| The point
at which sellers have fulfilled their obligations so the goods in a legal sense could be
said to have been delivered to the buyer. They are shorthand expressions that set out the
rights and obligations of each party when it comes to transporting the goods. Following,
are the thirteen terms of sale in international trade as Terms of Sale reflected in the
recent amendment to the International chamber of Commerce Terms of Trade (INCOTERMS),
effective July 1990: exw, fca, fas, fob, cfr, cif, cpt, cip, daf, des, deq, ddu and ddp. - EXW (Ex Works) (...Named Place): A Term of Sale
which means that the seller fulfills the obligation to deliver when he or she has made the
goods available at his/her premises (i.e., works, factory, warehouse, etc.) to the buyer.
In particular, the seller is not responsible for loading the goods in the vehicle provided
by the buyer or for clearing the goods for export, unless otherwise agreed. The buyer
bears all costs and risks involved in taking the goods from the seller's premises to the
desired destination. This term thus represents the minimum obligation for the seller.
- FCA (Free Carrier) (... Named Place): A
Term of Sale which means the seller fulfills their obligation when he or she has handed
over the goods, cleared for export, into the charge of the carrier named by the buyer at
the named place or point. If no precise point is indicated by the buyer, the seller may
choose, within the place or range stipulated, where the carrier should take the goods into
their charge.
- FAS (Free Alongside Ship) (...Named Port
of Shipment): A Term of Sale which means the seller fulfills his obligation to deliver
when the goods have been placed alongside the vessel on the quay or in lighters at the
named port of shipment.This means that the buyer has to bear all costs and risks of loss
of or damage to the goods from that moment.
- FOB (Free On Board) (...Named Port of
Shipment): An International Term of Sale that means the seller fulfills his or her
obligation to deliver when the goods have passed over the ship's rail at the named port of
shipment. This means that the buyer has to bear all costs and risks to loss of or damage
to the goods from that point. The FOB term requires the seller to clear the goods for
export.
- CFR (Cost and Freight) (...Named Port of
Destination): A Term of Sale where the seller pays the costs and freight necessary to
bring the goods to the named port of destination, Terms of Sale but the risk of loss of or
damage to the goods, as (continued) well as any additional costs due to events occurring
after the time the goods have been delivered on board the vessel, is transferred from the
seller to the buyer when the goods pass the ship's rail in the port of shipment. The CFR
term requires the seller to clear the goods for export.
- CIF (Cost, Insurance and Freight)
(...Named Place of Destination): A Term of Sale where the seller has the same obligations
as under the CFR but also has to procure marine insurance against the buyer's risk of loss
or damage to the goods during the carriage. The seller contracts for insurance and pays
the insurance premium. The CIF term requires the seller to clear the goods for export.
- CPT (Carriage Paid To) (...Named Place of
Destination): A Term of Sale which means the seller pays the freight for the carriage of
the goods to the named destination. The risk of loss of or damage to the goods, as well as
any additional costs due to events occurring after the time the goods have been delivered
to the carrier, is transferred from the seller to the buyer when the goods have been
delivered into the custody of the carrier. If subsequent carriers are used for the
carriage to the agreed upon destination, the risk passes when the goods have been
delivered to the first carrier. The CPT term requires the seller to clear the goods for
export.
- CIP (Carriage and Insurance Paid To)
(...Named Place of Destination): A Term of Sale which means the seller has the same
obligations as under CPT, but with the addition that the seller has to procure cargo
insurance against the buyer's risk of loss of or damage to the goods during the carriage.
The seller contracts for insurance and pays the insurance premium. The buyer should note
that under the CIP term the seller is required to obtain insurance only on minimum
coverage. The CIP term requires the seller to clear the goods for export.
- DAF (Delivered At Frontier) (...Named
Place): A Term of Sale which means the sellers fulfill their obligation to deliver when
the goods have been made available, cleared for export, at the named point and placed at
the frontier, but before the customs Terms of Sale border of the adjoining country.
(continued).
- DDU (Delivered Duty Unpaid) (...Named
Port of Destination): A Term of Sale where the seller fulfills his obligation to deliver
when the goods have been made available at the named place in the country of importation.
The seller has to bear the costs and risks involved in bringing the goods thereto
(excluding duties, taxes and other official charges payable upon importation) as well as
the costs and risks of carrying out customs formalities. The buyer has to pay any
additional costs and to bear any risks caused by failure to clear the goods for in time.
- DDP (Delivered Duty paid) (...Named Port
of Destination): "Delivered Duty Paid" means that the seller fulfills his
obligation to deliver when the goods have been made available at the named place in the
country of importation. The seller has to bear the risks and costs, including duties,
taxes and other charges of delivering the goods thereto, clear for importation. While the
EXW term represents the minimum obligation for the seller, DDP represents the maximum.
- DES (Delivered Ex Ship) (...Named Port of
Destination): A Term of Sale where the seller fulfills his/her obligation to deliver when
the goods have been made available to the buyer on board the ship, uncleared for import at
the named port of destination. The seller has to bear all the costs and risks involved in
bringing the goods to the named port destination.
- DEQ (Delivered Ex Quay, [Duty Paid])
(...Named Port of Destination): A Term of Sale which means the DDU term has been fulfilled
when the goods have been available to the buyer on the quay (wharf) at the named port of
destination, cleared for importation. The seller has to bear all risks and costs including
duties, taxes and other charges of delivering the goods thereto. |
