Incoterms or International Commercial terms are a series of international sales terms, published

by International Chamber of Commerce (ICC) and widely used in international commercial

transactions. These are accepted by governments, legal authorities and practitioners worldwide
for the interpretation of most commonly used terms in international trade. This reduces or
removes altogether uncertainties arising from different interpretation of such terms in different
countries. Scope of this is limited to matters relating to rights and obligations of the parties to the
contract of sale with respect to the delivery of goods sold. They are used to divide transaction
costs and responsibilities between buyer and seller and reflect state-of-the-art transportation
practices. They closely correspond to the U.N. Convention on Contracts for the International
Sale of Goods. The first version was introduced in 1936 and the present dates from 2000.

As of January 1, 2011 the eighth edition, Incoterms 2010,[1][2] have effect. The changes therein
affect all of the five terms previously listed in section D, which are now obsolete and have been
replaced with these three:

 DAT (Delivered at Terminal)

 DAP (Delivered at Place)
 DDP (Delivered Duty Paid)

The new terms apply to all modes of transport

Group E – Departure
EXW – Ex Works (named place)
The seller makes the goods available at his premises. The buyer is responsible for all
charges.

This trade term places the greatest responsibility on the buyer and minimum obligations on the
seller. The Ex Works term is often used when making an initial quotation for the sale of goods
without any costs included.

EXW means that a seller has the goods ready for collection at his premises (Works, factory,
warehouse, plant) on the date agreed upon.

The buyer pays all transportation costs and also bears the risks for bringing the goods to their
final destination.

[edit] Group F – Main carriage unpaid

FCA – Free Carrier (named places)
The seller hands over the goods, cleared for export, into the custody of the first carrier
(named by the buyer) at the named place. This term is suitable for all modes of transport,
including carriage by air, rail, road, and containerised / multi-modal sea transport. This is
 the correct "freight collect" term to use for sea shipments in containers, whether LCL
(less than container load) or FCL (full container load).
FAS – Free Alongside Ship (named loading port)
The seller must place the goods alongside the ship at the named port. The seller must
clear the goods for export. Suitable only for maritime transport only but NOT for
multimodal sea transport in containers (see Incoterms 2010, ICC publication 715). This
term is typically used for heavy-lift or bulk cargo.
FOB – Free on board (named loading port)
The seller must themself load the goods on board the ship nominated by the buyer, cost
and risk being divided at ship's rail. The seller must clear the goods for export. Maritime
transport only but NOT for multimodal sea transport in containers (see Incoterms 2010,
ICC publication 715). The buyer must instruct the seller the details of the vessel and port
where the goods are to be loaded, and there is no reference to, or provision for, the use of
a carrier or forwarder. It does not include Air transport. This term has been greatly
misused over the last three decades ever since Incoterms 1980 explained that FCA should
be used for container shipments.

[edit] Group C – Main carriage paid

CFR or CNF – Cost and Freight (named destination port)
Seller must pay the costs and freight to bring the goods to the port of destination.
However, risk is transferred to the buyer once the goods have crossed the ship's rail.
Maritime transport only and Insurance for the goods is NOT included. Insurance is at the
Cost of the Buyer.
CIF – Cost, Insurance and Freight (named destination port)
Exactly the same as CFR except that the seller must in addition procure and pay for
insurance for the buyer. Maritime transport only.
CPT – Carriage Paid To (named place of destination)
The general/containerised/multimodal equivalent of CFR. The seller pays for carriage to
the named point of destination, but risk passes when the goods are handed over to the
first carrier.
CIP – Carriage and Insurance Paid (To) (named place of destination)
The containerised transport/multimodal equivalent of CIF. Seller pays for carriage and
insurance to the named destination point, but risk passes when the goods are handed over
to the first carrier.

[edit] Group D – Arrival

This section is outdated. Please update this section to reflect recent events or newly
available information. Please see the talk page for more information. (December 2010)
DAF – Delivered At Frontier (Deliveplace)
This term can be used when the goods are transported by rail and road. The seller pays
for transportation to the named place of delivery at the frontier. The buyer arranges for
customs clearance and pays for transportation from the frontier to his factory. The
passing of risk occurs at the frontier.
DES – Delivered Ex Ship (named port)
Where goods are delivered ex ship, the passing of risk does not occur until the ship has
arrived at the named port of destination and the goods made available for unloading to
the buyer. The seller pays the same freight and insurance costs as he would under a CIF
arrangement. Unlike CFR and CIF terms, the seller has agreed to bear not just cost, but
also Risk and Title up to the arrival of the vessel at the named port. Costs for unloading
the goods and any duties, taxes, etc… are for the Buyer. A commonly used term in
shipping bulk commodities, such as coal, grain, dry chemicals - - - and where the seller
either owns or has chartered, their own vessel.
DEQ – Delivered Ex Quay (named port)
This is similar to DES, but the passing of risk does not occur until the goods have been
unloaded at the port of destination.
DDU – Delivered Duty Unpaid (named destination place)
This term means that the seller delivers the goods to the buyer to the named place of
destination in the contract of sale. The goods are not cleared for import or unloaded from
any form of transport at the place of destination. The buyer is responsible for the costs
and risks for the unloading, duty and any subsequent delivery beyond the place of
destination. However, if the buyer wishes the seller to bear cost and risks associated with
the import clearance, duty, unloading and subsequent delivery beyond the place of
destination, then this all needs to be explicitly agreed upon in the contract of sale.
DDP – Delivered Duty Paid (named destination place)
This term means that the seller pays for all transportation costs and bears all risk until the
goods have been delivered and pays the duty. Also used interchangeably with the term
"Free Domicile". The most comprehensive term for the buyer. In most of the importing
countries, taxes such as (but not limited to) VAT and excises should not be considered
prepaid being handled as a "refundable" tax. Therefore VAT and excises usually are not
representing a direct cost for the importer since they will be recovered against the sales
on the local (domestic) market.