INCOTERMS - 2020 -Â INTERNATIONAL COMMERCIAL TERMS
*Goods move across international borders because there has been a sale involving:
*Contract of sale should define the responsibility of both parties relating to:
- The phyisical nature of the goods
- Movement of the consignment
*Buyers and sellers have various options relating to the movement of the
- The division of costs
- Defining each parties responsibility and the transfer of risk
Incoterms 2020 came into effect onÂ 1 January 2020.
Reviewed every 10 years to ensure that they are kept up to date with current Â trade practices.
The terms help traders avoid costly misunderstan dings by clarifying the tasks, costs and risks involved in the delivery of goods from sellers to buyers.
Incoterms identify the obligations placed on the parties to the contracts in terms of:
- Responsibilities relating the costs and the division when shipping the goods
- Distribution of risks associated with the movement of goods
- Where these risks transfer to another party
There are 2 categories as follows:
- Terms of any mode or modes of transport
- CIP: Carriage and Insurance Paid To
- CPT: Carriage Paid To
- DAP: Delivered At Place
- DPU: Delivered At Place Unloaded
- DDP: Delivered Duty Paid
- EXW: Ex Works
- FCA: Free Carrier
(All of these term need to specify the port or destination)
- Terms for sea and inland waterway transport
- CFR: Cost and Freight to
- CIF: Cost, Insurance and Freight to
Â Â Â Â Â Â Â (To the named port of destination)
- FAS: Free Alongside Ship
- FOB: Free on Board
Â Â Â Â Â Â Â (To the named port of shipment)
The aim is to assist Incoterm users in identifying the correct term for their particular requirements.