What are incoterms?

• Set of Private or International Rules.

• Defined criteria on the distribution of expenses and the transmission of risks between the buying party and the selling party in an international sales contract.

• The incoterms are voluntary acceptance by the parties.

• They are accepted by governments and Federal authorities.

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What are they for?

Who is responsible for the expenses involved from a shipment at a specific point in the expedition trip?

Who owns the goods from a specific point of the trip?

Who is responsible for paying damages to the goods from a specific point in the transit of a shipment?

What are they for?

• They do not constitute a contract

• They do not replace the laws that govern the contract

• No Define Title Transfers

• They do not meet the price conditions either in cash or Credits

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General Objective of Incoterms

Establish a set of optional terms and rules, which allow the rights and obligations of the Seller and the Buyer to be agreed, in international commercial transactions.

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Incoterms 2020

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Breakdown of the Incoterms

EXW(EX Works)

The seller complies when he makes the merchandise available to the buyer. This term with less obligation for the seller. With this term the buyer must assume all the risks and costs.

FCA(Free Carrier)

The seller delivers the merchandise for export to transport. The selected place of delivery will influence the obligations of buyer and seller. The seller will be responsible for the loading of the merchandise of his unit if the delivery is in his facilities

FAS ( Free Along Ship)

This term (Free next to the Ship) The seller's responsibility ends when the merchandise is located next to the ship at the port of shipment. This means that the buyer assumes the costs and risks from that moment.

FOB (Free on Board)

The responsibility of the seller ends when the merchandise exceeds the ship's side. The buyer must take care of the costs and risks from that point.

CFR (Cost & Freight)

The responsibility of the seller ends when the merchandise is loaded to the ship with the difference that it will have to take care of the freight. The risk for the loss or damage is transmitted to the buyer from this point.

CIF (Cost Insurance and Freight)

The seller delivers the merchandise loaded on the ship, must pay the costs and the main sea freight in addition to having insurance with minimal coverage However, the buyer can express that it requires greater coverage and agree.

CPT (Carriage Paid to)

The seller will be responsible for paying the freight and insurance to the destination. When the merchandise has been delivered to the transport at destination, the responsibility on the merchandise is transferred to the buyer.

CIP (Carriage & Insurance Paid to)

The seller delivers the merchandise to the transport, paying the transport costs. You should also consider the purchase of insurance. The buyer will assume all the risks and costs of any event occurred after the goods have been delivered to the transport.

DPU (Delivery Place Unloaded)

The seller is responsible for the expenses and the risk of moving the merchandise to the agreed delivery place. The download of the transport is at the cost and risk of the buyer.

DDP (Delivery Duty Paid)

This term is the one that the seller assumes the most costs, since it must take care of all the expenses until the product is delivered to the buyer's premises. All expenses, including import taxes are borne by the seller.

DAP (Delivery at Place)

The seller is responsible for the expenses and the risk of moving the goods to the place of delivery agreed with the buyer.