Incoterms 2020 - Banco Sabadell

The seller fulfils his delivery obligation once the merchandise has been placed in his own premises (factory, warehouse, etc.) at the buyer's disposal.

The seller is not responsible for loading the merchandise on the transport provided by the buyer nor for the export customs clearance, unless otherwise agreed. The buyer bears all the costs and risks inherent in transporting the merchandise from the seller's premises to the desired destination. This term represents the minimum obligation on the part of the seller.

This term should not be used when the buyer is unable to carry out, directly or indirectly, the export formalities. In such circumstances, the term FCA should be used.

It is suitable for domestic trade. In the case of international trade, FCA is more advisable.

Nor is it suitable when payment is made by documentary credit. If documentary credit is used, no shipping document should be required, as delivery to the carrier is not one of the seller’s obligations.

The seller has complied with his delivery obligation once the merchandise has been delivered, after the export procedures have been performed, to the carrier designated by the buyer at the agreed place.

If the buyer does not indicate a specific delivery point, the seller can choose, within the stipulated place or area, where he will deliver to the carrier. When, in accordance with commercial practice, the assistance of the seller is required to carry out the contract with the carrier (in cases such as transport by train or plane), the seller may do so at the buyer’s expense and risk. The term FCA can be used for all means of transport, including multimodal.

The term FCA should be used for maritime transport in all those cases where the delivery is not carried out in the traditional way on board the ship (in a cargo, train, container or similar terminal). If the term FOB were used for these cases, the seller would bear the risks and costs until the merchandise is put on board for a period over which he would have no possibility to control.

The seller pays the freight costs to transport the goods to the agreed destination.

The risk of loss or damage to the merchandise, together with any additional costs due to events that may occur after the date of delivery to the carrier, are transferred from the seller to the buyer at the time the merchandise has been delivered into the carrier’s custody. If the transport involves several carriers to the agreed destination point, the risk is transferred at the moment the merchandise has been delivered to the first carrier.

CPT requires the seller to clear the merchandise for export. The term can be used for all means of transport, including multimodal.

The seller has the same obligations as under the CPT term and, moreover, must obtain transport insurance against the risk of loss or damage to the goods incurred by the buyer during transport.

The seller contracts the insurance and pays the corresponding premium. The seller is obliged to obtain insurance that complies with the coverage provided by clauses (A) of the Institute's Loading Clauses (LMA / IUA) or other similar clauses. The insured amount must be, at least, for the price established in the contract plus 10% (that is, 110%).

CIP requires the seller to clear the merchandise for export. The term can be used for all means of transport, including multimodal.

The seller has fulfilled his obligation to deliver the merchandise once it has been made available to the buyer at the agreed destination.

The seller must bear the risks and costs of placing the merchandise at the agreed point (excluding fees, taxes and any other official expense derived from importing it into the country of destination). The buyer must bear any additional costs and assume the risks derived from the lack of clearance of the merchandise in the country of import. If the parties want the seller to complete the customs formalities and bear the resulting costs and risks, the precise instructions must be added to the DAP term. If the parties wish to add some of the costs derived from the importation to the obligations of the seller (such as VAT), this must be clearly stated (for example, “DAP, VAT paid”).

Generally, this term is not appropriate in a documentary credit, since a document certifying delivery at destination would be required, which would distort the documentary credit.

The seller has fulfilled his obligation to deliver the merchandise once it has been made available to the buyer at the agreed destination unloaded but not cleared for import.

The seller must bear all the risks and costs until the merchandise is placed at the agreed point (excluding fees, taxes and any other official expense derived from importing it into the country of destination).

Generally, this term is not appropriate in a documentary credit, since a document certifying delivery at destination would be required, which would distort the documentary credit.

The seller has fulfilled his obligation to deliver the merchandise once it has been made available to the buyer at the agreed destination. The seller must bear the risks and costs of placing the merchandise at the agreed point (including customs duties, taxes and delivery costs of the goods cleared for import. While the term EXW represents the minimum obligation for the seller, the term DDP represents the maximum obligation.

This term should not be used if the seller cannot, directly or indirectly, obtain the import license.

If the parties want the pay to satisfy the import duties, the term DAP should be used.

If the parties wish to exclude some of the costs derived from the importation to the obligations of the seller (such as VAT), this must be clearly stated (for example, “DDP, VAT unpaid”).

Generally, this term is not appropriate in a documentary credit, since a document certifying delivery at destination would be required, which would distort the documentary.

The seller complies with his delivery obligation once the merchandise has been placed next to the ship at the dock or the barges at the designated point of shipment.

In this case, the buyer must bear all the costs and risks of loss or damage to the merchandise from that moment. The term FAS can only be used for maritime or inland water transport. FAS requires the seller to clear the merchandise for export.

When the goods are in containers the term FAS would be inappropriate and the term FCA should be used.

The seller complies with his delivery obligation once the merchandise has been placed on board at the designated point of shipment.

The buyer must bear all the costs and risks of loss or damage to the merchandise from that moment. FOB requires the seller to clear the merchandise for export. The term FOB can only be used for maritime or inland water transport. When passing the ship's rail is of no practical use for the purposes herein discussed, such as roll-on / roll-off (the load goes onto the ship inside the truck or wagon) or container traffic, the term FCA is more suitable.

The seller must pay the costs and freight necessary to place the merchandise in the port of destination, but it is the buyer who runs the risk of loss or damage to the merchandise, along with any additional costs due to events that may occur later to the merchandise on board the ship at the port of shipment.

CFR requires the seller to clear the merchandise for export. The term CFR can only be used for maritime or inland water transport. When passing the ship's rail is of no practical use for the purposes herein discussed, such as roll-on / roll-off (the load goes onto the ship inside the truck or wagon) or container traffic, the term CPT is more suitable.

The seller has the same obligations as under the CFR term and, moreover, must obtain maritime transport insurance against the risk of loss or damage to the goods incurred by the buyer during transport.

The seller contracts the insurance and pays the corresponding premium. The buyer must bear in mind that under term CIF, the seller is obliged to obtain insurance that complies with the coverage provided by clauses (C) of the Institute's Loading Clauses (LMA / IUA) or other similar clauses. The insured amount must be, at least, for the price established in the contract plus 10% (that is, 110%).

CIF requires the seller to clear the merchandise for export. The term CIF can only be used for maritime or inland water transport. When passing the ship's rail is (as in FOB) of no practical use for the purposes herein discussed, such as roll-on / roll-off (the load goes onto the ship inside the truck or wagon) or container traffic, the term CIP is more suitable.