Guide to Documentary Credits – Topic 5, Important updates to figures (1 November 2019)

Please note the updates to the figures below that follow the publication of Incoterms 2020. All updates are in bold.

All content in the tables below has been taken from ICC publication n° 723E, INCOTERMS® 2020. ISBN 978-92-842-0510-3, © 2019 International Chamber of
Commerce (ICC). Available on ICC Knowledge 2 Go: 2go.iccwbo.org [Accessed: 24 October 2019].

5.3.3.1 Group 1: Incoterms® for use with any mode or modes of transport

Figure 5.4 EXW Incoterm®

EX WORKS

EXW [insert named place of delivery] Incoterms® 2020

Seller Buyer
Delivery when the seller places the goods at the disposal of the buyer at a named place (such as a factory or
occurs… warehouse), which may or may not be the seller’s premises.

The seller does not need to load the goods on any collecting vehicle, nor does it need to clear the
goods for export, where such clearance is applicable.

Contract of The seller has no obligation to the buyer to make a contract of carriage. However, the seller must It is up to the buyer to contract or arrange at
carriage and provide the buyer, at the buyer’s request, risk and cost, with any information in the possession of its own cost for the carriage of the goods
the seller, including transport-related security requirements, that the buyer needs for arranging from the named place of delivery.
insurance carriage.

The seller has no obligation to the buyer to make a contract of insurance. However, the seller must The buyer has no obligation to the seller to
provide the buyer, at the buyer’s request, risk and cost, with information in the possession of the make a contract of insurance.
seller that the buyer needs for obtaining insurance.

The London Institute of Banking & Finance is a registered charity, incorporated by Royal Charter.
Figure 5.5 FCA Incoterm®

FREE CARRIER

FCA [insert named place of delivery] Incoterms® 2020

Seller Buyer
Delivery when the seller delivers the goods to the buyer in one or other of two ways.
occurs…

First, when the named place is the seller’s premises, the goods are delivered when they are
loaded on the means of transport arranged by the buyer.

Second, when the named place is not the seller's premises, the goods are delivered when, having
been loaded on the seller’s means of transport, they reach the named other place and are ready
for unloading from that seller’s means of transport and at the disposal of the carrier or of another
person nominated by the buyer.

Whichever of the two is chosen as the place of delivery, that place identifies where risk transfers
to the buyer and the time from which costs are for the buyer’s account.

Contract of The seller has no obligation to the buyer to make a contract of carriage. However, the seller must The buyer must contract or arrange at its
carriage and provide the buyer, at the buyer’s request, risk and cost, with any information in the possession of own cost for the carriage of the goods from
the seller, including transport-related security requirements, that the buyer needs for arranging the named place of delivery, except when the
insurance carriage. If agreed, the seller must contract for carriage on the usual terms at the buyer’s risk and contract of carriage is made by the seller.
cost.

The seller must comply with any transport-related security requirements up to delivery.

The seller has no obligation to the buyer to make a contract of insurance. However, the seller must The buyer has no obligation to the seller to
provide the buyer, at the buyer’s request, risk and cost, with information in the possession of the make a contract of insurance.
seller that the buyer needs to obtain insurance.

The London Institute of Banking & Finance is a registered charity, incorporated by Royal Charter.
Figure 5.6 CPT Incoterm®

CARRIAGE PAID TO

CPT [insert named place of destination] Incoterms® 2020

Seller Buyer
Delivery when the seller delivers the goods - and transfers the risk - to the buyer by handing them over to
occurs… the carrier contracted by the seller or by procuring the goods so delivered.

The seller may do so by giving the carrier physical possession of the goods in the manner and at
the place appropriate to the means of transport used.

Once the goods have been delivered to the buyer in this way, the seller does not guarantee that
the goods will reach the place of destination in sound condition, in the stated quantity or indeed
at all.

Contract of The seller must contract or procure a contract for the carriage of the goods from the The buyer has no obligation to the seller to
carriage and agreed point of delivery, if any, at the place of delivery to the named place of destination make a contract of carriage or of insurance.
insurance or, if agreed, any point at that place. The contract of carriage must be made on usual terms
at the seller’s cost and provide for carriage by the usual route in a customary manner of
the type normally used for carriage of the type of goods sold. If a specific point is not
agreed or is not determined by practice, the seller may select the point of delivery and the
point at the named place of destination that best suit its purpose.

