In every course of shipping, there shall be a shipper
or consignor, and correspondingly a consignee or receiver, whether for
commercial, personal or any other purpose.
Basically, distinction of liability as to the shipper
and consignee that pertains to what extent one party are obliged to cover, from
the transfer of the subject articles to the port/pier from the shipper's
warehouse or any place of pick-up, down to the charges - the shipping/airline
will be collecting from the time of shipping, the insurance, if any, and the
corresponding expenses to the port of destination necessary to proceed the
delivery to consignees address, as generally termed as "Terms of
Shipment".
TERMS
OF SHIPMENT
International Commerce Terms or Incoterms® rules
are standard trade definitions, devised and published by International Chamber
of Commerce (ICC) and widely used in international commercial transactions and
sales contracts. Incoterms ® 2010 were launched in mid-September 2010
and will come into effect on 1 January 2011.
Ex
Works (.....named place)
"Ex Works" means that the seller fulfils his
obligation to deliver when he has made the goods available at his premises
(i.e. works, factory, warehouse, etc.) to the buyer. In particular, he is not
responsible for loading the goods on the vehicle provided by the buyer or for
clearing the goods for export, unless otherwise agreed. The buyer bears all
cost and risks involved in taking the goods from the seller's premises to the
desired destination. This term thus represents the minimum obligation for the
seller. This term should not be used when the buyer cannot carry out directly
or indirectly the export formalities. In such circumstances, the FCA term
should be used.
Free
Carrier (.....named place)
"Free Carrier" means that the seller fulfils
his obligation to deliver when he has handed over the goods, cleared for
export, into the carrier named by the buyer at the named place or point. If no
precise point is indicated by the buyer, the seller may chose within the place
or range stipulated where the carrier shall take the goods inton his charge.
When according to commercial practice, the seller's assistance is required in
making the contract with the carrier (such as in rail or air transport) the
seller may act at the buyer's risk and expense.
This term may only be used for any mode of transport, including
multimodal transport.
Carriage
Paid To (.....named place to destination)
"Carriage paid to ..." means that the seller
pays the freight for the carriage of the goods to the named destination. The
risk of loss or damage to the goods, as well as any additional costs due to
events occurring after the time the goods have been delivered to the carrier,
is transferred from the seller to the buyer when the goods have been delivered
to the custody of the carrier.
"Carrier” means any person who, in a contract of
carriage, undertakes to perform or to procure the performance of carriage, by
rail, road, sea, air, inland waterway or by a combination of such modes.
If subsequent carriers are used for the carriage to the
agreed destination, the risk passes when the goods have been delivered to the
first carrier.
The CPT term requires the seller to clear the goods for
export.
This term may be used for any mode of transport including
multimodal transport.
Carriage
and Insurance Paid To (.....named place to destination)
"Carriage and Insurance Paid To..." means
that the seller has the same obligations as under CPT but with the addition
that the seller has to procure cargo insurance against the buyer's risk of loss
of or damage to the goods during the carriage. The seller contracts for
insurance and pays the insurance premium. The buyer should note that under the
CIP term the seller is only required to obtain insurance on minimum coverage.
The CIP term requires the seller to clear the goods for export.
This term may be used for any mode of transport including
multimodal transport.
Delivered
at Frontier (.....named place)
"Delivered at Frontier" means that the seller
fulfils his obligation to deliver when the goods have been made available,
cleared for export, at the named point and place at the frontier, but before
the customs border of the adjoining country. The term 'frontier' may by used
for any frontier including that of the country of export. Therefore, it is of
vital importance that the frontier in question be defined precisely by always
naming the point and place in the term.
The term is primarily intended to be used when goods
are to be carried by rail or road, but it may be used for any mode of transport
including multimodal transport.
Delivered
Duty Unpaid (.....named place to destination)
"Delivered Duty Unpaid" means that the seller
fulfils his obligation to deliver when the goods have been made available to
the named place in the country of importation. The seller has to bear the costs
and risks involved in bringing the goods thereto (excluding duties, taxes and
other official charges payable upon importation) as well as the costs and risks
of carrying out customs formalities. The buyer has to pay any additional costs
and to bear any risks caused by his failure to clear the goods for import in
time. If the parties wish the seller to carry out customs formalities and bear
the costs and risks resulting there from, this has to be made clear by adding
words to this effect.
If the parties wish to include in the seller's
obligations some of the costs payable upon importation of the goods (such as
value added tax (VAT), this should be made clear by adding words to this
effect: "Delivered Duty Unpaid, VAT paid, ( ... named place of
destination)".
