The International Chamber of Commerce (ICC) established rules for managing conflicts arising from the interpretation of international contracts between exporters and importers regarding the transfer of goods, their costs of transactions and the responsibility for damages.
The CCI imposed in 1936, the INCOTERMS (International Commercial Terms). The International Trade Terms were initially employed in maritime and land transport and in 1976, the air transport. More two terms were created in 1980 with the appearance of the intermodal transportation system that uses the process of unitization of cargo.
In 1990, adapting the data interchange, a new version of INCOTERMS was established containing 13 terms. Been in force since 01/01/2000 the Incoterms 2000, that takes into account the recent growth of free trade zones, the increase of electronic communications in business transactions and changes in practice for the transport of goods. Moreover, the Incoterms 2000, offers a simpler and clearer view of the 13 Incoterms.
INCOTERMS are represented by abbreviations. The rules are internationally uniform and impartial and serve as basis for negotiations on trade between countries. The classification below follows an increasing order in the seller's responsibility: the sales referred to in the above group comprise those made on departure and on arrival.
Sales in the match, for groups E, F and C, leave the shipping risks under responsibility of the buyer. For sales on arrival, the risks are the responsibility of the seller in case the terms of group D, except the DAF. In the case of DAF - Delivery at Frontier, the seller bears the risk until the border mentioned in the contract and the purchaser from it.
The terms of group C deserve attention to avoid confusion. For example, if the contract for the international carriage or insurance is contracted by the seller does not imply that the overall risks of the main transport fit him.
ICC selects own the sea, river or lake transportation, the terms FAS, FOB, CFR, CIF, DES and DEQ. Aim to all means of transport, including multimodal: EXW, FCA, CPT, CIP, DAF, DDU and DDP. The DAF is the most used in the land.
EXW (Ex Works): The merchandise is delivered to the business of the seller, in the designated location. The buyer receives the goods at the place of production (factory, plantation, mine, warehouse), on the agreed date; all expenses and risks rests with the buyer, since the removal of goods in the designated location to the final destination; are minimal obligations and responsibility of the seller.
FCA ( Free Carrier): The seller's obligation ends when delivering the goods, cleared for export, into the custody of the carrier named by the buyer at the designated location; customs clearance is responsibility of the seller.
FAS ( Free Alongside Ship ): The seller's obligation is to put the goods side of the side of the ship to the pier in the port of ship or transshipment vessel. With the advent of Incoterms 2000 goods the clearance of goods becomes responsibility of the seller, unlike the previous version when it was responsibility of the buyer.
FOB ( Free on Board ): Seller, at its own risk and should put the goods on board the vessel nominated by the buyer at the named port of shipment. It is up to the seller to meet the export formalities; this formula is more used in Brazilian exports by sea or waterway home. The use of FCA provision will be employed in the case of using road, rail or air.
CFR (Cost and Freight): The costs incurred in bringing the merchandise aboard the ship, the freight to the port of destination and the export formalities are paid by the seller; risks and damage to the goods from the time it is placed aboard the ship at the port of shipment, are the responsibility of the buyer, who must hire and pay for insurance and spending on the landing. This term can be used only for sea or inland waterway transport home. The CPT term is used when the means of transport is by road, rail or air.
CIF (Cost, Insurance and Freight): Clause universally used in all expenses, including marine insurance and freight, until the arrival of the goods at port of destination are paid by the seller; all risks from the time transposing the ship's rail at the port of shipment, are the responsibility of the purchaser; the buyer receives the goods at the port of destination and must pay all costs such as landing taxes, customs duties. This mode can only be used for shipping. The CIP term should be used for cases of road, rail or air.
CPT (Carriage Paid To): The seller pays the freight to the location of destination indicated; the buyer assumes the burden of risk of loss or damage from the time the carrier takes custody of the goods. This term can be used regardless of form of transport, including multimodal.
CIP (Carriage and Insurance Paid to): Carriage and Insurance Paid up. The freight is paid by the seller until the agreed destination; responsibilities are the same as specified in CPT plus the insurance payment to the destination; the risks and damage pass to the Buyer's responsibility at the time the carrier takes custody of the goods. This term can be used regardless of form of transport, including multimodal.
DAF ( Delivered At Frontier ): The delivery of the goods is made in a point before the customs border with the neighboring country cleared for export however, not clared for import; from that point the buyer is responsible for costs and damages.
DES (Delivered Ex Ship): The seller puts the goods, not cleared aboard the ship at the port of destination, to the buyer; to reach the destination , the responsibility for damages is the seller. This term can only be used when it comes to a maritime transportation.
DEQ ( Delivered Ex - Quay ): The seller delivers the goods to the buyer not cleared at the port of destination; responsibility for the costs of delivery of the goods at the destination port and disembarking at the pier is the seller. This Incoterm shows that it is the buyer's responsibility to clear the goods for import and pay for all formalities, duties, taxes and other expenses related to importation, unlike the Incoterms 1990.
DDU ( Delivered Duty Unpaid ): It consists in delivery of goods within the country of the buyer, risks and costs until delivery of the goods are paid by the seller except those resulting from the payment of duties, taxes and other charges related to the importation .
DDP ( Delivered Duty Paid): Seller complies with the terms of negotiation to make the goods available in the country of the importer on the combined site cleared for import, but without the responsability to make landing; the seller bears all the risks and costs related to taxes and other charges to the delivery of the goods; this term represents the maximum responsibility of the seller as opposed to EXW .