The seller must comply with any transport-related security requirements for transport to the
destination.

The London Institute of Banking & Finance is a registered charity, incorporated by Royal Charter.
 The seller has no obligation to the buyer to make a contract of insurance. However, the seller must
provide the buyer, at the buyer’s request, risk and cost, with information in the possession of the
seller that the buyer needs for obtaining insurance.

Figure 5.7 CIP Incoterm®

CARRIAGE AND INSURANCE PAID TO

CIP [insert named place of destination] Incoterms® 2020

Seller Buyer
Delivery when the seller delivers the goods - and transfers the risk - to the buyer by handing them over to
occurs… the carrier contracted by the seller or by procuring the goods so delivered.

The seller may do so by giving the carrier physical possession of the goods in the manner and at the
place appropriate to the means of transport used.

Once the goods have been delivered to the buyer in this way, the seller does not guarantee that the
goods will reach the place of destination in sound condition, in the stated quantity or indeed at all.

Contract of The seller must contract or procure a contract for the carriage of the goods from the agreed The buyer has no obligation to the seller to
carriage and point of delivery, if any, at the place of delivery to the named place of destination or, if make a contract of carriage.
insurance agreed, any point at that place. The contract of carriage must be made on usual terms at the
seller’s cost and provide for carriage by the usual route in a customary manner of the type
normally used for carriage of the type of goods sold. If a specific point is not agreed or is
not determined by practice, the seller may select the point of delivery and the point at the
named place of destination that best suit its purpose.

The seller must comply with any transport-related security requirements for transport to the
destination.

The London Institute of Banking & Finance is a registered charity, incorporated by Royal Charter.
 Unless otherwise agreed or customary in the particular trade, the seller must obtain at its own cost The buyer has no obligation to the seller to
cargo insurance complying with the cover provided by Clauses (A) of the Institute Cargo Clauses make a contract of insurance. However, the
(LMA/IUA) or any similar clauses as appropriate to the means of transport used. The insurance shall buyer must provide the seller, upon request,
be contracted with underwriters or an insurance company of good repute and entitle the buyer, or with any information necessary for the seller
any other person having an insurable interest in the goods, to claim directly from the insurer. to procure any additional insurance requested
by the buyer as mentioned opposite.

When required by the buyer, the seller must, subject to the buyer providing any necessary
information requested by the seller, provide at the buyer’s cost any additional cover, if procurable,
such as cover complying with the Institute War Clauses and/or Institute Strikes Clauses (LMA/IUA)
or any similar clauses (unless such cover is already included with the cargo insurance described in
the preceding paragraph).

The insurance shall cover, at a minimum, the price provided in the contract plus 10% (ie 110%) and
shall be in the currency of the contract.

The insurance shall cover the goods from the point of delivery to at least the named place of
destination.

The seller must provide the buyer with the insurance policy or certificate or any other evidence of
insurance cover.

Moreover, the seller must provide the buyer, at the buyer’s request, risk and cost, with information
that the buyer needs to procure any additional insurance.

The London Institute of Banking & Finance is a registered charity, incorporated by Royal Charter.
Figure 5.8 DAP Incoterm® (previously figure 5.9)

DELIVERED AT PLACE

DAP [insert named place of destination] Incoterms® 2020

Seller Buyer
Delivery when the seller delivers the goods - and transfers risk - to the buyer; when the goods are placed
occurs… at the disposal of the buyer on the arriving means of transport ready for unloading at the named
place of destination; or at the agreed point within that place, if any such point is agreed.

Contract of The seller must contract or arrange at its own cost for the carriage of the goods to the named place The buyer has no obligation to the seller to
carriage and of destination or to the agreed point, if any, at the named place of destination. If a specific point is make a contract of carriage or of insurance.
not agreed or is not determined by practice, the seller may select the point at the named place of
insurance destination that best suits its purpose.

The seller must comply with any transport-related security requirements for transport to the
destination.

The seller has no obligation to the buyer to make a contract of insurance.

