The Incoterms (International Commercial Terms) are a set of rules for the definition of specified terms of delivery in foreign trade.
The rules are published by the International Chamber of Commerce (ICC). Experts from the international and national ICC member group adapt the Incoterms rules to the latest developments.
The 3-letter clauses regulate the essential buyer and seller duties, in particular for cross-border transactions. As a result, contractual partners achieve an internationally uniform interpretation of certain obligations of buyers and sellers. In this way, misunderstandings and litigation can be avoided.
The ICC rules are standard throughout the world and are supported by the United Nations Commission on International Trade Law (UNCITRAL). The Incoterms only become effective when they are referred to in a purchase agreement. Which of the clauses applies, the contracting parties must agree concrete. In addition, it is important to state in the contract which version of the Incoterms should apply.
If you have any questions, please do not hesitate to contact us. Properly applied, you avoid possible hidden extra costs!
The Incoterms 2010
EXW (ex works)
According to this clause, the seller already fulfills his obligation to deliver if he delivers the goods to the buyer at the agreed time (eg ex factory, factory, warehouse, etc.) to the buyer for collection. This clause is therefore the most favorable clause for the seller. But in our view, the most unfavorable form of a delivery term for the buyer
FOB (Free on Board)
According to this clause, the seller is obliged to deliver the goods on board the ship designated by the buyer at the named port of shipment. In addition, he must obtain the export license and / or other official permits and complete all export customs formalities. The seller is not obliged to complete import customs formalities and to pay the import duties. This delivery condition is recommended by us as you select the forwarder of your choice to do the transport. He will only charge you the freight costs and fees agreed with you in advance so no hidden costs/surprises.
CFR (Cost and Freight)
According to this clause, the seller is obliged to deliver the goods on his own account to an agreed place of delivery and also to conclude a contract for the carriage of the goods to the port of destination. He may also need to obtain the export license and / or other regulatory approvals and complete all customs formalities.
CIF (Cost, Insurance and Freight)
This clause is CFR. In addition, the seller has to arrange a transport insurance on his own account. Please note that the place of jurisdiction in case of damage is most likely abroad.
DDP (Delivered Duty Paid)
According to this clause, the seller is obligated to deliver the goods already customs cleared for import to the buyer using the agreed mode of transport and to the agreed place.
DAP (Delivered at Place)
According to this clause, the seller is obliged to deliver the goods to the buyer to the agreed place and at a certain time using the agreed mode of transport. Unlike in the case of clause DAT, the seller has therefore not fulfilled his obligation to deliver until he has unloaded the goods himself.