Incoterm 2000

❂ICC International Chamber of

Commerce
❂The World Business organization

❂WWW.iccbooks.com
 The international
commercial terms
❂ A set of rules for the interpretation of trade
terms,in a contract of sale
❂ ¨Published and regularly updated by the ICC inc.
International Chamber of Commerce
❂ To help parties to avoid misunderstandings,with
all the waste of time and money that this entails
 Purpose of the Incoterms

❂ To determine the seller’s and buyer’s

respective obligations concerning
responsibilities and charges for the
transportation of goods from the seller’s
premises to the buyer’s place
❂ To avoid any misunderstanding in the
following questions : “who is responsible
for what ? Who is going to pay for what ?”
An incoterm is a 3 letters word
followed by a name of place...
❂ Applying only to the contract of sale in
some very distinct respects
❂ Dealing with a number of identified
obligations imposed on the parties
❂ There are 13 Incoterms and each one fits a
specific situation and specific means of
transport
The structure of
Incoterms
❂ 4 groups of terms
Group E departure
EXW Ex Works (… named place)

Group F Main carriage unpaid

FCA Free Carrier (…named place)
FAS Free Alongside Ship (…named place)
FOB Free On Board (…named port of shipment)

Group C Main Carriage Paid

CFR Cost and Freight (…named port of destination)
CIF Cost Insurance and Freight (…named port of destination)
CPT Carriage Paid To (…named place of destination)
CIP Carriage Insurance Paid To (…named place of destination)

Group D Arrival
DAF Delivered at Frontier (…named place)
DES Delivered Ex Ship (…named port of destination)
DEQ Delivered Ex Quay (…named port of destination)
DDU Delivered Duty Unpaid (…named place of destination)
DDP Delivered Duty Paid (…named place of destination)
A tool to understand the
division of costs
Passing of risks
from the seller to the buyer

❂ Use the right incoterm !

 The terms, one by one…..where
are the risks transferred ?
❂ EXW : Ex Works (….named place)
❂ risks are transferred from the seller to the
buyer, when the goods have been placed at
the disposal of the buyer at the seller’s
premises or another named place not
cleared for export and not loaded on any
collecting vehicle
…….
❂ FAS : Free alongside ship (…named port)
❂ Risks are transferred to the buyer when the goods
have been placed alongside the vessel nominated by
the buyer at the named port of shipment
❂ FCA : Free Carrier (… named place )
❂ Risks are transferred when the goods have been
delivered to the first carrier
Only for sea freight :
❂ FOB : Free On Board (…named port of shipment )
❂ Risks are transferred as the goods pass the ship’s
rail at port of shipment
❂ CFR :Cost and Freight (…named port of shipment) :
same transfer of risks
❂ CIF : Cost ,Insurance and Freight (named…): same
transfer of risks as for FOB and CFR
All means of transport...
❂ CPT : Carriage paid to (…named place of
destination)
❂ Risks transferred as indicated in FCA

❂ CIP : Carriage,Insurance paid to

❂ Risks transferred as indicated in FCA
For trucking or railways…
❂ DAF : Delivered At Frontier (…named
place)
❂ Both parties must specify which frontier
❂ Risks are transferred once the goods
have been placed at the disposal of the
buyer on the arriving means of transport
not unloaded at the named place of
delivery at the frontier
When the sellers is responsible
all the way…
❂ DES : Delivered Ex Ship (…named port of
destination)
❂ Risks are transferred upon arrival, on board of
the vessel when the goods have been placed
at buyer’s disposal at the unloading point
❂ DEQ : Delivered Ex Quay (…named port)
❂ Transfer of risks on the quay at the port of
destination
And….
❂ DDU : Delivered Duty Unpaid (…named place of
destination)
❂ Risks are transferred when goods have been
placed at the buyer’s disposal on any arriving
means of transport non unloaded at the
named place of destination
❂ DDP : Delivered Duty Paid (…named place..)
❂ Same as DDU but cleared out of customs
Conclusion
❂ If you use them right ,
both parties will
understand exactly
their rights and
obligations .. No more
disputes, at least not
about who is
responsible !….