
 The obligation to notify
 The seller must, at the buyer’s risk and expense,
give the buyer sufficient notice either that the goods
have been delivered or that the vessel has failed to
take the goods within the time agreed.
 The buyer must give the seller sufficient notice of
the vessel name, loading point and, where necessary,
the selected delivery time within the agreed period.

21. 21
FOB - Free on Board
(... named port of shipment)
 FOB requires the seller to clear the goods for export,
where applicable.
 This rule is to be used only for sea and inland
waterway transport.
 Where the goods are in containers, it is typical for
the seller to hand the goods over to the carrier at a
terminal and not alongside the vessel. In such
situations, the FOB rule would be inappropriate, and
the FCA rule should be used.
 Difference with the interpretation in Revised
American Foreign Trade Definitions 1990

22. 22
CFR - Cost and Freight
(…named port of destination)
 “Cost and Freight” means that the seller delivers the goods
on board the vessel or procure the goods already so delivered.
 The risk of loss of or damage to the goods passes when the goods are
on board the vessel.
 The seller must contract for and pay the costs and freight
necessary to bring the goods to the named port of destination.
 The contract of carriage must be made on usual terms at the seller’s
expense and provide for carriage by the usual route in a vessel of the
type normally used for the transport of the type of goods sold.
 The seller fulfils its obligation to deliver when it deliver the
goods on board the vessel at the port of shipment but not
when the goods reach the port of destination.

23. 23
CFR - Cost and Freight
(…named port of destination)
 This rule has two critical points, because risk passes and costs
are transferred at different places.
 While the contract will always specify a destination port, it might not
specify the port of shipment, which is where risk passes to the buyer.
If the shipment port is of particular interest to the buyer, the parties
are well advised to identify it as precisely as possible in the contract.
 The parties are well advised to identify as precisely as possible the
point at the agreed port of destination, as the costs to that point are for
the account of the seller.
 If the seller incurs costs under its contract of carriage related to
unloading at the specified point at the port of destination, the seller is
not entitled to recover such costs from the buyer unless otherwise
agreed between the parties.

24. 24
CFR - Cost and Freight
(…named port of destination)
 The seller must give the buyer any notice needed in order to
allow the buyer to take measures that are normally
necessary to enable the buyer to take the goods.
 CFR requires the seller to clear the goods for export, where
applicable.
 This rule is to be used only for sea and inland waterway
transport.
 CFR may not be appropriate where goods are handed over
to the carrier before they are on board the vessel, for
example goods in containers, which are typically delivered
at a terminal.

25. 25
CIF – Cost, Insurance and Freight
(…named port of destination)
 “Cost, Insurance and Freight” means that the seller delivers
the goods on board the vessel or procures the goods already
so delivered.
 The risk of loss of or damage to the goods passes when the goods are
on board the vessel.
 The seller must contract for and pay the costs and freight
necessary to bring the goods to the named port of destination.
 The contract of carriage must be made on usual terms at the seller’s
expense and provide for carriage by the usual route in a vessel of the
type normally used for the transport of the type of goods sold.
 The seller fulfils its obligation to deliver when it hands the
goods over to the carrier and not when the goods reach the
place of destination.

26. 26
CIF – Cost, Insurance and Freight
(…named port of destination)
 The seller also contracts for insurance cover against
the buyer’s risk of loss of or damage to the goods
during the carriage.
 The buyer should note that under CIF the seller is
required to obtain insurance only on minimum cover.
 Should the buyer wish to have more insurance protection,
it will need either to agree as much expressly with the
seller or to make its own extra insurance arrangements.
 The insurance shall cover, at a minimum, the price
provided in the contract plus 10% (i.e., 110%) and
shall be in the currency of the contract.
 Risks and Insurance

27. 27
CIF – Cost, Insurance and Freight
(…named port of destination)
 This rule has two critical points, because risk passes and
costs are transferred at different places.
 While the contract will always specify a destination port, it might not
specify the port of shipment, which is where risk passes to the buyer.
If the shipment port is of particular interest to the buyer, the parties
are well advised to identify it as precisely as possible in the contract.
 The parties are well advised to identify as precisely as possible the
point at the agreed port of destination, as the costs to that point are
for the account of the seller.
 If the seller incurs costs under its contract of carriage related to
unloading at the specified point at the port of destination, the seller is
not entitled to recover such costs from the buyer unless otherwise
agreed between the parties.

28. 28
CIF – Cost, Insurance and Freight
(…named port of destination)
 The seller must give the buyer any notice needed in order to
allow the buyer to take measures that are normally
necessary to enable the buyer to take the goods.
 CIF requires the seller to clear the goods for export, where
applicable.
 This rule is to be used only for sea and inland waterway
transport.
 CIF may not be appropriate where goods are handed over to
the carrier before they are on board the vessel, for example
goods in containers, which are typically delivered at a
terminal.

