terms Incoterms 2010 are designated by a three-letter abbreviation, a total of 11 terms have been defined, 7 of them are applicable to any mode of transport of the main transportation, the remaining 4 terms are applicable exclusively to sea transport and transport of territorial waters. All terms are classified into 4 categories E, F, C, D. These letters are basic categories or conditions and denote the most important thing, namely the point of transition of the obligation for the goods from the seller to the buyer and establish the moment when the risk of accidental loss or damage to the goods passes. Next, we will consider these categories, click on the terms below and a detailed description will open.

E term - shipment, transfer of obligations at the place of departure (departure) - open description Close the description of the term E
"E" - shipment, transfer of obligations at the place of departure (departure). The seller must provide the goods to the buyer directly at the factory, his warehouse, the seller does not clear the goods by customs, the term imposes minimum obligations on the seller: the seller must only provide product at the disposal of the buyer in the agreed place - usually in the seller’s own premises. But in practice, the seller often helps the buyer to load the goods onto the vehicle provided by the buyer. Although the term EXW would better reflect this if the seller's obligations have been extended to include loading, it was decided to retain the traditional principle of minimum obligations of the seller in accordance with the terms EXWThat they can be used for cases where the seller does not want to take any liability for cargo loading. If the buyer wants the seller to do more, this should be stated in the contract - the sale. EXW


F term - main carriage not paid for by the seller (main carriage unpaid) - open description Close the description of the term F
"F" - the main carriage is not paid by the seller (main carriage unpaid), transfer of obligations at the departure terminals for the main carriage. The seller undertakes to put the goods at the disposal of the carrier, which the buyer hires independently. FCA, FAS, FOB. These terms provide that the seller delivers the goods for carriage in accordance with the buyer's instructions. When making delivery according to the term FCAwhen the place named in the contract as a place of delivery is the seller’s premises delivery is considered complete when the goods are loaded onto the buyer’s vehicle, and in other cases the delivery is completed when the goods are made available to the buyer without unloading the seller’s vehicle. Term FOB no need to use just to denote any delivery item - for example "FOB factory ","FOB factory", "FOB from the seller’s factory or other internal items, such writing creates confusion and should be avoided.


With the term - the main carriage paid by the seller (main carriage paid) - open the description Close the description of the term C

"C" - the main carriage paid by the seller (main carriage paid), the transfer of obligations - from the arrival terminals for the main carriage. The seller is obliged to conclude a contract for the transport of goods, but without assuming the risk of accidental loss of or damage to the goods. CFR, CIF, CPT, CIP. The terms impose on the seller the obligation to enter into a contract of carriage under normal conditions at its own expense. The point to which he must pay transportation costs must be indicated after the corresponding "C" term. In accordance with the terms CIF и CIP the seller must insure the goods and incur insurance costs. In some cases, the parties themselves decide whether they wish to insure themselves and to what extent. Since the seller insures the benefit of the buyer, he does not know the exact requirements of the buyer.

In accordance with the terms of cargo insurance of the Association of London insurers, insurance is carried out with "minimum coverage" under Condition "C", with "medium coverage" under Condition "B" and with "the widest coverage" under Condition "A". Since the sale of goods by the term CIF the buyer may wish to sell the goods in transit to a subsequent buyer who in turn may wish to resell the goods again, it is impossible to know the insurance of a size suitable to such subsequent buyers and, therefore, has traditionally selected the minimum insurance CIF, which, if necessary, allows the buyer to require additional insurance from the seller. Minimum insurance, however, is not suitable for the sale of industrial goods, where the risk of theft, theft or improper transport or storage of goods requires more than insurance under Condition "C". Since the term CIP Unlike term CIF normally used for the sale of industrial goods, it would be better to adopt the broadest insurance coverage for CIPThan the minimum insurance CIF. But changing the seller’s insurance liability obligation CIF и CIP would lead to confusion, and thus both conditions reduce the seller's insurance obligation to minimum insurance. Buyer by term CIP especially important to know the following: the need for additional security, he should agree with the seller that the last additional insurance or take on itself the extended insurance.

