THE OBJECTIVES OF INCOTERMS
Incoterms (International Commercial Terms) are terms of trade, created in 1936 by the International Chamber of Commerce in Paris..
These terms define the responsibilities and obligations of a seller and a buyer under international trade agreements on the loading, transport, type of transportation, insurance and delivery.
It acts so here s distribution of transport costs, first feature of Incoterms.
The second role of Incoterms is to define the place of risk transfer, is to say that the seller or buyer must bear damage in cases of poor performance of the carriage.
is a standard updated regularly and allows buyer and seller to get agreement quickly and without ambiguity the terms of the transaction.
Thus, in an international contract of sale, Incoterms will enable clarify some points:
a) Determine the critical point of risk transfer from seller to l buyer in the process delivery of the goods (loss, damage, stolen goods) thus allowing those who bear these risks to take steps including in term insurance.
b) Specify that the seller or buyer must purchase the contract of carriage.
c) Divide between both the logistical and administrative costs at different stages of the process.
d) Identify which supports packaging, marking, handling operations, loading and unloading of goods or packing and unpacking of containers so that the operations inspection.
e) Set the respective obligations for the formalities export and or import, the regulation of fees and charges import and supply documents. There are 13 Incoterms adopted by the Chamber of Commerce.
THE 13 INCOTERMS
SALES START (The goods travel on international transport, at the risk of buyer)
1) incoterm "EXW" (place)
- Seller: the seller only responsibility is to place the goods in suitable packaging to transportation, the provision of buyer premises.
- Buyer: buyer bears all costs and risks associated with transportation, departure factory at the destination.
The group of Incoterms "F" = FREE or FREE
2) FCA = FREE CARRIER (named place)
- Vendor: if the supply at the premises of the seller, the seller makes the loading of the goods packed properly on the vehicle provided by the buyer. The export duty is charged to the seller.
- Buyer: the buyer chooses the mode of transport and the carrier with which it concludes the contract of carriage and pays the principal transport. The transfer costs and risks occurs when the carrier takes charge of the goods. The parties must agree on the place of delivery of goods.
3) FAS = FREE ALONG SIDE SHIP (named port of shipment)
- Seller: the seller obligations are fulfilled when the goods are cleared placed alongside the vessel on the quay or in lighters at the port of shipment.
- Buyer: From this point the buyer must bear all costs and risks of loss or damage once the goods have been delivered alongside the vessel, particularly in the case of delay of the vessel or annulment of stop. The buyer designates the carrier, concluded the contract of carriage and pays the freight.
4) FOB = FREE ON BOARD (named port of shipment)
- Seller: the goods are placed aboard the ship by the seller. The formalities of export obligations to the seller.
- Buyer: the buyer indicates the ship and pays freight. The transfer costs and risks is done when the goods pass the ship rail.
The group of Incoterms "C" = COST AND CARRIAGE COST or
5) = CFR COST AND FREIGHT (named port of destination)
- Seller: he chooses the carrier, finds and supports the charge by paying the freight to the port of destination, unloading not included. The loading of goods released on the ship lies and shipping formalities. By cons, transfer risk is the same as FOB.
- Buyer: bears the risk of transmission when the goods have been delivered on board the vessel at the port of embarkation, the approved carrier and take delivery of the goods at the port of destination.
6) = CIF COST, INSURANCE AND FREIGHT (named port of destination)
- Seller: term identical to the CFR with the additional obligation for the seller to procure marine insurance against the risk of loss or damage to goods. The seller pays the insurance premium.
- Buyer: bears the risk of transmission when the goods have been delivered on board the vessel at the port of embarkation. Receive and take delivery of the goods carrier at the port of destination.
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