INTERNATIONAL COMMERCIAL TERMS

In connection with the revision work, suggestions are made to represent the trade terms in another manner for the purpose of easier reading and understanding. The terms have been basically classified into the following 4 groups:

CHART OF INCOTERM 1990

I-    Free Alongside Ship (F.A.S):

    -   An International Commercial Term (Incoterm).

     The seller pays all costs, including the cost of placing goods at the disposal of a carrier.

     -     The buyer pays the loading cost and subsequent expenses. In a FAS sale, the obligation is fulfilled when goods are placed near the carrier at the dock. FAS after called on quay.

II-   Ex Work (EXW):

     -     An International Commercial Term (Incoterm).

     The seller pays for loading at the factory. The buyer takes delivery and pays the cost from the factory to the destination port.

III- Ex Quay (EXQ):

A term of sale, the seller pays all delivery cost, including the cost of loading goods into a ground carrier at the destination port. The buyer pays all subsequent charges.

IV- Ex Ship (EXS):

A term of sale, also called over-side, the seller pays all delivery loans, including the cost of unloading goods from the ship. The buyer pays all subsequent charges.        

V-   Free On Board (FOB):

An international commercial term, the seller pays the transportation and insurance including cost of loading cargo at the port.

Kinds of Free On Board (FOB) are:

1-    FOB Airport (FOBA):

The seller arranges and pays for the transport of goods to a carrier at the named airport.

2-    FOB Freight Allowed (FOBFA):

The seller’s invoice price is reduced by amount the buyer pays in freight charge.

3-    FOB Freight Prepaid (FOBFP):

The seller arranges and pays for inland transport to the departure port. The buyer pays all other expenses.

4-    FOB Inland Carrier (FOBIC):

The seller arranges for inland transport to the departure port. The buyers pay all charges.

5-    FOB Inland Port of Origin (FOBPO):

The seller arranges and pays the cost of transport to a named domestic inland port. The buyer pays all other charges.

6-   FOB Named Port of Exportation (FOBNPE):

The seller arranges to deliver cargo to a named exportation port. The buyer pays all freight charges.

7-   FOB Vessel (FOBV):

The seller arranges the shipment, prepares documentation, and pay all costs including the cost of loading cargo aboard the vessel. The seller also pays the insurance to the loading point. Cost pass to the buyer once goods have been loaded.

VI- Carriage Paid To (CPT):

The seller pays the freight for carriage of the goods to the named destination, the risk of, loss of, or damage to the goods, as well as any additional cost due to event occurring after the time. The goods have been delivered to the carrier.

VII- Carriage and Insurance Paid To (CIP):

An international commercial term (INCOTERM). The seller pays the cost of delivery and insurance to a named destination. The buyer bears all subsequent costs.

VIII-Cost, Insurance and Freight (CIF):

A condition of sale for goods carried by sea where the seller pays for loading and transporting the goods and arranges marine insurance.

IX-  Delivered Ex Quay (DEQ):

Seller shall be free from responsibilities on risks and expenses when he places the goods on quay (wharf) after finish import customs clearance at the named port of destination, ready for the buyer’s use. This term shall be used on inland or ocean water transportation.

X- Delivered Ex Ship (DES):

The seller’s responsibility on all risks and expenses shall be finished when he places the goods on board of ship at the port of destination (seller’s port). The buyer once pays all subsequent charges. This term shall be used on inland or ocean water transportation.

XI- Delivered Duty Paid (DDP):

An international commercial term (INCOTERM). The seller makes all arrangements and pays all costs, including duties, to a named foreign destination. The buyer pays all subsequent costs-a description applied to dutiable imports when duties and taxes have been paid. Fully paid duties entitle the owner or consignee to withdraw the imports from a bonded warehouse or customs facility for sale or other uses in the importing country.

XII- Delivered Duty Unpaid (DDU):

An international commercial term (INCOTERM). The seller makes all arrangements and pays all costs to a named foreign destination. The buyer pays duties and all subsequent costs.

XIII- Delivered At Frontier (DAF):

The seller shall be free from responsibilities on all risks and expenses when he places the goods at the named place (destination) subsequent to the completion of import customs clearance at the buyer’s border, and after that, this is the buyer’s responsibilities.

The original purpose of this term is to use on the rail or road transportation.  

XIV- Value Added Tax (VAT):

Tax imposed at each step in the production process, levied upon the difference between the purchase cost of the asset to the taxpayer and the price at which it may be sold-the value added to it. VAT is a primary source of tax revenue in certain European countries but has not been extensively used in the United States.

XV- Cost and Freight (CFR):

A condition of sale goods carried by sea where the seller pays for loading and transporting goods but the buyer pays the insurance costs once the goods have been loaded: The buyer ordered the goods on a cost and freight basis, preferring to make insurance arrangements personally.

XVI-  Free Carrier (FCA):

A condition of sale where the seller pays for transportation and insurance of the goods until they have been loaded onto a container at a specified place.

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