“Incoterms” provide a set of international rules for interpreting the most commonly used trade terms in foreign trade. The objective is to avoid confusion caused by varying interpretations in different countries. Often parties to a contract are unaware of the unique trading practices in their respective countries. This can give rise to misunderstanding, disputes and litigation. In order to remedy these problem, the International Chamber of Commerce (ICC) first published a set of international rules for the interpretation of trade terms in 1936. Amendments and additions have been made since then to keep the rules in line with current international practices.

EXW – Ex Works – Title and risk pass to buyer including payment of all transportation and insurance cost from the seller’s door.

FCA – Free Carrier – Title and risk pass to buyer including transportation and insurance cost when the seller delivers goods cleared for export to the carrier. Seller is obligated to load the goods on the buyer’s collecting vehicle. It is the buyer’s obligation to receive the seller’s arriving vehicle unloaded.

FAS – Free Alongside Ship – Title and risk pass to buyer including payment of all transportation and insurance cost once delivered alongside ship by the seller. Used for sea or inland waterway transportation. The export clearance obligation rest with the seller.

FOB – Free on Board – Title and risk pass to buyer including payment of all transportation and insurance cost once delivered on board the ship by the seller.

CFR – Cost and Freight – Title, risk and insurance cost pass to buyer when delivered on board the ship by seller who pays the transportation cost to the destination port

CIF – Cost Insurance and Freight – Title and risk pass to buyer when delivered on board the ship by seller who pays transportation cost to destination port.

CPT – Carriage Paid to – Title, risk and insurance cost pass to buyer when delivered to carrier by seller who pays transportation cost to destination.

CIP – Carriage and Insurance Paid to – Title and risk pass to buyer when delivered to carrier by seller who pays transportation and insurance cost to destination.

DAF – Delivered at Frontier – Title, risk and responsibility for import clearance pass to buyer when delivered to named border point by seller.

DES – Delivered Ex Ship – Title, risk and responsibility for import clearance pass to buyer when delivered to named border point by seller.

DEQ – Delivered Ex Quay (Duty Paid) – Title and risk pass to buyer when delivered on board the ship at the destination point by the seller who delivers goods on dock at destination point cleared for import.

DDU – Delivered Duty Unpaid – Seller fulfills obligation when goods have been made available at the named place in the country of importation.

DDP – Delivered Duty Paid – Title and risk pass to buyer when seller delivers goods to named destination point cleared for import.