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Incoterms 2010

The purpose of INCOTERMS is to provide a set of international rules for the interpretation of the most commonly used commercial clauses in foreign trade. There are officially accepted international rules for the interpretation of trade clauses issued by the International Chamber of Commerce, facilitating the conduct of international trade. However, they still do not constitute a binding standard, either in terms of international or national law.

  • Specifies shipping conditions
  • It is used throughout the world
  • It protects carriers and customers

The terms and conditions become legally binding when the seller and the buyer agree on some of them in the purchase agreement. However, the INCOTERMS clause does not address the issue of the transfer of title to goods, it only resolves the transfer of the right of disposal to the consignment.

The INCOTERMS clauses mainly regulate

  • The way, place and moment of handing over the goods to the buyer
  • The way, place and moment of transfer of expenses and risks from the seller to the buyer
  • Other obligations of the parties in the provision of transport, accompanying documents, control, insurance, customs clearance, etc.

The risk of loss and damage to the goods, as well as the obligation to bear the cost of the goods, passes from the Seller to the Buyer when the Seller has fulfilled its obligation to deliver the goods. Since the buyer should not be allowed to delay the transfer of risk and costs, all clauses stipulate that the transfer of risk and costs may also occur before delivery of the goods if the buyer does not accept the goods as agreed. This requirement is particularly important in the application of the EXW clause, since in all other clauses the goods would be regularly identified as being intended for the buyer if provision was made for their loading or dispatch (category F and C endorsement) or delivery to a destination endorsement category D). 

INCOTERMS clauses focus their attention on the seller's commitment to deliver goods.

History

The first set of international rules for the interpretation of delivery clauses was issued in 1936 under the name INCOTERMS 1936.

Changes were later made, the latest in 2010, when changes and adjustments were made to bring the rules into line with current modern (eg electronic data transmission, etc.) international trade practices. 

New DAT and DAP 2 delivery terms were introduced, replacing the original DDU, DAF, DES and DEQ delivery terms. The INCOTERMS delivery terms do not constitute legally binding conditions. Therefore, all delivery clauses according to all issued INCOTERMS rules (1936, 1953, 1967, 1980, 1990, 2000, 2010) are valid (only a reference to the relevant INCOTERMS edition must be provided for the delivery point indication).

  • The first interpretation was published in 1936
  • Updated in 2010
  • New DAT and DAP delivery terms
  • Must be stated in the purchase contract

Clause “E” - EXW / Out of Race

Withdrawal clause represents the seller's minimum obligations. Under this clause, the Seller does not have to do anything more than give the goods (identifiable from other goods) available to the Buyer at an agreed location that is usually in the Seller's own property and not customs cleared. If the buyer requires something more from the seller, he must do so clearly in the sales contract.

  • Seller's minimum commitment
  • The Seller shall only hand over the goods to the Buyer
  • Specification of conditions in the purchase contract

EXW - EX WORKS

  • Named place of delivery
  • FROM THE RACE - named place of delivery

The risk and freight costs pass from the Seller to the Buyer at the moment when the Seller makes the goods available to the Buyer as specified in the contract (plant, warehouse, factory, etc.) sufficiently identifiable from the other goods.

“F” clauses

  • FCA / Free Carrier
  • FAS / Free to the ship's side
  • FOB / Free Ship 

Claims for which the Seller does not pay the main freight charge require the Seller to deliver the goods for transport to the carrier designated by the Buyer at the agreed point of export clearance.

The commitment passes to the buyer at the moment of sale at the designated location.

FCA - FREE CARRIER

  • Named place of delivery 
  • PAID CARRIERS - named delivery point

The risk and freight costs pass from the seller to the buyer at the moment when the seller delivers the goods in the designated place to the carrier designated by the buyer. In the case of an FCA clause, if the place agreed in the contract as the place of delivery is the object of the seller, delivery is accomplished by loading the goods on a means of transport delivered by the buyer to the goods, but in all other cases the delivery is fulfilled if the goods are available at the agreed place of delivery the buyer not unloaded from the means of transport of the seller and customs cleared in the export.

FAS - FREE ALONGSIDE SHIP

  • named port of shipment
  • PAYED to the side of the ship - named port of embarkation

Delivery condition only for sea and inland waterway transport. The risk and freight costs pass from the seller to the buyer when the seller delivers the goods at the named port of shipment to the side of the ship designated by the buyer.

FOB - FREE ON BOARD

  • named port of shipment
  • PAYED boat - named port of embarkation

Delivery condition only for sea and inland waterway transport. The risk and freight costs pass from the seller to the buyer as soon as the goods are delivered on board the ship at the named port of shipment.

