They are international standards of trade terms, developed, maintained and promoted by the International Chamber of Commerce Law and Practice Committee (CLP-ICC) . INCOTERMS are terms used in an international contract of sale, that define which of the two parties (seller or buyer) has the obligation to insure the merchandise, what kind of policy should be purchased and who pays the insurance premium.

These thirteen standardized terms facilitate international trade by allowing agents from different countries to understand each other. They are terms commonly used in international contracts and whose definition is protected by copyright of ICC. Meaning of the different incoterms:

Obligations of the Exporter:

  • Make the merchandise available to the importer at the exporter’s premises (without raising the goods to the transport).
  • This term represents the minimum obligation for the exporter.

Obligations of the Importer:

  • Assume the cost of the inherent risk of transportation, including transit follow-up, claims, etc.
  • Carry out the export clearance of the merchandise.

Obligations of the Exporter:

• Deliver the goods to the carrier designated by the importer at the exporter’s premises (loaded on the transport). If delivered elsewhere, the exporter won’t be obliged to unload the goods from his transport, or upload it to the transport of the importer.

Obligations of the Importer:

• Choose the mode of transport and carrier.
• Assuming expenses and risks of the merchandise since the carrier takes care of it at the agreed place.

Obligations of the Exporter:

• Deliver the goods to the side of the ship at the sea port of shipment and with the export clearance already made. Doesn’t include boarding the ship.
• In that place the responsibility of the exporter ends on damage or loss of the merchandise.
• When the goods are delivered to the container or loading terminal at the port of shipment, it is considered that the risk was transfered to the importer.

Obligations of the Importer:

• Choose shipping company and name the ship to the exporter.
• Pay freight and assume the risk of the merchandise since the exporter gives it to the side of the ship.

Obligations of the Exporter:

• Deliver the goods on board the ship at the sea port of shipment. The responsibility of the exporter for any damage or loss of the merchandise is transmited to the buyer once the merchandise has been declared on board the ship, which means that the carrier has the custody of the goods.
• If the goods are delivered at the container or loading terminal at the port of shipment, and not on board the ship, FOB is not the appropriate Incoterms and the use of FCA is recommended.

Obligations of the Exporter:

• The exporter is responsible for delivering the goods at the sea port of shipment and more precisely, the delivery concludes exactly when the goods are put on board the ship, as in the FOB, having as a substantial difference that with CFR the seller must hire the international transport and pay the freight.
• When the exporter is unwilling to assume responsibility for delivering the goods on board the ship, then the Incoterms CPT is the appropriate option.

Obligations of the Importer:

• Assume any additional expense and risk of loss or damage and its claim and follow-up as long as the good has been declared on board the ship at the port of shipment.

Obligations of the Exporter:

• Means the same as the CFR with the addition of Marine Insurance (to the agreed port of destination). The insurance must be contracted covering 110% of the CIF value.
• When the exporter is unwilling to assume responsibility for delivering the goods on board the ship but at the container terminal at the sea port of shipment, then the Incoterms CIP is the appropriate option.

Obligations of the Importer:

• Although the exporter contracts and pays the insurance, the merchandise travels at the risk of the importer, who is the beneficiary of the policy by direct designation or by the transferable character of the same.

Obligations of the Exporter:

• Deliver to carrier or designated person by exporter at agreed place (if agreed upon), contracting and paying for transportation to bring goods to designated place of destination. • Two critical points: Transmission of risks and transfer of costs. • Several carriers, transfer will be given by default when delivering the 1st carrier chosen by the exporter. • Specify in contract if you want the risk to be transmitted at a later stage.

Obligations of the Importer:

• Assume the risks inherent in the merchandise from the time the exporter delivers it to the first carrier, as well as any additional expenses in transit (loading, unloading, damage in transit, etc.)

Obligations of the Exporter:

• Means the same as CPT with the addition of insurance against loss or damage to merchandise during transportation (up to the agreed delivery point). The insurance must be contracted covering 110% of the CIP value.

Obligations of the Importer:

• Assume the risks inherent in the merchandise from the time the exporter delivers it to the first carrier, as well as any additional expenses in transit (loading, unloading, damage in transit, etc.)
• Importer must warn the exporter that if he wants more protection, he needs to expressly agree on the amount of the insurance, or specify his own agreements for the extra insurance.

Obligations of the Exporter:

• It means that the exporter is responsible for delivering the goods at the agreed place without lowering it from the last means of transport used. • All risks and costs of the merchandise from the factory, warehouse or warehouse of the exporter to the place of destination (without the unloading of the goods of the last means of transport), are at the expense and charge of the exporter.

Obligations of the Importer:

• Assuming the inherent risks of the merchandise from the time the exporter delivers it to the agreed place, without lowering it from the last means of transport used.
• If the importer is unwilling to assume the risk of unloading and prefers the exporter to absorb it and the delivery concludes with the unloading of the goods placed in a cargo or container terminal at the agreed place of destination, Incoterms DAT would be appropriate.

Obligations of the Exporter:

• It means that the exporter is responsible for delivering the goods at the cargo or container terminal at the agreed place of destination unloaded from the vehicle of arrival.
• All risks and costs of the merchandise from the exporter’s factory, warehouse or warehouse to the delivery at the cargo terminal of the agreed place of destination, are at the expense and expense of the exporter.

Obligations of the Importer:

• Assumes the inherent risks of the merchandise since the exporter delivers it at the agreed place, unloaded from the means of transport.

Obligations of the Exporter:

• Deliver the merchandise on its own, available to the importer, at the agreed place of destination in the importer’s country, including the unloading handling.
• Carry out the export and import clearance of the merchandise.
• Represents the maximum obligation for the seller.

Obligations of the Importer:
• Assume the risks and costs of unloading the goods from the last means of transport.

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