International Commercial Terms – 2010
Incoterms are three-letter terms that describe the major tasks, costs, and risks involved in delivering goods from seller to buyer.
The rules of Incoterms state which of the parties to the contract of sale is responsible for carrying or preparing the insurance policy, or when the seller delivers the goods to the buyer, and what costs each party is responsible for paying. These rules do not apply to the price of the goods, the method of payment, the transfer of ownership of the goods or the consequences of breach of contract.
Definitions of terms in Incoterms rules:
Carrier: is the party with whom the contract of carriage is concluded.
Customs formalities: Requirements to comply with any applicable customs regulations, including documentary, security, intelligence and physical inspection duties.
Delivery: Indicates the point at which the risk of loss or damage to the goods is transferred from the seller to the buyer.
Note: When using the terms Incoterms 2010 in sales contracts, Incoterms® parties to the transaction must include the phrase 2010 at the place or port of delivery of the goods as accurately as possible in the relevant contracts. Like the following example:
CFR Bandar Abbas, Persian Gulf, Iran Incoterms® 2010
Delivery document: This document, or its electronic equivalent, indicates the delivery of the goods.
Electronic history or procedure: A collection of information that includes one or more electronic messages and can replace paper reports, depending on the case.
Packaging: This word has the following three meanings, which in Incoterms 2010 regulations, means only items one and two.
1) Packaging of goods upon request and according to the contents of the sales contract.
2) Packaging of goods suitable for shipping conditions.
3) Batching of goods packed in containers or other means of transport.
** Incoterms terms for any method of transportation **
1) EXW: EX Works
2) FCA: Free CArrier
3) CPT: Carriage Paid To
4) CIP: Carriage and Insurance Paid To
5) DAT: Delivered At Terminal
6) DAP: Delivered At Place
7) DDP: Delivered Duty Paid
** Incoterms terms for sea transport and inland waterways **
1) FAS: Free Alongside Ship
2) FOB: Free On Board
3) CFR: Cost and FReight
4) CIF: Cost, Insurance and Freight
EXW (Insert Named place of delivery) Incoterms® 2010
Delivery at work (seller)
The seller must provide the goods to the buyer at his place of work or at another designated place. Delivery of the goods by the seller does not require loading on the means of transport or clearance of goods for export.
Indicates the minimum duty for the seller and the maximum responsibility for the buyer.
The seller has no obligation to clear the goods for export and should only assist the buyer with the cost and risk of exporting the goods.
The buyer must, at his own expense and risk, obtain any export license, import of goods, other official permits or security certificates and perform all customs formalities for the export of goods.
The buyer accepts all risks arising from the loss or damage to the goods from the time the seller places the goods at the agreed point or place without loading them on the means of transport.
It represents the cheapest way for the buyer to buy and is usually the best choice when the buyer has a representative in the seller’s country.
Since the sellers’ warehouse is not always inside the factory, it is better to research the place of delivery of the goods and the conditions of transportation before choosing this term.
Choosing this method for the seller is the same as selling goods to customers in the country, in other words, choosing this term is more appropriate for domestic trade.
Choosing this term during the embargo is recommended as a solution !!
FCA (Insert Named place of delivery) Incoterms® 2010
Delivery to the carrier (indicate the place of delivery specified)
The seller must deliver the goods to the carrier or another person designated by the buyer at his workplace or other designated location. The risk in this place is transferred from the seller to the buyer.
The seller must obtain any issuance license or other official licenses at his own expense and risk and perform all necessary formalities for the issuance of the goods.
The buyer must conclude the contract of transportation and insurance of the goods from the designated place at his own expense.
If the place of delivery of the goods is the seller’s place of work, full delivery is only when the seller loads the goods on the means of transport specified by the buyer, and in other cases when the goods are at the disposal of the carrier, on the means of transport prepared by the seller and ready. It is for evacuation, it is complete.
The buyer must pay all costs related to the goods from the time they are delivered, as well as any additional costs arising from his failure to determine the carrier, the carrier’s failure to deliver the goods, or the buyer’s failure to provide appropriate information.
The seller must pay for any pre-shipment inspections that are mandatory by order of the authorities of the exporting country.
Means physical delivery of goods in Actual Delivery Note: Real delivery or Virtual Delivery means a specific time and place. If he is not present to receive the goods, then according to the law of international trade, the hypothetical delivery is realized and the seller has no responsibility for the quality of the goods received by the buyer and the buyer does not have the right to confiscate his guarantees.