Incoterms 2000

International Commercial Terms

OUTLINE
- P1 : Introduction of incoterms and differences among 4 term groups of Incoterms 2000 - P2 : 3 main terms - P3 : comparison between different versions of incoterms P4 : QUIZ

I-1.Incoterms
- a set of internationally recognised trading terms, defined by ICC - first published in 1936 and updated periodically - help avoid problems of misunderstanding and costly litigation - main purpose : clearly set out the obligations of the seller and the buyer, the division of functions, costs and risks related to the delivery

- Incoterms 2000 includes 13 Incoterms segmented

under four classifications

TERM GROUPS

II- 2. Differences among 4 term groups in Incoterms 2000 - Group E : the seller makes the goods available at his premises, buyer pays all transportation costs and bears all the risks - Group F : the seller is responsible for handing over the goods to a nominated carrier, free of risk and expense to the buyer.

(DAF)

EXW

FCA

FAS

CPT CIP

FOB

CFR CIF (DAF) DAF

DEQ DES DDU DDP

Differences among 4 term groups

Group C : the seller must bear certain costs even after the critical point for the division of the risk of loss or damage of the goods has been reached. The risk is transferred in the exporters country.
Group D : The seller has to bear all the costs and risk related to the process of bringing the goods to the final destination in the importers country. The risk of loss or damage of the goods is transferred to the buyer in his country.

Details in 3 main terms: in FOB, CFR, Details 3 main CIF terms:

FOB, CFR, CIF

What means of transport is used? Where along the transportation route does delivery take place? What costs and risks might each party pay and bear after the point of delivery?

D terms
C terms
F terms
E term

Transport used is only inland or waterway one. Delivery takes place when the goods pass the ships rail at the named port of shipment. The seller must obtain all necessary customs formalities for the export of the goods.

The buyer has to bear all costs and risks of loss of or damage to the goods from delivery point and has responsibility of preparing all necessary customs formalities to import. Moreover, the buyer must contract at his own expense for the carriage of the goods from the named port of shipment.

The seller has to: Clear the goods for export Sign the carriage contract to the named port of destination and Pay the cost and freight necessary to bring the goods there.

The buyer has to: Bear the risk of loss of or damage to the goods and additional costs occurring after the time of delivery. Clear the goods for import.

CFR price = FOB price + freight

CIF term

CIF price = CFR price + premium insurance cost

Obligations (S-seller, B-buyer) Inland freight delivery to named port of shipment Export customs clearance Loading to main carrier Freight to main carriage Marine insurance Unload from main carrier Customs clearance in buyers country Other costs and risks in buyers

FOB

CFR

CIF

S S B B B B

S S S B B B

S S S S B B

Reasons for revisions in Incoterms

To adapt to the changing condition of international

commerce Correct some unreasonable points and make sure for a clear, precise and consistent language in order to avoid conflicts and misunderstandings

Incoterms 2000 vs Incoterms 1990

FAS

Differences

DEQ

FCA

In FAS
risks and costs The buyer for export clearance The seller

In DEQ
risks and costs
The seller for import clearance The buyer

In FCA
Incoterms 1990 The obligation of the seller is presented according to different means of transportation: by rail, road, air, inland waterway, multimodal transports and other transports.

In FCA
In Incoterms 2000
If the place of delivery is one of the sellers premises, the seller is obliged to bear costs for loading goods on the buyers transport.
If the place of delivery is not one of the sellers premises, the seller is only obliged to bear costs until the goods are placed under the buyers disposal on the sellers transport without having to pay unloading costs.

IV/ Changes in Incoterms 2010

1.

Incoterms DAF, DES, DDU and DEQ replaced

Previous Incoterms
Delivered at Frontier (DAF) Delivered Ex Ship (DES) Delivered Duty Unpaid (DDU) Delivered Ex Quay (DEQ)

New Incoterms
Delivered at Place (DAP)

Delivered at Terminal (DAT)

IV/ Changes in Incoterms 2010

2. Institute cargo clauses updated and insurance obligations clarified 3. New security obligations 4. Obligations around terminal handling charges clarified 5. Requirements and obligations associated with string sales recognised

Key amendments in Incoterms 2010

1. 2. 3.

Using Incoterms for domestic sale of goods contracts Revised term categories Maintenance of electronic records

Question
1.

How many terms are there in Incoterms 2000 ?

A. 10 B. 11 C. 12 D. 13

2. If the Seller wants to minimise his risks, what series of Incoterms 2000 will the he use?
A. E term B. F term C. C term D. D term

3. What CFR stands for ?

A. Carriage and flexibility B. Cost, Freight & Rail C. Cost, Free and Rail D. Carriage and freight

4. "FOB" is only appropriate when goods are shipped via:

A. Truck B. Rail C. Ship D. Air

5. After 1 January, 2011, which Incoterms we use in contract:

A. 1990 B. 2000 C. 2010 D. Depend on the agreement of both parties