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International regulations Incoterms 2010 "

 

As you know, one of the most important documents in any segment of international trade is sales contract. After many centuries, it was modified, supplemented and improved to create the best possible trading conditions. However, when the period of economic globalization that proved inadequate, and it was necessary to achieve the greatest possible uniformity of their content. For this purpose were established International rules for the interpretation of trade terms (International Rules for the Interpretation of Trade Terms), or Incoterms. They have been developed by the International Chamber of Commerce in the year 1936.

However, additions and changes were made in 1953, 1967, 1976, 1980, 1990 and 2000 respectively. So many amendments was due to a change in how the world market research and continuous technological progress: built more new high-quality roads and vehicles, increased number of shopping areas and markets. The latest revision of the rules was published in the year 2010 the Russian National Committee for the International Chamber of Commerce.

               So, what is a “terms of delivery”?

                 Delivery basis is the special conditions governing the obligations of the parties to the trade transaction for delivery of goods from the seller to the buyer and the point of transfer of the risk of accidental loss of or damage to the goods from the supplier to the buyer, as well as the time of execution of the exporter or importer obligations to deliver the goods. Basic terms and conditions establish the basis of the contract price.

In addition, basic supply conditions affect the cost structure to be included in the customs value of goods, together with the applicable forms of calculation mentioned in foreign trade contract, affect the organisation of accounting of payments to foreign suppliers.

   It should be noted that the rules of Incoterms are of recommendatory character and are applied by agreement of the parties.

Now their more detailed description:

1. Category E-Shipping

EXWEx works (… the name of the place)

The term “ex works” means that the seller fulfills his obligation to deliver when it will provide the goods at the disposal of the buyer on his undertaking or another named place (i.e.: works, factory, warehouse, etc.). Seller is not responsible for loading the goods on the vehicle, as well as for customs clearance of the goods for export.

This term is the minimum obligations for the seller, and the buyer has to bear all costs and risks in connection with the carriage of the goods from the seller to the destination. This term should not be used when the buyer cannot carry out the export formalities. In this case, the FCA term should be used, provided that the seller agrees to bear the costs and risks for the shipment of goods.

All kinds of transport

2. Category F main carriage unpaid

FCAFree carrier (… named place of destination)

The term “free carrier” means that the seller delivers the cleared goods to the carrier nominated by the buyer at the named place. If delivery occurs at the seller’s premises, the seller is responsible for shipping. If delivery occurs at any other place, the seller for the shipment of goods is not responsible. This term may be used for any mode of transport, including multimodal transport.

All kinds of transport
FASFree alongside ship (… named port of destination named port of shipment)

The term “free alongside ship” means that the seller delivers when the goods are placed alongside the vessel on the quay or in lighters at the named port of shipment. This means that from that moment all the costs and risks of loss of or damage to the goods shall be borne by the buyer. Under the terms of the term FAS to the seller to clear the goods for export.

Marine or inland waterway transport
FOBFree on Board (… named port of destination named port of shipment)

The term “free on board” means that the seller fulfilled deliv-ery when the goods pass the ship’s rail at the named port of shipment. This means that from that moment all the costs and risks of loss of or damage to the goods shall be borne by the buyer. Under the terms of the term FOB the seller to clear the goods for export. This term may only be used when the goods are transported by sea or inland waterway transport.

Marine or inland waterway transport

3. Category C main carriage paid

CFRCost and freight (… named port of destination named port of destination)

The term “cost and freight” means that the seller delivers when the goods pass the ship’s Rails at the port of shipment.

The seller must pay the costs and freight necessary to bring the goods to the named port of destination but the risk of loss of or damage to the goods, as well as any additional costs due to events occurring after the time of delivery, are transferred from the seller to the buyer. Under the terms of the term CFR the seller to clear the goods for export.

Marine or inland waterway transport
CIFCost, insurance and freight (… named port of destination named port of destination)

The term “cost, insurance and freight” means that the seller delivers when the goods pass the ship’s Rails at the port of shipment. The seller must pay the costs and freight necessary to bring the goods to the named port of destination but the risk of loss of or damage to the goods, as well as any additional costs due to events occurring after the time of delivery, are transferred from the seller to the buyer. However, in CIF the seller also has to procure marine insurance against the buyer’s risk of loss of or damage to the goods during the carriage. Consequently, the seller is obliged to enter into a contract of insurance and pay premiums. The buyer should note that under the CIF term the seller is required to obtain insurance only on minimum cover.

If the buyer wishes to have the protection of greater cover, he would either need to agree with the seller or to make his own extra insurance arrangements.

In CIF the seller to clear the goods for export.

Marine or inland waterway transport
CPTFreight/carriage paid to (… named port of destination named place of destination) the term “freight/carriage paid to” means that the seller delivers the goods to the carrier nominated by him. In addition, the seller must pay the costs associated with transporting the goods to the named destination. This means that the buyer bears all risks of loss of or damage to the goods, as well as other costs after transfer

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