Chapter 5: Incoterm 2010

Jacob A. Manning, Esq.

Dinsmore & Shohl LLP
Instructor: Binh
2100 Market DoWheeling,
Street,
West Virginia 26003
304-230-1700
jacob.manning@dinslaw.com
 Background

 International Commercial Terms

– First published in 1936 by International
Chamber of Commerce (ICC)
– Revised 6 times before 2010
– Current revision (“Incoterms 2010”) to
become effective January 2011
Purpose
 Simplify some terms of an international sales agreement
 What do Incoterms not do?
– Take the place of a sales agreement or terms and conditions
– Supply all terms for an international sale
 Not for service contracts
 Do not determine transfer of title
 Do not determine breach of contract or remedies
 Do not protect parties from their own risk of loss
 Do not cover goods before or after delivery
Purpose

 Apply to contract of sale

– Not contract of carriage
– Not contract of insurance
– Not documents related to financing
– Even if those documents and the Incoterm Rule chosen have
some implications for one another
Purpose
 Terms covered by Incoterms
– Warehousing
– Packing and loading
– Inland freight
– Terminal charges
– Freight forwarder’s fees
– Ocean/air freight
– Duty, taxes, & customs clearance
– Delivery
– Security Clearances (new to 2010)
  2 Groups of Incoterms Rules
 Rules for Any Mode of Transport
– EXW, FCA, CPT, CIP, DAT, DAP, DDP
 Rules for Sea and Inland Waterway Transport
– FAS, FOB, CFR, CIF

Changes
2010 Changes

 Two new rules:

– DAT (delivered at terminal)
 Delivered at a named place, at buyer’s disposal, unloaded
 Replaces DEQ
– DAP (delivered at place)
 Delivered at a named place, at buyer’s disposal, not unloaded
 Replaces DAF, DES, DDU
2010 Changes

 Domestic-User-Friendly
– Now state that Rules can be used domestically
– Obligation to comply with export /import formalities is “where
applicable”
– Coincided with declining use of UCC terms
– May be used within the EU
2010 Changes

 Guidance Notes
– Explain fundamentals, usage, risk, costs, etc.
– Review and use them
 Electronic Communication
– Electronic means of communication now given same effect as
paper as long as parties agree or where customary
 Security-Related Clearances
– Rules now allocate responsibility for these
 2010 Changes

 String Sales
– Rules now recognize that seller may fulfill its obligations by procuring
goods that have been shipped
 Terminal Handling Charges (Phí xếp dỡ tại bến bãi)
– Now specifically allocated so that buyer is not charged twice (seller
and terminal)
 Phân loại trong Incoterms 2010
 Các điều khoản E: EXW
Người bán giao hàng cho người mua định đoạt ngay tại xưởng/kho của
mình.
 Các điều khoản F: FCA, FAS, FOB
Người bán đưa hàng đến cho người vận tải đầu tiên, người mua chịu trách
nhiệm về chi phí và rủi ro của việc vận tải chính.
 Các điều khoản C: CFR, CIF, CPT, CIP
Người bán thu xếp và thanh toán tiền vận chuyển nhưng không chịu rủi ro
trong quá trình vận chuyển.
 Các điều khoản D: DAT, DAP, DDP
Người bán chịu tất cả các chi phí giao dịch và rủi ro cho đến điểm giao
hàng – điểm đích.
13
A. Rules for any mode of transport

1. Ex Works (EXW)
2. Free Carrier (FCA)
3. Carriage Paid To (CPT)
4. Carriage and Insurance Paid To (CIP)
5. Delivered at Terminal (DAT)
6. Delivered at Place (DAP)
7. Delivered Duty Paid (DDP)
 Ex Works – Giao hàng tại xưởng
– Seller delivers when it places the goods at the disposal of buyer at the
seller’s premises or another named place (i.e. works, factory, warehouse,
etc.).
– Seller does not need to load the goods on any collecting vehicle, nor does
it need to clear the goods for export, where such clearance is applicable.
 Fewest up front requirements for seller
 Format:
EXW + seller’s premises or another named place + (Incoterms 2010)
 Example: “Ex works [factory] Wheeling, WV, U.S.A. (Incoterms 2010)”
 Ex Works

 Notes
– Seller has no obligation to load goods, even if better-suited to do so
– If seller does load goods, it does so at buyer’s expense and risk
– Better-suited to domestic transport (no obligation that seller clear
goods for export—only provide assistance if necessary at buyer’s
expense and risk)
– Buyer bears all risk of loss from time seller places goods at buyer’s
disposal
FCA – Giao hàng cho người chuyên chở

 Free Carrier

– Seller delivers the goods to the carrier or another person

nominated by the buyer at the seller’s premises or another
named place.

