Getting the terms of sale wrong is a common mistake. This will explain the terms and erase the chance of making an error.

1. UNDERSTANDING
INCOTERMS
A Guide to Terms of Sale

2. What are Incoterms?
An internationally recognized set of Terms of Sale.
They define what costs buyers and sellers are responsible for.
They define the risks that buyers and sellers have and where the risks are transferred.
Whether buying or selling, understanding your responsibilities is critical to a successful
transaction.
Current Version - Incoterms 2010 effective 1/1/11 revisions coming 2020

3. There are 11 Incoterms. However, there is no need to consider all of them. Many are either rarely used
or more importantly, dangerous or unnecessary to use. Here’s the entire list, grouped into two
categories -
Rules For Any Mode Or Modes Of Transport
EXW - EX WORKS
FCA - FREE CARRIER
CPT - CARRIAGE PAID TO
CIP - CARRIAGE AND INSURANCE PAID TO
DAT - DELIVERED AT TERMINAL
DAP - DELIVERED AT PLACE
DDP - DELIVERED DUTY PAID
Rules For Sea And Inland Waterway Transport
FAS - FREE ALONGSIDE SHIP
FOB - FREE ON BOARD
CFR - COST AND FREIGHT
CIF - COST INSURANCE AND FREIGHT

4. We suggest focusing ONLY on the below terms as they cover almost all transactions -
Ex Works - Seller makes the goods available at their premises, or another named place. Ex Works places the
maximum obligation on the buyer and minimum obligations on the seller.
FOB - Seller bears all costs and risks up to the point the goods are loaded on board the vessel
CFR - Seller pays for transporting goods up to the named port of destination. Buyer assumes all risks after the
the goods have been loaded on board the ship in the country of Export
CIF – Similar to CFR but with the addition that the seller must also obtain insurance for the goods while in
transit to the named port of destination.
This term should be avoided -
DDP – Delivered Duty Paid – The seller is responsible for transporting the goods to the buyers door. Critically,
use of this term shifts the responsibility for obtaining Customs clearance in the buyers country and paying all
import duites & taxes. In many nations this is dangerous, exposing yourself to taxes you may not have realized
(VAT, Excise…) & you may not be aware of any special import requirements.
The following chart lays out who bears what costs and risks under all Incoterms

6. UP NEXT –
UNDERSTANDING THE
RISKS AND CLAUSES IN A
CONTRACT OF CARRIAGE –
BILL OF LADING
A weekly look at critical subjects

7. IF YOU HAVE QUESTIONS ABOUT THIS PRESENTATION PLEASE
CONTACT OUR DIRECTOR OF COMPLIANCE, SEAN MCCLUNG -
SMCCLUNG@JANELGROUP.COM
OR 401-727-1776 X 114.
WE LOOK FORWARD TO CREATING STRATEGIES THAT MATTER!
www.janelgroup.com