Incoterms ®2010 rules explain a set of three-letter trade terms reflecting business-to-business practice in contracts for the sale of goods. Incoterms rules describe mainly the tasks, costs and risks involved in the delivery of goods from sellers to buyers.
1 Incorporate the Incoterms® 2010 rules into your contract of sale If you want the Incoterms® 2010 rules to apply, you should make this clear in your contract, through such words as, “[the chosen Incoterms rule including the named place, followed by] Incoterms® 2010”.
2 Choose the appropriate Incoterms rule
The chosen Incoterms rule needs to be appropriate to the goods, to the means of their transport,
and above all to whether the parties intend to put additional obligations, for example the obligation to
organise carriage or insurance, on the seller or on the buyer. The Guidance Notes to each Incoterms rule
contain information that is particularly helpful when making this choice. Whichever Incoterms rule is chosen,
the parties should be aware that the interpretation of their contract may well be influenced by customs
particular to the port or place being used.
Incoterms’ is a registered trademark of the International Chamber of Commerce (ICC).
EXW (insert named place of delivery) Incoterms® 2010
This rule may be used irrespective of the mode of transport selected, and may also be used where more than one mode of transport is employed. It is suitable for domestic trade, while FCA is usually more appropriate for international trade.
“Ex Works” means that the seller delivers when it places the goods at the disposal of the buyer at the seller’s premises or at another named place (i.e.,works, factory, warehouse, etc.). The seller does not need to load the goods on any collecting vehicle; nor does it need to clear the goods for export, where such clearance is applicable.The parties are well advised to specify as clearly as possible the point within the named place of delivery, as the costs and risks to that point are for the account of the seller. The buyer has to bear all costs and risks involved in taking the goods from the agreed point, if any, at the named place of delivery.
FCA (insert named place of delivery) Incoterms® 2010
This rule may be used irrespective of the mode of transport selected, and may also be used where more than one mode of transport is employed. “Free Carrier” means that the seller delivers the goods to the carrier or another person nominated by the buyer at the seller’s premises or another named place. The parties are well advised to specify as clearly as possible the point within the named place of delivery, as the risk passes to the buyer at that point.If the parties intend to deliver the goods at seller’s premises, they should identify the address of those premises as the named place of delivery. If, on the other hand, the parties intend the goods to be delivered at another place, they must state a different, specific place of delivery.
DDP (insert named place of destination) Incoterms® 2010
This rule may be used irrespective of the mode of transport selected, and may also be used where more than one mode of transport is employed.“Delivered Duty Paid” means that the seller delivers the goods when the goods are placed at the disposal of the buyer, cleared for import on the arriving means of transport, ready for unloading at the named place of destination. The seller has to bear all the costs and risks involved in bringing the goods to that place and has an obligation to clear the goods for export and import and to pay any import duty and for any customs formalities.
CPT (insert named place of destination) Incoterms® 2010
This rule may be used irrespective of the mode of transport selected, and may also be used where more than one mode of transport is employed. “Carriage Paid To” means that the seller delivers the goods to the carrier or another person nominated by the seller at an agreed place (if any such place is agreed between the parties) and the seller must contract for and pay the cost of carriage necessary to bring the goods to the named place of destination.When CPT, CIP, CFR or CIF are used, the seller fulfils its obligation to deliver when the seller hands the goods over to the carrier and not when they reach the buyer at the place of destination.This rule has two critical points because risk passes and costs are transferred at different places. The parties are well advised to identify as precisely as possible in the contract both the place of delivery, where the risk passes to the buyer, and the named place of destination to which place the seller must contract for the carriage. If several carriers are used for the carriage to the agreed destination and the parties do not agree on a specific point of delivery, the default position is that risk passes when the goods have been delivered to the first carrier, a point entirely of the seller’s choosing and over which the buyer has no control. Should the parties wish the risk to pass at a later stage (e.g., at an ocean port or airport),they need to specify this in their contract of sale.The parties are also well advised to identify as precisely as possible the point within the agreed place of destination as the costs to that point are for the account of the seller. The seller is advised to procure contracts of carriage that match that choice precisely. If the seller incurs costs under its contract of carriage related to unloading at the named place of destination, the seller is not entitled to recover such costs from the buyer unless otherwise agreed between the parties.
