(INCOTERMS) By By Muhammad Hamayuon Bashir Muhammad Hamayuon Bashir [email protected][email protected]* International Chamber of Commerce * International Chamber of Commerce International Commercial Terms ICC ICC * Official Rules for Interpretation of Official Rules for Interpretation of Trade Terms Trade Terms
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International Commercial Term 2000 ( incoterms 2000)
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* International Chamber of Commerce* International Chamber of Commerce
International Commercial Terms
ICCICC** Official Rules for Interpretation of Trade Official Rules for Interpretation of Trade TermsTerms
Background to the presentation Background to the presentation
The topic of Inco Terms is complicated yet interesting.The topic of Inco Terms is complicated yet interesting.
Inco Terms are used in the international trade.Inco Terms are used in the international trade.
Inco Terms are official rules of ICCInco Terms are official rules of ICC
To understand Inco Terms it is essential to have a fair To understand Inco Terms it is essential to have a fair idea of international trade.idea of international trade.
Activity to move a cargo from one country to Activity to move a cargo from one country to other.other.
Inland Transportation, Loading & Unloading, Overseas Inland Transportation, Loading & Unloading, Overseas transportation, Storage, documentation, Payment of goods, transportation, Storage, documentation, Payment of goods, Clearance, Risk coverage, Handing over taking over of cargo.Clearance, Risk coverage, Handing over taking over of cargo.
Each of the above activity is an independent one and is Each of the above activity is an independent one and is performed by separate organization who has special manpower performed by separate organization who has special manpower and equipment to cater the requirement.and equipment to cater the requirement.
The involvement of various organizations at different level The involvement of various organizations at different level demand for determination of the following:demand for determination of the following:
What will be the point of delivery?What will be the point of delivery?
Who will pay the cost at different stages?Who will pay the cost at different stages?
How the risk element shall be determined?How the risk element shall be determined?
Purpose of IncotermsPurpose of Incoterms
Rules for the interpretation of trade terms in foreign trade
Reduce misunderstanding, disputes & litigation.
ScopeScope
Rights and obligations of the parties to the contract of sale with respect to the delivery of “tangible” goods sold
and
NOT including “intangibles” such as computer software etc.
MisconceptionsMisconceptions Incoterms apply to contract of carriage rather Incoterms apply to contract of carriage rather
than to the contract of sale.than to the contract of sale.
Incoterms assumed to provide for all the duties Incoterms assumed to provide for all the duties which parties may wish to include in a contract of which parties may wish to include in a contract of sale.sale.
Structure of IncotermsStructure of Incoterms
MAIN MAIN CARRIAGE CARRIAGE
UNPAIDUNPAID
FCAFCA
FASFAS
FOBFOB
PART EPART E PART FPART F PART CPART C PART DPART D
Seller delivers when he Seller delivers when he places the goods at the disposal places the goods at the disposal of the buyerof the buyer at the seller’s premises or another named at the seller’s premises or another named place (i.e. works, factory, warehouse, etc.) not cleared place (i.e. works, factory, warehouse, etc.) not cleared for export and not loaded on any collecting vehicle.for export and not loaded on any collecting vehicle.
Buyer has to bear all costs and risks.Buyer has to bear all costs and risks.
Min obligation for the seller.Min obligation for the seller.
Carrier means any person who undertake to perform a Carrier means any person who undertake to perform a contract of carriage and include a nominee by the buyer.contract of carriage and include a nominee by the buyer.
Seller Seller delivers the goods, cleared for export, to the delivers the goods, cleared for export, to the carriercarrier nominated by the buyer at the name place. nominated by the buyer at the name place.
Seller delivers when the Seller delivers when the goods are placed goods are placed alongside the vesselalongside the vessel at the name port of shipment. at the name port of shipment.
FAS term requires the seller to clear the goods for FAS term requires the seller to clear the goods for export.export.
The buyer has to bear all costs and risks of loss of The buyer has to bear all costs and risks of loss of or damage to the goods from that point.or damage to the goods from that point.
The FOB term requires the seller to clear the The FOB term requires the seller to clear the goods for export.goods for export.
Seller delivers when the goods pass the ship’s rail Seller delivers when the goods pass the ship’s rail at the named port of shipment.at the named port of shipment.
This term can be used only for sea or inland This term can be used only for sea or inland waterway transport.waterway transport.
COST AND FREIGHTCOST AND FREIGHT(….named port of destination)(….named port of destination)
COST AND FREIGHTCOST AND FREIGHT(….named port of destination)(….named port of destination)
CFRCFR
Seller to pay the costs and freight for named port Seller to pay the costs and freight for named port of destinationof destination
Seller delivers when the Seller delivers when the goods pass the ship’s railgoods pass the ship’s rail in the port of shipment.in the port of shipment.
the risk of loss of or damage to the goods, as well as any additional the risk of loss of or damage to the goods, as well as any additional costs due to events occurring after the time of delivery, are costs due to events occurring after the time of delivery, are transferred from the seller to the buyer.transferred from the seller to the buyer.
COST INSURANCE & FREIGHTCOST INSURANCE & FREIGHT(….named port of destination)(….named port of destination)CIFCIF
Seller to clear the goods for export.Seller to clear the goods for export.
