Incoterms specify the rights of each party that enter a contract when it comes to the delivery of any goods sold. There are eleven terms in total, having been reduced from thirteen in 2011. Here is a breakdown of some of the terms:
CIP – Carriage and Insurance Paid – The seller will pay for moving goods to its intended destination. The buyer will bear the risk of any loss or damage as soon as it is in the hands of the first carrier, but the seller will pay for any cargo insurance required.
CPT – Carriage Paid To – This is where the seller has to pay for moving the goods to the destination, and the buyer will bear the risk of any loss or damage.
DAP – Delivered At Place – Delivery will take place when the seller has placed the goods at the buyer’s disposal in its intended and named destination.
DAT – Delivered At Terminal – This is where delivery will take place when the seller has placed the goods at a named terminal. This terminal can encompass quays, warehouses and other such terminals.
ExW – Ex Works – This is where the seller’s only responsibility is to make the goods available to purchase at the seller’s premises. Any costs and risks of moving goods are the responsibility of the buyer.
FCA – Free Carrier – The seller will deliver any goods which have been cleared for export, to the carrier whom the buyer will have selected.
CFR – Cost And Freight – The seller will clear all goods for export and will pay for any costs and also for freight.
CIF – Cost Insurance And Freight – The seller clears goods for export, pays costs, pays cargo insurance and pays for freight to its intended destination.
FAS – Free Alongside Ship – The seller will deliver the goods to a named port. Then, the buyer will bear all costs and risks.
FOB – Free On Board – The seller will deliver goods on board the ship and will also clear these for export. Then, the buyer will bear all responsibility of risk and costs.