Incoterms 2000
http://www.iccwbo.org/incoterms/faq.asp
http://www.sy-nett.no/html/inco2000.htm

Why Incoterms?
Incoterms are international rules that are accepted by governments, legal authorities and practitioners worldwide for the interpretation of the most commonly used terms in international trade. They either reduce or remove altogether uncertainties arising from differing interpretations of such terms in different countries.

What do they cover?
The scope of Incoterms is limited to matters relating to the rights and obligations of the parties to the contract of sale with respect to the delivery of goods sold, but excluding "intangibles" like computer software.

Incoterm series

Incoterm 2000 are divided into four series, E, F, C and D, denoted by the first letter in the three-letter abbreviation.

Under the "E"-term (EXW), the seller only makes the goods available to the buyer at the seller's own premises. It is the only one of that category.
Under the "F"-terms (FCA, FAS and FOB), the seller is called upon to deliver the goods to a carrier appointed by the buyer.
Under the "C"-terms (CFR, CIF, CPT and CIP), the seller has to contract for carriage, but without assuming the risk of loss or damage to the goods or additional costs due to events occurring after shipment or dispatch.
Under the "D"-terms (DAF, DES, DEQ, DDU and DDP), the seller has to bear all costs and risks needed to bring the goods to the place of destination.

What are the 13 Incoterms?
Each Incoterm is referred to by a three-letter abbreviation. Here is a complete list: EXW, FCA, FAS, FOB, CFR, CPT, CFR, CIF, DAF, DES, DEQ, DDU, DDP.

EXW

(Ex Works) (… named place) - represents the minimum involvement of the seller and the maximum involvement of the buyer in the movement of the goods from the point of 'works'. Risk and responsibility pass from the seller to the buyer when the cargo is made available on the ground at the 'works', at or on the agreed future date or future time, uncleared through customs.

FCA

(Free Carrier) (… named place) requires the seller to take responsibility for risks and costs up to the handover to the carrier, including export customs clearance.

FAS

(Free Alongside Ship) (… named port of shipment) is Monomodal in that it may only be used for transaction where the main carriage is by seafreight. Under this term, risk and responsibility pass from the seller to the buyer when the goods are placed alongside a named ship (or a ship operated by a named service) at a named area within a named port. FAS requires the seller to arrange export customs clearing.

FOB

(Free On Board) (… named port of shipment) is one of the commoner trade terms in use. In defining FOB as an INCOTERM, it is expressed as being Monomodal and it can only be used for transactions where seafreight is the main carriage. Under INCOTERMS 2000, risk and responsibility pass from the seller to the buyer when the goods pass over the (named or unnamed) ship's rail at the (named) port of loading, cleared for export by the seller.

CFR/CIF

(Cost and Freight, Cost, Insurance and Freight) (… named port of destination)
Terms beginning 'C' are 'Contracts of Dispatch'. They differ from other INCOTERMS as they segregate the point at which risk and responsibility passes from the point at which costs pass. Under all other terms, the point of transferring risk and the point at which responsibility for cost is also transferred are simultaneous. With the 'C' terms this is NOT the case.
CFR (Cost and Freight) – risk passes from the seller to the buyer when the cargo crosses the ship's rail at the origin port. However, the responsibilities for the costs of transit only pass from the seller to the buyer at the destination port. CFR and CIF are Monomodal expressions used when the main carriage is by sea and both are suited to the use of Bills of Lading.
CIF (Cost, Insurance and Freight) represents the condition of CFR with the addition of Insurance. This is the first of only two terms that place a compulsory responsibility for insurance on the seller. Under all other terms, the buyer considers insurance as an optional responsibility. (Refer CIP)

CPT/CIP

(Carriage Paid To, Carriage and Insurance Paid To) (… named place of destination)
CPT (Carriage Paid To) is the multimodal equivalent of CFR. The named place where the seller's costs end can be a point other than a seaport (as well as being a seaport), in the buyer's country.
CPT may be used for airfreight, roadfreight and railfreight as well as for seafreight when the ship's rail serves no purpose. E.g. if the destination is an inland point or a modern port with conditions as discussed under FOB.
Under CPT, risk and responsibility passes when the cargo is handed to the first carrier.
However, responsibility for costs only transfer when the goods arrive at the stated place where carriage is 'paid to'. CIP (Carriage & Insurance Paid to) represents CPT with the inclusion of Insurance.

