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WhatisINCOTERMS
Incoterms arestandardtradedefinitionsm ost
com m onlyusedininternational salescontracts.
DevisedandpublishedbytheInternational
Cham berofCom merce, theyareattheheartof
worldtrade.
Versionof INCOTERMS
ICCintroducedthefirstversionof Incoterms - shortfor
"International Commercial Terms" - in1936.
Updatedfor several times tokeeppacewiththedevelopmentof
international trade
INCOTERMS 2000: thelatestedition
Versions of Incoterms precedingthe2000editionmaystill be
incorporatedintofuturecontracts if theparties soagree.
notrecommended latestversionis designedtobring Incoterms
intolinewiththelatestdevelopments incommercial practice.
3. Use of Incoterms
Not implied into contracts for the sale of goods.
Specifically include them in the contract when using
Incoterms,
Further, your contract should expressly refer to the rules
of interpretation as defined in the latest revision of
Incoterms.
Ensure the proper application of the terms by additional contract
provisions.
In case of a dispute, courts and arbitrators will look at: 1) the sales
contract, 2) who has possession of the goods, and 3) what payment, if
any, has been made.
Incoterms Do . . .
Group C CFR Cost and Freight Main carriage paid (... named port of
Main Carriage destination)
Paid CIF Cost. Insurance and Freight (... named port of destination)
Carriage Paid To (... named place of destination)
CPT
Carriage and Insurance Paid To (…named place of
CIP
destination)
卖方义务 买方义务
A1 提供符合合同的货物 B1 支付货款
A2 许可证、核准书和手续 B2 许可证、核准书和手续
A3 运输和保险合同 B3 运输合同
A4 交付货物 B4 收取货物
A5 风险转移 B5 风险转移
A6 费用划分 B6 费用划分
A7 通知买方 B7 通知卖方
A8 交货证明、运输单据或具 B8 交货证明、运输单据或
具
有同等效力的电子信息 有同等效力的电子信
息
A9 检验、包装、标记 B9 货物检验
A10 其他义务 B10 其他义务
5 Modes of Transport of Incoterms
EXW
. All modes of transport FCA
CPT
including multimodal transport CIP
DAF
DDU
DDP
FAS
Sea and inland FOB
waterway transport CFR
CIF
DES
DEQ
6. Notes on Incoterms
Definition:
The seller delivers when the goods pass the ship’s rail 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 point. The FOB term
requires the
seller to clear the goods for export.
Obligations of the parties under FOB
Buyer’s obligations
Seller’s obligations
B1 Payment of the price
A1 Provision of goods in conformity
B2 Licenses, authorization and formalities
with the contract
A2 Licenses, authorization and formalitiesB3 Contracts of carriage and insurance
A3 Delivery B4 Taking delivery
Definition:
The seller delivers when the goods pass the ship’s rail in the port
of shipment. The seller must pay the costs and freight necessary to
bring the goods to the named port of destination. But the risk of
loss or damage to the goods, as well as any additional costs due to
events occurring after the time of delivery, are transferred from the
seller to the buyer. However, in CIF the seller also has to procure
marine insurance against the buyer’s risk of loss of or damage to
the goods during the carriage. Consequently, the seller contracts
for insurance and pays insurance premium.
Obligations of the parties under CIF
Seller’s obligations Buyer’s obligations
A1 Provision of goods in conformity B1 Payment of the price
with the contract
B2 Licenses, authorization and formalities
A2 Licenses, authorization and formalities
Definition:
The seller delivers when the goods pass the ship’s rail in the port
of
shipment. The seller must pay the costs and freight necessary to
bring the
goods to the named port of destination but the risk of loss of or
damage
to the goods, as well as any additional costs due to events
occurring after
The difference between CIF and CFR :
the time of delivery, are transferred from the seller to the buyer.
The
Under CFRthe seller is not obligated to arrange marine insurance
CFR,
term requires
against the
the risk of seller
loss to damage
of , or clear the
to goods for export.
, the goods in transit. The buyer
is obligated to arrange insurance and pay the insurance premium.
The nature of performance of a CIF contract
It is sale of documents rather than goods.
Three stages of delivery in a CIF contract,
i.e. “provisional delivery” on shipment, “symbolical delivery” on tender of
the documents, and “complete delivery” when the goods are handed over to
the buyer,
The contractual obligation of delivery is satisfied just by delivery of
documents and not by actual physical delivery of the goods.
The buyer cannot refuse the documents and ask for the actual goods, nor can
the seller withhold the documents and tender the goods they represent.
