International Commercial Terms EXW!!FCA!!FAS!!FOB!!CFR!!CIF!!CPT!! CIP!!DAP!!DAT!!DDP!

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1 International Commercial Terms EXW FCA FAS FOB CFR CIF CPT CIP DAP DAT DDP General'Aspects Moreandmorecompaniesresorttothepotentialitiesofthe worldmarket.inthiscontext,perfectunderstandingofincoterms 2010(InternationalCommercialTerms versionpublishedbythe InternationalChamberofCommerce,ICC),ineffectasofJanuary 1,2011,isnecessary. Thus,asofthisdate,inproposalsorcontractsofinternational forum,theexpression Incoterms2010 mustbeplacedanditis notapplicabletocontractoftransportorinsurance. Incoterms2010determine:Costdistribution/goodsdeliverysite/ Whoassumestheriskoftransport/Responsibilityofcustoms duties

2 Thereare11,andsolelythesemustbeused: Foranymodeoftransport(land,maritime,airorrailroad), includingmultimodal: EXW,FCA,CIP,CPT,DAP,DAT,DDP Exclusivelyfortransportofgoodsbymaritimeorfluvial: FAS,FOB,CFR,CIF Thoseofthe F Groupandthatofthe E Group correspondto unpaidmaintransport.thoseofthe D Group(Delivered)and thoseofthe C Group correspondtopaidmaintransport. Representedbyacronyms(3letters),theinternationalcommercial terms deal really with selling conditions, since they define the minimum duties and obligations of the vendor and buyer with respect to freights, insurances, movement in terminals, customs releases and obtainment of documents of an international contract of sale of goods. For this reason they are also called price' clauses, for the fact that each term determines the elementsthatcomprisethepriceofthegoods. Once aggregated to the buy and sell agreement, they begin to have legal force, with their precise and effectively determined legal meaning. Thus they reflect the summarized text of international custom on trade matter, with the purpose of simplifyingandspeedinguptheelaborationofclausesofbuyand sellagreements. AgoodmasteryofINCOTERMSisindispensablesothenegotiator may include all its costs in the Foreign Trade transactions. Any erroneous interpretation on duties and obligations of the buyer and vendor can cause large commercial losses to one or both parties.thisway,carefulstudyonthemostconvenienttermfor every commercial operation is important, in order to avoid incompatibility with the clauses intended by the negotiating parties.

3 GROUP& INCOTERMS&2010& COST&TRANSFER&POINT& RISK&TRANSFER&POINT& E& EXW"EX"WORK& ORIGIN WAREHOUSEATTHEORIGIN FAS"FREEALONGSIDESHIP& UNPAIDMAINTRANSPORT ALONGSIDETHESHIP FOB"FREEONBOARD& UNPAIDMAINTRANSPORT FIRSTRAILOFTHESHIP F& FCA"FREECARRIER& UNPAIDMAINTRANSPORT FIRSTINTERNATIONALTRANSPORT CFR&7&COSTANDFREIGHT& PAIDMAINTRANSPORT FIRSTRAILOFTHESHIP CIF&7&COST,INSURANCEANDFREIGHT& PAIDMAINTRANSPORT FIRSTRAILOFTHESHIP CPT&"CARRIAGEPAIDTO& PAIDMAINTRANSPORT FIRSTINTERNATIONALTRANSPORT C& CIP&"CARRIAGEANDFREIGHTPAIDTO& PAIDMAINTRANSPORT FIRSTINTERNATIONALTRANSPORT DAP"DELIVERYATPLACE& EXPENSESUPTOPLACEOFDELIVERY SPECIFICPLACEOFDESTINATION DAT&7&DELIVERYATTERMINAL& EXPENSESUPTOWAREHOUSETERMINAL SPECIFICPLACEOFDESTINATION D& DDP"DELIVERYDUTYPAID& EXPENSESINCLUDINGTAXESUPTOFINALPLACEOFDELIVERY SPECIFICPLACEOFDESTINATION

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5 INCOTERMS2010: EXW$%$Ex$Works$(...$named$place) The goods are placed at the buyer s disposal at the vendor s establishment, or in another named place (factory, warehouse, etc.), without necessarily being ready for exportation or loaded on any transportvehicle. In this term, the exporter concludes its participation in the businesswhenitpacksthegoodsinthetransportpackaging(box, sack,etc.)andmakesitavailable,withintheestablisheddeadline, initsownestablishment. Thus,itfallsontheforeignimportertoadoptallarrangementsfor withdrawal of the goods from the exporter s establishment, internal transport, shipment abroad, licenses, contracting of internationalfreightandinsurance,etc. The term EXW must not be used when the vendor is not apt, directly or indirectly, to obtain the necessary documents for exportationofthegoods. As it can be observed, the buyer assumes all costs and risks involvedinthetransportofthegoodsfromthesiteoforiginupto thesiteofdestination. FCA$ $Free$Carrier$(...$named$place) Inthistermthevendor(exporter)completesitsobligationswhen itdeliversthegoods,clearedforexportation,atthecaresofthe internationalcarrierindicatedbythebuyer,atthedesignatedsite ofthecountryoforigin.itmustbenotedthatthechosensiteof deliveryhasanimpactontheshipmentandunloadingobligations ofthegoodsatthatsite.

