The INCOTERMS emerged in 1936 when the International Chamber of Commerce (ICC), based in Paris, interpreted and consolidated the various contractual forms that had been used in international trade. The constant improvement of negotiating processes and logistical, with the latter absorbing more sophisticated technologies, has resulted in the INCOTERMS whether to alter long the years, resulting in a new set of rules, known today as INCOTERMS 2000.
Represented by acronyms of three (3) letters, the terms of international trade deal effectively conditions of sale because define the rights and obligations of the seller and the minimum buyer for freight, insurance, handling terminal, releases in customs and obtaining documents from an international contract for the purchase and sale of goods. Therefore they are also called "terms of prices," because a word determine the elements that make up the price of the commodity.
After aggregates to the contract of sale, are replaced by legal force, with its precise legal meaning and effectively determined. Displaying thus writing a summary of customary international in the field of trade, in order to simplify and expedite the drafting of the clauses of the contracts of sale.
A good field of INCOTERMS is essential for the negotiator to include all costs in international transactions. Any erroneous interpretation of rights and obligations of the buyer and seller can cause major damage to trade one or both sides. Thus, it is important to study carefully on the term most convenient for each commercial transaction, so that if avoid incompatibilities with clauses sought by merchants.
The latest publication, 560 Brochure, 2000, includes small changes in relation to the previous, basically aimed at facilitating procedures. Here are the definitions of these INCOTERMS, and limitations of liability of each party:
| EXW (ex works) |
In this term, the exporter terminating its participation in the business when pakirajo the goods on the packaging of transport (box, bag, etc.) and provides, at the time, in their own establishment.
Thus, the importer take all steps to withdrawal of the goods on which the exporter, internal transport, release for export, shipment to the final destination, licensing, the hiring of international freight and insurance and the like.
EXW The term should not be used when the seller is not able to, directly or indirectly, to obtain the necessary documents for export of the goods. As you can see, the buyer assumes all the costs and risks involved in the transport of goods from the place of origin to the destination. |
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| FCA (free carrier) |
In this term the seller (exporter) complete their delivery obligations when the goods, desembaraçada for export, to the attention of international carrier indicated by the buyer (importer), in the place designated the country of origin. It should be noted that the venue of delivery has an impact on the obligations of embarkation and disembarkation of the goods there.
If the delivery occurs on the property of the seller, the seller is responsible for the shipment. If the delivery occurs at any other place, the seller is not responsible for the landing. Thus, the buyer (importer) hire international freight and insurance. This term may be used in any mode of transport.
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| FAS (free alongside ship) |
In this term, the responsibility of the seller was closed when the goods are placed along the side of the ship carrier in the port of embarkation appointed. The hiring of international freight and insurance is on the buyer.
The seller is responsible for the clearance of goods for export. This term may be used only in the transport oceanway (sea, river or lake). |
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| FOB (free on board) |
In this term, the responsibility of the seller, on the goods, there is so far the transposition of amurada the ship at the port of embarkation, although the placing of the goods on board the vessel is also, in principle, task charged to the seller.
The term FOB requires that the seller desembarace the goods for export.
The international carrier is hired by the buyer (importer). So, in the sale FOB, the exporter needs to know what the term maritime agreed between the buyer and the owner to verify who should cover the cost of shipment of goods. This term may be used only in the transport oceanway (sea, river or lake). |
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| CFR (cost and freight) |
In this term, the seller assumes all costs prior to boarding international, as well as the hiring of international freight, to transport the goods to the port of destination indicated.
It appears that the risks for damages of the goods are transferred from the seller to the buyer even at the port of origin. Thus, the trading (selling itself) is still occurring in the country of the seller.
The term CFR requires that the seller desembarace the goods for export. This term can only be used in the transport oceanway (sea, river or lake). |
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| CIF (cost, insurance and freight) |
In this term, the seller has the same obligations described in the CFR term and, in addition, must hire the maritime insurance against risks of loss and damage during transport.
As the negotiation is still occurring in the country of the exporter (the amurada the vessel, the port of embarkation, is the point of transferring responsibility for the goods), the buyer should note that at the end CIF the seller is only required to hire with insurance minimum coverage.
The term CIF requires that the seller desembarace the goods for export. This term can only be used in the transport oceanway (maritime, fluvial and lacustrine). |
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| CPT (carriage paid to) |
In this term, the seller hires the freight for the transportation of goods to the place designated. The risks of loss and damage of goods, as well as any additional costs due to events occurring after the delivery of the goods carrier, are transferred by the seller to the buyer when the goods are delivered to custody of the carrier.
The term CPT requires that the seller desembarace the goods for export. This term may be used in any mode of transportation, including multimodal |
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| CIP (carriage and insurance paid to) |
In this term, the seller has the same obligations defined at the end CPT and, in addition, ship with insurance against risks of loss and damage of goods during international transport.
The buyer should note that at the end CIP the seller is required only to hire insurance coverage with minimal since the sale (transfer of responsibility for the goods) is processed in the country of the seller.
The term CIP requires that the seller desembarace the goods for export. This term may be used in any mode of transportation, including multimodal. |
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| DAF (delivered at frontier) |
In this term, the seller complete its obligations when the goods delivery, desembaraçada for export, at one point indicated the border and set the most accurate possible. The delivery of the goods to the buyer occurs at a point prior to the customs office of the neighbouring country.
The DAF terms can be used in any mode of transport. However, it is usually employed when the mode of transport is terrestrial (road or rail). |
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| DES (delivered ex ship) |
In this term, the seller complete its obligations when the goods are delivered to the buyer on board the ship, not desembaraçada for export, at the port of discharge. The seller assumes all the costs and risks during international travel.
Removal of the goods through the vessel and to import must be provided by the buyer. This term can only be used in the transport oceanway (sea, river or lake). |
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| DEQ (delivered ex quay) |
In this term, the seller only meets its obligation to deliver the goods when it is provided in the place designated in the country of final destination, not desembaraçada for import.
The risks and costs are transferred from the seller to the buyer from the delivery at the pier of the port of destination.
This term may be used only when the goods must be delivered by sea transport, interior hidroviário or multimodal, landing on the ship at berth (atracadouro) at the port of destination. |
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| DDU (delivered duty unpaid) |
In this term, the seller only meets its obligation to deliver the goods when it is provided in the place designated in the country of final destination, not desembaraçada for import.
All risks of loss and damage of the goods are made by the seller until the delivery at the designated place with the exception of taxes, fees, other charges on imports official incidents and the costs and risks involved in the nationalization of the goods.
This term may be used in any mode of transportation, including multimodal. |
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| DDP (delivered duty paid) |
In this term the seller only meets its obligation to deliver the goods when it is provided in the place designated in the country of final destination, desembaraçada for import.
The seller assumes all risks and costs, including taxes and other charges on imports incidents. Unlike EXW term, which represents the minimum obligations for the seller, the DDP carries the maximum of obligations to the seller.
The term DDP should not be used when the seller is not fit to, directly or indirectly, to obtain the necessary documents to import the goods.
This term may be used in any mode of transportation, including multimodal |
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