INCOTERMS:
The Incoterms(International commercial terms) were evolved by the International chamber of Commerce to provide set of international rules for the interpretation of the chief terms used in foreign trade contract.

CONTRACT TERMS FOR CARRIAGE BY SEA TRANSPORT:
1.FAS – Free Alongside Ship
The price quoted under this contract includes charges up to placing the goods alongside the ship in the seller’s country. The buyer has to bear all costs and risks of loss of or damage to the goods from that moment.

2. FOB – Free On Board
The price quoted under this contract charges up to preparation of goods for export and placing them on board of the named vessel in the seller’s country, any loss of or damage to the goods after this stage should be borne entirely by the buyer.

3. CFR – Cost and Freight
Though under CFR contract the seller pays charges up to the destination the risk of loss of or damge to the goods passes to the buyer moment the goods are palced on board the ship in the seller’s country.

4. CIF – Cost, Insurance and Freight
This contract includes cost of goods, freight charges and insurance all expenses incurred up to the port of destination are borne by the seller. Similarly the risk in the goods passes on to the buyer the moment they placed on board a vessel in the seller’s country.

5.DES – Delivered Ex Ship
Thus the price quoted may be same as the price under CIF contract. The risk is transferred to the buyer from the time he takes delivery of the goods.

6. DEQ – Delivered Ex Quay
This is in effect an extension of the Ex Ship contract. In addition he ahs to provide the import license and bea the cost of any import duty. The buyer’s duty to take delivery of the goods from the quay or wharf at the port of destination.









CONTRACT TERMS FOR CARRIAGE BY ANY MODE OF TRANSPORT:

1.EXW – Ex Works
The price under this contract represents the minimum since the goods are delivered at the seller’s premises. The price excludes all other expenses.

2. FCA – Free Carrier
This terms corresponds to FOB under sea transport. The seller fulfil his obligation to deliver when he has handed over the goods, cleared for export into the charge of the carrier named by the buyer.

3. CPT – Carriage Paid To
This contract term can be compared to the CFR term used for carriage by sea transport. The price quoted includes cost of goods and freight charges. The seller has to prepare goods, pack them, pay for checking operations and take them for transportation to the carrier. The buyer on receipt of intimation from the seller, may arrange for insuring the goods.

4. CIP – Carriage and Insurace Paid To
This term corresponds to CIF contract under sea transport. Therefore the price quoted includes cost of the goods, freight charges and insurance premium.

5. DAF – Delivered At Frontier
Under this contract the seller’s obligations are fulfilled when the goods have arrived at the frontier, but before the customs border of the adjoining country. for example Delivered a Franco-Italian Frontier. The buyer should arrange for taking delivery of the goods at the frontier.

6. DDp – Delivery Duty Paid
While the term “Ex Works” signifies the seller’s minimum obligation the term “delivered Duty Paid”, when followed by words naming the buyer’s premises, enotes the other extreme the seller’s maximum obligation. the seller has to do all that is necessary to place the goods at the premises of the buyer.

7. DDU – Delivery Duty Unpaid
This term is similar to DDP except that the seller’s obligation excludes payment of duties, taxes and other official charges payable upon importation.









METHODS OF SETTLING DEBTS IN INTERNATIONA TRADE(Payment Terms)

1.Advance Remittance
The exporter would dispatch the goods after he receives the full payment from the importer. this is the most beneficial term of payment that the exporter can expect, but is at the cost of the importer.

2. Open Account:
It is the reverse of that for advance remittance. Under this method goods are dispatched directly to the buyer who takes delivery of them without making payment. The open account business is most advantageous to the importer, the exporter bears the entire risk.

3, Consignment Sale:
The exporter may have his selling agents abroad to whom the goods are dispatched. They receive the goods without making any payment. The goods are sold by the selling agents on behalf of the exporter.

4. Bill for Collection:
The goods are dispatched to the importer’s country but the relative documents are sent through a bank for collection. the bank hands over the documents to the importer only on receiving from the later value of the goods as advised by the exporter

5.Letter of Credit:
Letter of Credit is an undertaking by the importer’s bank that if the exporter exports the goods and produces documents as stipulated in the letter, the bank would make payment to the exporter.
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Thanks and Regards,
Sparky