INCO TERM - Inco terms are a set of rules which define the responsibilities of sellers and buyers for the delivery of goods under sales contracts. They are published by the International Chamber of Commerce (ICC) and are widely used in commercial transactions.

Inco terms include 11 terms segmented into four main groups.

* E- Departure

* Ex-Works (EXW) - The seller (exporter) makes the goods available to the buyer (importer) at the seller's premises. The buyer is responsible for all transportation costs, duties, and insurance, and accepts risk of loss of goods immediately after the goods are purchased and placed outside the factory door. The ExWorks price does not include the price of loading goods onto a truck or vessel, and no allowance is made for clearing customs. If FOB is the Customs valuation basis of the goods in the country of destination, the transportation and insurance costs from the seller's premises to the port of export must be added to the ExWorks price.

* F Main Carriage Unpaid

* Free Alongside Ship (FAS) - The seller transports the goods from his place of business, clears the goods for export and places them alongside the vessel at the port of export, where the risk of loss shifts to the buyer. The buyer is responsible for loading the goods onto the vessel (unless specified otherwise) and for paying all costs involved in shipping the goods to the final destination.

* Free Carrier (FCA) The seller (exporter) clears the goods for export and delivers them to the carrier and place specified by the buyer. If the place chosen is the seller place of business, the seller must load the goods onto the transport vehicle; otherwise, the buyer is responsible for loading the goods. Buyer assumes risk of loss from that point forward and must pay for all costs associated with transporting the goods to the final destination UTILITES.

* Free on Board (FOB) - The seller delivers the goods on board the ship and clears the goods for export. From that point, the buyer bears all costs and risks of loss and damage.

* C  Main Carriage Paid

* Cost and Freight (CFR)-The seller (exporter) is responsible for clearing the goods for export, delivering the goods past the ships rail at the port of shipment and paying international freight charges. The buyer assumes risk of loss once the goods cross the ship rail, and must purchase insurance, unload the goods, clear customs, and pay for transport to deliver the goods to their final destination. If FOB is the Customs valuation basis, the international freight costs must be deducted from the CFR price.

* Cost, Insurance and Freight (CIF) - The seller (exporter) is responsible for delivering the goods onto the vessel of transport and clearing Customs in the country of export. He is also responsible for purchasing insurance, with the buyer (importer) named as the beneficiary. Risk of loss transfers to buyer as the goods cross the ship rail. If these goods are damaged or stolen during international transport, the buyer owns the goods and must file a claim based on insurance procured by the seller. The buyer must clear customs in the country of import and pay for all other transport and insurance in the country of import. CIF can be used as an Incoterm only when the international transport of goods is at least partially by water. If FOB is the Customs valuation basis, the international insurance and freight costs must be deducted from the CIF price. A CIF transaction will read CIF, port of destination. For example, assuming that goods are exported to the port of Los Angeles, a CIF transaction would read “CIF Los Angeles.

* Carriage Paid To (CPT) - The seller (exporter) clears the goods for export, delivers them to the carrier and is responsible for carriage costs to the named place of destination. Risk of loss transfers to buyer once the goods are transferred to the carrier and the buyer must insure the goods from that time on. If FOB is the Customs valuation basis, the international freight cost must be deducted from the CPT price.

* Carriage and Insurance Paid To (CIP) - The seller transports the goods to the port of export, clears Customs, and delivers them to the carrier. From that point risk of loss shifts to the buyer. Seller is responsible for carriage and insurance costs to the named place of destination. The buyer is responsible for all costs, and bears risk of loss from that point forward. If FOB is the Customs valuation basis, international freight and insurance costs need to be deducted from the CIP price.

* D  Delivered

* Delivered At Frontier (DAF) - The seller (exporter) is responsible for all costs involved in delivering the goods to the named point and place at the frontier. Risk of loss transfers at the frontier. The buyer must pay the costs and bear the risk of unloading the goods, clearing Customs, and transporting the goods to the final destination. If FOB is the Customs valuation basis, the international insurance and freight costs must be deducted from the DAF price.

* Delivered at Terminal (DAT) - The seller delivers when the goods are placed at the buyer’s disposal on the arriving means of transport ready for unloading at the named port or place of destination. Terminal includes any place, including a quay, warehouse, container yard, or road, rail, or air cargo terminal. The seller bears costs and all risks involved in bringing the goods to and unloading them at terminal at the named port or place of destination.


* Delivery Duty Paid (DDP) -The seller delivers the goods, cleared for import, to the buyer at destination. The seller bears all costs and risks of moving the goods to destination, including the payment of customs duties and taxes.


* Delivery Duty Un-paid (DDU) - The seller (exporter) is responsible for all costs involved in delivering the goods to a named place of destination where the goods are placed at the disposal of the buyer. The buyer (importer) assumes risk of loss at that point and must clear Customs and pay duties and provide inland transportation & insurance to the final destination. DAP -- Delivered at Place - The seller delivers when the goods are placed at the buyers disposal on the arriving means of transport ready for unloading at the named place of destination. The seller bears all costs and risks of moving the goods to the named place.