2010 Rules
INCOTERMS
2010 Rules
The Incoterms
2010 rules* (International Commercial Terms) were developed by the International Chamber of
Commerce (ICC) as a uniform set of rules to clarify the costs, risks and obligations of buyers and sellers in international
commercial transactions. Because they address issues relating to import and export, Incoterms
2010 rules are periodically revised and multiple versions are available for use by contracting parties. The
Incoterms
2010 rules became effective J anuary 1, 2000, and remain in effect. The Incoterms
2010 rules became available for use as of January 1, 2011, Incoterms 2000 rules
continue to be available. It is incumbent upon contracting parties to determine which term they want to use and to
designate the version being applied.
For some time Incoterms
2010 rules can be divided into two groups multi-modal (available for multiple forms of transport, including
land, air and waterway transportation) and single mode (applicable only to waterway transportation). The terms in
each group are listed on page 2 in order of increasing responsibility for the seller (and correspondingly decreasing
responsibility for the buyer). So, for example, using the term EXW makes the seller responsible only for making the
goods available at its own premises; delivery occurs and risk of loss transfers at that point. When the term DDP is used,
the seller becomes responsible for everything except on-carriage where the location for delivery is not the buyers
actual location. DDP is the only Incoterms
2010 rules and the UCC. Free on board (F.O.B.), free alongside
(F.A.S.) and C.I.F. are all used in the UCC, but their definitions there are much different from the definition of the same
terms in the Incoterms
2010 rules all three of the overlapping terms (FOB, FAS and CIF)
fall into the single mode group, meaning they can only be used for waterway transportation. Under the UCC only
F.A.S. is limited to use with a vessel.
Numerous publications and seminars are available through the International Chamber of Commerce
(http://store.iccbooksusa.net/ or http://www.iccbooks.com/Home/Home.aspx) as well as from other organizations
explaining in depth the application of both the Incoterms
2010 rules.
Guide to the Incoterms
2010 rules
Ex works (EXW) named place (sellers location)
An Incoterms
rule under which the price that the seller quotes applies only at the point of origin. The
buyer takes possession of the shipment at the point of origin and bears all costs and risks associated with
transporting the goods to the destination. This Incoterms
rules
Compare: Delivered Duty Paid
Unchanged
in
Incoterms
2010 rules
Free Carrier At (FCA) named place (sellers country)
An Incoterms
rule under which seller delivers goods, cleared for export, to the buyer-designated carrier
at a named location. Used for any mode of transport. Seller must load goods onto the buyer's carrier. The
key document signifying transfer of responsibility is receipt by carrier to exporter.
See Also: Incotermsrules
Unchanged
in
Incoterms
2010 rules
Carriage Paid To (CPT) named place of destination
An Incoterms
rule used for any mode of transportation. Buyer assumes title and risk of loss when goods
are delivered to the carrier. Seller pays shipping to destination. CPT delivery takes place when the
exporter hands over goods to the carrier. The exporter is given bill of lading or equivalent document (air
waybill, sea waybill, multi-modal bill of lading).
See Also: Incotermsrules
Compare: Carriage and Insurance Paid To
Unchanged
in
Incoterms
2010 rules
Carriage Insurance Paid (CIP) named place of destination
An Incoterms
rule under which seller delivers goods to seller-designated carrier, pays cost of carriage to
named destination and must obtain insurance to cover buyers risk of loss in transit. Buyer bears risk of loss
and any additional costs after sellers delivery to carrier, protected by sellers insurance. Used for any
mode of transportation; same as CPT, but seller pays for insurance and names buyer as beneficiary.
See Also: Incotermsrules
Compare: Carriage Paid To
Eliminated in
Incoterms
2010 rules
Delivered Duty Unpaid (DDU) named place of destination
An Incoterms
rule under which seller bears the risk and expense of getting the goods to a named
destination, but excluding duties, taxes and other official charges payable on import. Some variations on
DDU are possible if the seller is to pay some of the import charges. Delivery takes place when the
exporter places goods at the disposal of the importer in city of delivery. There is no corresponding
transportation document, although a bill of lading is usually used. Used for any mode of transportation.
Same as Delivered Ex Quay (DEQ), except that the buyer and seller can specify delivery of the goods to
a warehouse or other destination point. Seller must arrange for ground transport in the buyer's country.
Buyer bears responsibility for import customs duties.
This term is defined in the Incoterms
rules
Compare: Delivered Duty Paid, Delivered Ex Quay, Delivered at Terminal, Delivered at Place
Guide to the Incoterms
2010 rules
Delivered at Terminal (DAT) named place of destination
An Incoterms
rule under which seller delivers goods to a named terminal in the destination country.
Buyer is responsible for import clearance and any further in-country carriage. This term is one of two
terms considered to be replacement terms for Delivered Duty Unpaid (DDU), which is eliminated from
Incoterms2010.
