Incoterms delivery clauses | If (2024)

FAQs

What is the delivery clause in Incoterms? ›

The seller delivers the goods: to the carrier or another person nominated by the seller at an agreed place (if any such place is agreed between parties) and that the seller must contract for and pay the costs of carriage necessary to bring the goods to the named place of destination.

Incoterm Categories

CPT (Carriage Paid To) : Place. CIP (Carriage and Insurance Paid To): Place. DAP (Delivered at Place): Place. DPU (Delivered at Place Unloaded): Place.

If an Incoterm is agreed upon when selling a good, it defines the rights and obligations of the parties with regard to the cost and risk of shipping. For example, under the Incoterm EXW (Ex Works), the seller is not allowed to increase the price to cover shipping costs.

The title and risk of loss with respect to the Products shall transfer to Licensee upon Delivery. Incoterm. Unless otherwise agreed to in writing by the parties, all shipments are made EX WORKS to Seller's place of business. Buyer accepts all risk and expense of shipping, and all risk of loss or damage in transit.

It's one of the easiest for sellers, who only have to make the buyer's shipment available for pickup. That said, we also see the following Incoterms used with relative frequency: DDP (Delivered Duty Paid), FOB (Free on Board), CIF (Cost, Insurance, and Freight), and FAS (Free Alongside Ship).

The delivery clauses clarify the buyer and seller's rights and obligations regarding the delivery and handing over of the goods. The delivery terms often relate to the transport of goods at distance selling.

Incoterms Rules for Any Mode of Transport

Some common examples of Incoterms rules for any mode of transportation include Delivered Duty Paid (DDP), Delivered at Place (DAP), and Ex Works (EXW).

Incoterms are categorized into two main groups to facilitate understanding and application in international trade: 7 rules for any mode of transport (EXW, FCA, CPT, CIP, DAP, DPU, DDP). 4 rules for sea and inland waterway transport (FAS, FOB, CFR, CIF).

In choosing the right incoterm, buyers and sellers must consider their experience level. For example, EXW Incoterm is not suitable for importers. A buyer with more experience importing goods can decide on Ex Works Incoterm. DAP, DDP, and DPU Incoterms are good for importers with little experience.

How do you use Incoterms correctly? ›

To use Incoterms correctly in your contract, you need to follow some basic rules. First, you need to specify the Incoterm, the version, and the place or port of delivery after the price in your contract. For example, you can write "CIF london Incoterms 2020" or "DAP 123 Main Street, New York Incoterms 2020".

Delivery – at which point the seller's responsibility ends and the risk of loss or damage passes to the buyer. Transportation – which party is responsible for transportation costs. Documentation and formalities – who is responsible for dealing with customs, shipping documentation, duty payments, and other formalities.

Because the seller will build shipping into the price of the goods, these Incoterms might be difficult for buyers to accept as they take on the risk — and cost — but have no control over the shipment until the goods arrive in their country. The Incoterms more favorable to buyers are DAT, DAP, and DDP.

An Overview of Incoterms® 2020. The Incoterms® are a set of 11 individual rules issued by the International Chamber of Commerce (ICC) which define the responsibilities of sellers and buyers for the sale of goods in international transactions.

First published by ICC in 1936, Incoterms® rules are a set of eleven three-letter trade terms, reflecting business-to-business practice in contracts for the sale and purchase of goods.

Each Incoterm rule specifies the seller's obligations for cargo delivery and clarifies when delivery takes place. Each rule also specifies when the risk of loss or damage to the goods being exported pass from the seller to the buyer by reference to the delivery provision.

Under the Delivered Duty Paid (DDP) Incoterm rules, the seller assumes all responsibilities and costs for delivering the goods to the named place of destination. The seller must pay both export and import formalities, fees, duties and taxes.

Point of Delivery and Transfer of Risk. Page 2. EXW - EX WORKS means that the seller delivers the goods to the buyer when it places the goods at the disposal of the buyer at a named place (like a factory or warehouse), and that named place may or may not be the seller's premises.

CIF - Cost, insurance and freight

The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination. The seller also contracts for insurance cover against the buyer's risk of loss of or damage to the goods during the carriage.