FOB-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.
FCA-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 charge of the carrier named by the buyer at the named place or point. If no precise point is indicated by the buyer, the seller may choose within the place or range stipulated where the carrier shall take the goods into 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 be used for any mode of transport, including multimodal transport. "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 the buyer instructs the seller to deliver the cargo to a person, e.g. a freight forwarder who is not a 'carrier', the seller is deemed to have fulfiled his obligation to deliver the goods when they are in the custody of that person.
"Transport terminal" means a railway terminal, a freight station, a container terminal or yard, a multipurpose cargo terminal or any similar receiving point.
"Container" includes any equipment used to unitise cargo, e.g. all types of containers and/or flats, whether lSO accepted or not, trailers, swap bodies, ro-ro equipment, igloos, and applies to all modes of transport.
CIF-Cost, Insurance and Freight
"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 for export.
This term can only be used for sea and inland waterway transport. When the ship's rail serves no practical purposes such as in the case of roll-on/roll-off or container traffic, the CIP term is more appropriate to use.
CFR-Cost and Freight
"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.
"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 costs 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.
DDU-Delivered Duty Unpaid
"Delivered duty unpaid" means that the seller fulfils his obligation to deliver when the goods have been made available at 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 therefrom, 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.