C clause

- CPT / carriage paid to, 
- CIP / carriage and insurance paid to, 
- CFR / cost and freight, 
- CIF / cost, insurance and freight, 

embarkation or shipment clauses for which the main freight is paid by the seller freight contract. Furthermore, the place where the seller must pay the shipping costs must be determined. It can be said that the clauses of category "C" represent contracts for dispatch of goods. However, the risk for the goods passes from the seller to the buyer as soon as the goods are handed over to the first carrier.

CPT - CARRIAGE PAID TO

  • Named place of destination
  • TRANSPORT PAID TO - named destination

The risk of loss and damage to the goods as well as any additional costs incurred after delivery of the goods to the carrier from the Seller to the Buyer shall pass (as with FCA) at the moment of delivery of the goods to the first carrier or other person appointed by the Seller at the agreed place. However, the Seller is obliged to negotiate the contract of carriage and pay the costs associated with the transport of the goods to the designated destination.

CIP - CARRIAGE AND INSURANCE PAID TO

  • Named place of destination
  • TRANSPORT AND INSURANCE PAID TO - named destination

The risk of loss and damage to the goods as well as any additional costs incurred after delivery of the goods to the carrier from the Seller to the Buyer passes (as with CPT) at the moment of delivery of the goods to the first carrier or other person appointed by the Seller at the agreed place and the Seller is obliged to negotiate a transport contract and pay the costs the goods to the designated destination. The Seller is also obliged to take out insurance covering the Buyer's risk of loss or damage to the Goods during transportation on the basis of minimum coverage by the Institute Cargo Clauses (Category C) or other similar conditions. similar conditions. The insurance must be negotiated by the Seller with a separate insurance contract on behalf of the Buyer at 110% of the value of the goods and must be handed over to the Buyer at least upon delivery of the goods in the currency of the contract and the contract.

CFR - COST AND FREIGHT

  • Named port of destination
  • COST AND TRANSPORT - named port of destination

Delivery condition only for sea and inland waterway transport. The risk of loss and damage to the goods as well as any additional costs incurred after the delivery of the goods to the carrier from the Seller to the Buyer passes (as with FOB) at the moment the goods are loaded on board the ship at the port of shipment. However, the Seller is obliged to negotiate the contract of carriage and pay the costs and freight necessary for the delivery of the goods to the designated port of destination.

CIF - COST, INSURANCE AND FREIGHT

  • Named port of destination 
  • COST, INSURANCE AND TRANSPORT - named port of destination

Delivery condition only for sea and inland waterway transport. The risk of loss and damage to the goods as well as any additional costs incurred after the delivery of the goods to the carrier from the Seller to the Buyer passes (as with FOB) at the moment the goods are loaded on board the ship at the port of shipment. However, the Seller is obliged to negotiate the contract of carriage and pay the costs and freight necessary for the delivery of the goods to the designated port of destination. The Seller is also obliged to take out insurance covering the Buyer's risk of loss or damage to the Goods during transportation on the basis of minimum coverage by the Institute Cargo Clauses (Category C) or other similar conditions. similar conditions. The insurance must be negotiated by the Seller with a separate insurance contract on behalf of the Buyer to 110% of the value of the goods and in the currency of the contract and insurance.

"D" clauses

- DAT / with delivery to the terminal, 
- DAP / with delivery at destination, 
- DDP / with delivery, duty paid

The delivery clause is the seller responsible for delivering the goods to the designated destination or to the designated transshipment point at the port or destination. The seller bears all the dangers and costs until the goods arrive at that location. Category "D" clauses represent goods delivery agreements

DAT - DELIVERED AT TERMINAL

  • Named terminal at port or destination 
  • DELIVERED TO THE TRANSLATION - the designated dock at the port or destination

The new clause replaced the former less popular DEQ clause and extended its scope to all modes of transport. The risk and freight costs pass from the seller to the buyer at the moment when the goods are unloaded from the incoming means of transport and made available to the buyer at the designated transshipment point at the designated port or destination. It is the only clause where the seller has the obligation and responsibility for unloading the goods from the incoming goods.

DAP - DELIVERED AT PLACE

  • Named place of destination
  • DELIVERED IN THE DESTINATION PLACE - named destination

The new clause merged the earlier DAF, DES and DDU clauses, which differed only at the point of delivery. The risk and freight costs pass from the seller to the buyer at the moment when the seller makes the goods available to the buyer on the incoming device ready for unloading at the agreed destination. Import customs clearance, including customs duty, is already at the buyer's risk and expense.

DDP - DELIVERED DUTY PAID

  • Named place of destination
  • DELIVERED DELIVERED DUTY - named destination

The risk and freight costs pass from the Seller to the Buyer (as in DAP) at the moment the Seller makes the Goods available to the Buyer on the incoming device ready for unloading at the agreed destination. However, the seller is obliged to clear the goods for import and to pay import duties. This delivery condition is limited by the national (customs and financial) legislation of the country of destination in the area of ​​customs clearance.

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