The Incoterms
The Incoterms, contraction of the English terms "International Commercial Terms", make it possible to determine the obligations of the salesman and the purchaser concerning the distribution of the transport costs, as well as the place of delivery which represents the point of transfer of the risks of the salesman to the purchaser.
There are 11 different Incoterms, 7 of which are said to be "multimodal", the rules apply to all means of transport (air, rail, sea). The other 4 Incoterms are called "maritime" because they apply only to maritime transport.
EXW: This is the rule that imposes the fewest obligations on the seller, his only responsibility is to pack the goods and make them available to the buyer in his own premises (those of the seller). The buyer bears all costs and risks related to the loading and transportation of the goods until their arrival at destination.
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FCA: Two options are possible for this Incoterm depending on the place of delivery
- Delivery at the seller's premises, the choice of the carrier and the transport costs are at the buyer's expense. The supplier loads the cleared goods on board the means of transport (this is the FCA "seller's premises")
- Delivery at any other place: the seller arranges for the goods to be brought to the place of shipment where they are made available to the carrier ready for unloading (this is the "other named place" FCA).
In both types of FCA, the buyer is responsible for the major part of the transport, the seller must provide all the necessary documents for the export of the goods.
CPT: The seller pays for transportation to the destination but is no longer responsible for the goods, which travel at the buyer's risk.
The transfer of risk occurs when the goods are delivered to the carrier, while the transfer of costs from the seller to the buyer occurs when the goods arrive at destination.
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CIP: The seller pays the costs of transportation to the destination.
As with CPT, the costs of unloading at the agreed destination are only payable by the seller if this is provided for in the contract of carriage.
However, unlike CPT, the seller is obliged to take out insurance to cover the risks associated with the transport of the goods to the place of destination.
DAP: This Incoterm means that the goods are considered delivered when they are placed at the disposal of the buyer but not unloaded. The seller takes care of the transportation of the goods to the agreed delivery point in the country of destination. It is the buyer's responsibility to take care of customs formalities.
DPU: This rule means that the goods are considered as delivered, once unloaded from the means of transport and put at the disposal of the buyer at the agreed destination (terminal, port or other). Under this Incoterm rule, delivery and arrival at destination occur at the same point. The seller therefore assumes all risks and costs associated with the transport of the goods and their unloading to the place of delivery.
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DDP: This is the Incoterm rule that assigns the maximum level of obligations to the seller, who assumes all risks and costs, including customs clearance, to the named place. Thus, the goods are delivered customs cleared, ready to be unloaded at the place of destination. Only the costs of insurance and unloading at destination are for the buyer's account.
FAS (only applies to sea transport): The costs (and risks) are transferred to the buyer when the goods are placed alongside the ship (e.g. on a quay) at the chosen shipping port. The buyer thus pays all costs related to the goods from the moment they are delivered.
FOB (only applies to sea transport): The transfer of costs (and risks) takes place as soon as the goods are loaded on board the vessel chosen by the buyer at the agreed port of shipment. Thus, unlike FAS, the loading of the vessel is the responsibility of the seller.
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CFR (applies to sea transport only): The risk passes to the buyer at the port of departure when the goods are delivered on board the ship, whereas the costs are borne by the seller under the contract of carriage until the goods arrive at the agreed port of destination, not including unloading.
Thus, as a matter of principle, the costs of discharging the vessel are the responsibility of the buyer, as are the resulting handling charges.
CIF (only applies to sea transport): The seller pays the costs of transport to the place of destination; as with CPT, the costs of unloading at the chosen destination are only payable by the seller if this is provided for in the contract of carriage. The insurance must cover at least the price of the goods plus 10%.
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