ICC Incoterms 2010

Last updated on : 14/09/2015

Contents

Introduction
Free Carrier FCA
Carriage Paid To CPT
Carriage and Insurance Paid CIP
Delivered at Terminal DAT
Delivered at Place DAP
Delivered Duty Paid DDP

Terms for sea and inland waterways

Free Alongside Ship FAS
Free on Board FOB
Cost and Freight CFR
Cost Insurance and Freight CIF
Conclusion

Introduction

Incoterms or trade terms are used to define the obligations of

seller and buyer in the movement of goods from one person to
another. The term is used to explain which party is responsible
for the costs and risks at each stage of the goods movement,
according to Tate's Export Guide.

Incoterms should always be negotiated and used to provide a

legally-enforceable part of the sales contact, to either avoid
disputer when something goes wrong or help resolve disputes
which go to litigation.

With former revisions, Incoterms could be listed in order of

increasing responsibility for the seller, from EX Works to
Delivery Duty Paid named place of destination. Things are not
now so simple. Place of transfer from seller to buyer may not
be the place of transfer or final destination.

Seven of the terms in the latest revision, including two new

ones, may be used irrespective of the mode of carriage of
goods. Carriage may be party, wholly or not all by sea.

EX Works EXW

Free Carrier FCA

Carriage Paid To CPT

Carriage and Insurance Paid to CIP

Delivered At Terminal DAT

Delivered At Place DAP

Delivered Duty Paid DDP

The other four terms are for carriage by sea or inland waterway
and the named places of delivery are all sea or freshwater
ports. These are:

Free Alongside Ship FAS

Free On Board FOB

Cost and Freight CFR

Cost, Insurance and Freight CIF

Use of the last three does not imply delivery as crossing a

ship's rail but does mean that the goods are sitting on or in the
vessel. Compliance with any Incoterm includes acting within
appropriate time limits, packaging requirements and other
conditions of the sales contract or normal practice.
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Free Carrier FCA

Free Carrier FCA named place Incoterms 2010 - This term

may be used whatever mode or modes of transport will be
used.
This term and not FOB should be used for containerised goods
delivered to a carrier at an inland container terminal. The seller
delivers goods to the carrier acting for the buyer at the seller's
premises or another named place, which should be specified
precisely. If delivery is at the seller's premises, goods are
delivered when loaded on the vehicle provided by the buyer;
elsewhere, goods are delivered on the seller's vehicle and
ready for unloading on behalf of the buyer.

The seller is responsible for clearing the goods for export, but
not for any import customs formalities or charges. The seller
may by agreement arrange for carriage at the buyer's risk and
expense, but is not obliged to do either. The seller is not
responsible for insuring the goods for part or whole of their
travels, but may either agree to do this or must on request give
the buyer any information needed to obtain insurance cover.

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Carriage Paid To CPT

Carriage Paid To CPT named place Incoterms 2010 - This

term may be used whatever mode or modes of transport will be
used.

The seller delivers the goods to the carrier or another person

nominated by the seller (by implication, unloaded from the
seller's vehicle) at an agreed place (not the final destination)
but bears all costs of transporting the goods to the final
destination. The seller and buyer must agree on the place of
delivery, where risk passes to the buyer, and the final
destination which should both be specified precisely.

If the seller incurs costs of unloading at delivery or final

destination, he may recover them by agreement with the buyer.
The seller must at his own expense obtain any export licences
needed and enter goods to customs for export and any transit
arrangements if applicable but he has no obligation relating to
import formalities or charges.

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Carriage and Insurance Paid CIP

Carriage and Insurance Paid CIP to named place Incoterms

2010 - This term may be used whatever mode or modes of
transport will be used.