The London Institute of Banking & Finance is a registered charity, incorporated by Royal Charter.
Figure 5.9 DPU Incoterm® (previously DAT (Delivered at Terminal) figure 5.8)

DELIVERED AT PLACE UNLOADED

DPU [insert named place of destination] Incoterms® 2020

Seller Buyer
when the seller delivers the goods - and transfers risk - to the buyer; when the goods, once
unloaded from the arriving means of transport, are placed at the disposal of the buyer, at a
Delivery named place of destination or at the agreed point within that place, if any such point is
occurs… agreed.

The seller bears all risks involved in bringing the goods to and unloading them at the named
place of destination. In this Incoterms® rule, therefore, the delivery and arrival at destination
are the same. DPU is the only Incoterms® rule that requires the seller to unload goods at
destination. The seller should therefore ensure that it is in a position to organise unloading at
the named place. Should the parties intend the seller not to bear the risk and cost of
unloading, the DPU rule should be avoided and DAP should be used instead.

The seller must contract or arrange at its own cost for the carriage of the goods to the named The buyer has no obligation to the seller to make
place of destination or to the agreed point, if any, at the named place of destination. If a a contract of carriage.
Contract of specific point is not agreed or is not determined by practice, the seller may select the point at
carriage and the named place of destination that best suits its purpose.
insurance

The seller must comply with any transport-related security requirements for transport to the
destination.

The seller has no obligation to the buyer to make a contract of insurance. The buyer has no obligation to the seller to make
a contract of insurance. However, the buyer
must provide the seller, at the seller’s request,
risk and cost, with information that the seller
needs for obtaining insurance.

The London Institute of Banking & Finance is a registered charity, incorporated by Royal Charter.
Figure 5.10 DDP Incoterm®

DELIVERED DUTY PAID

DDP [insert named place of destination] Incoterms® 2020

Seller Buyer
Delivery when the goods are placed at the disposal of the buyer, cleared for import, on the arriving means of
occurs… transport, ready for unloading, at the named place of destination or at the agreed point within that
place, if any such point is agreed.

The seller bears all risks involved in bringing the goods to the named place of destination or to the
agreed point within that place. In this Incoterms® rule, therefore, delivery and arrival at
destination are the same.

Contract of The seller must contract or arrange at its own cost for the carriage of the goods to the named place The buyer has no obligation to the seller to
carriage and of destination or to the agreed point, if any, at the named place of destination. If a specific point is make a contract of carriage.
not agreed or is not determined by practice, the seller may select the point at the named place of
insurance destination that best suits its purpose.

The seller must comply with any transport-related security requirements for transport to the
destination.

The seller has no obligation to the buyer to make a contract of insurance. The buyer has no obligation to the seller to
make a contract of insurance. However, the
buyer must provide the seller, at the seller’s
request, risk and cost, with information that
the seller needs for obtaining insurance.

The London Institute of Banking & Finance is a registered charity, incorporated by Royal Charter.
5.3.3.2 Group 2: Incoterms® for use with sea and inland waterway transport only

Figure 5.11 FAS Incoterm®

Free Alongside Ship

FAS [insert named port of shipment] Incoterms® 2020

Seller Buyer
when the seller delivers the goods to the buyer by placing the goods alongside the ship (eg on
Delivery a quay or a barge) nominated by the buyer at the named port of shipment or when the seller
occurs… procures goods already so delivered.

The risk of loss of or damage to the goods transfers when the goods are alongside the ship,
and the buyer bears all costs from that moment onwards.

The seller has no obligation to the buyer to make a contract of carriage. However, the seller The buyer must contract at its own cost for the
must provide the buyer, at the buyer’s request, risk and cost, with any information in the carriage of the goods from the named port of
Contract of possession of the seller, including transport-related security requirements, that the buyer shipment, except when the contract of carriage is
carriage and needs for arranging carriage. If agreed, the seller must contract for carriage on the usual made by the seller.
insurance terms at the buyer's risk and cost.

The seller must comply with any transport-related security requirements up to delivery.

The seller has no obligation to the buyer to make a contract of insurance. However, the seller The buyer has no obligation to the seller to make
must provide the buyer, at the buyer’s request, risk and cost with information in possession a contract of insurance.
of the seller that the buyer needs for obtaining insurance.

The London Institute of Banking & Finance is a registered charity, incorporated by Royal Charter.
Figure 5.12 FOB Incoterm®

FREE ON BOARD

FOB [named port of shipment] Incoterms® 2020

Seller Buyer
Delivery when the seller delivers the goods to the buyer on board the vessel nominated by the
occurs… buyer at the named port of shipment or procures the goods already so delivered.