29. 29
In a case in which goods were sold on terms “CIF Hong Kong shipment
from continental port not later than 31st October”, the goods were
actually shipped after that date, but the bill of lading was forged to
indicate shipment on time. The buyers discovered the forgery only after
having accepted physical delivery of the goods and did not make any
objection to the quality of the goods delivered. The court observed:
“[T]here is a right to reject documents and a right to reject goods, and
the two things are quite distinct. A CIF contract puts a number of
obligations upon the seller, some of which are in relation to the goods
and some of which are in relation to the documents. So far as the goods
are concerned, he must put on board at the port of shipment goods in
conformity with the contract description, but he must also send forward
documents, and those documents must comply with the contract.”
Symbolic Delivery under CIF
Kwei Tek Chao v. British Traders & Shippers Ltd (1954) 2

30.  A Chinese company signed a contract with an American company
importing 1,000 tons of chemical material. The terms of contract are as
follows: USD 500 per MT, FOB NY, payment by irrevocable L/C,
shipment within May, packed to be suitable for ocean transport, in case
of a dispute, it should be brought to arbitration in the U.S..
 On May 20, the Chinese company sent a ship to the port of New York
and notified the American exporter to make delivery. Yet it was already
May 28, and the US company didn’t come. Thus, the Chinese company
reminded the exporter, and the exporter replied that under FOB New
York, the seller is only responsible for making delivery at the seller’s
premises in the city of New York. The Chinese company disagreed and
the two parties decided to resort to arbitration.
Q: Is the American exporter in breach of his obligation to deliver?
30

31. 31
 A company exported 500 tons of walnuts to a Canadian importer at CIF Quebec
CAD 4800 per ton, delivery not later than Oct. 31st, partial shipment and
transshipment not allowed, the goods should reach the destination no later than
Nov. 30, otherwise the buyer was entitled to refuse to take delivery, payment
was to be made by L/C 90 days after sight.
 The importer opened L/C on Sep. 25. The exporter finished delivery on Oct.5th.
However, when the ship reached the east coast of Canada, it was already
Nov.25th, and the seawater started to freeze. The carrier was worried that the
ship could not come out if it sailed for Quebec, thus directed the Master to
discharge the goods onto another port and shipped the goods by rail to Quebec
according to transshipment clause. When the goods reached Quebec, it was
already Dec. 2nd. Thus the importer claimed that the goods arrived late and
refused to take delivery unless the exporter cut the price by 20% to make up for
his loss.
 Q: Is the importer’s request reasonable or not?

32. Rules for Any Mode or
Modes of Transport
 EXW - Ex Works (named place of delivery)
 FCA - Free Carrier (named place of delivery)
 CPT - Carriage paid to (named place of destination)
 CIP - Carriage and Insurance paid to (named place of
destination)
 DAP - Delivered at Place (named place of destination)
 DPU – Delivered at Place Unloaded (named place of
destination)
 DDP - Delivered Duty Paid (named place of destination)
32

33. EXW – Ex Works
(……named place of delivery)
 “Ex works” means that the seller delivers when it places the
goods at the disposal of the buyer at the seller’s premises or
at another named place (i.e., works, factory, warehouse, etc.)
 The seller does not need to load the goods on any collecting
vehicle, even though it practice the seller may be in a better
position to do so.
 If the parties wish the seller to load the goods, this should be made
clear by adding explicit wording to this effect in the contract of sale.
And the seller does so at the buyer’s risk and expense.
 In case where the seller is in a better position to load the goods, FCA,
which obliges the seller to do so at its own risk and expense, is
usually more appropriate.
33

34. 34
 A buyer who buys from a seller on an EXW basis
for export needs to be aware that the seller has an
obligation to provide only such assistance as the
buyer may require to effect that export: the seller is
not bound to organize the export clearance.
 Buyers are therefore well advised not to use EXW if
they cannot directly or indirectly obtain export clearance.
 The buyer must pay the costs of any mandatory
pre-shipment inspection (PSI), INCLUDING
inspection mandated by the authorities of the
country of export.
EXW – Ex Works
(……named place of delivery)

35. 35
 This rule may be used irrespective of the mode of
transport selected and may also be used where more
than more than one mode of transport is employed.
 It is suitable for domestic trade, while FCA is
usually more appropriate for international trade.
 EXW represents the minimum obligation for the
seller. Therefore, the price may be the lowest.
However, this term is seldom used because it means
too much effort and risks for the buyer.
EXW – Ex Works
(……named place of delivery)

36. 36
FCA - Free Carrier
(... named place of delivery)
 “Free Carrier” means that the seller delivers the goods to the
carrier or another person nominated by the buyer at the
seller’s premises or another named place.
 “Carrier” means any person, who, in a contract of carriage, undertakes
to perform or to procure the performance of transport, by rail, road,
air, sea, inland waterway or by a combination of such modes.
 If subsequent carriers are used for the carriage to the agreed
destination, the risk passes when the goods have been delivered to the
first carrier.
 The buyer must contract at its own expense for the carriage of
the goods from the named place of delivery.

