In INCOTERMS-2000, the conditions for facilitating understanding are grouped into 4 categories depending on the increase in the obligations of the seller:
Group E (EXW), according to which the seller only provides the goods to the buyer in its territory; Group F (FCA, FAS, FOB), according to which the seller is obliged to deliver the goods to the carrier designated by the buyer; Group C (CFR, CIF, CPT, CIP) contains terms according to which the seller must conclude a contract of carriage without assuming the risk of loss, damage to the goods or additional costs due to events after the shipment and dispatch of the goods; Group D (DAF, DES, DEQ, DDU, DDP), according to which the seller must bear all costs and risks necessary for the delivery of the goods to the country of destination.
The term “free” used in the designation of basic conditions (English – free, German – frei, Fr. – franco) means that the buyer is free from the risks and all costs of delivering the goods to the place indicated behind the word “free”.
Group E Departure | EXW Franco Factory (place name) |
Group F Basic transportation is not paid | FCA Franco carrier (place name) FAS Franco along the side of the vessel (name of the port of shipment) FOB Franco board (name of the port of shipment) |
Group C Basic transportation paid | CFR Cost and Freight (destination port name) CIF Cost, Insurance and Freight (destination port name) CPT Freight/shipping paid up to (destination name) CIP Freight/shipping and insurance paid up to (destination name) |
Group D Arrival | DAF Delivery to the border (name of the place of delivery) DES Delivery from ship (name of port of destination) DEQ Delivery from the pier (name of the destination port) DDU Duty-free Delivery (Destination Name) DDP Duty Delivery (Destination Name) |
The relevant conditions are broken down into 10 points of obligations, where each obligation of the seller (indicated by the letter A) mirrors the corresponding obligation of the buyer (indicated by the letter B) on the same subject.
And. | Obligations of the seller | B. | Obligations of the buyer |
A.1 | Provision of goods in accordance with the contract | B.1 | Payment of the price |
A.2 | Licenses, certificates and other formalities | B.2 | Licenses, certificates and other formalities |
A.3 | Contract of carriage and insurance | B.3 | Contract of carriage and insurance |
A.4 | Supply | B.4 | Acceptance of delivery |
A.5 | Transfer of risks | B.5 | Transfer of risks |
A.6 | Cost-sharing | B.6 | Cost-sharing |
A.7 | Notice to the buyer | B.7 | Notice to the seller |
A.8 | Evidence of delivery, transport documents or equivalent electronic communications | B.8 | Evidence of delivery, transport documents or equivalent electronic communications |
A.9 | Inspection – packaging – marking | B.9 | Inspection of the goods |
A.10 | Other responsibilities | B.10 | Other responsibilities |
The application of INCOTERMS is optional and depends on the will of the Contracting Parties. If the interpretation of the basic conditions in the contract and in INCOTERMS do not coincide, the terms of the contract shall prevail.
If the parties, in determining the basic condition of delivery in the sales contract, intend to adhere to the interpretation proposed in the INCOTERMS compilation, they make an appropriate reference in the contract (e.g. CIF for
INCOTERMS-2000). However, accepting the interpretation of the term by
INCOTERMS as a general basis of the contract, the parties may at the same time make changes or additions to the contract that correspond to the conditions adopted in this branch of trade, or the circumstances prevailing at the conclusion of the contract. The content of these changes should be specified in detail in the contract, because they can significantly affect the price level of the goods.
INCOTERMS does not contain provisions on the moment of transfer of ownership of the goods. That provision must be specifically provided for in the treaty, otherwise the matter would be decided on the basis of the applicable law.