The seller delivers goods to a carrier or another person named

by the seller, unloaded from the seller's vehicle, at a named
place agreed between seller and buyer, and the seller is
responsible for carriage, insurance and any other costs involved
in conveying the goods to the final destination. The seller must
obtain any export licence needed and enter the goods to
customs for export and any transit arrangement. Unless by
agreement with the buyer, insurance arranged by the seller
need only be minimal: if the buyer wants more, the buyer is
responsible for the cost of any extra insurance cover and must
give the seller any extra information needed to obtain that
cover. The place named in this Incoterm is not the final
destination.

Under this Incoterm risks and costs are transferred at different

places: risk at the place of delivery, costs at final destination
because the seller contracts for carriage to that destination.
The place where risk passes should be identified as exactly as
possible; the seller is responsible for any cost of unloading and
must notify the buyer that the goods are delivered there. If two
or more carriers are involved in the latter part of the journey
and seller and buyer do not agree on the place of delivery to be
named, then risk passes to the first carrier and the seller
chooses the place without need for agreement with the buyer.
If seller and buyer should agree that risk is to pass at a later
stage in the journey, such as when goods reach a port of
departure from the originating country, then this agreement
should be included in the sales contract.

The buyer is responsible for fees for mandatory preshipment

inspection unless this is an official requirement of the country
of export. How that might work when the regulations of the
importing country say otherwise is not clear.

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Delivered at Terminal DAT

Delivered At Terminal DAT named place Incoterms 2010 -

This term may be used regardless of the mode or modes of
carriage to be used.

The seller is responsible for moving the goods to the named

terminal, which may be a quay at a port, a rail or air cargo
terminal, a container yard, warehouse, or a precisely-identified
place along a road or in a lorry park and for informing the
buyer that the goods are available for him. Once the goods are
unloaded the seller places them at the buyer's disposal on an
agreed date or within an agreed period.

Again, the Incoterms place of delivery, that is where risk

passes to the buyer, is not the final destination. The place of
risk transfer should be specified exactly and the seller should
obtain a corresponding contract of carriage to that place. If this
place is not agreed with the buyer, the seller chooses it. If the
seller and buyer agree that the seller should be responsible for
moving the goods further, then either DAP or DDP should be
used.

The seller obtains any export licences required, enters the

goods to customs for export if appropriate and makes any
arrangements for transit through other countries. He is not
responsible for insuring the goods beyond the place of delivery,
but must at the buyer's expense provide any information the
buyer needs to obtain cover for the rest of the journey. The
buyer is responsible for moving the goods from the named
place of delivery to the final destination. He also pays for any
mandatory preshipment inspection unless this is a requirement
of the authorities in the country of export.

For Intrastat reports, DAT replaces the former DEQ.

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Delivered at Place DAP

Delivered At Place DAP named place Incoterms 2010 - This

term may be used whatever mode or modes of transport will be
used.

The seller has no obligation to the buyer to insure goods either

to or from that place, but may insure them to that place in his
own interest. The seller bears all costs of carriage, insurance
and anything else up to that place. This place should be
specified exactly and the seller should ensure that his contract
with the carrier includes it. If seller and buyer do not agree on
the place, the seller decides it. The seller cannot recover cost of
unloading at the named place without the buyer's agreement.
If the buyer fails to take on the goods there, he is responsible
for all costs resulting from warehousing, loss or damage from
the agreed time of delivery.

The seller must obtain any export authorisation required, enter

the goods to customs for export and make any necessary
arrangements for transit through other countries. The seller
arranges and pays for carriage from the named place to the
final destination but is not required to secure insurance cover
for the goods after delivery at the named place, although he
must provide the buyer, at the latter's expense, with any
information needed for this. He must also pay any charges for
unloading at the final destination if the contract of carriage
requires this. The buyer is not responsible for fees for
mandatory preshipment inspection required either by the
exporting or importing country.

For Intrastat reports, DAP replaces the former DAF, DES and
DDU.

