INCOTERMS 2020: What are they?

INCOTERMS 2020: Terms of Delivery for International Sale of Goods

What are INCOTERMS 2020?

INCOTERMS, an acronym which stands for international commercial terms, are standard terms published and trademarked by International Chamber of Commerce (ICC), for and used in international commerce, maritime law and basically all modes of transport under shipping law. INCOTERMS 2020 are the latest list of standard terms, updated in 2020.

What are INCOTERMS used for?

INCOTERMS are standard terms used in bills of lading, charter parties, contracts of affreightment, sea waybills, recap of fixture and other documents related to shipping law and maritime law. These standard terms set out the time and place of delivery of the cargo. INCOTERMS also determine at which point and under which conditions the responsibility of the cargo, the ownership of the goods and the associated costs pass from the seller to the buyer.

What do INCOTERMS mean?

EXW – Ex Works

In case of “Ex Works” clause the seller is considered to have delivered the goods when it places the goods at the disposal of the buyer, within the seller’s premises or at some other place agreed in the contract (i.e., works, factory, warehouse, etc.). The seller is not obliged to load the goods on any collecting vehicle, as it is not obliged to clear the goods for export, if custom-clearance is applicable.

FCA – Free Carrier

In case of “Free Carrier” clause the seller is to deliver the goods to the carrier or a third party nominated by the buyer within the seller’s premises or another determined place. The parties are recommended to clearly specify at which the point the goods will be delivered, since the risk also passes to the buyer at that point.

CPT – Carriage Paid to

In case of “Carriage Paid To” clause the seller is to deliver the goods to the carrier or a third party appointed by the seller at a determined place. The seller must arrange and bear the costs of the carriage of the goods to the named place of destination.

CIP – Carriage and Insurance Paid to

In case of “Carriage and Insurance Paid To” clause the seller is to deliver the goods to the carrier or a third party appointed by the seller at a determined place and that the seller must arrange and bear the costs of the carriage of the goods to the named place of destination. The seller also arranges and pays for insurance cover against the buyer’s risk arising from a loss of or damage to the goods that occurs during the transport.

DAT – Delivered at Terminal

In case of “Delivered at Terminal” clause the seller is considered to have delivered the goods when the goods, upon being unloaded from the arriving means of transport, are placed at the disposal of the buyer at a specified terminal at the determined port or place of destination. The seller bears all risks involved in carrying the goods and unloading the goods at the terminal at the determined port or place of destination.

DAP – Delivered at Place

In case of “Delivered at Place” clause the seller is considered to have delivered the goods when the goods are placed at the disposal of the buyer on the arriving means of transport and are ready for unloading at the determined place of destination. The seller bears all risks involved in carrying the goods to the determined place.

DDP – Delivered Duty Paid

In case of “Delivered Duty Paid” clause the seller is considered to have delivered the goods when the goods are placed at the disposal of the buyer, are cleared for import on the arriving means of transport and are ready for unloading at the determined place of destination. The seller pays for all the costs of bringing the goods to the place of destination, bear the risks involved in bringing the goods to the place of destination. The seller is also obliged to clear the goods for export and/or import, to pay any duty for both export and import and to run all customs procedures.

FAS – Free Alongside Ship

In case of “Free Alongside Ship” clause the seller is considered to have delivered the goods when the goods are placed alongside the vessel (e.g., placed on a quay or a barge) named by the buyer at the determined port of shipment. The risks arising from any loss of goods or damage to the goods pass to the buyer when the goods are alongside the ship. The buyer also covers all costs from that moment onwards.

FOB – Free On Board

In case of “Free On Board” clause the seller is considered to have delivered the goods when the goods are on board the vessel named by the buyer at the determined port of shipment. The risks arising from any loss of goods or damage to the goods pass to the buyer when the goods are on board the vessel. The buyer also covers all costs from that moment onwards.

CFR – Cost and Freight

In case of “Cost and Freight” clause the seller is considered to have delivered the goods when the goods on board the vessel. The risks arising from any loss of goods or damage to the goods pass to the buyer when the goods are on board the vessel. The seller must arrange and bear the costs and freight of the required carriage of the goods to the determined port of destination.

CIF – Cost, Insurance and Freight

In case of “Cost, Insurance and Freight” clause the seller is considered to have delivered the goods when the goods on board the vessel. The risks arising from any loss of goods or damage to the goods pass to the buyer when the goods are on board the vessel. The seller must arrange and bear the costs and freight of the required carriage of the goods to the determined port of destination. The seller must also obtain insurance coverage against the buyer’s risk of loss of or damage to the goods that occur during the carriage.

Turkish Maritime Lawyer Baris Erkan Celebi and his Turkish Maritime Law Firm handles disputes arising from the terms set out in all kinds of carriage documents in maritime law and shipping law, including bill of lading, charter party, recap of fixture, sea waybill and contracts of affreightment.