Incoterms are codifications of international rules for the uniform interpretation of common contract clauses in export/import transactions. Developed and issued by the International Chamber of Commerce (ICC) in Paris, the version which is currently valid is Publication No. 460 from 1990. The thirteen Incoterms are described below.
Cost and Freight - The Seller must contract and pay for the carriage of the goods to the port of destination named in the sales contract.
Cost, Insurance and Freight - The only difference between CFR and CIF is that under the latter term, the seller has the added obligation to procure insurance. CIF is used for goods carried by sea.
Freight/Carriage and Insurance Paid To - CIP is used irrespective of the mode of transportation, while CIF is used for goods carried by sea.
Freight and Carriage Paid To - While CFR is used for goods that are to be carried by sea, the term CPT is used irrespective of the mode of transport.
Delivered at Frontier - When the parties merely wish to clarify that the seller should arrange and pay for the transport, the CPT term should be used. However, if the seller is to also bear the risk of loss and/or damage, the DAF term should be used.
Delivery/Duty Paid - While under the term DDU, the seller does not have to clear the goods for import and pay the duty, but he must do so under DDP.
Delivery/Duty Unpaid - While under the term DDP, the seller has to clear the goods for import and pay the duty, but under DDU he only has to clear the goods for export.
Ex Quay - As in the term DES, under DEQ the points of division of costs and risks coincide, but they have now been moved one step further from the ship onto the quay. The seller not only has to contract for the carriage and pay the freight, but also bears the risk of bringing the goods ashore and clearing the goods for import.
Ex Ship - As with CFR and CPT, the seller has to pay the costs of carriage. However, for DES, he also must assume the risk of loss or damage to the goods as well as of any cost increases to the point of delivery.
EXWORKS - The Seller must make the goods available at the seller's premises.
Free Alongside Ship - The Seller must only make the goods available at the ship. The buyer is responsible for all export obligations.
Free Carrier (...named place) - The Seller fulfills his obligations by delivering the goods at the named point into the custody of the carrier nominated by the buyer.
Free On Board - The Seller must provide the export license at his own risk and must pay any export taxes and fees. Further, the goods must be placed onboard the ship at the risk of the seller.