Icoterms

The Icoterms (from International commercial terms) are a set of rules established to create the conditions, terms, and limits in the responsibilities, as the seller as the buyer.

These uniform rules of International Trade, determine the reach of trade agreements. Deliveries of goods, costs, risks, payment methods, general conditions of these transactions, are previously agreed.

The Icoterms contain a total of 13 different types of contracts which develop hereunder.

 

CFR (Cost and Freight) – Port of agreed destination

For the seller the scope is the same as the FOB quote with the only difference that the company must take care of hiring the hold of the ship and pay the freight to destination.

The risk of loss or damage of the goods as well as any additional costs due to occurred events after the moment of delivery, are transmitted from the seller to the buyer.

CFR term demand to the seller dispatch the goods for the export

This term may only be used for transport by sea or inland waterways.

Obligations of the seller

Deliver the necessary merchandise and documents

Packing

Freight (from the factory to the place of export)

Customs (documents, permits, requirements, taxes)

Export costs (maneuvers, storage, agents)

Freight (from place of export to place of import)

Obligations of the buyer

Payment of Merchandise

Import costs (maneuvers, storage, agents)

Customs (documents, permits, requirements, taxes)

Freight and insurance (place of import to plant)

Delays

 

CIF (Cost, Insurance and Freight) – Port of agreed destination

It means that the seller delivers the merchandise when it exceeds the ship’s border at the agreed port of shipment.

The seller must pay the costs and freight necessary to drive the goods to the port of agreed destination.

Under conditions CIF the seller must also take out insurance and pay the corresponding premium in order to cover the risks loss or damage that may be suffered by the merchandise during the transport.

The buyer should note that the seller is required to get insurance with only minimal coverage. If the buyer wants more coverage you will need to expressly agree with the seller or arrange their own additional insurance.

The term CIF requires the seller to ship goods for the export.

This term may only be used for transport by sea or inland waterways.

 

Obligations of the seller

Deliver the necessary merchandise and documents

Packing

Freight (from the factory to the place of export)

Customs (documents, permits, requirements, taxes)

Export costs (maneuvers, storage, agents)

Freight and Insurance (from place of export to place of import)

Obligations of the buyer

Payment of Merchandise

Import costs (maneuvers, storage, agents)

Customs (documents, permits, requirements, taxes)

Freight and insurance (place of import to plant)

Delays

 

 

CIP (Carriage and Insurance Paid to) – Place of agreed destination

The seller delivers the goods to the carrier designated by him/her but, in addition, must pay the costs of the necessary transport to bring the goods to the agreed destination. The seller must also get an insurance against risks, which the buyer supports, loss or damage of the goods during the transport.

The buyer assumes all risks and any other cost occurred after the goods have been thus delivered.

The CPT requires the seller to ship the goods for export.

This term may be used regardless of the mode of transport, including multimodal transport

 

Obligations of the seller

Deliver the merchandise and necessary documents

Packing

Freight (from the factory to the place of export)

Customs (documents, permits, requirements, taxes)

Export costs (maneuvers, storage, agents)

Freight and Insurance (from place of export to place of import)

Import costs (maneuvers, storage, agents)

Obligations of the buyer

Payment of Merchandise

Customs (documents, permits, requirements, taxes)

Freight and insurance (place of import to plant)

Import costs (maneuvers, storage, agents) “partial”

Delays

 

CPT (Carriage Paid To) – Place of agreed destination

The seller delivers the goods to the carrier designated by him but, in addition, must pay the necessary costs of transport to bring the goods to the agreed destination.

The buyer assumes all risks and any other costs incurred after the goods have been thus delivered.

The CPT requires the seller to clear the goods for export.

This term can be used regardless of the mode of transport, including multimodal transport

CPT

Obligations of the seller

Deliver the merchandise and necessary documents

Packing

Freight (from the factory to the place of export)

Customs (documents, permits, requirements, taxes)

Export costs (maneuvers, storage, agents)

Freight (from place of export to place of import)

Import costs (maneuvers, storage, agents) “Partial”

Obligations of the buyer

Payment of Merchandise

Customs (documents, permits, requirements, taxes)

Freight and Insurance (place of import to plant)

Import costs (maneuvers, storage, agents) “partial”

Delays

 

DAF (Delivered At Frontier) Agreed place

It means that the seller has fulfilled his/her obligation to deliver when he has placed the merchandise shipped in the Customs for export at the agreed place and place of the border but before the border customs of the buyer country.

This term may be used irrespective of the mode of transport when the goods are to be delivered at a land border.

Obligations of the seller

 

Deliver the merchandise and necessary documents

Packing

Freight (from the factory to the place of export)

Customs (documents, permits, requirements, taxes)

Export costs (maneuvers, storage, agents)

Freight (from place of export to place of import) (partial)

Insurance (partial)

Obligations of the buyer

Payment of Merchandise

Freight (place of export to place of import) (partial)

Insurance (partial)

Import costs (maneuvers, storage, agents) “partial”

Customs (documents, permits, requirements, taxes)

Freight and Insurance (from place of import to plant)
Delays

DDP (Delivered Duty Paid) – Place of agreed destination

It means that the seller delivers the goods to the buyer, dispatched for importation, and not unloaded from the means of transport used at the agreed place of destination.

The seller must assume all costs and risks incurred in bringing the goods to that place, including customs procedures, and the payment of customs formalities, customs duties, taxes and other charges for import into the country of destination.

