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LOGO
INCOTERMSGROUP 1
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INCOTERM DEFINITIONS1
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INCOTERMS
GROUP 1
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INCOTERMS
Incoterms - International Commercial Terms: A set of
international rules issued by ICC for the interpretation of trade
terms.1
The first Incoterm rules were published in 1936, then it is
revised and added six times in the 1953, 1967, 1976, 1980,1990, 2000. The latest edition is the Incoterms 2010 which are
effective from January 1, 2011.
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INCOTERMS
INCOTERMS identify the obligations placed on
the parties to the contracts in terms of:
- Responsibility relating the costs and the division
when shipping the goods.
- Distribution of risks associated with themovement of goods.
- Where these risks transfer to another party
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Who does what, who pays for what, when
risk in the goods passes from seller to
buyer.
When delivery occurs, as well as issues suchas insurance, export and import clearance and
the allocation of other costs pertaining to thedelivery of goods.
What do INCOTERMS cover?
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tThis is an example text. Go ahead and replace it with your own text. tThis is an example
text. Go ahead and replace it with your own text.This is an example text. Go ahead and replace it with your own text.
There is nothing on ownership/title to the goods, nothing
in detail on payment obligations (when, how, what security,
against what documents), nothing on detailed vesselrequirements, force majeure, termination, insolvency.
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In short INCOTERMS do not constitute a complete
contract of sale, but rather provide convenient,
internationally recognised rules for the sale of goods.
They work well as general outline of the contract of sale
which is to be specified and adjusted with further terms and
conditions of the contract
What do INCOTERMS not cover?
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What is Incoterms 2010?
Incoterms 2010 are
divided into two
categories:+ Clauses for all types
of transport: EXW,
FCA, CPT, CIP, DAT,
DAP, DDP
+ Clauses for sea and
inland water transport:
FAS, FOB, CFR, CIF.
Incoterms 2010
1 Incoterms 2010 consist
of 11 terms.
Four terms wereeliminated (DAF, DEQ,
DES, DDU) and two
were added: DAT &
DAP
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Incoterms 2010
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- No, it isnt. Because Incoterms are not law, its onlyprovide a set of international rules for obligations,
risk and cost while the buyers get the goods to thesellers.
- The goal of the new Incoterms 2010 is to simplify
the drafting of sale contracts by clearly defining
some of the obligations of both buyers and sellers ,
thus avoiding misunderstandings , which might
otherwise occur.
Is Incoterms 2010 always legally binding in
international sales contracts?
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- Incoterms cant be used as a completed foreign contract- So, we can use Incoterms 2000 in international sales
contracts. however, incoterms 2010 is still encouragedbecause it provides the new standards to current economic
conditions
- Whether selecting any conditions Incoterms, theparties still need to know that the interpretation of
contracts also govern its own strong traditions of each
port or locality concerned.
Is Incoterms 2010 always legally binding in
international sales contracts?
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STRUCTURE OF INCOTERMS
2010
- Rules for Any mode of transportEXW EX WORKS
FCA FREE CARRIER
CPT CARRIAGE PAID TOCIP CARRIAGE AND INSURANCE PAID TO
DAT DELIVERED AT TERMINAL
DAP DELIVERED AT PLACE
DDP DELIVERED DUTY PAID
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STRUCTURE OF INCOTERMS
2010
-Rules for Sea and inland waterway transport only
FAS FREE ALONGSIDE SHIP
FOB FREE ON BOARD
CFR COST AND FREIGHT
CIF COST INSURANCE AND FREIGHT
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RESPONSIBILITY OF SELLER AND BUYER UNDEREACH TERM
FCA
EXW
CPT
The Seller's only responsibility is to make the goods available
at the Seller's premises.
The Buyer bears full costs and risks of moving the goods from
there to destination.
The Seller delivers the goods, cleared for export, to the
carrier selected by the Buyer.
The Seller loads the goods if the carrier pickup is at the
Seller's premises. From that point, the Buyer bears the costs
and risks of moving the goods to destination
The Seller pays for moving the goods to destination. From
the time the goods are transferred to the first carrier, the Buyer
bears the risks of loss or damage.
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RESPONSIBILITY OF SELLER AND BUYER UNDEREACH TERM
DAT
CIP
DAP
The Seller pays for moving the goods to destination. From the
time the goods are transferred to the first carrier, the Buyer bears
the risks of loss or damage. The Seller, however, purchases the
cargo insurance.
The Seller delivers when the goods, once unloaded from the
arriving means of transport, are placed at the Buyer's disposal at
a named terminal at the named port or place of destination.
The Seller bears all risks involved in bringing the goods to and
unloading them at the terminal at the named port or place ofdestination.
The Seller delivers when the goods are placed at the Buyer's
disposal on the arriving means of transport ready for unloading
at the names place of destination. The Seller bears all risks
involved in bringing the goods to the named place. Hunh Thy Trang
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16Theo http://www.orey-shipping.com/60Incoterms.pdf
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What is the difference between: FOB & FCA, CIF & CIP, CFR &
CPT?
FOB (Free On Board) (Rule for sea and inland waterway transport):
Seller delivers the good (cleared for export) on board the vesselnominated by buyer at the port of delivery .
Cost and risk change from seller to buyer as the goods pass over
the imaginary vertical line defined by the ship's rail.
FCA (Free Carrier) (Rule for any mode of transport):Seller hands over the goods to buyer's designated carrier (pre-cleared for export) at the named place.
Cost and risk change from seller to buyer as soon as the goods
are accepted and signed for by the buyer's designated carrier.
The differences between FOB & FCA:
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What is the difference between: FOB & FCA, CIF & CIP, CFR &
CPT?
CFR- Cost and Freight (Rule for sea and inland waterway transport):The seller delivers the goods on board the vessel and pays the cost and
freight necessary to bring the goods to the named port of destination.Risk passes and cost are transferred at difference places, the risk passes
when the goods are on board the vessel (not until the goods reach the
destination); the cost of carriage will be covered by the seller until the goods
reach destination.
CPT- Carriage Paid To (Rule for any mode of transport):The seller delivers the goods (cleared for export) to the carrier or another
person nominated by the seller and seller arranges and pays for the carriage up
to the named place of destination.
Risk to the goods transfers from the seller to the buyer when good so
delivered to the first carrier not until the goods reach destination.
The differences between CFR & CPT:
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FOB CIF CFR rules for sea and inland waterway transport, FCA CIP
CPT are applicable to goods for transport by air, rail, road and
containerised/multi-modal transport.
FOB, CIF, CFR may not be appropriate for use where goods are handed
over to the carrier before they are on board the vessel, for example goods in
containers, which are typically delivered at a terminal. In such situations, the
FCA, CIP, CPT rule should be used.
When shouldnt FOB, CIF, CFR be used?
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THANK YOU