Ex-works

EXW – Ex Works (…named place): Ex works means that the seller (exporter) delivers when he places the goods at the disposal of the buyer (importer) at the seller’s premises or another named place (i.e. works, factory, warehouse, etc.) not cleared for export and not loaded on any collecting vehicle.

This term thus represents the minimum obligation for the seller (exporter), and the buyer (importer) has to bear all costs and risks involved in taking the goods from the seller’s premises. However, if the parties wish the seller (exporter) to be responsible for the loading of the goods on departure and to bear the risks and all the costs of such loading, this should be made clear by adding explicit wording to this effect in the contract of sale.

Free Carrier (FCA)

FCA – Free Carrier (…named place): Free Carrier means that the seller (exporter) delivers the goods, cleared for export, to the carrier nominated by the buyer (importer) at the named place. It should be noted that the chosen place of delivery has an impact on the obligations of loading and unloading the goods at that place. If delivery occurs at the seller’s premises, the seller (exporter) is responsible for loading. If delivery occurs at any other place, the seller (exporter) is not responsible for unloading.

This term may be used irrespective of the mode of transport, including multimodal transport.
A Carrier means any person who, in a contract of carriage, undertakes to perform or to procure the performance of transport by rail, road, air, sea, inland waterway or by a combination of such modes.

If the buyer (importer) nominates a person other than a carrier to receive the goods, the seller (exporter) is deemed to have fulfilled his obligation to deliver the goods when they are delivered to that person.

Carriage Paid To (CPT)

CPT – Carriage Paid To (…named place of destination): “Carriage paid to…” means that the seller (exporter) delivers the goods to the carrier nominated by him but the seller (exporter) must in addition pay the cost of carriage necessary to bring the goods to the named destination. This means that the buyer (importer) bears all risks and any other costs occurring after the goods have been so delivered.

Carrier means any person who, in a contract of carriage, undertakes to perform or to procure the performance of transport, by rail, road, air, sea, 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 (exporter) to clear the goods for export.

This term may be used irrespective of the mode of transport including multimodal transport

Carriage and Insurance Paid To (CIP)

CIP – Carriage and Insurance Paid To (…named place of destination): “Carriage and Insurance paid to…” means that the seller (exporter) delivers the goods to the carrier nominated by him but the seller (exporter) must in addition pay the cost of carriage necessary to bring the goods to the named destination. This means that the buyer (importer) bears all risks and any additional costs occurring after the goods have been so delivered. However, in CIP the seller (exporter) also has to procure insurance against the buyer’s risk of loss of or damage to the goods during the carriage.

Consequently, the seller (exporter) contracts for insurance and pays the insurance premium. The buyer (importer) should note that under the CIP term the seller (exporter) is required to obtain insurance only on minimum cover. Should the buyer (importer) wish to have the protection of greater cover, he would either need to agree as much expressly with the seller (exporter) or to make his own extra insurance arrangements.

Carrier means any person who, in a contract of carriage, undertakes to perform or to procure the performance of transport, by rail, road, air, sea, 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 CIP term requires the seller (exporter) to clear the goods for export.

This term may be used irrespective of the mode of transport including multimodal transport.

Delivered at Terminal (DAT)

Delivered at Terminal (…named terminal at port or place of destination) Seller delivers when the goods, once unloaded from the arriving means of transport, are placed at the disposal of the buyer at a named terminal at the named port or place of destination.

Delivered at Place (DAP)

Delivered at Place means the seller delivers, when the goods are placed at the disposal of the buyer, on the arriving means of transport, ready for unloading at the named place of destination. The seller assumes all risks involved in bringing the goods to the named place.

Delivered Duty Paid (DDP)

DDP – Delivered Duty Paid (…named port of destination): Delivered duty paid means that the seller (exporter) delivers the goods to the buyer (importer), cleared for import, and not unloaded from any arriving means of transport at the named place of destination. The seller (exporter) has to bear all the costs and risks involved in bringing the goods thereto including, where applicable (Refer to Introduction paragraph 14), any “duty” (which term includes the responsibility for and the risk of the carrying out of customs formalities and the payment of formalities, customs duties, taxes and other charges) for import in the country of destination.

Whilst the EXW term represents the minimum obligation for the seller (exporter), DDP represents the maximum obligation. This term should not be used if the seller (exporter) is unable directly or indirectly to obtain the import license.

If the parties wish the buyer (importer) to bear all risks and costs of the import, the DDU term should be used. This term may be used irrespective of the mode of transport but when delivery is to take place in the port of destination on board the vessel or on the quay (wharf), the DES or DEQ terms should be used

However, if the parties wish to exclude from the seller’s obligations some of the costs payable upon import of the goods (such as VAT), this should be made clear by adding explicit wording to this effect in the contract of sale.

Free Alongside Ship (FAS)

FAS – free alongside Ship (…named port of shipment): Free alongside Ship means that the seller (exporter) delivers when the goods are placed alongside the vessel at the named port of shipment. This means that the buyer (importer) has to bear all costs and risks of loss of or damage to the goods from that moment.

The FAS term requires the seller (exporter) to clear the goods for export. However, if the parties wish the buyer (importer) to clear the goods for export, this should be made clear by adding explicit wording to this effect in the contract of sale.

This term can be used only for sea or inland waterway transport.

Free On Board (FOB)

FOB – Free On Board (…named port of shipment): Free on Board means that the seller (exporter) delivers when the goods pass the ship’s rail at the named port of shipment. This means that the buyer (importer) has to bear all costs and risks of loss of or damage to the goods from that point.

The FOB term requires the seller (exporter) to clear the goods for export. If the parties do not intend to deliver the goods across the ship’s rail, the FCA term should be used.

This term can be used only for sea or inland waterway transport.

Cost and Freight (CFR)

CFR – Cost & Freight (…named port of destination): Cost and Freight means that the seller (exporter) delivers when the goods pass the ship’s rail in the port of shipment. The seller (exporter) 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 of delivery, are transferred from the seller (exporter) to the buyer (importer).

The CFR term requires the seller (exporter) to clear the goods for export. If the parties do not intend to deliver the goods across the ship’s rail, the CPT term should be used.

This term can be used only for sea and inland waterway transport.

Cost Insurance and Freight (CIF)

The CIF term requires the seller (exporter) to clear the goods for export. If the parties do not intend to deliver the goods across the ship’s rail, the CIP term should be used.

This term can be used only for sea and inland waterway transport.

However, in CIF the seller (exporter) also has to procure marine insurance against the buyer’s risk of loss of or damage to the goods during the carriage.

Consequently, the seller (exporter) contracts for insurance and pays the insurance premium. The buyer (importer) should note that under the CIF term the seller (exporter) is required to obtain insurance only on minimum cover. Should the buyer (importer) wish to have the protection of greater cover, he would either need to agree as much expressly with the seller (exporter) or to make his own extra insurance arrangements.

CIF – Cost, Insurance & Freight (…named port of destination): Cost, Insurance and Freight means that the seller (exporter) delivers when the goods pass the ship’s rail in the port of shipment. The seller (exporter) 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 of delivery, are transferred from the seller (exporter) to the buyer (importer).