37. 37
FCA - Free Carrier
(... named place of delivery)
 It should be noted that the chosen place of delivery
has an impact on the obligations of loading and
unloading the goods at that place.
 If the named place is the seller’s premises, delivery is
completed when the goods have been loaded on the
means of the transport provided by the buyer.
 In any other case, delivery is completed when the goods
are placed at the disposal of the carrier or another
person nominated by the buyer on the seller’s means of
transport ready for unloading.

38. 38
FCA - Free Carrier
(... named place of delivery)
 The buyer must pay the costs of any mandatory
pre-shipment inspection EXCEPT when such
inspection is mandated by the authorities of the
country of export.
 FCA requires the seller to clear the goods for
export, where applicable.
 This rule may be used irrespective of the mode
of transport selected and may also be used
where more than one mode of transport is
employed.

39. 39
CPT - Carriage Paid to
(... named place of destination)
 “Carriage paid to...” means that the seller delivers the goods
to the carrier or another person nominated by the seller at an
agreed place (if any such place is agreed between the
parties) and that the seller must contract for and pay the
costs of carriage necessary to bring the goods to the named
place of destination.
 The contract of carriage must be made on usual terms at the
seller’s expense and provide for carriage by the usual route
and in a customary manner.
 The seller fulfils its obligation to deliver when it hands the
goods over to the carrier and not when the goods reach the
place of destination.

40. 40
CPT - Carriage Paid to
(... named place of destination)
 This rule has two critical points, because risk passes and costs
are transferred at different places.
 The parties are well advised to identify as precisely as
possible in the contract both the place of delivery, where
the risk passes to the buyer, and the named place of
destination to which the seller must contract for carriage.
 Should the parties wish the risk to pass at a later stage (e.g.,
at an ocean port or an airport), they need to specify this in
their contract of sale.
 The parties are also well advised to identify as precisely
as possible the point within the agreed place of
destination, as the costs to that point are for the account of
the seller.

41. 41
CPT - Carriage Paid to
(... named place of destination)
 If the seller incurs costs under its contract of carriage
related to unloading at the named place of
destination, the seller is not entitled to recover such
costs from the buyer unless otherwise agreed
between the parties.
 CPT requires the seller to clear the goods for export,
where applicable.
 This rule may be used irrespective of the mode of
transport selected and may also be used where more
than one mode of transport is employed.

42. 42
CIP - Carriage and Insurance Paid to
(... named place of destination)
 “Carriage and insurance paid to...” means that the seller
delivers the goods to the carrier or another person nominated
by the seller at an agreed place (if any such place is agreed
between the parties) and that the seller must contract for and
pay the costs of carriage necessary to bring the goods to the
named place of destination.
 The contract of carriage must be made on usual terms at the
seller’s expense and provide for carriage by the usual route
and in a customary manner.
 The seller fulfils its obligation to deliver when it hands the
goods over to the carrier and not when the goods reach the
place of destination.

43. 43
CIP - Carriage and Insurance Paid to
(... named place of destination)
 The seller also contracts for insurance cover
against the buyer’s risk of loss of or damage to the
goods during the carriage.
 The buyer should note that under CIP the seller is
required to obtain insurance complying with the cover
provided by ICC (A) or any similar clauses.
 Should the buyer wish to procure additional insurance, it
will need either to agree as much expressly with the
seller or to make its own extra insurance arrangements.
 The insurance shall cover, at a minimum, the price
provided in the contract plus 10% (i.e., 110%) and shall
be in the currency of the contract.

44. 44
CIP - Carriage and Insurance Paid to
(... named place of destination)
 Two critical points, same with CPT
 If the seller incurs costs under its contract of carriage related
to unloading at the named place of destination, the seller is
not entitled to recover such costs from the buyer unless
otherwise agreed between the parties.
 CIP requires the seller to clear the goods for export, where
applicable.
 This rule may be used irrespective of the mode of transport
selected and may also be used where more than one mode of
transport is employed.