– The parties are well advised to specify as clearly as possible the

point within the named place of delivery, as the risk passes to the
buyer at that point.
 Notes
 Seller does clear goods for export; import formalities are
buyer’s responsibility
 Seller may contract for carriage at buyer’s expense and risk
 FCA

 Seller’s delivery options

– If the named place is seller’s premises: seller must load goods onto
buyer’s means of transport

– If the named place is any other place: seller must place the goods at
buyer’s (or his carrier’s disposal) on seller’s mode of transport (ready
for unloading)
 FCA
 Improvements over Ex Works
– Seller clears goods for export
– Can be used to require seller to load goods, when seller is in a
better position to do so
 But…
– Buyer may have little idea what delivery at seller’s factory means
– Buyer has costs in addition to sales price that must calculated
– Seller has no control over carrier, insurance, etc.

FCA+ seller’s premises or another named place +

(Incoterms 2010)
 CPT: Carriage Paid To – Cước phí trả tới
– Seller delivers the goods to the carrier or another person
nominated by the seller at an agreed place (if any place is
agreed between the parties) and the seller must contract for and
pay the costs of carriage necessary to bring the goods to the
named place of destination.
 CPT
 2 points of importance
– Place of delivery of goods to carrier
 Seller’s delivery obligation is complete
 Risk of loss passes
– Place of destination
 Seller contracts for and pays for carriage to the place of destination

CPT+ agreed place of the carrier, place of destination

+ (Incoterms 2010)
CPT
 Example:
– Contract says seller is to deliver goods to shipping warehouse in
Hochiminh city.
Terms of sale are “CPT, 24 Nguyen Hue – Hochiminh city, Singapore
048621 (Incoterms 2010).”
– Delivery obligation is fulfilled when seller delivers to the shipping
facility in Hochiminh city.
– Risk of loss passes at the moment the goods are handed over to
the carrier in Hochiminh city.
– But seller pays for carriage to Singapore.
CPT

 Notes
– Seller clears goods for export and pays for transport through any
country necessary to delivery
– Seller has no obligation to pay for insurance but must provide
buyer information to buy insurance at buyer’s risk and expense
– Buyer obtains import licenses and carries out customs formalities
– Seller pays for both loading and unloading if covered by contract
of carriage
CIP: Carriage and Insurance Paid To
– Seller delivers the goods to the carrier or another person nominated by
the seller at an agreed place (if any such place is agreed between the
parties); seller must contract for and pay the costs of carriage necessary
to bring the goods to the named place of destination.
CIP
 Notes
– Like CPT but with the additional requirement that seller pay for
insurance to the named destination
– Insurance requirement is minimum cover (institute cargo clause c) in
the amount of contract price plus 10% from point of delivery to point of
destination
– Buyer may pay for additional coverage (institute cargo clauses a or b);
seller must provide the information necessary to allow buyer to do so.
CIP+ agreed place of the carrier, place of destination
+ (Incoterms 2010)
 DAT – Giao hàng tại bến

 Delivered at Terminal
– Seller delivers when the goods, once unloaded from the arriving means
of transport, are placed at the disposal of the buyer at a named terminal
at the named port or place of destination.
– “Terminal” includes any place, whether covered or not, such as a quay,
warehouse, container yard or road, rail or air cargo terminal.
– The seller bears all risks involved in bringing the goods to and unloading
them at the terminal at the named port or place of destination.
 DAT
 Notes
– Seller’s obligation is fulfilled and risk of loss passes at same
time: when the goods are unloaded at the arriving terminal
and placed at buyer’s disposal
– Can specify a point within the terminal at which time the
obligation is complete
– Seller clears goods for export but not for import
– No requirement of insurance
– If the intention is to carry seller’s obligation further into
buyer’s country, use DAP or DDP
 DAP: Delivered at Place – giao hàng tại nơi đến
– Seller delivers when the goods are placed at the disposal of the buyer on
the arriving means of transport ready for unloading at the named place of
destination.
– The seller bears all risks involved in bringing the good to the named place.
 DAP
 Notes
– Much like DAT, but with additional obligation by seller into
country of delivery
– Goods are placed at buyer’s disposal at named location
ready for unloading; risk passes at that point
– Seller clears goods for export but not import (use DDP if
intent is to require seller to clear goods for import also).
– No obligation on seller to purchase insurance
DDP: Delivered Duty Paid-giao hàng đã thông quan NK
– Seller delivers the goods when the goods are placed at the
disposal of the buyer, cleared for import on the arriving means of
transport ready for unloading at the named place of destination.