Contract The seller has no obligation to the buyer to make a contract of carriage. However, the The buyer must contract at its own cost for the carriage of the
of seller must provide the buyer, at the buyer’s request, risk and cost, with any goods from the named port of shipment, except when the
information in the possession of the seller, including transport-related security contract of carriage is made by the seller.
carriage requirements, that the buyer needs for arranging carriage. If agreed, the seller must
and contract for carriage on the usual terms at the buyer's risk and cost.
insurance

The seller must comply with any transport-related security requirements up to

delivery.

The seller has no obligation to the buyer to make a contract of insurance. However, the The buyer has no obligation to the seller to make a contract of
seller must provide the buyer, at the buyer’s request, risk and cost, with information insurance.
in the possession of the seller that the buyer needs for obtaining insurance.

The London Institute of Banking & Finance is a registered charity, incorporated by Royal Charter.
Figure 5.13 CFR Incoterm®

COST AND FREIGHT

CFR [insert named port of destination] Incoterms® 2020

Seller Buyer
Delivery when the seller delivers the goods to the buyer on board the vessel or procures
occurs… the goods already so delivered.

The seller must contract or procure a contract for the carriage of the goods from The buyer has no obligation to the seller to make a contract of
the agreed point of delivery, if any, at the place of delivery to the named port of carriage.
destination or, if agreed, any point at that port. The contract of carriage must be
Contract of made on usual terms at the seller’s cost and provide for carriage by the usual route
carriage and in a vessel of the type normally used for the transport of the type of goods sold.
insurance

The seller must comply with any transport-related security requirements for
transport to the destination.

The seller has no obligation to the buyer to make a contract of insurance. The buyer has no obligation to the seller to make a contract of
However, the seller must provide the buyer, at the buyer’s request, risk and cost, insurance.
with information in the possession of the seller that the buyer needs for
obtaining insurance.

The London Institute of Banking & Finance is a registered charity, incorporated by Royal Charter.
Figure 5.14 CIF Incoterm®

COST, INSURANCE AND FREIGHT

CIF [named port of destination] Incoterms® 2020

Seller Buyer
when the seller delivers the goods to the buyer on board the vessel or
Delivery occurs… procures the goods already so delivered.

The seller must contract or procure a contract for the carriage of the goods The buyer has no obligation to the seller to make a contract of
from the agreed point of delivery, if any, at the place of delivery to the carriage.
named port of destination or, if agreed, any point at that port. The contract
Contract of of carriage must be made on usual terms at the seller’s cost and provide for
carriage and carriage by the usual route in a vessel of the type normally used for the
insurance transport of the type of goods sold.

The seller must comply with any transport-related security for transport to
the destination.

Unless otherwise agreed or customary in the particular trade, the seller The buyer has no obligation to the seller to make a contract of
must obtain at its own cost cargo insurance complying with the cover insurance. However, the buyer must provide the seller, upon
provided by Clauses (C) of the Institute Cargo Clauses (LMA/IUA) or any request, with any information necessary for the seller to
similar clauses. The insurance shall be contracted with underwriters or an procure any additional insurance requested by the buyer as
insurance company of good repute and entitle the buyer, or any other person mentioned opposite.
having an insurable interest in the goods, to claim directly from the insurer.

When required by the buyer, the seller must, subject to the buyer providing
any necessary information requested by the seller, provide at the buyer’s
cost any additional cover, if procurable, such as cover complying with the
Institute War Clauses and/or Institute Strikes Clauses (LMA/IUA) or any
similar clauses (unless such cover is already included with the cargo
insurance described in the preceding paragraph).
The London Institute of Banking & Finance is a registered charity, incorporated by Royal Charter.
 The insurance shall cover, at a minimum, the price provided in the contract
plus 10% (ie 110%) and shall be in the currency of the contract.

The insurance shall cover the goods from the point of delivery to at least
the named place of destination.

The seller must provide the buyer with the insurance policy or certificate or
any other evidence of insurance cover.

Moreover, the seller must provide the buyer, at the buyer’s request, risk
and cost, with information that the buyer needs to procure any additional
insurance.

The London Institute of Banking & Finance is a registered charity, incorporated by Royal Charter.