45. 45
 “Delivered at place” means that the seller delivers when the
goods are placed at the disposal of the buyer on the arriving
means of transport ready for unloading at the named place of
destination.
 The seller has no obligation to unload the goods from
arriving means of transport
 If the seller incurs costs under its contract of carriage
related to unloading at the named place of destination, the
seller is not entitled to recover such costs from the buyer
unless otherwise agreed between the parties.
 The seller bears all risks involved in bringing the goods to the
named place.
DAP – Delivered at Place
(…named place of destination)

46. 46
 This rule may be used irrespective of the mode of
transport selected and may also be used where more
than one mode of transport is employed.
 DAP requires the seller to clear the goods for export,
where applicable.
 If the parties intend the seller to clear the goods for
import, pay any import duty or carry out any import
customs formalities, the DDP term should be used.
DAP – Delivered at Place
(…named place of destination)

47. DPU – Delivered at Place Unloaded
(…named place of destination)
 “Delivered at place unloaded” 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
place of destination.
 The seller has the obligation to unload the goods.
 The seller bears all risks involved in bringing the goods to
the named place.
 DPU requires the seller to clear the goods for export, where
applicable. If the parties intend the seller to clear the goods
for import, pay any import duty or carry out any import
customs formalities, the DDP term should be used.

48. 48
DDP - Delivered Duty Paid
(... named place of destination)
 “Delivered duty paid” means that the seller delivers the
goods when the goods are placed at the disposal of the
buyer, cleared for import on the arriving means of
transport ready for unloading at the named place of
destination.
 The seller has no obligation to unload the goods from
arriving means of transport
 If the seller incurs costs under its contract of carriage
related to unloading at the named place of destination,
the seller is not entitled to recover such costs from the
buyer unless otherwise agreed between the parties.

49. 49
DDP - Delivered Duty Paid
(... named place of destination)
 The seller bears all the costs and risks involved in bringing
the goods to the named place of destination and has an
obligation to clear the goods not only for export but also for
import, to pay any duty for both export and import and to
carry out all customs formalities.
 However, if the parties wish to exclude from the seller’s
obligation some of the costs payable upon import of the
goods (such as value-added tax: VAT), this should be made
clear by adding explicit wording to this effect in the
contract of sale (such as “Delivered duty paid, VAT
unpaid”).

50. 50
DDP - Delivered Duty Paid
(... named place of destination)
 This rule may be used irrespective of the mode of
transport selected and may also be used where more
than one mode of transport is employed.
 The parties are well advised not to use DDP if the
seller is unable directly or indirectly to obtain import
clearance. If the parties wish the buyer to bear all
risks and costs of import clearance, the DAP term
should be used.
 DDP represents the MAXIMUM obligation for the
seller.

51. 51
Appropriation
 The risk of loss of or damage to the goods, as well as
the obligation to bear the costs relating to the goods,
passes from the seller to the buyer when the seller has
fulfilled his obligation to deliver the goods.
 Since the buyer should not be given the possibility to
delay the passing of the risk and costs, all terms
stipulate that the passing of risk and costs may occur
even before delivery, if the buyer does not take delivery
as agreed or fails to give such instruction (with respect
to time for shipment and/or place for delivery) as the
seller may require in order to fulfill his obligation to
deliver the goods.

52. 52
 It is a requirement for such premature passing of risk and
costs that the goods have been clearly identified as the
contract goods intended for the buyer or, as is stipulated in
the terms, set aside for him (appropriation).
 This requirement is particularly important under EXW,
since under all other terms the goods would normally have
been identified as intended for the buyer when measures
have been taken for their shipment or dispatch (“F”- and
“C”-terms) or their delivery at destination (“D”-terms).
 In exceptional cases, however, the goods may have been
sent from the seller in bulk without identification of the
quantity for each buyer and, if so, passing of risk and cost
does not occur before the goods have been appropriated.

53. 53
Checking-Packaging-Marking
 The seller must pay the costs of those checking
operations (such as checking quality, measuring,
weighing, counting) that are necessary for the purpose
of delivering the goods.
 The seller must, at its own expense, package the goods,
unless it is usual for particular trade to transport the
type of goods sold unpackaged. The seller must
package the goods in the manner appropriate for their
transport, unless the buyer has notified the seller of
specific packaging requirements before the contract of
sale is concluded.
 Packaging is to be marked appropriately.

54. 54
Inspection of Goods
 In many cases, the buyer may be well advised to arrange for
inspection of the goods before or at the time they are
handed over by the seller for carriage (so-called pre-
shipment inspection or PSI).
 Unless the contract stipulates otherwise, the buyer would
himself have to pay for the cost for such inspection that is
arranged in his own interest.
 However, if the inspection has been made in order to enable
the seller to comply with any mandatory rules applicable to
the export of the goods in his own country, the seller would
have to pay for that inspection, unless the EXW term is
used, in which case the costs of such inspection are for the
account of the buyer.