Incoterms

INCOTERMS: Incoterms is a contraction of “INternational COmmercial TERMS”. These determine the reciprocal obligations of the seller and the buyer within the framework of an international purchase / sales agreement.

Incoterms specify respective responsibilities but do not set out the moment when transfer of property takes place.
Incoterms define how costs are shared and risks are divided.

Presentation of incoterms at customs

4 alphanumerical characters, including:
3 letters showing the incoterm which applies to the contract.
1 figure locating the carriage contract :
1: location within France.
2: location within another European Union Member State.
3: location outside the European Union

Incoterms: there are four groups

Group E: Ex-works

EXW: The seller has fulfilled their delivery obligation when the merchandise is made available at their premises (workshop, factory, warehouse, etc.). The buyer bears all fees and risks inherent to the shipment of the merchandise from the seller’s premises to its required destination. This term represents minimal obligations for the seller.

Group F: Free

FCA: The seller has fulfilled their delivery obligation when they have delivered their merchandise, with customs clearance for export, to the buyer’s designated carrier at the agreed place. The buyer chooses the mode of transport and the carrier. They pay for the principal carriage. Transfer of fees and risks takes place when the carrier takes charge of the merchandise.
FAS: The seller has fulfilled their delivery obligation when the merchandise has been placed alongside the ship, on the agreed quay or embarkation port. The buyer must bear all fees and risks of loss or damage to which the merchandise may be subject. The FAS term means that the seller is responsible for obtaining customs clearance for the merchandise at export.
FOB: The seller has fulfilled their delivery obligation when the merchandise is placed on board the ship at the designated embarkation port. The seller clears the merchandise with customs at export. The buyer chooses the ship and pays maritime freight costs. Transfer of fees and risks takes place when the ship’s rail leaves the embarkation port.

Group C: Cost or Carriage

CFR: The seller must choose the ship and pay the fees and freight costs required to ship the merchandise to the designated port of destination. Responsibility for export formalities lies with the seller. The same point of risk transfer applies as with FOB.
CIF: The seller is subject to the same obligations as with CFR, but they must also supply maritime insurance against the risk of loss or damage to the merchandise during carriage. Responsibility for export formalities lies with the seller. During carriage by sea or inland waterway, the goods travel at the buyer’s own risk, from the point when the ship’s rail leaves the embarkation port.
CPT: The seller chooses the mode of transport and pays freight costs for the carriage of the merchandise to the agreed destination. They obtain customs clearance for the merchandise at export. When the merchandise is handed over to the principal carrier, the risks are transferred from the seller to the buyer.
CIP: The seller’s obligations are the same as with CPT, but they must also provide insurance against the risk of loss or damage to which the merchandise may be subject during carriage. The seller obtains customs clearance for the merchandise at export.

Groupe D: Delivered

DAF: The seller has fulfilled their delivery obligation when the merchandise has been delivered and cleared by customs at export, at the agreed place at the border, but before reaching the border of the adjacent country. The merchandise is on the transport vehicle which is carrying it, but which has not yet been unloaded. Transfer of fees and risks takes place when the border is crossed. Responsibility for customs import formalities and the payment of customs duties and taxes owing to the import lies with the buyer.
DES: The seller has fulfilled their delivery obligation when the merchandise, which has not been cleared by customs, is made available to the buyer on board the ship at the agreed port of destination. The seller bears all costs and risks relating to the shipment of the merchandise, until it reaches the agreed destination port.
DEQ: The seller has fulfilled their delivery obligation when they have made the merchandise, which has not been cleared by customs at import, available to the buyer on the quay at the agreed port of destination. The buyer clears the merchandise for import with customs. Transfer of fees and risks takes place when the merchandise is on the quay of the agreed port.
DDP: The opposite to the EXW ex-works term, this term places the seller under the maximum obligation. The seller deals with everything, including customs clearance upon import and payment of any duties and taxes required. Transfer of fees and risks takes place upon delivery to the buyer. The buyer is responsible for fees and risks incurred during unloading.
DDU: The seller delivers the merchandise to the buyer, not cleared by customs at import, and not unloaded from any transport vehicle upon arrival at the agreed destination. The buyer deals with their risks and fees, the completion of customs import formalities and the payment of import duties and taxes.
There is an essential distinction (departure/arrival) and frequency of use within the EU.
Sale on departure, 8 incoterms: the buyer is liable for the risks of the principal carriage.

Sale on arrival, 5 incoterms: the seller is liable for the risks of the principal carriage.

Sale on departure	Sale on arrival
CIF: frequently used	DAF: rarely used
CIP: frequently used	DDU: rarely used
CFR: frequently used	DDP: rarely used
CPT: frequently used	DES: utilisation rare
EXW: frequently used	DEQ: rarely used
FAS: rarely used
FCA: frequently used
FOB: frequently used