INCOTERMS 2010 by the International Chamber of Commerce International Business Transactions SSL MSG IB 2013/2014 Monika Grottel PhD

INCOTERMS 2010 What the ICC is? INCOTERMS – what does it mean? The history of INCOTERMS How to use the INCOTERMS? Main features of INCOTERMS rules Rules for any mode(s) of transport Rules for sea and inland waterway transport

Customs, habits, rules?

Is it law, regulation or optional convention? THE RULE Is it law, regulation or optional convention?

THE RULE ……………………………….

What the ICC is? The International Chamber of Commerce (ICC) ……………………………………….. ………………………………………….

INCOTERMS what does it mean? International Commercial Terms a series of pre-defined commercial terms published by the International Chamber of Commerce (ICC) widely used in international commercial transactions

INCOTERMS what does it mean? a set of three-letters trade terms reflecting bussiness –to-bussines practice in contracts for the sale of goods the Incoterms rules describe mainly the tasks, costs and risks involved in the delivery of goods from sellers to buyers

The history of INCOTERMS 1921 – …………………………………… 1936 – …………………………………… 1953 – ……………………………………. 1967, 1976, 1980, 1990, 2000 – …………. January 1, 2011 – Incoterms 2010…………………………………………

How to use the INCOTERMS? „CIF Hamburg, Incoterms 2010” „FCA 38 Cours Albert1er, Paris, France Incoterms 2010”

How to chose the appropriate INCOTERMS rule? The chosen Incoterms rule has to be appropriate: to the goods, to the means of their transport to whether the parties intend to put additional obligations, such as obligation to organize carriage or insurance, on the seller or on the buyer

How to use the INCOTERMS? Remember that Incoterms rules dont give you a complete contract of sale!

INCOTERMS rules do say!

INCOTERMS rules say nothing about!

Main features of INCOTERMS rules The 11 Incoterms rules are presented in two classes: rules for any modes of transport rules for sea and inland waterway transport

Main features of INCOTERMS rules Incoterms rules have been used in international sale contracts, where goods pass across national borders in various areas of the world trade blocs have made border formalities between different countries less significant

Main features of INCOTERMS rules traders use Incoterms rules for domestic sale contracts in the USA in domestic trade Incoterms are used rather than the former Uniform Commercial Code shipment and delivery terms

Main features of INCOTERMS rules Guidance Notes before each Incoterms rule you will find a Guidance Note Guidance Notes explain the fundamentals of each Incoterms rule: when it should be used, when risk passes, how costs are allocated between seller and buyer

Variants of INCOTERMS rules Can we alter an Incoterms rule?

Terms used in the INCOTERMS 2010 CARRIER – CUSTOMS FORMALITIES – DELIVERY – DELIVERY DOCUMENT – PACKAGING –

Rules for any mode(s) of transport EXW FCA CPT CIP DAT DAP DDP

EXW Ex Works (named place of delivery) the seller delivers, when it places the goods at the disposal of the buyer at the seller’s premises or at another named place (works, factory, warehouse..) represents the minimum obligation for the seller

EXW the seller’s obligations

EXW the buyer’s obligations

FCA Free Carrier (named place of delivery) the seller hands over the goods, cleared for export, into the disposal of the first carrier (named by the buyer) at the named place the seller pays for carriage to the named point of delivery risk passes when the goods are handed over to the first carrier

FCA the seller’s obligations

FCA the buyer’s obligations

CPT Carriage Paid To (named place of destination) the seller pays for carriage risk transfers to buyer upon handing goods over to the first carrier and NOT when the goods reach the place of destination

CPT the seller’s obligations

CPT the buyer’s obligations

CIP Carriage and Insurance Paid To (named place of destination) seller pays for carriage and insurance to the named destination point seller contracts for insurance cover against the buyer’s risk of loss of or damage to the goods during the carriage

CIP seller is required to obtain insurance only on minimum cover risk passes when the goods are handed over to the first carrier

CIP the seller’s obligations

CIP the buyer’s obligations

DAT Delivered At Terminal (named terminal at port or place of destination) seller delivers when the goods are unloaded from the arriving means of transport, are placed at the disposal of the buyer at a named terminal of destination

DAT seller pays for carriage to the terminal, except for costs related to import clearance seller assumes all risks up to the point that the goods are unloaded at the terminal

DAT the seller’s obligations

DAT the buyer’s obligations

DAP Delivered at Place (named place of destination) seller delivers when the goods are on the arriving means of transport, ready for unloading at a named place of destination seller pays for carriage to the named place, except for costs related to import clearance, seller assumes all risks prior to the point that the goods are ready for unloading by the buyer

DAP the seller’s obligations

DAP the buyer’s obligations

DDP Delivered Duty Paid (named place of destination) seller is responsible for delivering the goods to the named place in the country of the buyer seller pays all costs in bringing the goods to the destination including import duties and taxes DDP places maximum obligations on the seller and minimum obligations on the buyer

DDP the seller’s obligations

DDP the buyer’s obligations

Rules for sea and inland waterway transport FAS FOB CFR CIF

FAS Free Alongside Ship (named port of shipment) seller must place the goods alongside the ship at the named port and clear the goods for export suitable only for maritime transport but NOT for multimodal sea transport in containers is typically used for heavy-lift or bulk cargo

FAS the seller’s obligations

FAS the buyer’s obligations

FOB Free on Board (named port of shipment) seller must load the goods on board the vessel nominated by the buyer cost and risk are passes when the goods are actually on board of the vessel (this rule is new!) and the buyer bears all costs from that moment the seller must clear the goods for export

FOB the seller’s obligations

FOB the buyer’s obligations

CFR Coast and Freight (named port of destination) seller must pay the costs and freight to bring the goods to the port of destination risk is transferred to the buyer once the goods are loaded on the vessel!! maritime transport only and insurance for the goods is NOT included.

CFR the seller’s obligations

CFR the buyer’s obligations

CIF Cost Insurance and Freight (named port of destination) the same as CFR except that the seller must in addition procure and pay for the insurance maritime transport only

How to use the INCOTERMS? EXW, FCA, DAT, DAP, DDP, FAS, FOB – the named place is the place where delivery takes place and where risk passes from the seller to the buyer CPT, CIP, CFR, CIF – the named place differs from the place of delivery. The named place is the place of destination to which carriage is paid

How to use the INCOTERMS? is a registered trademark of the ICC, registered in several countries

INCOTERMS 2010