DES/DEQ

(Delivered Ex Ship, Delivered Ex Quay) (… named port of destination)
Terms prefixed 'D' are 'Contracts of Arrival' involving the passing of risk and responsibility at the point where costs also terminate. DES (Delivered Ex Ship) is Monomodal. Although not triggered by the use of the ship's rail, the point of handover (ship's side, arrived) will be inappropriate in a modern port. From the seller's perspective, DES reverses the risk advantages of CFR, placing all risks with the seller until the cargo arrives at the named port.

DEQ (Delivered Ex Quay) extends the shipper's responsibility beyond the arrival of the vessel to the point where the goods are discharged.

DDU

(Delivered Duty Unpaid) (… named place of destination) excludes the payment of domestic duties and the clearance charges associated with the import process at destination.

DDP

(Delivered Duty Paid) (… named place of destination) is a Multimodal term that must be qualified by naming the place to which the seller is taking responsibility for transport costs and the risks of transit. These risks and costs include the payment of domestic duties in the buyer's country and any charges associated with the import clearing process at destination.

DAF

(Delivered At Frontier) (… named place) is a monomodal (land) expression which should be further qualified by naming the frontier (border post) up to which the seller is prepared to take responsibility for transport costs and the corresponding risks of transit. The seller must clear the cargo through customs on the export side of the border of handover, whereas the buyer must clear the goods through customs on the import side.
What does it take to use Incoterms correctly?
ICC recommends that "Incoterms 2000" be referred to specifically whenever the terms are used, together with a location. For example, the term "Delivered at Frontier (DAF)" should always be accompanied by a reference to an exact place and the frontier to which delivery is to be made. To prevent misunderstandings, variations of the three-letter Incoterms should be strictly avoided.
Here are three examples of correct use of Incoterms:FCA Kuala Lumpur Incoterms 2000FOB Liverpool Incoterms 2000DDU Frankfurt Schmidt GmbH Warehouse 4 Incoterms 2000

INCOTERMS CHART

The following chart summarizes the responsibilities of both the buyer and seller for each of the current 13 INCOTERMS (http://www.i-b-t.net/incoterms.html).

EXW
FCA
FAS
FOB
CFR
CIF
CPT
CIP
DAF
DES
DEQ
DDU
DDP
SERVICES
Ex Works
Free Carrier
Free Alongside Ship
Free Onboard Vessel
Cost & Freight
Cost Insurance & Freight
Carriage Paid To
Carriage Insurance Paid To
Delivered At Frontier
Delivered Ex Ship
Delivered Ex Quay Duty Unpaid
Delivered Duty Unpaid
Delivered Duty Paid
Warehouse Storage
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Warehouse Labor
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Export Packing
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Loading Charges
Buyer
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Inland Freight
Buyer
Buyer
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Terminal Charges
Buyer
Buyer
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Forwarder's Fees
Buyer
Buyer
Buyer
Buyer
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Loading On Vessel
Buyer
Buyer
Buyer
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Ocean/Air Freight
Buyer
Buyer
Buyer
Buyer
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Seller
Charges On Arrival At Destination
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Seller
Seller
Buyer
Buyer
Seller
Seller
Seller
Duty, Taxes & Customs Clearance
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Seller
Delivery To Destination
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Buyer
Seller
Seller

INCOTERMS QUIZ

(http://www.exportimportlaw.com/quizzes/incotermsquiz.html)


1. Incoterms 2000
a) are internationally recognized commercial shipping terms
b) are ocean navigational vectors derived from the Inca Empire of the Andes
c) are federally-mandated insurance premiums and conditions on export transaction
d) dictate the type of ink and formatting used in international shipping contracts

2. Incoterms 2000 were written
a) under the United Nations Convention for the International Sale of Goods (Vienna Convention)
b) by the International Chamber of Commerce
c) under the Kyoto Protocols as adopted in 2000
d) under “fast track” authority granted by the U.S. Congress

3. Incoterms 2000 apply
a) to all international shipments of goods
b) to International shipments beyond a certain tonnage
c) to international shipments under the Uniform Commercial Code
d) only if clearly incorporated into the contract of sale

