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Incoterms
The following is a list of the most common INCO terms used in international trade.
CFR
CIF
CIP
CPT
DAF
DDP
DDU
DEQ
DES
EXW
FAS
FCA
FOB
CFR:
Cost and Freight (named port of destination)
"Cost and freight " means that the seller delivers when the goods pass the ship's rail in the port of shipment.
The seller must pay the costs and freight necessary to bring the goods to the named port of destination but the risk of loss of or damage to the goods, as well as any additional costs due to events occuring after the time of delivery, are transferred from the seller to the buyer.
The
CFR term requires the seller to clear the goods for export.
This term can only be used for sea and inland waterway transport. If the parties do not intend to deliver the goods across the ship's rail, the
CPT term should be used.
CIF:
Cost, Insurance and Freight (named port of Destination)
"Cost, insurance and freight " means that the seller delivers when the goods pass the ship's rail in the port of shipment.
The seller must pay the costs and freight necessary to bring the goods to the named port of destination but the risk of loss of or damage to the goods, as well as any additional costs due to events occurring after the time of delivery, are transferred from the seller to the buyer. However, in CIF the seller also has to procure marine insurance against the buyer's risk of loss of or damage to the goods during the carriage.
Consequently, the seller contracts for insurance and pays the insurance premium. The buyer should note that under the CIF term the seller is required to obtain insurance only on minimum cover. Should the buyer wish to have the protection of greater cover, the buyer would either need to agree as much expressly with the seller or to make his/her own extra insurance arrangements.
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