Since 1936 the Incoterms of the ICC, the International Chamber of Commerce, have regulated clearly and uniformly the worldwide rights and obligations between seller and buyer, respectively exporter and importer. Although they do not possess status as laws and do not replace a sales agreement, the Incoterms have facilitated their formulation and given both sides legal certainty. A revised version has been in force since 1 January 2011. Here you can find the most important changes, handling tips as well as more detailed information. There is also an overview available for download.*
*(all information without guaranty)
How the incoterms have changed:
- The revised version that has been in force since 1 January 2011 and contains only eleven instead of 13 clauses.
- These were divided into two categories: 1. The for all types of transport valid clauses EXW, FCA, CPT, CIP, DDP, and newly DAP and DAT, which replace DEQ, DAF, DES and DDU 2.FAS, FOB, CFR, CIF – exclusively for sea and inland navigation.
3. DAP replace DAF, DES and DDU.
4. DAT replaces DEQ.
5. With CIF, CFR and FOB the transfer of perils will take place if the goods are placed on deck of ship
6. With the C-clauses there is a new obligation for the buyer to provide insurance-related information.
What you should know about the current Incoterms
- Incoterms are legally binding only if they have been properly agreed to.
- Modifying them jeopardizes legal certainty.
- The clauses are only applicable for business-to-business transactions.
- The new Incoterms can also be applied to national trade.
- The Incoterms 2000 and older versions retain their validity; therefore, it is recommended that the applied version is indicated.
- For container shipment, the ICC recommends using FCA instead of FAS and FOB, and CPT and CIP instead of CFR and CIF.
- Instead of delivering DDP, the sender should rather deliver DAP or DAT and add "including import customs clearance" or "excluding import customs clearance" as DDP represents the maximum obligation for sellers. This means that the sender takes expense and risk to the destination of the goods and is obliged to clear them for export and import, paying all the export and import fees as well as completing the customs formalities. "Including import customs clearance", however, means that the sender only has to pay for any costs incurring at the border.
- Both for the addressee and the sender using FCA is recommended, named place of delivery, instead of EXW: With FCA the addressee is not obliged to organise the loading of goods and to write the export documents. FCA offers protection against damages which might be caused during the loading. The sender has advantages because of clear rules concerning liability, costs and the volume of tasks.
Explanation of the clauses DAP, DAT, DDP and EXW
- DAP: The DAP (delivered at place) clause regards the delivery as complete when the goods are placed, ready for unloading by the buyer, on the arriving means of transportation at the designated destination. The seller bears all the risks that arise in connection with the transport to this place. It is thus more of a general clause in which the destination is defined as accurately as possible.
- DAT: According to the DAT (delivered at terminal), the seller delivers the goods as soon as they are unloaded from the arriving means of transportation and made available to the buyer at a named terminal in the designated port or destination. "Terminal" can be any place, roofed or not. Whether it is a pier, a storage hall, a container depot or a highway, railway or air freight terminal.
- DDP: DDP (delivered duty paid) represents the maximum obligation for sellers. He bears expense and risk to the destination of the goods and is obliged to clear them for export and import, paying all the export and import fees as well as completing the customs formalities.
- EXW: The EXW clause represents the minimum obligation for sellers. Unlike the use of FCA, with EXW the seller has no obligation to the buyer to load the goods or to clear them for export. If the seller does do the loading, under the EXW clause, the buyer will have to bear the risk and expense.