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on enquiries@tatefreightforms.co.uk or call 01908 221
162 now!
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Delivered Duty Paid DDP

Delivered Duty Paid DDP named place of destination

Incoterms 2010 - This term may be used whatever mode or
modes of transport may be used.
The seller delivers the goods when they are put at the disposal
of the buyer, cleared for import on the arriving means of
transport and ready for unloading at the named place of
destination at an agreed time or within an agreed period. The
seller bears all costs and risks to that point: he must clear
goods both for export from country of export and for import
and must pay any import charges including VAT and other
taxes. Use of this term involves maximum responsibility for the
seller. DDP should not be used if, as is often the case, the seller
cannot obtain import clearance: if the buyer is to obtain import
clearance, DAP should be used. The place of delivery need not
be the buyer's premises, but it should be specified as exactly as
possible.

If seller and buyer do not agree on the place of delivery, the

seller decides. The buyer is responsible for obtaining insurance
cover, but the seller may do this by agreement and at the
buyer's expense. The buyer is responsible for the costs of
unloading at the place of delivery and of further carriage if any,
unless it has been agreed - as will often happen - that the
seller is to pay them. The buyer is not responsible for the costs
of mandatory preshipment inspection.

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Terms for sea and inland waterways

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Free Alongside Ship FAS

Free Alongside Ship FAS named port of shipment Incoterms

2010 - The seller delivers the goods when they are placed (on
a quay or a barge) alongside the vessel nominated by the
buyer at the named port of shipment.

The place where cost and risk are transferred, and the time,
should be identified as exactly as possible. The seller either
delivers the goods alongside the ship or, if he is one of a string,
procures goods from a previous owner in he string. For goods
in containers, the seller often passes goods to a carrier at an
inland terminal and then FCA should be used.

The seller must obtain any licence or other authorisation for

export, enter the goods to customs for export. He may by
agreement contract for onward carriage at the buyer's risk and
expense. He is not responsible for any import procedures or
costs. The seller is not responsible for insuring the goods any
further but must give the buyer, at the buyer's expense, any
information needed to secure cover.

The buyer is responsible for carriage from the place of delivery

and for import clearance and charges. He covers all risks
including failure of the vessel for any reason to take the goods
on board, late arrival of the vessel and damage to the goods en
voyage. He must give the seller any information and
documents required for transit through other countries. He
pays the charges of any mandatory preshipment inspection
unless this is required by the country of export.

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Free on Board FOB

Free On Board FOB named port of shipment Incoterms 2010

- There is a significant change from the meaning of this term in
former revisions of Incoterms: transfer of risk does not happen
at the moment when goods cross the ship's rail.

The seller delivers the goods on a ship nominated by the buyer

at the named port of shipment or procures goods already
delivered there. Risk of loss or damage passes when the goods
are resting on or in the vessel, not when they are hanging from
a crane or being handled over the ship's side. If goods are
passed to a carrier before being loaded on a ship, as goods in
containers are received by a carrier at an inland container
terminal, FCA should be used.

The seller delivers the goods on board the vessel nominated by

the buyer at the named port of shipment, or procures goods
already delivered aboard, at a time agreed with the buyer. If
the loading place has not been agreed, the seller decides it.
Risk of damage or loss passes from seller to buyer when the
goods are on the vessel. The seller must where appropriate
obtain any authorisation such as export licences and enter the
goods to customs. He is not responsible for import clearance or
charges. He may make a contract for onward carriage,
preferably with the agreement of the buyer, but has no
obligation to do this. Nor is he required to arrange insurance
cover, but must give the buyer - at the buyer's expense - any
information needed for the buyer to do this. If there is doubt,
allocation of costs such as trimming coal in a ship's hold should
be agreed between seller and buyer.

The buyer is responsible for onward carriage and insurance

cover. If the vessel he has nominated fails to take the goods on
board, he bears all risks of loss or damage to the goods. He
must obtain if applicable any official authorisation for export
and enter goods to customs for export and transport through
any other countries.

