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Incoterms

What are Incoterms?

"Incoterms" are rules that are designed to facilitate the contracting parties and eliminate possible misunderstandings. They may be divided into groups according to the distribution of obligations between the two Contracting Parties

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EXW / EX Works (named place) - The seller provides the goods in his premises. The buyer is responsible for the loading. This form of franking imposes a minimum of obligations on the seller and a maximum on the buyer. The term "Ex Works" is often used when making an initial offer to sell goods without any costs being included. EXW means that the seller prepares the goods ready for loading in its premises (factory or warehouse) on the date agreed with the customer. The buyer pays all transport costs and also bears the risks of transporting the goods to their final destination. The seller does not load the goods and does not owe export fees. If the seller loads the goods, he does so at the risk of the buyer and the costs are for the buyer. If the parties wish the seller to be responsible for the loading of the goods and transport and to bear the risk and all costs of such loading, this must be made clear by adding the explicit text to that effect in the contract of sale.

FCA / Free Carrier (named place) - The seller delivers the goods released for export to the carrier approved by the buyer at a specific place. This is used for each mode of transport. The seller is obliged to load the goods on the carrier approved by the buyer. The main document certifying the transfer of responsibility is the delivery note from the carrier to the exporting contractor.

FAS / Free Alongside Ship (named port of shipment) - The seller is obliged to deliver the goods to the ship in the agreed port. The seller is obliged to release the goods for export. this type of delivery is only suitable for maritime transport, but not for multimodal maritime transport in containers (see Incoterms 2010, ICC publication 715). This term is usually used for heavy or bulk cargo.

FOB / Free On Board (named port of shipment) - free on board (agreed port of loading)

CFR / Cost and Freight (named port of destination) = value and freight (agreed port of destination)

CIF / Cost, Insurance and Freight (named port of destination) = value, insurance and freight (agreed port of destination)

CPT / Carriage Paid To (named place of destination) = transportation paid to (agreed destination)

CIP / Carriage and Insurance Paid То (named place of destination) = transportation and insurance paid to (agreed destination)

DAF / Delivered At Frontier (named place) = delivered to the border (agreed place)

DES / Delivered Ex Ship (named port of destination) = delivered by ship to (agreed port of destination)

DEQ / Delivered Ex Quay (named port of destination) = delivered from the quay (agreed port of destination)

DAP / Delivered at Place (named place of destination) = delivery on site (agreed destination)

DDP / Delivered Duty Paid (named place of destination) = delivered, duty paid (agreed destination)

The "E" category clauses are the most favorable for the buyer, because if delivery is agreed under the EXW conditions, it means that the seller is obliged to deliver buyer's goods in seller's warehouse. All risks are then borne by the buyer.

Category "F" clauses also provide for an obligation for the seller. Under these clauses, the seller is obliged to deliver the goods to a carrier designated by the buyer, including to load them. All other costs and risks after delivery of the goods to the carrier are borne by the buyer, including transportation costs.

The clauses of category "C" increase the obligations of the seller at the expense of the buyer, and here the seller must bear the costs of transportation. Not only to load the goods, but he is obliged to conclude the contract of carriage. All other costs and risks related to the delivery will be borne again by the buyer.

The "D" category clauses are the most unfavorable for the seller, because in them the seller bears all costs and bears all the risks of delivery of the goods to the destination.

FCAUnder this clause, the seller bears the costs of insuring the goods and the other costs until delivery to the buyer at the agreed place, and the goods are handed over to the seller free for export. It is submitted with completed documents, including paid duties. All other costs - insurance from the moment of delivery of the goods to the carrier, payment of the transport price, customs clearance of imports into the country of the buyer, as well as the risk are borne by the buyer.

FAS – Goods delivered ex - goods delivered along the ship to the designated place of loading - this clause is agreed for shipments by sea. According to the clause, the seller bears the costs of insuring the goods and other costs until they are handed over to a carrier on the quay at the agreed port for departure. Unlike the previous clause, here the buyer bears all other costs, including the costs of releasing the goods for export, transport costs, unloading, loading and customs formalities.

FOB – Goods freely loaded on board - the seller bears the costs of insurance, transportation of the goods to the port of departure, where he must load the goods on board the vehicle and pay the costs related to the export of the release of the goods for export. The remaining costs to the destination in the buyer's country are borne by him.

CFR – Under this clause, the seller shall bear all costs related to the delivery of the goods to the port of departure, including those for loading the ship. The costs of releasing the goods for export, as well as to pay the transport price to the port of the buyer, at the same time he is obliged to notify the buyer of the time and place of arrival of the goods.

CIFvalue, insurance and price to the designated port of destination - the delivery conditions under this clause are similar to those under the previous one. The only difference is that here the seller has to pay the insurance.

CPTcarriage paid up to - under this clause the seller bears the costs of releasing the goods for export and transporting them to their destination, and all other costs are borne by the buyer.

CIPsimilar to the previous one, but here the seller also bears the insurance costs.

DATthe goods delivered and unloaded at the agreed terminal at the destination - according to this clause all delivery costs and risks to the agreed terminal, including the unloading of the goods are borne by the seller, after which the buyer is only obliged to pick up the goods from the terminal and draw up the import documents, including the payment of import duties and taxes.

DAPthe goods delivered to the agreed destination - in essence the obligations in connection with the delivery are distributed in the same way as in the previous one, except that at the destination the seller must make the goods available to the buyer ready for unloading. Here the buyer takes over the unloading.

DDPthe goods delivered with paid duty - the seller bears absolutely all delivery costs, including the payment of import duties. The only obligation of the buyer is to receive the goods, ie to unload and release the vehicles.

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