Terms of trade
Terms of Trade and Terminology
"Incoterms" is a trademark of the International Chamber of Commerce. Incoterms and terms of trade are considered international trade rules and are regularly updated as the business environment changes. The main purpose is to define the criteria for the allocation of costs related to international transactions, and the transfer of risk between buyers and sellers.
You need to understand the Incoterms international trade regulations to standardize the cargo transportation and acceptance procedures. In addition, international trade regulations determine the cost allocation of international commercial transactions, and establish agreement responsibilities for exporters and importers.
1. EX WORKS (EXW)
It means that the seller must give sufficient notice of the time and place of handing over the goods to the buyer within the specified date or period, hand over the goods to the buyer at its place of business (i.e. factory, warehouse, etc.), and bear the cost of delivery. The inspection operation fee and the commercial invoice issued to the buyer, and the certificate of compliance required by the contract, are the fulfillment of its delivery obligations. Unless otherwise agreed, the seller is not responsible for loading the goods on the means of transport provided by the buyer, nor is it responsible for customs clearance of the goods for export. The buyer shall bear all costs and risks from the receipt of the goods at the seller's business place to the delivery of the goods to the destination, and pay for the goods in accordance with the provisions of the sales contract.
2. FREE CARRIER (FCA)
It means that the seller must, within the specified date or period, complete the customs clearance procedures at the designated place or place, pay the inspection operation costs required for delivery, and deliver the goods to the carrier designated by the buyer to take over. all risks and costs, and give the buyer sufficient notice, issue a commercial invoice to the buyer, proof of compliance required by the contract, and, if customary requires, give the buyer the usual documents to prove the delivery, the freight forwarder's receipt, in the buyer's Risks and costs in exchange for shipping documents such as bills of lading, that is, to fulfill its delivery obligations. If the buyer does not specify a precise location, the seller may, within the specified place or area, select the place where the carrier takes over the goods for sale as the place of delivery. According to commercial practice, when signing a contract with the carrier, if the seller's assistance is needed, the buyer can only bear the risks and expenses to make the contract.
3. CARRIAGE PAID TO (CPT)
It means that the seller must negotiate a delivery contract at his own risk and expense for delivery of the goods to the designated destination within the specified date or period, and after completing the customs clearance procedures, bear the inspection costs required for delivery and send the goods to the delivery Take over by the carrier, bear all the risks and expenses before the carrier takes over, and the freight and expenses required to transport the goods to the designated destination, and at the same time give the buyer sufficient notice, issue the buyer's commercial invoice, and the certificate of compliance required by the contract. If customary required, and to give the buyer the usual shipping documents, that is, to fulfill its delivery obligations.
4. CARRIAGE AND INSURANCE PAID TO (CIP)
It means that the seller must negotiate a delivery contract at his own risk and expense for delivery of the goods to the designated destination within the specified date or period, and after completing the customs clearance procedures, bear the inspection costs required for delivery and send the goods to the delivery The person takes over, bears all the risks and expenses before the carrier takes over, as well as the freight and expenses required for the goods to be transported to the designated destination, purchases and pays the insurance for the transportation of the goods, and at the same time gives the buyer sufficient notice, and issues the buyer with a commercial invoice, The proof of conformity required by the contract, the policy of insurance, if required by custom, and the giving of the usual shipping documents to the buyer, constitute the fulfillment of his obligation to deliver. The buyer bears the risk of damage and loss of the goods when the goods are handed over to the carrier, and pays for the goods in accordance with the provisions of the sales contract.
5. FREE ALONGSIDE SHIP (FAS)
It means that the seller must bear all the risks and costs, and within the specified date or period, at the designated port of loading, in accordance with the customary method of the port, bear the cost of inspection operations required for delivery, and deliver the goods to the loading place designated by the buyer Designate the side of the ship (generally refers to the area within the reach of the ship's rigging or shore crane), and give the buyer sufficient notice, issue the buyer's commercial invoice, the certificate of compliance required by the contract, and the usual documents to prove delivery (usually a wharf receipt or A dockkeeper's receipt, if requested by the buyer, shall be exchanged at the buyer's risk and expense for a shipping document, such as a bill of lading) that fulfills its delivery obligations. The seller shall be given sufficient notice of the delivery time, bear all the risks and expenses after the goods are handed over to the ship's side, and obtain the import and export licenses, go through customs clearance procedures at their own risks and expenses, and pay for the goods in accordance with the provisions of the sales contract.
6. FREE ON BOARD (FOB)
It means that the seller must, within the specified date or period, complete the export customs clearance procedures at the designated port of loading in accordance with the customs of the port, bear the inspection operation costs required for delivery, load the goods on the ship designated by the buyer, and Bear all risks and costs before the goods pass the ship's rail, and at the same time give the buyer sufficient notice, issue the buyer's commercial invoice, the usual documents required by the contract to prove delivery (usually the mate's receipt, if the buyer requires it, it should be at the buyer's risk and fees, in exchange for shipping documents such as bills of lading), that is, to fulfill its delivery obligations. The buyer shall be responsible for chartering the ship or pre-negotiating the space required for freight, timely notifying the seller of the name of the ship, the place of loading and the time of delivery to the ship, and bearing all risks and expenses after the goods have passed the ship's rail, and paying according to the provisions of the sales contract. price.
