Incoterms are a set of international norms that interpret commercial terms relative to international contracts for the sale of goods, limiting the rights and obligations of the parties concerned with regards to goods delivery. They are published by the International Chamber of Commerce, and the latest revisions appeared on 1 January 2020.
Incoterms are not laws: they are norms and practices, and so a new version does not revoke the previous ones. However, when the name of the Incoterm is specified, the version being referred to must be stated – for example: EX-WORKS (2020 version).
What they regulate
Goods delivery. Delivery and possession are not to be confused. The moment the risks involved with the goods is transmitted from seller to buyer. The distribution of costs inherent in import-export. Customs papers procedures.
Brief description and structure
Incoterms are classified according to means of transport:
Any mode or modes of transport (also when partially by sea)
|EXW||Ex Works||(S) places goods at (B’s) disposal at seller’s establishment without loading them onto any means of transport.|
|FCA||Free carrier-named place||(S) delivers the goods to the carrier at the designated place and loaded on the means of transport.|
|CPT||Carriage paid to||(S) delivers goods to (B) when it places them at the carrier’s disposal on the transport means.… Besides, (S) must pay the freight cost.|
|CIP||Carriage and insurance paid to||(S) delivers goods to (B) when it places them at the carrier’s disposal on the transport means. Besides, (S) must pay the freight cost as well as minimum cover transport insurance premium. Greater cover will be negotiated if (S) so desires.|
|DAP||Delivered at Place||(S) delivers the goods and places them at the disposal of (B) in the means of transport ready for discharge at the named place of destination.|
|DPU||Deliverd at Place Unloaded||(S) delivers the goods and places them at the disposal of (B) unloaded.|
|DDP||Delivered duty paid||(S) delivers the goods and places them at the disposal of(B) at the designated destination without discharge and having duly dealt with all the costs of import formalities.|
|(S):Seller (B): Buyer|
Maritime Transport and inland navigable waterways.
|FAS||Free alongside ship||(S) delivers the goods to (B) or its carrier on the dock alongside the vessel.|
|FOB||Free on board||(S) delivers the goods on board the vessel.|
|CFR||Cost and freight||(S) delivers the goods on board the vessel. In addition it must pay the freight costs.|
|CIF||Cost, insurance and freight||(S) delivers the goods on board the vessel. In addition, it must pay the freight cost and a minimum-cover insurance premium. Greater cover will be negotiated if (B) so desires.|
|(S):Seller (B): Buyer|