– The seller bears all the costs and risks involved in bringing the
goods to the place of destination and has an obligation to clear
the goods not only for export but also for import, to pay any duty
for both export and import and to carry out all customs formalities.
– Like DAP, but including seller’s obligation to clear goods for import—pay for
any necessary licenses
– Maximum obligation for seller
– If seller is not well-suited to clear goods for import, DAP should be used
– No obligation to pay for insurance
B. Rules for Sea and Inland Waterway Transport

1. Free Alongside Ship (FAS) – Giao hàng tại mạn tàu

2. Free On Board (FOB) – Giao hang lên tàu

3. Cost and Freight (CFR) – Tiền hàng và cước phí

4. Cost Insurance and Freight (CIF) – Tiền hàng, bảo hiểm và

cước phí
 FAS: Free Alongside Ship
– Seller delivers when the goods are placed alongside the vessel (e.g., on a
quay or a barge) nominated by the buyer at the named port of shipment.
– The risk of loss of or damage to the goods passes when the goods are
alongside the ship, the buyer bears all costs from the moment onwards.
 FAS
 Notes
– Usage: “FAS Charleston, SC, USA (Incoterms 2010)”
– Can be used in a string sale where seller procures goods already delivered for
shipment
– Seller is obligated to clear goods for export but not import
– Seller has no obligation to pay for contracts of carriage or insurance but may contract
for carriage and must assist buyer by providing necessary information for insurance
– Not appropriate when goods in container and delivered to carrier at terminal; use FCA
– Might want to define what it means to be “alongside” ship
 FOB: Free on Board
– Seller delivers the goods on board the vessel nominated by the buyer at the
named port of shipment or procures the goods already so delivered.
– The risk of loss of or damage to the goods passes when the goods are on
board the vessel, and the buyer bears all costs from that moment onwards.
FOB

 Notes
– Notice change in 2010: “free on board” no longer means across the
ship’s rail; now means on board the vessel
– Another change in 2010: if requested by buyer or if it is commercial
practice and buyer does not instruct otherwise, seller may contract
for carriage at buyer’s risk and expense; seller may decline but
must notify buyer promptly
 Therefore, may want to exclude if that is the intent
– Like FAS but goods must be placed on board
– Usage: “FOB Charleston, SC, USA (Incoterms 2010)”
 CFR: Cost and Freight
– Seller delivers the goods on board the vessel or procures the goods already
so delivered.
– The risk of loss of or damage to the goods passes when the goods are on
board the vessel.
– The seller must contract for and pay the costs and freight necessary to bring
the goods to the named port of destination.
CFR

 2 places of importance
– Place of delivery of goods
 Seller’s delivery obligation is fulfilled when goods are on board the
vessel
 Risk of loss passes when the goods are on board the vessel
– Port of destination
 Seller pays for carriage to port of destination
CFR
 Examples:
– Contract says: Seller is to deliver goods on board vessel at Port of
Charleston, SC, USA. Terms of sale are: “CFR, Shanghai (Incoterms
2010).”
 Seller’s delivery obligation is fulfilled when the goods are on board the vessel
in South Carolina; risk of loss passes then also
 Seller must pay for shipment to Shanghai
– Contract says terms of sale are: “CFR, Shanghai (Incoterms 2010).”
Silent as to port of shipment
 Seller’s delivery obligation is fulfilled when the goods are on board the vessel
in the port selected by seller; risk of loss passes then also
 Seller must pay for shipment to Shanghai
CFR

 Notes
– Seller pays for unloading if the contract of carriage covers
unloading
– Seller clears goods for export but not import
– Seller has no obligation to obtain insurance
– If intent to ship in containers and delivery is to carrier other than
vessel, use CPT
– Giá CFR = giá FOB + F
 CIF: Cost Insurance and Freight
– Seller delivers the goods on board the vessel or procures the goods already
so delivered.
– The risk of loss of damage to the goods passes when the goods are on
board the vessel.
– The seller must contract for and pay the costs and freight necessary to bring
the goods to the named port of destination.
CIF

 Notes
– Like CFR but with additional obligation to procure insurance to
port of destination
– Insurance requirement is minimum cover (institute cargo clause
c) in the amount of contract price plus 10% from point of delivery
to point of destination
– Seller clears goods for export but not import
– Giá CIF=Giá FOB + F(cước vận chuyển) +(CIF x R)=
(FOB+F)/(1-R)
 Sự khác biệt giữa Incoterms 2000 và 2010