There are also particular instances where the buyer may wish to obtain even more protection than is available under Institute Clause "A" Association named above, for example, insurance against war, riots, civil commotion, strikes or other labor disturbances. If he wishes the seller to arrange such insurance he must instruct him accordingly, and in this case, the seller would have to provide such insurance.

Since the cost-sharing point is fixed in the destination country, "C" terms are often mistakenly considered arrival contracts where the seller bears all the risks and costs until the goods actually arrive at the agreed point. It should be noted that "C" - terms have the same nature as "F" - terms in that the seller fulfills the contract in the country of shipment or dispatch. Thus, sales contracts in accordance with "C" - terms, like contracts under "F" - terms, fall into the category of shipment contracts. The nature of shipment contracts stipulates that, while the usual shipping charges for transporting goods along the normal route and in the usual way to the agreed place must be paid by the seller, the buyer bears the risk of loss or damage to the goods, as well as additional costs arising from events that occur after the goods have been properly delivered for shipment. Thus, "C" terms differ from all other terms in that they contain two "critical" points. One indicates the point to which the seller must arrange transportation and incur costs under the contract of carriage, while the other serves to transfer risks. For this reason, utmost care must be exercised when adding to the seller the obligations that are imposed on him after the risk has passed beyond the above “critical” point.

The essence of "C" - terms is to release the seller from any further risks and costs after he has duly complied with the contract of purchase - sale contract for carriage, passing the goods to the carrier and providing insurance in accordance with the terms CIF и CIP.

"C" - Terms as terms of shipment contracts can be illustrated by the common use of documentary credits as the preferred method of payment used in such conditions. In cases where the parties to the purchase agreement have agreed that the seller will receive payment when the agreed loading documents for the documentary loan are submitted to the bank, the main purpose of the documentary loan would completely contradict if the seller incurred further risks and costs after receiving payment for documentary loans or after shipment and dispatch of goods. Of course, the seller will have to bear all costs under the contract of carriage, regardless of whether cargo previously, after shipment or to be paid at the destination (freight payable by the consignee at the port of destination); however, additional costs that may arise as a result of events that occurred after shipment and dispatch are necessarily paid by the buyer. If the seller must provide a contract of carriage, which includes payment of duties, taxes and other fees, such costs are, of course, borne by the seller, to the extent that they are attributed to him under the contract.

This is clearly stated in the article by A. 6. all "C" - terms. If several contracts of carriage are usually entered into relating to the transshipment of goods at intermediate points to reach the agreed destination, the seller must pay all of these costs, including any costs incurred in transhipping the goods from one vehicle to another. However if carrier used his rights - according to the contract of carriage - to avoid unforeseen circumstances, then all additional costs arising from this will be charged to the buyer, since the seller’s obligation is limited to ensuring the usual contract of carriage. It often happens that the parties to the purchase and sale contract want to clearly define to what extent the seller must secure the contract of carriage, including the cost of unloading. Since such costs are usually covered by freight, when goods are transported on ordinary shipping lines, the purchase and sale contract often provides for goods to be transported in this way or at least in accordance with the “conditions of carriage of goods by voyages”.

After terms CFR и CIF It is not recommended to add the words "including unloading if the meaning of the abbreviation is not clearly understood in the relevant trade area and is not accepted by the contracting parties or with the relevant law or custom of trade. In particular, the seller should not - and he could not - without changing the nature" C "- of the terms to take any obligations regarding the arrival of the goods at the destination, as the buyer bears the risk of delay during transportation. Xia to the place of shipment or dispatch, for example, "shipment (dispatch) not later than ...." The contract, for example, "CFR Vladivostok no later than ... "is actually incorrect and thus can cause all kinds of interpretations. It can be assumed that the parties had in mind, or that the goods should arrive in Vladivostok on a certain day, in which case the contract is not a shipment contract, a contract of arrival, or, in another case, that the seller must send the goods at such a time that the goods arrive in Vladivostok before a certain date, except in cases of delay in transportation due to unforeseen events.