DDP

Obligations of the seller

 

Deliver the merchandise and necessary documents

Packing

Hauling (from the factory to the place of export)

Customs (documents, permits, requirements, taxes)

Export costs (maneuvers, storage, agents)

Freight (from place of export to place of import)

Insurance

Import costs (maneuvers, storage, agents)

Customs (documents, permits, requirements, taxes)

Freight and insurance (place of import to plant)

Delays

Obligations of the buyer

Payment of Merchandise

DDU (Delivered Duty Unpaid) – Place of agreed destination

It means that the seller has fulfilled his obligation to deliver when he has made the goods available to the buyer at the agreed place of the importing country and the seller has to bear all costs and risks related to carrying the goods to that place (excluding rights, taxes and other official charges payable on importation). And also costs and risks of carrying out customs formalities.

 

Obligations of the seller

Deliver the merchandise and necessary documents

Packing

Freight (from the factory to the place of export)

Customs (documents, permits, requirements, taxes)

Export costs (maneuvers, storage, agents)

Freight and Insurance (from place of export to place of import)

Obligations of the buyer

Payment of Merchandise

Import costs (maneuvers, storage, agents) “partial”

Customs (documents, permits, requirements, taxes)

Freight and insurance (place of import to plant)

Delays

 

DEQ (delivered Ex-Quay) – Port of agreed destination

It means that the seller delivers when the goods are made available to the buyer, without dispatching for import, at the dock (landing stage) at the agreed port of destination. The seller must assume the costs and risks incurred when driving the goods to the agreed port of destination and when unloading the goods at the spring (landing stage).

The term DEQ requires the buyer to dispatch the goods for importation and to pay for all import formalities, duties, taxes and other charges.

This term may only be used for transport by sea or inland waterways or for multimodal transport

 

Obligations of the seller

Deliver the merchandise and necessary documents

Packing

Freight (from the factory to the place of export)

Customs (documents, permits, requirements, taxes)

Export costs (maneuvers, storage, agents)

Freight and Insurance (from place of export to place of import)

Import costs (maneuvers, storage, agents)

Customs (documents, permits, requirements, taxes)

Obligations of the buyer

Merchandise Payment

Freight and insurance (place of import to plant)

Import costs (maneuvers, storage, agents)

Delays

This term may be used only for transport by sea or inland waterways or for multimodal transport.

 

DES (Delivered Ex Ship) – Port of agreed destination

It means that the seller delivers when the goods are placed at the disposal of the buyer on board the ship, not cleared for importation, at the agreed port of destination.

Obligations of the seller

Deliver the merchandise and necessary documents

Packing

Freight (from the factory to the place of export)

Customs (documents, permits, requirements, taxes)

Export costs (maneuvers, storage, agents)

Freight and Insurance (from place of export to place of import)

Obligations of the buyer

Merchandise Payment

Import costs (maneuvers, storage, agents)

Customs (documents, permits, requirements, taxes)

Hauling and insurance (place of import to plant)

Delays

 

EXW (Ex-Works) – Agreed place

It means that the seller delivers when the goods are made available to the buyer at the seller’s premises or at another agreed place (ie factory, storage, etc.).

This term represents, therefore, the lowest obligation of the seller, and the buyer must assume all costs and risks.

Obligations of the seller.

Delivery of the necessary merchandise and documentsPacking Obligations of the buyer.Merchandise Payment Domestic freight (from the factory to the place of export)Customs (documents, permits, requirements, taxes)Export costs (maneuvers, storage, agents)International freight (from place of export to place of import)InsuranceImport costs (maneuvers, storage, agents)Transport and insurance (place of import to plant)

FAS (Free Along Ship) –       Port of agreed shipment

It means that the liability of the seller is terminated once the merchandise is placed alongside the vessel at the agreed port of shipment. This means that the buyer must assume all the costs and risks of loss or damage of the merchandise from that moment

The term FAS requires the seller to clear the goods for export.

Obligations of the seller

Merchandise and Necessary DocumentsPacking Freight (from the factory to the place of export)Customs (documents, permits, requirements, taxes)Export costs (maneuvers, warehousing, agents)Obligations of the buyerMerchandise PaymentsFreight and insurance (from place of export to the place of importation)Import costs (maneuvers, storage, agents)Customs (documents, permits, requirements, taxes)Insurance and freight (place of import to plant)Delays

 

FCA (Free Carrier) – Agreed place

It means that the seller delivers the merchandise for export to the carrier proposed by the buyer, at the agreed place.The chosen place of delivery influences the loading and unloading obligations of the parties. If the delivery takes place at the premises of the seller this is responsible for the load. If delivery occurs anywhere else, the seller is not responsible for the download.This term can be used in any means of transport including multimodal transport.

FCA

Obligations of the seller

Delivery of the Merchandise and necessary documentsPackingFreight (from the factory to the place of export)Customs (documents, permits, requirements, taxes)Export costs (maneuvers, storage, agents)Obligations of the buyerMerchandise paymentsFreight (from place of export to place of import)InsuranceImport costs (maneuvers, storage, agents)Customs (documents, permits, requirements, taxes)Freight and insurance (place of import to plant)Delays

 

FOB (Free On Board) – Port of agreed shipment

The seller’s liability ends when the goods exceed the ship’s mark at the agreed port of shipment.The buyer must bear all costs and risks of loss and damage of the merchandise from that point.The term FOB requires the seller to dispatch the goods for export.This term may only be used for transport by sea or inland waterways.

FOB

Obligations of the seller

Deliver the necessary merchandise and documentsPacking Freight (from the factory to the place of export)Customs (documents, permits, requirements, taxes)Export costs (maneuvers, storage, agents)Obligations of the buyerMerchandise PaymentFreight and Insurance (from place of export to the place of import)Import costs (maneuvers, storage, agents)Customs (documents, permits, requirements, taxes)Freight (place of import to plant)

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