7. COST AND FREIGHT (CFR)
It means that the seller must, within the specified date or period, negotiate a contract of carriage for the delivery of the goods to the designated port of destination at his own risk and expense, and after completing the customs clearance procedures, bear the inspection costs required for delivery and load the goods on board the ship In addition to bearing all risks and expenses before the goods cross the ship's rail, the freight and expenses from the port of loading to the port of destination must be paid in advance, and at the same time give the buyer sufficient notice, issue the buyer's commercial invoice, the certificate of compliance required by the contract, and give the buyer the usual shipping documents (such as bills of lading), that is, to fulfill its delivery obligations. The buyer must bear all the risks and costs after the goods have passed the ship's rail, and pay the price in accordance with the provisions of the sales contract.
8. COST, INSURANCE AND FREIGHT (CIF)
It means that the seller must, within the specified date or period, negotiate a contract of carriage for the delivery of the goods to the designated port of destination at his own risk and expense, and after completing the customs clearance procedures, bear the inspection costs required for delivery and load the goods on board the ship In addition to bearing all the risks and expenses before the goods pass the ship's rail, the freight and expenses from the port of loading to the port of destination must be paid in advance, cargo transportation insurance should be purchased, and at the same time, full notice should be given to the buyer, and the buyer's commercial invoice and certificate of compliance required by the contract must be given. An insurance policy and gives the buyer usually a shipping document (such as a bill of lading) that fulfills his delivery obligations. The buyer must bear all the risks and costs after the goods have passed the ship's rail, and pay the price in accordance with the provisions of the sales contract.
9. DELIVERED AT FRONTIER (DAF)
It means that the seller shall be responsible for concluding the delivery contract, bearing all risks and costs, including the inspection operation costs required for delivery, and transporting the goods to the designated place at the border delivery place within the specified date or period, and completing export customs clearance After the formalities, it will be handed over to the buyer, and at the same time give the buyer sufficient notice, give the buyer the commercial invoice, the proof of compliance required by the contract, and provide the buyer's usual documents (warehouse receipt, wharf warehouse receipt or bill of lading), that is, fulfill its delivery obligation. However, land transportation, especially railway transportation, often crosses the national border to the final destination of the importing country. In this case, the buyer will require the seller to provide the combined rail waybill for transporting the goods to the final destination of the importing country. The buyer must bear all the risks and costs from the time the goods are placed at its disposal, go through the import customs clearance procedures by itself, and pay for the goods in accordance with the provisions of the sales contract.
10.DELIVERED EX SHIP (DES)
It means that the seller shall, at all risks and costs, transport the goods to the designated port of destination, within the specified date or period, on board a ship at the usual place of unloading, before going through the import customs clearance procedures, with unloading equipment suitable for the nature of the goods, capable of The method of unloading from the ship, paying the inspection operation cost required for delivery, handing over the goods to the buyer, giving the buyer sufficient notice, issuing the buyer's commercial invoice, the certificate of compliance required by the contract, and providing the buyer's small bill of lading or usually Documents (such as bills of lading). The buyer shall bear all the risks and costs from the time the goods are placed at its disposal, and pay the price for the goods in accordance with the provisions of the sales contract, and when applicable, pay for the customs clearance procedures for the import of the goods and pay customs clearance fees and all duties, taxes and other cost.
11.DELIVERED EX QUAY (DEQ)
It means that the seller must bear all risks and costs, and within the specified date or period, arrive at the designated port of destination—in fact, most of them are in the terminal warehouse (TRANSIT SHED) or terminal chain warehouse, and give the buyer sufficient notice to open to the buyer Commercial invoice, certificate of conformity required by the contract, and provide the buyer's small bill of lading or common documents (such as bill of lading), and hand over the goods to the buyer. The buyer shall bear all risks and costs from the time the goods are placed at his disposal, obtain import permits or other official documents, and when applicable, carry out customs clearance procedures and pay handling fees, duties, taxes and other charges, and in accordance with the contract of sale stipulated payment.
12. DELIVERED DUTY UNPAID (DDU)
It means that the seller shall, within the specified date or period, bear all risks and costs-except for duties, taxes and other official fees payable at the time of import-ship the goods to the destination designated by the importing country, and give the buyer sufficient notice to start Give the buyer a commercial invoice, the certificate of compliance required by the contract, and provide the buyer with a small bill of lading or a common document (such as a bill of lading), and hand over the goods to the buyer. The buyer shall bear any additional costs and risks arising from its failure to complete the import customs clearance procedures in time, as well as all risks and costs from the time the goods are placed at its disposal, and pay for the goods in accordance with the provisions of the sales contract.
13. DELIVERED DUTY PAID (DDP)
It means that the seller must bear all risks and expenses within the specified date or period, and after completing the import customs clearance procedures, transport the goods to the designated destination in the importing country, give the buyer sufficient notice, and issue the buyer's commercial invoice and contract requirements. The certificate of compliance, and provide the buyer's small bill of lading or common documents (such as bill of lading), and hand over the goods to the buyer. The buyer must bear all risks and costs from the time the goods are placed at its disposal, and pay for the goods in accordance with the contract of sale.