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Cost and Freight CFR

Cost and Freight CFR named port of destination Incoterms

2010 - This rule is intended for use only when carriage is by
sea or inland waterway.

As with CPT, CIP and CIF, the seller delivers goods on board a
vessel at the port of shipment or procures goods already so
delivered aboard, and risk passes at the named port of
destination but without unloading. The seller is responsible for
all costs and freight required to bring goods to the named port
of destination. He clears goods for export if applicable, but has
no responsibility for import procedures or charges. He also pays
for preshipment inspection if this is required by the country of
export.

Risk passes and costs are transferred at different places. Risk

passes at the port of shipment, which may or may not be
named in the sales contract, but costs go to the buyer at the
destination port. If a letter of credit is to specify the port of
shipment, the sales contract should specify it only in general
terms such as "any UK seaport". The seller's contract with the
carrier may include charges for unloading at the destination
port and carriage through any other country but he is not
entitled to recover them from the buyer without agreement.

The seller must provide the buyer with the transport document,
such as the full set of copies of a bill of lading, for onward
carriage to the destination port. CPT and not CFR should be
used where goods pass to a carrier before loaded on a vessel,
say at a container terminal. The seller is not responsible for
insuring the goods for the onward journey but must provide the
buyer with any information required to obtain such insurance.

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Cost Insurance and Freight CIF

Cost Insurance and Freight CIF named port of destination

Incoterms 2010 - This term is to be used only when carriage
is by sea or inland waterway.

Risk of damage or loss passes once goods are on the vessel at

the port of shipment or during carriage by sea if the transaction
is one of a string. The seller delivers the goods on board the
vessel at the port of destination or procures goods already
aboard. The seller contracts for and pays costs for carriage to
the port of destination and for insurance to cover the buyer's
risk of damage or loss in carriage. The seller enters the goods
to customs for export if applicable.

Risks and costs are transferred at different places. Risk passes

to the buyer at the port of shipment but the seller pays
carriage to the port of destination. The seller may incur costs of
unloading there as part of his contract with the carrier, but may
recover them from the buyer only by agreement. The seller is
responsible for export customs clearance if applicable, but not
for any import customs formalities or charges. If goods are
taken by the carrier before reaching the port of shipment, as
are containerised goods at a container terminal, then CIP
should be used.

The seller must provide the buyer with the transport document,
such as a full set of copies of a bill of lading. The seller is not
responsible for insuring the goods for the onward journey but
must provide the buyer with any information required to obtain
such insurance. Insurance may be only minimal (Clause C of
the Institute Cargo Clauses) unless by agreement with the
buyer. The seller must give the buyer any information required
for cover under Clauses A or B or against war or strike, and
give the insurance document to the buyer. The seller does not
pay for preshipment inspection unless it is officially required by
the authorities of the exporting country.

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Conclusion

The list of Incoterms cannot cover all the various arrangements

which may be made between seller and buyer. For example,
only two - CIP and CIF - require the seller to procure insurance
cover for the onward movement of the goods. The seller is not,
for example, required to insure goods beyond there even under
DDP. But the seller will normally use his own domestic
insurance under terms such as DAT or FAS for movements as
far as a container terminal or port, and will often agree to
provide insurance cover as far as the destination port if not to
the buyer's premises.

If the buyer is to secure insurance cover, the seller must give

the buyer whatever help is needed to arrange insurance for the
onward movement, whether this is required by the Incoterm
used or not.

For further information please see the ICC Incoterms 2010

publication, ICC 715E, and the Guide to Incoterms from ICC
United Kingdom, these can be bought using the following
contact details:

12 Grosvenor Place
London
SW1X 7HH
Tel: 0207 838 9363
Fax: 0207 235 5447
Email: publications@iccorg.co.uk.
Need further help with Incoterms? Book a place onto our
Incoterms training course, contact us
on enquiries@tatefreightforms.co.uk or call 01908 221
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