4. To apply to the transaction, Incoterms 2000 must be incorporated into
a) contract of carriage
b) negotiable bill of lading
c) sales contract
d) the Shippers Export Declaration or AES form

5. Incoterms 2000 address
a) Ownership rights
b) Breaches of contract
c) The risks of loss between the parties
d) Type of ship used

6. Incoterms 2000
a) Can only be used for international purchases
b) Can only be used for purchases within the same country
c) Can only be used for purchases across the ocean
d) Can be used for both domestic and international purchases

7. How many terms are in Incoterms 2000?
a) 5
b) 13
c) 2,000
d) the number is limited only by the parties’ cargo needs

8. If the Seller wants to minimize its costs/risks, what series of Incoterms 2000 will the Seller use?
a) “E” series
b) “F” series
c) “C” series
d) “D” series

9. Under which series of Incoterms 2000 is the Seller’s cost/risk the greatest?
a) “E” series
b) “F” series
c) “C” series
d) “D” series

10. Which terms are limited to shipments via maritime or inland waterway?
a) EXW, FAS, and FOB
b) FCA, CPT, and CIP
c) DAF, DDU, and DDP
d) FAS, FOB, and CIF

11. The following Incoterms 2000 are allowed regardless of the mode of transportation
a) EXW, FCA, and FAS
b) FCA, CPT, and CIP
c) EXW, FAS, and FOB
d) EXW, FCA, and DES

12. When goods are shipped "CIF", which party is responsible for the freight charges?
a) Buyer
b) Seller
c) Both
d) Neither


13. "FOB" is only appropriate when goods are shipped via
a) Truck
b) Rail
c) Ship
d) Air

14. Which Incoterms can be used to transfer title to goods at the port of export
a) EXW
b) FCA
c) FOB
d) None of the above

15. When goods are shipped "DDP”, who is responsible for Customs clearance?
a) Buyer
b) Seller
c) Both
d) Neither

16. "FOB" stands for
a) First On Board
b) Free On Boat
c) Free On Board
d) First Off Barge

17. In "DEQ," or "Delivered Ex Quay," what is a quay?
a) Dock
b) Vessel
c) Crane
d) Inter-modal transport

18. Which modes of transport are proper for goods shipped "DDP"?
a) Truck/Rail
b) Ship
c) Air
d) All of the above


INCOTERMS 2000 – REVISION

1. What are the Incoterms 2000?
2. In how many series are they classified? Which?
3. Under which term does the seller have to cover only warehouse storage, warehouse labour and export packing?
4. Under which term is the seller free of all obligations after he has given the goods to the carrier named by the buyer?
5. Under which term is the seller required to bear all costs and risks to bring the goods to the country of destination?
6. As a result, which group represents the most and which obligations for the seller/buyer?
7. Which Incoterms can only be used for sea and inland waterway transport?
8. In the sentence “Our prices are CIF Koper”, what does Koper refer to?
9. In the sentence, “Our prices are EXW Koper”, what does Koper refer to?
INCOTERMS QUIZ - keys
(http://www.exportimportlaw.com/quizzes/incotermsquiz.html)

1. Incoterms 2000 (a) are internationally recognized commercial shipping terms
2. Incoterms 2000 were written (b) by the International Chamber of Commerce
3. Incoterms apply (d) only if clearly incorporated into the contract of sale
4. To apply to the transaction, Incoterms 2000 must be incorporated into (c) the sales contract
5. Incoterms 2000 address (c) the risks of loss between the parties
6. Incoterms 2000 (d) can be used for both domestic and international purchases.
7. How many terms are in Incoterms 2000? (b) 13
8. (a) "E" Series
9. (d) "D" Series
10. (d) FAS, FOB, and CIF
11. (b) FCA, CPT, and CIP (also EXW, DAF, DDU, and DDP)
12. (b) the seller
14. "FOB" is only appropriate when goods are shipped via (c) ship
15. (b) the Seller agrees to clear goods for import and pay any duty
16. "FOB" stands for (c) “Free on Board”
17. (a) Dock
18. (d) All of the above (You can use EXW, FCA, CPT, CIP, DAF, DDU, or DDP for any mode of transport).