Seller to get insurance on min. cover. for greater Seller to get insurance on min. cover. for greater cover, buyer to get his extra arrangement.cover, buyer to get his extra arrangement.
Seller to pay the costs, freight and marine Seller to pay the costs, freight and marine insurance during the carriage.insurance during the carriage.
CARRIAGE PAID TOCARRIAGE PAID TO(…named port of destination)(…named port of destination)
CARRIAGE PAID TOCARRIAGE PAID TO(…named port of destination)(…named port of destination)
CPCPTT
The seller The seller deliver the goods to the carrierdeliver the goods to the carrier nominated by himnominated by him
The seller must in addition pay the cost of carriage The seller must in addition pay the cost of carriage necessary to bring the goods to the name destination.necessary to bring the goods to the name destination.
Buyer bears all risks and any other costs occurring Buyer bears all risks and any other costs occurring after the goods have been so delivered.after the goods have been so delivered.
CARRIAGE AND INSURANCE PAID TOCARRIAGE AND INSURANCE PAID TO(….named port of destination)(….named port of destination)CIPCIP
The seller also has to procure insurance.The seller also has to procure insurance.
Seller must in addition pay the cost of carriage necessary to Seller must in addition pay the cost of carriage necessary to bring the goods to the named destination.bring the goods to the named destination.
Seller Seller delivers the goods to the carrierdelivers the goods to the carrier nominated by nominated by him.him.
Seller delivers the goods Seller delivers the goods when the goods are placed at when the goods are placed at the disposal of the buyer on the arriving means of the disposal of the buyer on the arriving means of transporttransport, not unloaded, not cleared for import at the , not unloaded, not cleared for import at the named point and place at the frontier, but before the named point and place at the frontier, but before the customs border of the adjoining country.customs border of the adjoining country.
DELIVERED EX SHIPDELIVERED EX SHIP(….named port of destination)(….named port of destination)
DEDESS
Seller delivers when the Seller delivers when the goods are placed at the goods are placed at the disposal of the buyer on board the shipdisposal of the buyer on board the ship, not cleared , not cleared for import at the named port of destination. for import at the named port of destination.
The seller has to bear all the costs and risks The seller has to bear all the costs and risks involved in bringing the goods to the named port involved in bringing the goods to the named port of destination before discharging.of destination before discharging.
DELIVERED EX QUAYDELIVERED EX QUAY(….named port of destination)(….named port of destination)
DEDEQQ
Seller delivers Seller delivers when the goods are placed at the when the goods are placed at the disposal of the buyer not cleared for import on the disposal of the buyer not cleared for import on the quay (wharf)quay (wharf) at the named port of destination. at the named port of destination.
The seller has to bear costs and risks involved in The seller has to bear costs and risks involved in bringing the goods to the named port of bringing the goods to the named port of destination and discharging the goods on the destination and discharging the goods on the quay (wharf). quay (wharf).
The DEQ term requires the buyer to clear the The DEQ term requires the buyer to clear the goods for import and to pay for all formalities, goods for import and to pay for all formalities, duties, taxes and other charges upon import.duties, taxes and other charges upon import.
Customs Clearance Area for Storage, Appraisement & Release to the importer
DELIVERED DUTY UNPAIDDELIVERED DUTY UNPAID(….named place of destination)(….named place of destination)
DDUDDU
Seller delivers the Seller delivers the goods to the buyer, not cleared for import, and goods to the buyer, not cleared for import, and not unloaded from any arriving means of transport at the named not unloaded from any arriving means of transport at the named place of destinationplace of destination. .
The seller has to bear the costs and risks involved in brining The seller has to bear the costs and risks involved in brining the goods thereto, other than, where applicable, any “duty” the goods thereto, other than, where applicable, any “duty” (which term includes the responsibility for and the risks of (which term includes the responsibility for and the risks of the carrying out of customs formalities, and the payment of the carrying out of customs formalities, and the payment of formalities, customs duties, taxes and other charges) for formalities, customs duties, taxes and other charges) for import in the country of destination. import in the country of destination.
Such duty has to be borne by the buyer as well as any costs Such duty has to be borne by the buyer as well as any costs and risks caused by his failure to clear the goods for import in and risks caused by his failure to clear the goods for import in time.time.
Customs Clearance Area for Storage, Appraisement & Release to the
DELIVERED DUTY PAIDDELIVERED DUTY PAID(….named place of destination)(….named place of destination)
DDPDDP
Seller Seller delivers the goods to the buyerdelivers the goods to the buyer, cleared for , cleared for import, and not unloaded from any arriving means import, and not unloaded from any arriving means of transport at the named place of destination. of transport at the named place of destination.
The seller has to bear all the costs and risks The seller has to bear all the costs and risks involved in brining the goods thereto including, involved in brining the goods thereto including, where applicable, any “duty” (which term includes where applicable, any “duty” (which term includes the responsibility for and the risks of the carrying the responsibility for and the risks of the carrying out of customs formalities and the payment of out of customs formalities and the payment of formalities, customs duties, taxes and other formalities, customs duties, taxes and other charges) for import in the country of destination.charges) for import in the country of destination.