International Commercial Terms (Incoterms) were created in 1936 by the International Chamber of Commerce to standardize international commercial contract interpretations. The latest revision, Incoterms 2010, provides rules for 11 terms (down from 13 in 2000) that clarify obligations, risks, and costs in delivery of goods from seller to buyer. The terms are divided into two groups based on mode of transport, and four groups based on allocation of risks and costs. Incoterms aim to reduce uncertainties in international trade by achieving uniformity in contract interpretations.

1. International Commercial Terms 2010
Priyanka Jadhav

2. International Commercial Terms: History
 Initially created in 1936 by the International Chamber of Commerce (ICC) and have
been periodically revised (Incoterms® 2010 is the 8th revision)
 Current revision (“Incoterms 2010”) to become effective January 2011
 These Trade Terms are Short abbreviation for lengthy Contract provisions .
 New Layout – Divided into two distinct sections
 Any Mode Terms: DDP, DAP, DAT, CIP, CPT, FCA, EXW
 Waterway/Maritime Terms: FOB, FAS, CFR, CIF
 As opposed to 2000 version that began with EXW and progressed to DDP – Least
to most risk
 11 Terms (Down from 13)
 DAF, DES, DDU, & DEQ have been removed and replaced by DAP & DAT
respectively

3. Incoterms:
 Incoterms are set of international rules of interpretation of most commonly used terms in
international trade .
 Objective :
 To achieve uniformity
 To Avoid and minimize the uncertainties of trade in different countries
 Obligations, transfer of risks and allocation of costs in connection to delivery of a consignment
from seller to buyer.
 Up to which place the risks are borne by seller.
 Up to which place the costs are borne by seller.
Which responsibilities are borne by the seller.
 Which responsibilities are borne by the buyer.

4. Incoterms 2010 :
Departure Main Carriage
Unpaid
• FCA
• EXW • FAS
• FOB
Group E Group F
Arrival Main Carriage
Paid
Group D Group C
• DAT • CFR
• DAP • CIF
• DDP • CPT
• CIP

5. Group E:EXW (Ex works) (…named place of delivery )
 Ex means from .Work means factory ,mill or warehouse which are sellers premise.
 The only term where the seller /exporter makes the goods available at his own premises to
buyer .
Seller: Minimum Obligations Buyer :Maximum Obligations
• Goods to be made available only at seller • Is responsible for loading goods on truck or
premises . container at sellers premises and for
subsequent cost and risk .
• Arranges for export and Import Licenses
Carriage ,risks and
cost transfers to
Buyers

6. Group F Terms
 Main Carriage Unpaid
 Are considered Seller Friendly
 The seller /exporter is only responsible to deliver the goods to a carrier named by the buyer.
Three types :
1. FCA (Free Carrier )
2. FAS (Free Alongside Ship )
3. FOB (Free On Board )
Seller Responsibility : Buyer Responsibility :
• Handles Export Clearance • Contracts for Main Carriage
• Handles Pre-carriage • Control over Freight Costs
• Named Place on Seller’s Side

7. 1. FCA (Free carrier ) (…named place of delivery )
u The delivery of goods on truck , rail car or container at the specified point of
departure .
Seller: Buyer :
• Clears the goods for export . • Contracts for Main Carriage.
• Pre carriage . • Insurance
• Delivers goods to the carrier (transport • Costs and Risks transfers once goods have
vehicle )specified by the buyer at the been delivered to the carrier at named pace
named place. .
Carriage ,Risks and
Cost transfers to
Buyers

8. 2.FAS (Free Alongside ship ) (…named port of shipment )
 Goods are placed in the dock shed or at the side of the ship , on the dock within the reach of its
loading equipment so that they can be loaded aboard the ship at seller expense.
Seller: Buyer :
• Clears the goods for export . • Loading fees .
• Pre-carriage • Contracts for Main Carriage.
• Places the goods along side the vessel at • Insurance
the “named port of shipment”. • Costs and Risks transfers once goods have
• Commonly used in the sale of bulk been placed alongside ship.
commodity like oils grains and ore .
Carriage ,Risks
and Cost transfers
to Buyers

9. 3. FOB (Free on Board ) (…named port of shipment )
u The delivery of goods on board the vessel at the named port of origin (loading) at sellers
expense .
Seller: Buyer :
• Clears the goods for export . • Contracts for Main Carriage
• Pre-carriage • Cargo insurance
• Is responsible for delivering the goods, on • Costs and Risks transfers once goods have
board the ship at the port of shipment . been placed on board of ship.
Carriage ,Risks
and Cost transfers
to Buyers

10. Group C Terms
 The seller contracts and pays for carriage .
 Not responsible for costs and risks once the goods have been shipped .
 Are considered Buyer Friendly.
Three types
1. Cost and Freight (CFR )
2. Cost Insurance freight (CIF)
3. Carriage Paid To (CPT)
4. Carriage and Insurance Paid To (CIP)
Seller Responsibility : Buyer Responsibility :
• Contracts for Main Carriage • Named Place is on Buyer’s side
• Handles pre-carriage • Has risk of loss while goods are in
• Has control over freight costs transit with carrier selected and paid
• Passes risk of loss (delivers) to for by seller.
Buyer prior main carriage
• Handles export clearance

