Incoterms® 2020.
The INCOTERMS rules or International Commercial Terms are a series of pre_defined commercial terms published by the International Chamber of Commerce (ICC). They are widely used in International commercial transactions or procurement processes. A series of three-letter trade terms related to common contractual sales practices, the Incoterms rules are intended primarily to clearly communicate the tasks, costs, and risks associated with the transportation and delivery of goods.
The INCOTERMS rules are accepted by governments, legal authorities, and practitioners worldwide for the interpretation of most commonly used terms in international trade. They are intended to reduce or remove altogether uncertainties arising from different interpretation of the rules in different countries. As such they are regularly incorporated into sales contracts worldwide.
Rules for
any mode of transport.
EXW: Ex Works
This type of term indicates that the seller is responsible for making the goods available at their premises, and the buyer is responsible for collecting them from there. The seller does not have to bear any costs or risks associated with transporting the goods, as this is all the responsibility of the buyer.
FCA: Free Carrier
This type of term indicates that the seller is responsible for delivering the goods, cleared for export and packaged, to a named location. The buyer has the responsibility of arranging and paying for carriage and insurance from this point onwards.
CPT: Carriage Paid To
This is used when the seller agrees to pay for all costs associated with the transport of goods up to a specified destination. The risk and costs associated with any further transport from that point onwards is then passed onto the buyer. This type of Incoterm is most often used in cases where the goods are delivered directly to the buyer's door.
CIP: Carriage and Insurance Paid To
This requires the seller to pay for all costs associated with the transport of goods up to a specified destination, as well as for any associated insurance costs. The risk and responsibility for any further transport from that point onwards is then passed onto the buyer. This type of Incoterm is most often used when goods are shipped by air or sea.
DAP: Delivered At Place
This indicates that the seller is responsible for delivering the goods at a named place, cleared for importation, but not unloaded from any form of transport. The buyer then takes on responsibility for unloading costs from this point onwards.
DPU: Delivered at Place
This requires the seller to deliver goods to a specified destination, but does not require them to assume responsibility for any additional costs such as customs duties or taxes. The buyer then assumes the risk and responsibility for unloading the goods at their end.
DDP: Delivered Duty Paid
This requires the seller to be responsible for all costs associated with delivering goods to a named destination, including any customs duties or taxes. The buyer is then responsible for unloading the goods at their end.
Rules for
sea and inland waterway transport.
FAS: Free Alongside Ship
In this term, the seller must deliver the goods alongside a named vessel at the port of shipment. The buyer is responsible for loading, carriage and insurance costs from this point onwards.
FOB: Free On Board
In this term, the seller must deliver the goods on board a named vessel at the port of shipment. The buyer then takes over responsibility for loading, carriage and insurance costs from this point onwards.
CFR: Cost and Freight
This term is similar to CIF in that the seller pays for all costs related to loading, carriage and insurance up until delivery at a named port of destination. However, here it is assumed that the risk passes onto the buyer once shipment has been made.
CIF: Cost, Insurance and Freight
Here, the seller must deliver the goods to a named port of destination and pay for all associated costs including loading, carriage and insurance up to that point. The buyer then takes on responsibility for unloading the goods at their end.