CHAPTER 6 CARRIAGE OF GOODS & DOCUMENTATION 6.1 Introduction The parties to an international sale of goods contract must also allocate the risk of loss or damage to the goods in a way that each party accepts. Normally the seller bears the risk of loss or damage until the goods are delivered to the buyer. The parties must agree in their contract when “delivery” of the goods occurs. Many of the risks of loss or damage to goods have existed since merchants first started trading across borders. Therefore, some standard sets of rules have developed to help parties allocate these risks in their international contracts. One important example is the INCOTERMS.

6.2 Definition of INCOTERMS INCOTERMS called International Commercial terms issued by International Chamber of Commerce (ICC) since 1936 and then the recent revisions were issued in 1990 and 2000. INCOTERMS are Shipping International Standard Terms. These terms are defined as the rules for international trade and can function like a convention international language included un the international trade contract. INCOTERMS say who is responsible for insuring the goods. INCOTERMS express the agreements, the rights and the duties of the parties during the transportation of goods that pass from the seller to the buyer. INCOTERMS represent the Seller’s price and join the place of delivery.

6.2a The Meanings and Uses of Specific INCOTERMS This Section explains the specific INCOTERMS. One important thing to understand at the outset is that the terms discussed below may have different meanings under different revisions of the INCOTERMS, and different meanings under other sets of rules. So it is important to indicate exactly what meaning applies. Parties do this by including the phrase “(INCOTERMS[date])” immediately after the term, where the date shows which revision of the terms the parties are using. An example is “FOB Kompon Som (INCOTERMS 2000).” The chart below lists the basic meanings of terms in the 2000 version of the INCOTERMS. Below the chart are more detailed explanations of each term.

. Group E (Departure) EXW+(……named place of delivery) means Ex Works. Seller is responsible the sale of their goods only at the place of seller’s delivery and in the seller’s country. NOTE: the delivery may be outside the door of the factory. This term imposes the most duties on buyer but the sale price is cheap because the goods are sold in cost product. . Group F (Marine carriage unpaid) FCA+(…..named port of shipment) names Free carries. Seller is responsible the sale of their goods, when the goods are delivered to the carrier alongside a ship at the port of loading. FCA= EXW+ Transports from the seller to forwarder NOTE: This term is cleared by received for shipment B\L

FAS+(…. named port of shipment) means Free Alongside Ship FAS+(…..named port of shipment) means Free Alongside Ship. Seller is responsible the sale of their goods, when the goods are delivered to the carrier alongside a ship at the port of loading. NOTE: This term could mean that the goods are delivered to the dock or to a warehouse at the dock or at the container yard of a port. FAS= EXW +Transports from the seller to the port FOB+(….named port of shipment) means Free on Board. Seller is responsible the sale of their goods, when the goods are passed on the board of a ship at the shipment port and the loading freight is charged be seller. FOB= FAS +loading freight NOTE: This term is cleared by shipped on board B\L

. Group C (Marine carriage paid) CFR+(…..named port of destination) means Cost-Freights. Seller is responsible the sale of their goods, when the goods are arrived at the port of discharging (port of buyer’s place) not including the marine insurance. CFR = FOB + Ocean Freight NOTE: This term states the cost price and freights. The seller is not obliged to buye the ocean insurance. CIF+(……named port of destination) means Cost Insurance Freights. Seller is responsible the sale of their goods, when the goods are arrived at the port of discharging (port of buyer’s place). Seller is charged to buy insurance. CIF = CFR + Marine Insurance CIF = FOB + Marine Insurance + Ocean freight NOTE: This term states the total cost, the freights and marine insurance to the port of destination. Buyer will charge the discharging freight of goods from the ship and other freight

CPT +(…. named port of destination) means Carriage Paid to CPT +(…..named port of destination) means Carriage Paid to. Seller is responsible their goods until the goods are arrived at the port of discharging (port of buyer’s place) and when the goods are passed to the first carrier. CPT = CFR + First Discharging freight NOTE: This term is not included marine insurance and the first discharging freight is paid by the seller. First carrier may be forklift of port or level of vessel or level vehicle of port. CIP + (…..named port of destination ) means Carriage Insurance paid. Seller is responsible the sale of their goods until the goods are arrived at the port of discharging (port of buyer’s place ) and when the goods are passed to the first carrier including insurance. CIP = CPT + Marine Insurance CIP = CIF + First Discharging freight NOTE: In this term, seller is obliged to cover the first discharging freight and marine insurance.

. Group D (Arrival) DAF +(…..named place of delivery) means Delivered at frontier. Seller is responsible the sale of their goods until the goods are arrived at any frontier of a country that nam3ed in the contract. NOTE: This term is normally used for combined transport shipment and for the contract of goods involving cross border road or rail and also for the country has not maritime port e.g such as : Lao country. DES + (….named port of destination) means Delivered external Ship. Seller is responsible the sale of their goods until the goods are arrived at the port of discharging (port of buyer’s place) and when the goods are passed on board of the ship. NOTE: This term is like CIF. Discharging freight charged by buyer but the difference is seller must be more responsible until their goods are passed on board of ship.

DEQ + (…. named port of destination ) Means Delivered external quay DEQ + (….named port of destination ) Means Delivered external quay. Seller is responsible the sale of their goods until the goods are arrived at the port of discharging (port of buyer’s place ) and when the goods are disposed on the portside or passed to the warehouse or container yard or directly to the dry port. DEQ = CIF + Discharging freight NOTE: This term should be clearly confirmed in the contract. Discharging freight of goods from ship, to warehouse of port, to container yard of port or to any place of port including the transportation from ship to the dry port are charged by seller. DDU + (….named port of destination) means Delivered Duty Unpaid. Seller is responsible the sale of their goods until the goods are arrived at the port of discharging (port of buyer’s place) and when the goods are disposed to the final point of destination at the buyer’s place not including Duties paid. NOTE: This term means the seller is responsible the sale price of cost and all freights covered by seller except Duty paid. Discharging freight and other expenses of goods to the buyer’s place including Duties paid.

DDP + (. named port of destination) means Delivered Duty Paid DDP + (......named port of destination) means Delivered Duty Paid. Seller is responsible the sale of their goods until the goods are arrived at the port of discharging (port of buyer’s place) and when the goods are disposed to the final point of destination at the buyer’s place including Duties paid. NOTE: Discharging, transportation freight and duties are charged by seller. The delivery may be at the door of the buyer’s warehouse. DDP term is opposite of the EXW. This term imposes the most duties on seller and the sale price is very expensive because the goods are sold at the final destination place. NOTE: All shipping terms represent the seller’s price and must be jointed by seller’s place of the delivery of goods. FOB represents the export of the seller and CIF represents the import of the buyer. The EXW, FCA, CPT, CIP, DAF, DDU, DDP are used for all mode of transport including multimode and FAS, FOB, CFR, CIF, DES, DEQ are used for sea and land waterway transport only.