Export Transactions/Incoterms

Chapter 7

International Trade Law and Carriage of Goods 1/ International sale of goods involves: - contract between buyer and seller - contracts with third parties for transportation, insurance, financing 2/ International sales contracts generally shaped by mode of transport used (except EXW (ex works), DDP (delivered duty paid)) - must clearly state obligations in contract

International Trade Terms
International Chamber of Commerce, Paris: - non-governmental, promotes better world business environment - developed INCO terms - 1990

INCO Terms
- international rules for interpretation of key trade terms in foreign trade - need to state “Inco terms 1990 apply” - contract provisions can override Incoterms

INCO Terms
“E” Terms “F” Terms - Ex Works (EXW) - Free Carrier Multimodal (FCA) - Free Alongside Ship (FAS) - Free On Board (FOB) - Cost and Freight (CFR) - Cost, Insurance and Freight (CIF) - Carriage Paid To (CPT) - Carriage and Insurance Paid - Delivered at Frontier (DAF) - Delivered Ex Ship (DES) - Delivered Ex Quay (DEQ) - Delivered duty Unpaid (DDU) - Delivered Duty Paid (DDP)

“C” Terms

To (CIP)

“D” Terms

Free on Board – buyer arranges, risk of loss passes at “ship’s rail”, goods may be inspected and rejected if not in conformance at destination, best to arrange a pre-shipment inspection Cost, Insurance and Freight – seller arranges, risk of loss passes when goods delivered into carriers custody, but goods are subject to inspection and may be rejected if they do not conform to contract

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