incoterms. introduction universally recognised set of definitions of international trade terms...

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  • Incoterms

  • IntroductionUniversally recognised set of definitions of international trade termsRecognised by courts and other authorities Define the trade contract responsibilities and liabilities between buyer and seller Updated regularly to keep pace with changes and developments in international trade

  • IntroductionDevised an published by the ICCWBO ICC introduced Incoterms in 1936 Incoterms 2012 4 groups E, F, C and D and in all 13 main terms

    E: DepartureEXW- Ex WorksF: Main carriage unpaidFCA- Free CarrierFAS- Free Alongside ShipFOB- Free On BoardC: Main carriage paidCFR- Cost and FreightCIF- Cost, Insurance and FreightCPT- Carriage Paid ToCIP- Carriage and Insurance Paid ToD: ArrivalDAF- Delivered At FrontierDES- Delivered Ex ShipDEQ- Delivered Ex QuayDDU- Delivered Duty UnpaidDDP- Delivered Duty Paid

  • IntroductionPurpose of Incoterms

    Designed for Parties to a ContractProvides a set of international rules for foreign tradeReduces uncertaintiesAvoids different interpretations in different countriesAdditional costs and time can be avoided

  • IntroductionTHE SELLERS OBLIGATIONSA1Provision of goods in conformity with the contractA2Licenses, authorizations and formalitiesA3Contract of carriage and insuranceA4DeliveryA5Transfer of risksA6Division of costsA7Notice to the buyerA8Proof of delivery, transport document or equivalent electronic messageA9Checking packaging markingA10 Other obligations

  • IntroductionTHE BUYERS OBLIGATIONSB1Payment of the priceB2Licenses, authorizations and formalitiesB3Contract of carriageB4Taking deliveryB5Transfer of risksB6Division of the costsB7Notice to the sellerB8Proof of delivery, transport document of equivalent electronic messageB9Inspection of goodsB10 Other obligations

  • IntroductionScope of IncotermsIncoterms is limited:To rights and obligations of the parties to contract of sale with respect to the delivery of the goods sold.

    Do not deal with the consequences of breach of contract

    Primarily intended for use where goods are sold for delivery across national boundaries, hence international commercial terms

    Can be used in contracts for sale of goods directly.

  • IntroductionScope of IncotermsIncoterms is limited:To rights and obligations of the parties to contract of sale with respect to the delivery of the goods sold.

    Do not deal with the consequences of breach of contract

    Primarily intended for use where goods are sold for delivery across national boundaries, hence international commercial terms

    Can be used in contracts for sale of goods directly.

  • IntroductionStructure

    Group EDepartureEXW Ex Works (.............named place)

    Group FMain carriage unpaidFCA Free Carrier (.............named place)FAS Free Alongside Ship (.........named port of shipment)FOB Free On Board(............named port of shipment)

  • IntroductionStructure Group CMain carriage paidCFR Cost and Freight (...........named port of destination)CIF Cost, Insurance & Freight (.....named port of destination)CPT Cost Paid To (...........named port of destination)CIP Carriage and Insurance paid to( .named place of destination)

    Group DArrivalDAF 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)

  • IntroductionThe Terms

    The E Term is the term in which sellers obligation is at its minimumThe F Term require the seller to deliver as instructed by the buyerThe C Term require the seller to contract for carriage at his expenseThe D Term signifies arrival contracts

  • IntroductionAny mode of transport

    Group EEXW Ex Works (...............named place)Group FFCA Free Carrier(................named place)Group CCPT Cost Paid To (............named port of destination)CIP Carriage and Insurance paid to (..........named place of destination)Group DDAF Delivered at Frontier (............named place)DDU Delivered Duty Unpaid (..........named place of destination)DDP Delivered Duty Paid (..........named place of destination)

  • IntroductionMode of transport and the appropriate IncotermMaritime and inland waterway transport onlyGroup FFAS Free Alongside Ship(............named port of shipment)FOB Free On Board(............named port of shipment) Group CCFR Cost and Freight (............named port of destination)CIF Cost, Insurance & Freight (............named port of destination)Group DDES Delivered Ex Ship (............named port of destination)DEQ Delivered Ex Quay (............named port of destination)

  • EXW - Ex WorksGoods available only at sellers premises. Buyer: loads the goods on truck or container at the sellers premises, and takes into account the subsequent costs and risks.

  • FCA - Free CarrierDelivery at the specified point of departure: the sellers premises or a named cargo terminal / railroad stationBuyer: main carriage/freight, cargo insurance and other costs and risks

  • FAS - Free Alongside Ship Seller: places the goods alongside the ship at the named port, loaded at his expense. Buyer: pays loading fee, main carriage/freight, cargo insurance and other costs risks.

  • FOB - Free On Board Delivery of goods on board the vessel at the port of origin is at the sellers expense. Buyer is responsible for loading fee, main carriage/freight, cargo insurance and other costs risks.

  • CFR - Cost and Freight Seller: pays the costs and freight to bring the goods to the port of destination. Risk: transferred once the goods have crossed the ships rail.

  • CIF - Cost Insurance and Freight Used exactly the same way as CFR except that Seller: must in addition procure and pay for insurance for the cargo insurance and delivery of goods to the port of destinationBuyer: responsible for the import customs clearance & other costs and risks

  • CPT - Carriage Paid To Seller delivers the goods at the named place of destination at his expense. Buyer assumes the cargo insurance, import customs clearance, payment of customs duties and taxes, and other costs and risks.Risk transferred at the delivery of goods

  • CIP - Carriage & Insurance Paid To Seller delivers the goods on the ship. On board, the risk is transferred to the buyer. Buyer is accountable for the import customs clearance, payment of customs duties and taxes, and other costs and risks until goods reach their final destination.

  • DAF - Delivered At Frontier Delivery of goods is done at the specified point at the frontier at the seller's expense. Buyer is responsible for the import customs clearance, payment of customs duties and taxes. The transfer of risk is made at the frontier

  • DES - Delivered Ex Ship Seller assumes expenses linked to the delivery of goods. At the arrival of the ship, the risk is transferred to the buyer. Buyer is accountable for the unloading fee, import customs clearance, payment of customs duties and taxes, cargo insurance, and other costs

  • DEQ - Delivered Ex Quay Delivery of goods is done to the quay of the port at the seller's expense. He is also responsible for the import customs clearance and payment of customs duties and taxes at the buyer's end. Buyer assumes the cargo insurance and other costs and risks

  • DDU - Delivered Duty Unpaid Delivery of goods and the cargo insurance to the final destination, which is often the project site or buyer's premises, is done at the seller's expense. Buyer is responsible for the import customs clearance and payment of customs duties and taxes

  • DDP - Delivered Duty Paid Seller is responsible for most of the expenses, which include the cargo insurance, import customs clearance, and payment of customs duties and taxes at the buyer's end, and the delivery of goods to the final point at destination, which is often the project site or the buyer's premises. It is a door to door delivery. Risk is transferred when the goods are delivered

  • ConclusionIncoterms cannot be applied by themselves to a variety of situations, of medium of transports, technologies.... They must be supplemented by additional details adapted to these particular case. Define the geographical points where the transfers of risks and expenses will take place.

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