See Also: Incotermsrules
Compare: Delivered at Place, Delivered Duty Unpaid, Delivered Duty Paid
New in
Incoterms
2010 rules
Delivered at Place (DAP) named place of destination
An Incoterms
rule under which seller delivers goods to the buyers facility or another named location
(other than a terminal) in the destination country. Buyer is responsible for import clearance and any
further in-country carriage. This term is one of two terms considered to be replacement terms for
Delivered Duty Unpaid (DDU), which is eliminated from Incoterms2010 rules.
See Also: Incotermsrules
Compare: Delivered at Terminal, Delivered Duty Unpaid, Delivered Duty Paid
Unchanged
in
Incoterms
2010 rules
Delivered Duty Paid (DDP) named place of destination
An Incoterms
rule under which seller (exporter) is responsible for all costs involved in delivering the
goods to a named place of destination and for clearing customs in the country of import. Seller provides
literally door-to-door delivery, including customs clearance in the port of export and the port of
destination. Thus, seller bears the entire risk of loss until goods are delivered to the buyer's premises. Full
term is "DDP named place of destination." Delivery takes place when exporter places goods at disposal
of importer in city of delivery. There is no corresponding transportation document, although bill of lading
is usually used. Used for any mode of transportation. Seller bears all risk and customs responsibilities until
the goods are delivered to a specified location and clear import customs. Buyer assumes risk and title
when the goods are delivered to the buyer's specified location.
See Also: Incotermsrules
Compare: Delivered Duty Unpaid, Ex Works, Free On Board (UCC), Delivered at Terminal, Delivered at
Place
The single mode terms (which can only be used with waterway transportation) are:
Unchanged
in
Incoterms
2010 rules
Free Alongside Ship (FAS) named vessel at loading port
An Incoterms
rule used only for maritime trade (transport by vessel) Under this arrangement, the supplier
agrees to deliver the goods in proper condition alongside the vessel. The buyer assumes all subsequent
risks and expenses after delivery to the pier. This term can only be used for waterway transportation.
See also: Incotermsrules
Compare: F.A.S UCC
Unchanged
in
Incoterms
2010 rules
Free On Board (FOB) named vessel at loading port
An Incoterms
rule used only for maritime trade (transport by vessel) under which responsibility for the
shipment transfers from exporter to importer when shipment is loaded aboard the vessel. Seller must load
the goods onto the ship. Centuries of maritime tradition says that the FOB point is the Ship's Rail, also
referred to as "Freight on Board." This is the older maritime term of trade. If the freight falls while loading,
however, it is the exporter's responsibility if it lands on quay, but it is the importer's responsibility if it lands
on ship. The documentation of delivery is the ocean bill of lading or sea waybill. This term can only be
used for waterway transportation.
See Also: Freight Collect, Incotermsrules
Compare: Free On Board UCC
Unchanged
in
Incoterms
2010 rules
Cost & Freight (CFR) named port of destination
An Incoterms
rule under which goods are considered to be "delivered" (and buyer assumes risk of loss)
when they pass the ship's rail in the port of shipment. The seller is responsible for clearing the goods for
export and for costs and freight to bring the goods to the destination port. This term can only be used for
waterway transportation.
See Also: Incotermsrules
Compare: C.&F. UCC, C.I.F UCC, CIF Incoterm, Carriage Paid To
Guide to the Incoterms
2010 rules
Cost, Insurance & Freight (CIF) named port of destination
This Incoterms
rule is similar to Cost & Freight (CFR) where goods are considered to be "delivered" (and
buyer assumes risk of loss) when they pass the ship's rail in the port of shipment. The seller is responsible for
clearing the goods for export and for costs and freight to bring the goods to the destination port. Under
CIF the seller must also obtain marine insurance against buyer's risk of loss or damage in transit. This term
can only be used for waterway transportation.
See Also: Incotermsrules
Compare: C.&F. UCC, C.I.F UCC, Cost and Freight, Carriage Insurance Paid
Eliminated in
Incoterms
2010 rules
Delivered Ex Ship (DES) named port
An Incoterms
rule under which sellers delivery obligation is satisfied when goods are placed at buyers
disposition on board a vessel at a designated destination port, not cleared for import.
This term is defined in the Incoterms
2010 rules
Delivered Ex Quay (DEQ) named port
An Incoterms
rule used for ship transport. Signifies that the seller is responsible for all risks and costs
incurred to have the goods delivered and unloaded at a named port of destination. This includes the
obligation to contract and pay for freight and transportation costs by sea or inland waterway, unloading
fees, export and import licensing fees, and other taxes (unless specifically excluded in the contract). The
buyer is obligated only to assist in obtaining any import license or other official authorization necessary to
import the goods.
This term is defined in the Incoterms
rules
Compare: Delivered Ex Ship
Eliminated in
Incoterms
2010 rules
Delivered at Frontier (DAF)
An Incoterms
rule under which seller's delivery obligation is satisfied when goods are placed at buyer's
disposition on arriving means of transportation, cleared for export but not import, and not unloaded.
Delivery takes place when the vehicle is placed at disposal of importer at designated border city. There
is no specific documentation for transfer, although some carriers provide some. Used for any mode of
transportation. Buyer acquires title, risk and responsibility for import customs clearance.
This term is defined in the Incoterms
rules