6 If the delivery occurs at the vendor s property, the vendor is responsible for the shipment. If the delivery occurs in any other place,thevendorisnotresponsibleforunloading. This way, it is the buyer s (importer s) responsibility to contract internationalfreightandinsurance. Thistermcanbeusedinanymodeoftransport. FAS$ $Free$Alongside$Ship$(...$named$port$of$shipment) Inthisterm,thevendor sresponsibilityconcludeswhenthegoods areplacedalongsidethetransportingship,atthenamedportof shipment. The contracting of international freight and insurance remainsonthebuyer saccount. Thevendoristheoneresponsibleforclearanceofthegoodsfor exportation. Thistermcanonlybeusedinwaterwaytransportation(maritime, fluvialorlacustrine). FOB$ $Free$on$Board$(...$named$port$of$shipment) Inthisterm,thevendor sresponsibilityoverthegoodsgoesallthe wayuptothetimeoftranspositionoftheship srail,attheportof shipment,eventhoughplacementofthegoodsonboardtheship mayalsobe,inprinciple,taskunderthevendor sresponsibility. The term FOB requires the vendor to clear the goods for exportation. Itisemphasizedthattheinternationalcarrieriscontractedbythe buyer(importer).then,inthe FOB sale,theexporterneedsto know which maritime term has been agreed upon between the buyer and the rigger, in order to check who should cover the shipmentexpensesofthegoods. Thistermcanonlybeusedinwaterwaytransportation(maritime fluvialorlacustrine).

7 CFR$ $Cost$and$Freight$(...$named$port$of$destination) In this term, the vendor assumes all costs prior to international shipment, as well as the contracting of international freight, to transportthegoodsuptotheindicatedportofdestination. Itishighlightedthattherisksforlossesanddamagesingoodsare transferred from the vendor to the buyer still at the port of loading(thesameasfob,attheship srail).thus,thenegotiation (selling strictly speaking) is still taking place in the vendor s country. The term CFR requires the vendor to clear the goods for exportation. Thistermcanonlybeusedinwaterwaytransportation(maritime, fluvialorlacustrine). CIF$ $Cost,$Insurance$and$Freight$(...$named$port$of$ destination) Inthisterm,thevendorhasthesameobligationsasin CFR and, moreover,contractsthemaritimeinsuranceagainstrisksoflosses anddamagesduringtransport. Sincethenegotiationisstilltakingplaceattheexporter scountry (ship s rail, at the port of shipment, is the transfer point of responsibilityoverthegoods),thebuyermustobservethatinthe term CIF thevendorisonlyobligatedtocontractinsurancewith minimumcoverage. The term CIF requires the vendor to clear the goods for exportation. Thistermcanonlybeusedinwaterwaytransportation(maritime, fluvialorlacustrine). CPT$ $Carriage$Paid$to$(...$named$place$of$destination) Inthisterm,thevendorcontractsthefreightforthetransportof thegoodsuptothedesignedsite.

8 The risks of losses and damages in the goods, as well as any additionalcostsduetoeventsoccurredafterthedeliveryofthe goodstothecarrier,aretransferredbythevendortothebuyer, whenthegoodsaredeliveredatthecarrier scustody. The term CPT requires the vendor to clear the goods for exportation. This term can be used in any mode of transport, including multimodal. CIP$ $Carriage$and$Insurance$Paid$to$(...named$place$of$destination) In this term, the vendor has the same obligations as defined in CPT and, moreover, bears the insurance against risks of losses anddamagesofthegoodsduringinternationaltransport. The buyer must observe that in the term CIP the vendor is obligated only to contract insurance with minimum coverage, since the sale (transfer of responsibility over the goods) is processedinthevendor scountry. The term CIP requires the vendor to clear the goods for exportation. This term can be used in any mode of transport, includingmultimodal. DAP$%$Delivered$at$Place$(...named$place$of$destination) ThisnewtermwasintroducedinreplacementtothetermsDAF,DES andddu.withitsapplication,goodscouldbeplacedatthedisposalofthe buyer (importer) at the designated port of destination, still inside the transporting ship and prior to clearance for importation, as it already occurredwiththetermdes,oreven,inanyothersite,asitoccurredwiththe termsdaf,wherethedeliverywouldtakeplaceatthedesignatedfrontier andddu,wherethedeliverywouldbecarriedoutinsomesitedesignatedby thebuyeritself(importer),still,inanyofthecases,priortoclearanceofthe goods for importation. The vendor s responsibility consists in placing the goods at the disposal of the buyer, ready to be unloaded, which does not

9 concern the formalities for importation, at the designated terminal of destination,orinanotheragreedsite,assumingthecostsandrisksinherent tothetransportuptothesiteofdestination. DAT$%$Delivered$at$Terminal$(...named$place$of$destination) Thisnewtermwasintroduced,practicallyinreplacementofDEQand similarlytotheextinctterm,establishesthatthegoodscanbeplacedatthe disposal of the buyer (importer), not cleared for importation, at a port terminal and introduces the possibility for the goods to be placed at the disposal of the buyer (importer) in another terminal, outside the port of destination. The vendor ends its responsibility when it places the goods at the disposal of the buyer, which does not concern formalities for importation, at the designated terminal of destination, assuming the costs and risks inherent to the transport up to the port of destination and with unloadingofthegoods. DDP$ $Delivered$Duty$Paid$(...$named$place$of$destination) It is the Incoterm that establishes the greatest degree of commitment for the vendor. In this term, the vendor solely complieswithitsobligationofdeliverywhenthegoodshavebeen placedinavailabilityatthedesignatedsiteofthecountryoffinal destination,clearedforimportation.thevendorassumesallrisks andcosts,includingtaxes,feesandotherburdensincurredduring importation. Contrary to the term EXW, which represents the least obligations for the vendor, DDP results in the maximum obligationsforthevendor.

10 The term DDP must not be used when the vendor is not apt, directly or indirectly, to obtain the necessary documents for importationofthegoods. This term can be used in any mode of transport, including multimodal.