On presentation of the shipping documents, if they are complete and regular,
the buyer is bound to pay the price, irrespective of the arrival of the goods.
Whatever happens to the goods in transit, the bill of lading and the insurance
policy provide an almost complete, continuous cover from the port of
shipment to the port of destination.
Follow-up Practice
1 Review and Discussion Questions
1) What are trade terms? Why are they used in international trade?
2) W hat is the meaning of Incoterms? What is the significance of
using Incoterms?
3) What are the benefits of organizing the terms in Incoterms 2000
into four basic groups?
4) What are the differences between FOB and CFR?
5) Why does an export price need to contain a measuring unit, unit
price, employed currency and trade term?
6) Why is it advisable to use CIF in export and use FOB in import?
2 Match the trade terms under INCOTERMS 2000 with their Chinese equivalents
FOB
CFR
CIF
.4 Choose the right answer from each of the following.
1) Incoterms are a standard set of terms and abbreviations developed by _______.
A. the International Law Association
B. the International Chamber of Commerce
C. the United Nations Conference on Trade and Development
D. the United Nations Commission on International Trade Law ]
2) In the international trade practices regarding trade terms, which of the following is the most influential and widely used
_______.
A. Hague Rules 《海牙规则》
B. Warsaw-Oxford Rules 1932
C. Revised American Foreign Trade Definitions 1941
D. Incoterms
3) INCOTERMS2000 includes _________ trade terms.
A. 6 B. 12 C 13 D.14
4) As far as risks taken by the seller are concerned,
A. CIF is bigger than CFR. B. CIF is as the same as CFR.
C. CFR is bigger than CIF. D. FOB is bigger than CFR.
5) The term FOB should be followed by:
A. point of origin B. port of importation
C. port of discharge D. port of exportation
6) The term CIF should be followed by:
A. point of origin B. port of shipment
C. port of destination D. port of exportation
7) The term CFR should be followed by:
A. point of origin B. port of shipment
C. port of destination D. port of exportation
8) The term EXW should be followed by:
A. point of origin B. port of shipment
C. port of importation D. port of exportation
9) The term DAF should be followed by:
A. point of origin B. port of importation
C. place of destination D. port of shipment
10) The term FAS should be followed by:
A. point of origin B. port of destination
C. port of shipment D. port of exportation
11) The term DES should be followed by:
A. point of origin B. port of shipment
C. port of exportation D. port of destination
12) The term DEQ should be followed by:
A. point of origin B. port of loading
C. port of destination D. port of shipment
13) The term FCA should be followed by
A. point of origin B. seller’s place of shipment
C. buyer’s place of shipment D. buyer’s railway station
14) The term DDP should be followed by:
A. point of origin B. port of shipment
C. port of buyer’s premise D. place of destination
15) Which of the following prices quoted is correct?
A. US$1000 per M/T CIF USA B. US$ 200 per ton CIFC3 New York
C. US$150 per case CIF D. US$ 100 per doz. CIFC3 New York
5. Decide whether the following statements are true or false.
1) If the seller agrees to deliver the goods to a ship, but not to pay for loading
them, the term is FOB. ( )
2) Under FOB, the seller must bear all risks of loss of or damage to the goods
until such time as they have passed the ship’s rail at the named port of shipment.
( )
3) The only difference between CFR and CIF is that under a CFR contract the buyer
must purchase a marine insurance contract to cover the goods while they are on
the voyage. ( )
4) Under CFR, the seller must pay the usual freight rate and any additional costs that
arise en route. ( )
5) The terms FOB, CFR and CIF are applicable to all modes of transport. ( )
6) DAF is only adopted when two countries have land-connected borderline. ( )
7) Each term has a “liability point”, which means that costs and risks are all moved
over to another party from that very point. ( )
8) EXW contract is called "physical delivery" while CFR is “symbolic delivery”.( )
9 ) CFR states that the exporter is obligated to make all necessary arrangements to
ship the goods all the way from the exporter’s premises to the named port of
debarkation. ( )
10 ) Under CIF the seller also has to procure marine insurance against the buyer’s
risk of loss of or damage to the goods during the carriage. ( )
Case Study
1. http://www.exporteam.com 合众出口网
2.http://www.intl-trade.com 国际贸易
3.http://www.iccwbo.org 国际商会
4.http://www.mofcom.gov.cn 中国商务部
5.http://www.chinaintertrade.com 中国国际贸易网
6. http://www.tradehr.com 外贸英才网