Tiêu chí so sánh Incoterms 2000 Incoterms 2010

STT

1 Số các điều kiện 13 điều kiện: 11 điều kiện:

thương mại
EXW, FCA, CPT, CIP, DDP, EXW, FCA, CPT, CIP, DDP,
FOB, FAS, CFR, CIF, DAF, FOB, FAS, CFR, CIF,
DES, DEQ, DDU DAT, DAP
2 Số nhóm được phân 4 Nhóm: 2 Nhóm:

E, F, C, D - Các điều kiện áp dụng cho

mọi phương thức vận tải

- Các điều kiện áp dụng cho

vận tải biển và đường thủy
nội địa
 Tiêu chí so sánh Incoterms 2000 Incoterms 2010
STT
3 Cách thức phân nhóm Theo chi phí giao nhận Theo hình thức vận
vận tải và địa điểm chuyển tải: đường thủy và các
rủi ro loại phương tiện vận
tải
4 Khuyến cáo nơi áp dụng Thương mại quốc tế Thương mại quốc tế
Incoterms và nội địa
5 Hướng dẫn sử dụng trước Không có Có
mỗi điều khoản
6 Trao đổi thông tin bằng điện Không thật rõ Có qui định A1/B1
tử
7 Bảo hiểm Qui định chung chung ở Qui định rõ ở mục
mục A10/B10 A3/B3
 Tiêu chí so sánh Incoterms 2000 Incoterms 2010
STT
8 Thủ tục an ninh và các thông Qui định không rõ ràng Có qui định A2/B2;
tin cần thiết để làm thủ tục A10/B10
9 Phí xếp dỡ tại bến bãi (điều Người mua có thể trả chi Phân chia rõ ràng chi phí ở
kiện CPT, CIP, CFR, CIF,DAT phí hai lần: một là trong qui định A6/B6
và DDP) tổng giá mua và một là
cho người chuyên chở
hay người điều hành bến
bãi
10 Nơi chuyển rủi ro của điều Lan can tàu Hàng xếp xong trên tàu
kiện FOB, CFR, CIF
11 Bán hàng theo chuỗi Không có cụm từ “mua Thêm nghĩa vụ “mua hàng
hàng đã gửi đã gửi”
C. Final Advice

 2000 division of rules by seller’s obligation

– E (Make goods available at own premises)
– F (Deliver goods to a carrier appointed by buyer)
– C (Contract for carriage without assuming risk of loss during
shipment)
– D (Bear all costs and risks needed to bring goods to place of
destination)
 But remember rules are split by mode of transport
C. Final Advice

 Usage—use the phrase “Incoterms 2010” after the rule and

named place
– Clarifies that 2000 version does not apply
– Ensures no confusion with UCC (esp. given new focus on
domestic use)
 Usage—ensure you are naming the right location
– EXW, FCA, FAS, FOB, DAT, DAP, DDU=place of delivery
– CPT, CIP, CFR, CIF=place of desination
C. Final Advice

 Use contract of sale or terms and conditions

 Be careful modifying Incoterms Rules
– If you do modify rules (not advised), ensure contract clarifies
what you are modifying and what you are not
 Bài tập 1
 Một công ty Việt Nam ở Bắc Giang bán vải sấy ép khô cho một công
ty Trung Quốc qua cửa khẩu Lạng Sơn. Điều kiện công ty Trung Quốc
yêu cầu là giao hàng cho công ty đó trên các xe tải tại biên giới; việc
chuyên chở, thuê xe đến điểm quy định trên biên giới là do c ông ty
Việt Nam đảm nhận, còn việc bốc dỡ hàng từ xe tải xuống tại điểm
giao hàng, phía Trung Quốc sẽ lo.
 Vậy công ty Việt Nam áp dụng được điều khoản nào trong Incoterm
2010?
Bài tập 2

 Một công ty Việt Nam xuất hàng thủy sản là tôm đông lạnh
sang cho Nhật, phía Nhật yêu cầu giao tại cảng Kobe cho họ,
còn việc bốc hàng xuống họ sẽ tự lo, phía Việt Nam chỉ cần
đưa các con tàu chở hàng đến cảng Kobe an toàn là được.
Vậy công ty Việt Nam áp dụng được điều khoản nào trong
Incoterm 2010?
1. Why Vietnamese companies often export their goods
under FOB?
2. Advantages of exporting goods under CFR, CIF, CPT,
CIP?