This term may be used irrespective of the mode of transport.
Delivered
Duty Paid (.....named place to destination)
"Delivered Duty Paid" means that the seller
fulfils his obligation to deliver when the goods have been made available to
the named place in the country of importation.
The seller has to bear the risks and costs, including
duties, taxes and other charges of delivering the goods thereto cleared for
importation. Whilst the EXW term represents the minimum obligation for the
seller, DDP represents the maximum obligation.
This term should not be used if the seller is unable
directly or indirectly to obtain the import license. If the parties wish the
buyer to clear the good for importation and to pay the duty, the term DDU
should be used.
If the parties wish to exclude from the seller's
obligations some of the costs payable upon importation of the goods (such as
value added tax (VAT), this should be made clear by adding words to this
effect: "Delivered Duty Paid, VAT paid, ( ... named place of
destination)".
This term may be used irrespective of the mode of transport.
Free
Alongside Ship (.....named port of shipment)
"Free Alongside Ship" means that the seller
fulfils his obligation to deliver when the goods have been placed alongside the
vessel on the quay or in lighters at the named port of shipment. This means
that the buyer has to bear all costs and risks of loss of or damage to the
goods from that moment. The FAS term requires the buyer to clear the goods for
export. It should not be used when the buyer cannot carry out directly or
indirectly the export formalities.
This term can only be used for sea or inland waterway
transport.
Free
On Board (.....named port of shipment)
"Free On Board" means that the seller fulfils
his obligation to deliver when the goods have passed over the ship's rail at
the named port of shipment. This means that the buyer has to bear all costs and
risks of loss of or damage to the goods from that point. The FOB term requires
the seller to clear the goods for export.
This term can only be used for sea or inland waterway
transport. When the ship's rail serves no practical purpose, such as in the
case of roll-on/roll-off or container traffic, the FCA term is more appropriate
to use.
Cost
and freight (.....named port of destination)
"Cost and Freight" means that 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 the goods have been
delivered on board the vessel, is transferred from the seller to the buyer when
the goods pass the ship's rail in the port of shipment.
The CFR term requires the seller to clear the goods for
export.
This term can only be used for sea and inland waterway
transport. When the ship's rail serves no practical purpose, such as in the
case of roll-on/roll- off or container traffic, the CPT term is more
appropriate to use.
Cost,
Insurance and Freight (.....named port of destination)
"Cost, Insurance and Freight" means that the
seller has the same obligations as under CFR but with the addition that he has
to procure marine insurance against the buyer's risk of loss of or damage to
the goods during the carriage. The seller contracts for insurance and pays the
insurance premium. The buyer should note that under the CIF term the seller is
only required to obtain insurance on minimum coverage.
The CIF term requires the seller to clear the goods of
export.
This term can only be used for sea and inland waterway
transport. When the ship's rail serves no practical purpose, such as in the
case of roll-on/roll- off or container traffic, the CIP term is more
appropriate to use.
Delivered
Ex Ship (.....named port of destination)
"Ex Ship" means that the seller fulfils his
obligation to deliver when the goods have been made available to the buyer on
board the ship uncleared for import at the named port of destination. The
seller has to bear all the costs and risks involved in bringing the goods to
the named port of destination.
This term can only be used for sea or inland waterway
transport.
Delivered
Ex Quay (.....named port of destination)
"Delivered Ex Quay (duty Paid)" means that
the seller fulfils his obligation to deliver when the goods have been made available
to the buyer on the quay (wharf) at the named port of destination, cleared for
importation. The seller has to bear all risks including duties, taxes and other
charges of delivering the goods thereto.
This term should not be used if the seller is unable
directly or indirectly to obtain the import license.
If the parties wish the buyer to clear the goods for
importation and pay the duty the words 'duty unpaid' should be used instead of
'duty paid'.
If the parties wish to exclude from the seller's
obligations some of the costs payable upon importation of the goods (such as
value added tax (VAT), this should be made clear by adding words to this
effect: "Delivered Ex Quay, VAT unpaid ( ... named port of
destination)".
This term can only be used for sea or inland waterway
transport.
Note: If you are reading this article few years later than below date posted, it is highly recommended to further browse for possible amendment or you may contact us here and let us know how we can help you.
Note: If you are reading this article few years later than below date posted, it is highly recommended to further browse for possible amendment or you may contact us here and let us know how we can help you.
[Manila, Philippines | Updated: December 2013]