It happens in commodity trades that goods are bought while they are at sea, and in such cases when the terms of trade are added the word "afloat". Since in these cases, in accordance with the terms CFR и CIF the risk of loss or damage to the goods has already passed from the seller to the buyer, difficulties of interpretation may arise. One possibility is to keep the usual meanings of terms. CFR и CIF regarding the allocation of risk between seller and buyer, namely that risk passes upon shipment: this would mean that the buyer might have to assume the consequences of events that have already occurred at the time when the contract of purchase - sale came into force.

Another opportunity to clarify the moment of risk transfer is the time of signing a new purchase agreement. The first possibility is more realistic, since it is usually impossible to establish the state of the goods during transportation. For this reason, Article 68 of the UN Convention 1980 on Contracts for the International Sale of Goods (CISG) provides that “if circumstances indicate, the risk is accepted by the buyer from the moment the goods are transferred to the carrier who issued the documents included in the contract of carriage”. However, this rule has an exception when "the seller knew or should have known that the goods were lost or damaged, and did not inform the buyer of this." Thus, the interpretation of terms CFR и CIF with the addition of the word "afloat" will depend upon the law applicable to the contract - the sale.

Articles A.8. Incoterms tend to ensure that the seller provides the buyer with "proof of delivery", it should be emphasized that the seller fulfills this requirement by providing "ordinary" evidence. In accordance with the terms CPT и CIP it will be "usual transport document" and under the terms CFR и CIF it will be bill of lading or sea waybill. Transport documents must be “clean”, which means that they should not contain reservations or instructions stating the poor state of the goods or packaging. If such reservations or instructions appear in the document, it is considered “unclean” and is not accepted by banks in documentary credit transactions. However, it should be noted, the transport document, even without such reservations or instructions, usually does not provide the buyer with irrefutable proof in relation to the carrier that the goods were shipped in accordance with the terms of the contract of sale. Usually, the carrier in the standard text on the first page of the transport document refuses to take responsibility for information regarding the goods, indicating that the details included in the transport document are only the consignor’s statements. In accordance with most applicable laws and principles, the carrier must at least use reasonable means of verifying the accuracy of the information, and its inability to do so may make it responsible to the consignee. However, in container trade, the carrier has no means of checking the contents of the container, unless he himself was responsible for loading the container. 


D term - full delivery to the warehouse (arrival) - open description Close the description of the term D

"D" - arrival, transfer of obligations from the buyer, full delivery (arrival). The seller bears all shipping costs and assumes all risks until the goods are delivered to the country of destination DAT, DAP, DDP. The terms are different in nature from "C" - terms, as in accordance with "D" - terms the seller is responsible for the arrival of the goods at the agreed place or destination at the border or in the country of import. The seller must bear all the risks and costs of delivering goods to this place. Thus, “D” terms means arrival contracts, while “C” terms refer to shipping contracts. In accordance with the "D" - terms, except DDP, the seller is not obliged to deliver the goods cleared for import in the destination country.

In accordance with the term DDP The seller delivers when the goods have been delivered to the buyer, cleared of the customs duties required for import, in an arriving vehicle, ready for unloading at the named place of destination, thus imported into the country of import. In countries where customs clearance can be difficult and time consuming, it can be risky for the seller to commit to deliver the goods outside the customs clearance point. In most countries, it is now more appropriate for the party domiciled in the country concerned to clear customs and pay duties and other fees. Although in accordance with Articles B.5. and B.6. term DDU the buyer must bear the additional risks and costs that may arise from the inability for him to fulfill his obligations to clear the goods for import, the seller is advised not to use the term DDU in countries where it is possible to expect difficulties in clearing the goods for import.

If the parties suggest that the seller bear the risk during transportation, the term DAF should be used with the border indicated. The term DDU performs an important function in cases where the seller is ready to deliver the goods to the country of destination without clearing the goods to import and pay the duty. 


INCOTERMS 2010 summary table