11. 1. CFR (Costs and Freight ) (…named port of destination )
 The delivery of goods to the named port of destination (discharge ) at sellers expense .
Seller: Buyer :
• Clears the goods for export . • Onward Carriage by buyer
• Pre carriage • Has risk of loss while goods are in transit
• Is responsible : with carrier selected and paid for by seller.
• For contracting and paying for • Cargo Insurance
carriage of the goods .
• Risk transfers once goods have been
placed on board .
Cost transfers to
Risk transfers buyers at delivery
to buyers at named place

12. 2.CIF (Costs Insurance Freight ) (..named port of destination )
u The cargo insurance and delivery of goods to the named port of destination (discharge ) at
the sellers expense .
u Seller is responsible for procuring and paying for marine insurance in the buyer „s name for
the shipment .
Seller: Buyer :
• Clears the goods for export . • Onward Carriage by buyer
• Is responsible : • Has risk of loss while goods are in transit
• For contracting and paying for with carrier selected and paid for by seller.
carriage of the goods . • Cargo Insurance
• Insurance of goods
Cost transfers to
Risk transfers buyers at delivery
to buyers at named place

13. 3. CPT (Carriage Paid To ) (…named place of destination )
 The delivery of goods to the named place of destination (discharge ) at sellers expense .
 Often used in sales where the shipment is by air fright .
Seller: Buyer :
• Clears the goods for export. • Has risk of loss while goods are in
• Is responsible for : transit.
• Carriage of goods to “named • Import Custom clearance
place of destination” arranged by
seller .
• Risk transfers once goods have been
delivered to first carrier .
Cost transfers
Risk transfers to buyers
to buyers

14. 4. CIP (Carriage and Insurance Paid To ) (…named place of destination )
 The delivery of goods and the cargo insurance to the named place of destination (discharge )
at sellers expense .
Seller: Buyer :
• Clears the goods for export. • Has risk of loss while goods are in transit.
• Is responsible for : • Import Custom clearance
• Carriage of goods and insurance
to the “named place of destination”
arranged by seller .
• Risk transfers once goods have been
delivered to first carrier.
Risk transfers Cost transfers
to Buyers to buyers

15. D Group Terms
u The seller is responsible for all costs associated with bringing goods to the named plaice or port
u Are considered to be “Arrival Contracts”
u Are “Buyer friendly “
Three Types
1. DAT (Delivered At Terminal)
2. DAP (Delivered At Place )
3. DDP (Delivered Duty Paid )
Seller Responsibility : Buyer Responsibility :
• Contracts for Main Carriage • Named Place on Buyer’s side
• In charge of carrier (and usually
forwarder) selection
• Handles pre-carriage
• Has control over freight costs
• In control of documentation
• Passes risk of loss (delivers) to
Buyer at freight arrival point
• Handles export clearance

16. 1. DAT (Delivered at Terminal ) (….named terminal at port )
u Delivery of goods to the named terminal at the port or place of destination and unloaded .
Seller: Buyer :
• Clears the goods for export . • Import Custom clearance
• Is responsible
• Delivery of goods to the named
terminal at port or place of
destination .
• Unload the goods at terminal . Cost and Risks
transfers to buyer
once goods are made
available to buyer .

17. 2. DAT (Delivered at Place) (named place of destination)
 Delivery of goods to the named place of destination .
Seller: Buyer :
• Clears the goods for export • Onward Carriage
• Is responsible • Import Custom clearance
• Delivery of goods to the named place
of destination buyer side .
• Ready for Unloading by seller .
Cost and Risks
transfers to buyer once
goods made available
at port .

18. 3. DDP (Delivered Duty Paid ) (named place of Destination )
 Delivery of goods at the named place of destination with import clearance .
Seller: Buyer :
• Clears the goods for export • Onward Carriage
• Is responsible
• Delivery of goods to the named place
of destination
• Goods are ready for Unloading .
• Import Custom clearance by seller .
Cost and Risks
transfers to buyer once
goods made available
at named destination .

19. Incoterms 2010 Chart
Any Mode Terms Control of Main Carriage Risk of
Costs Cost Costs
Departure
EXW (Ex-Works) Buyer Buyer Buyer
Main Carriage Unpaid
FCA (Free Carrier) Buyer Buyer Buyer
Main Carriage Paid
CIP (Carriage & Insurance Paid To) Seller Seller Buyer
CPT (Carriage Paid To) Seller Seller Buyer
Arrival, Freight Prepaid
DAT (Delivered at Terminal) Seller Seller Seller
DAP (Delivered at Place) Seller Seller Seller
DDP (Delivered Duty Paid) Seller Seller Seller 19

20. Incoterms 2010 Chart
Sea, Inland Waterway Control of Main Carriage Risk of
Transport Terms Costs Cost Costs
Main Carriage Freight Collect
FAS (Free Alongside Ship) Buyer Buyer Buyer
FOB (Free on Board) Buyer Buyer Buyer
Main Carriage Freight Prepaid
CFR (Cost and Freight) Seller Seller Buyer
CIF (Cost, Insurance, and Freight) Seller Seller Buyer
20

21. u Thank You