CIP (insert named place of destination) Incoterms® 2010
This rule may be used irrespective of the mode of transport selected, and may also be used where more than one mode of transport is employed. “Carriage and Insurance Paid to” means that the seller delivers the goods to the carrier or another person nominated by the seller at an agreed place (if any such place is agreed between the parties) and the seller must contract for and pay the cost of carriage necessary to bring the goods to the named place of destination.The seller also contracts for insurance cover against the buyer’s risk of loss of or damage to the goods during the carriage. The buyer should note that under CIP the seller is required to obtain insurance only on minimum cover. Should the buyer wish to have more insurance protection, it would need either to agree as much expressly with the seller or to make its own extra insurance arrangements.When CPT, CIP, CFR or CIF are used, the seller fulfils its obligation to deliver when the seller hands the goods over to the carrier and not when they reach the buyer at the place of destination.This rule has two critical points because risk passes and costs are transferred at different places. The parties are well advised to identify as precisely as possible in the contract both the place of delivery, where the risk passes to the buyer, and the named place of destination to which place the seller must contract for carriage. If several carriers are used for the carriage to the agreed destination and the parties do not agree on a specific point of delivery, the default position is that risk passes when the goods have been delivered to the first carrier, a point entirely of the seller’s choosing and over which the buyer has no control. Should the parties wish the risk to pass at a later stage (e.g., at an ocean port or an airport), they need to specify this in their contract of sale.
CFR (insert named port of destination) Incoterms® 2010
This rule is to be used only for sea or inland waterway transport.“Cost and Freight” means that the seller delivers the goods on board the vessel or procures the goods already so delivered. The risk of loss of or damage to the goods passes when the goods are on board the vessel. The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination.When CPT, CIP, CFR or CIF are used, the seller fulfils its obligation to deliver when the seller hands the goods over to the carrier in the manner specified in the chosen rule and not when they reach the buyer at the place of destination.
CIF (insert named port of destination) Incoterms® 2010
This rule is to be used only for sea or inland waterway transport.“Cost, Insurance and Freight” means that the seller delivers the goods on board the vessel or procures the goods already so delivered. The risk of loss of or damage to the goods passes when the goods are on board the vessel. The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination.The seller also contracts for insurance cover against the buyer’s risk of loss of or damage to the goods during the carriage. The buyer should note that under CIF the seller is required to obtain insurance only on minimum cover. Should the buyer wish to have more insurance protection, it would need either to agree as much expressly with the seller or to make its own extra insurance arrangements
DAT (insert named terminal at port or place of destination) Incoterms® 2010
This rule may be used irrespective of the mode of transport selected, and may also be used where more than one mode of transport is employed. Nelivered at TerminalNmeans that the seller delivers when the goods, once unloaded from the arriving means of transport, are placed at the disposal of the buyer at a named terminal at the named port or place of destination. The seller has to bear all risks involved in bringing the goods to and unloading them at the terminal at the named port or place of destination.The parties are well advised to specify as clearly as possible the terminal and, if possible, a specific point within the terminal at the agreed port or place of destination, as the risks to that point are for the account of the seller. The seller is advised to procure a contract of carriage that matches that choice precisely.Moreover, if the parties intend the seller to bear the risks and costs involved in transporting and handling the goods from the terminal to another place, then the DAP or DDP rules should be used.DAT requires the seller to clear the goods for export, where applicable.However, the seller has no obligation to clear the goods for import or to pay any import duty or for any customs formalities.
DAP (insert named place of destination) Incoterms® 2010
This rule may be used irrespective of the mode of transport selected, and may also be used where more than one mode of transport is employed. Nelivered at PlaceNmeans that the seller delivers when the goods are placed at the disposal of the buyer on the arriving means of transport ready for unloading at the named place of destination. The seller has to bear all risks involved in bringing the goods to the named place.The parties are well advised to specify as clearly as possible the point within the agreed place of destination, as the risks to that point are for the account of the seller. The seller is advised to procure contracts of carriage that match that choice precisely. If the seller incurs costs under its contract of carriage related to unloading at the place of destination, the seller is not entitled to recover such costs from the buyer unless otherwise agreed between the parties.DAP requires the seller to clear the goods for export, where applicable.However, the seller has no obligation to clear tthe goods for import or to pay any import duty or for any customs formalities.
DDP (insert named place of destination) Incoterms® 2010
This rule may be used irrespective of the mode of transport selected, and may also be used where more than one mode of transport is employed. “Delivered Duty Paid” means that the seller delivers the goods when the goods are placed at the disposal of the buyer, cleared for import on the arriving means of transport, ready for unloading at the named place of destination. The seller has to bear all the costs and risks involved in bringing the goods to that place and has an obligation to clear the goods for export and import and to pay any import duty and for any customs formalities.
Brasil
Telefone: 31 3287-0303
Celular: 31 9 7173-0303
USA
Telefone: +1 (954) 860-9165
Email: fragata@fragatainternational.com