International Commercial Terms (INCOTERMS)
Common incoterms and their definitions
What are incoterms?
Incoterms are a series of predefined commercial terms published by the International Chamber of Commerce (ICC) relating to international commercial law.
When it comes to useful trade terms, incoterms come up so often that they deserve their own article. This is not a comprehensive list, but it does represent the ones we most often see in trading on our platform.
Cost, Insurance, and Freight (CIF) - Cost refers to the cost of goods and freight refers to all other costs relating to all the means of transportation of the goods. It means that the seller must pay the costs and freight necessary to bring the goods to a named port of destination and must also procure marine insurance against the buyer's risk or loss to the goods during the carriage.
Customer Identification Program (CIP) - A United States requirement, where financial institutions need to verify the identity of individuals wishing to conduct financial transactions with them and is a provision of the USA Patriot Act.
Ex Works (EXW) - The seller is limited to placing the merchandise at the disposal of the buyer in his home, within the established period, not being responsible for the clearance for export nor for the loading of the merchandise in any vehicle collector.
Delivery at Place (DAP) - Seller completes its obligations and terminates its liability when it places the goods at the disposal of the buyer, on or within the agreed period, at a designated place of destination other than a terminal, ready to be discharged from the carrier vehicle and not cleared for importation.
Delivery at Terminal (DAT) - Seller completes its obligations and terminates its liability when it places the goods at the disposal of the buyer, on or within the agreed period, at a designated place of destination other than a terminal, ready to be discharged from the carrier vehicle and not cleared for importation.
Delivery Duty Paid Group (DDP) - Seller completes its obligations and terminates its liability when the goods are made available to the buyer, on or within the agreed period, at the place of destination designated in the importing country, not discharged from the means of transport. The seller, in addition to the clearance, assumes all risks and costs, including taxes, fees, and other charges incurred on importation.
Free on Board (FOB) - The seller terminates his obligations and responsibilities when the goods, cleared for export, are delivered, packed, onboard the ship at the port of shipment, both indicated by the buyer, on or within the date of the agreed period.