INCO Terms & Responsibilities

The purpose of Inco terms is to provide a set of international rules for the interpretation of the most commonly used trade terms in foreign trade. Thus, the uncertainties of different interpretations of such terms in different countries can be avoided or at least reduced to a considerable degree.The scope of Incoterms is limited to matters relating to the rights and obligations of the parties to the contract of sale with respect to the delivery of goods. Incoterms deal with a number of identified obligations imposed on the parties and the distribution of risk between the parties.

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In total 13 Inco terms have been defined which are grouped into four basically different categories, applicable for sea and inland waterway transport or for all modes of transport:

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13 INCO Terms
EXW - Ex Works (named place)
FCA – Free Carrier (named place)
FAS – Free Alongside Ship (named place)
FOB – Free On Board (named port of shipment)
CFR – Cost and Freight (named port of destination)
CIF – Cost, Insurance and Freight (named port of destination)
CPT – Carriage Paid To (named place of destination)
CIP – Carriage and Insurance Paid To (named place of destination)
DAF – Delivered at Frontier (named place)
DES – Delivered Ex Ship (named port of destination)
DEQ – Delivered Ex Quay (named port of destination)
DDU – Delivered Duty Unpaid (named place of destination)
DDP – Delivered Duty Paid (named place of destination)

4 General Groups of Terms

“E” term: seller’s obligation (& control of shipment) is at its minimum
“F” terms: require the seller to deliver the goods for carriage as instructed by the buyer
“C” terms: require the seller to contract carriage on usual terms at his own expense
“D” terms: seller’s obligation & control at its maximum