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The Incoterms® rules are a standard set of trade terms used worldwide in international and domestic contracts of sale. The first version was published in 1936. The rules have been developed and maintained by experts and practitioners brought together by the ICC (International Chamber of Commerce). The Incoterms® rules are recognised by UNCITRAL as the global standard for the interpretation of the most common trade terms. The latest version is Incoterms® 2020 – published by the ICC in September 2019.
Below is a summary of Incoterms® 2020:
| Rules for any Mode or Modes of Transport: | |
|---|---|
| EXW | Ex Works [place of delivery] Incoterms® 2020
|
| FCA | Free Carrier [place of delivery] Incoterms® 2020
|
| CPT | Carriage Paid to [place of destination] Incoterms® 2020
|
| CIP | Carriage and Insurance Paid to [place of destination] Incoterms® 2020
|
| DAP | Delivered at Place [place of destination] Incoterms® 2020 |
| DPU | Delivered at Place Unloaded [place of destination] Incoterms® 2020 |
| DDP | Delivered Duty Paid [place of destination] Incoterms® 2020 |
| Rules for Sea and Inland Waterway Transport: | |
|---|---|
| FAS | Free Alongside Ship [port of shipment] Incoterms® 2020 |
| FOB | Free on Board [port of shipment] Incoterms® 2020 |
| CFR | Cost and Freight [port of destination] Incoterms® 2020
|
| CIF | Cost Insurance and Freight [port of destination] Incoterms® 2020 |
As was the case with previous versions of Incoterms® they reflect the agreement between buyer and seller only.
The rules reflect and regulate physical consignments of goods when it comes to:
- Passing of risk from seller to buyer
- Who is responsible for taking care of the transport / contract of carriage / freight charges
- Who is responsible for taking care of appropriate insurance covers
If the parties (buyer and seller) want the Incoterms® 2020 rules to apply to their contract, the safest way to ensure this is to make that intention clear in their contract, through words such as
FCA Gronjordsvej 10, 2300 Copenhagen Denmark Incoterms® 2020For more information about the new Incoterms® 2020 – or how to include the Incoterms® into the agreement, please consult the local ICC – or seek legal guidance.
For more information on how the trade term mentioned in the documentary credit, will be regarded as part of the document examination please contact your local Trade Finance department.