Bolivarian Republic of Venezuela
University Institute of Technology and Administration
Enlargement Altos Mirándonos
Miranda-Los Teques
Foreign Trade
I
NCOTE
RMS
Teacher: Student:
Alberto Espinoza Victor Angel Esparragoza
C.I: 29640319
Los Teques, Nonmember 24, 2020
Introduction
Incoterms (acronym for "international commercial terms") are international
commercial terms that clearly define and distribute the obligations, expenses and
risks of international transport and insurance, both between the exporter and the
exporter. These terms are recognized as international standards by customs
authorities and courts in all countries.
Incoterms
Incoterms are rules developed by the International Chamber of Commerce, which
are used in international sales contracts. Its name comes from international
commercial terms. These terms are used to determine at what point in the
purchase the risk of the goods and the responsibilities of the buyer and seller are
transferred. Although they are used voluntarily, most international transactions are
governed by the rules established in the Incoterms. The CISG convention itself
recognizes the importance of Incoterms.
Incoterms:
1- EXW (Ex Works)
The seller is only responsible for packaging the products, as he makes them
available to the buyer in his own warehouses. Thus, the buyer assumes the costs
and responsibilities arising from any maneuver, from loading to arrival at the final
destination.
2- FCA (Free Carrier)
The seller delivers the goods to an agreed place at his own risk and expense -
including the costs of customs clearance for export - until that time. The buyer is
responsible for the goods from the time of loading until final unloading. As an
update to Incoterms 2020, the buyer can request the carrier to issue a B/L (Bill of
Landing) to the seller under the "on board" specification to justify the delivery of the
goods.
3- FAS (Free Alongside Ship)
Incoterm used in maritime transport for bulk cargo or with a very large volume. The
seller transmits the goods at the agreed quay or port of shipment next to the vessel
on which the goods will travel. At that time, the importer incurs all costs and
damages.
4- FOB (Free On Board)
The Incoterm FOB, used in the maritime transport, establishes that the seller
provides the merchandise in the established ship assuming all responsibility until
that moment. Then, the buyer is responsible for everything until its arrival at the
final destination.
5- CFR (Cost and Freight)
Used in shipping, the seller is responsible for the cost until the goods arrive at their
destination. However, when loaded on the ship the risk stops to be the buyer's
responsibility.
6- CPT (Carriage Paid To)
It is used in any type of transport. The seller assumes the costs until the goods
reach their final destination; while the risk passes to the buyer when the goods are
in the possession of the carrier.
7- CIF (Cost Insurance and Freight)
It complies with the same parameters as the CFR but with the addition that the
seller must take out insurance. And this is where another new feature of Incoterms
2020 comes in, with an update of the coverage that must be contracted and
certified by the insurance contracted by the seller under the Institute's Cargo
Clauses (C).
8- CIP (Carriage and Insurance Paid)
Can be used for any type of transport, the exporter is responsible for the costs of
the main transport and insurance during the entire journey. As with the CIF, the
Incoterms 2020 expand the various minimum insurance coverages for the goods
under the Institute's Cargo Clauses (A).
9- DAT (Delivered At Terminal), from Incoterms 2020 is called
The exporter assumes expenses and risks until the delivery of the goods, with the
exception of the costs derived from the import of the goods that are attributed to
the buyer. Compatible with any transport.
10-DPU (Delivered at place Unloaded)
Another of the updates as it replaces the previous DAT. The seller continues to
assume the costs and risks but with Incoterms 2020 the place of unloading is
extended, since before it was done exclusively in the terminal. It is used for all
types of transport.
11-DDP (Delivery Duty Paid)
Used for all transport, the seller assumes absolutely all costs and risks of the
export operation.
History of Incoterms
The laws of each country or union of countries provide legal coverage within the
territory in which they have been approved, but cannot be applied outside their
domain. This situation makes it difficult to decide which regulations are applicable
in a purchase and sale contract between two countries with different legislations. At
the beginning of the 20th century, the need to solve this problem was established
in order to reduce the risk of legal complications and thus facilitate the exchange in
international trade. Within the framework of the International Chamber of
Commerce (ICC), the world exporters and the rest of the commercial sectors
approved a first regulation that later on has been subject to different revisions: they
are the INCOTERMS, acronyms of the English terms International Commercial
TERMS (terms of international trade). Since its creation in 1936, the INCOTERMS
have undergone several updates with the aim of improving and giving greater
support to traders. Constant modifications have been included to adapt them to the
present commercial practices and to adapt them to the development of the
International Trade. After the revisions published in 1953, 1967, 1976, 1980, 1990
and 2010, the INCOTERMS 2010 are presented as the last modification of the
standard.
The most used Incoterms
CIF: (Cost, Insurance and Freight): The seller is responsible for transport and
insurance until the goods arrive at the port of destination.
CFR: (Cost and Freight): The seller takes care of the transport but not the
insurance, so the buyer would be unprotected against possible risks.
DDP: (Delivery Duty Paid): This incoterm allows the seller to make the goods
available to the buyer in the designated country of destination. The use of the term
DDP implies that the seller must pay any import or export duties and carry out all
customs formalities.
EXW: (Ex Works): Delivery is made to the seller's premises or to another named
place when the goods are placed at the disposal of the buyer.
FOB: (Free on Board): The seller is responsible for the goods until they are loaded
on the ship.
PURPOSE OF INCOTERMS
The purpose of INCOTERMS is to establish a set of uniform international rules for
the interpretation of the most commonly used terms in international trade, in order
to avoid, as far as possible, the uncertainties arising from such terms in different
countries.
In addition they delimit with pressure the following terms of the contract:
- Distribution of costs between exporter and importer.
- Place of delivery of the goods.
- Documents that the exporter must provide to the importer.
- Transfer of risks between exporter and importer in the transport of the goods
INCOTERMS 2020 CHANGES
The changes introduced in this new version are
DAT disappears and is replaced by DPU. It is really a name change DAT > DPU.
Delivered at Terminal disappears and is replaced by Delivered at Place Unloaded,
which is generic and can also contain a terminal but the responsibilities and
obligations are the same as in the DAT incoterm.
Incoterms CIF and CIP have new conditions for insurance.
For the FCA Incoterm, when talking about maritime transport, the buyer can allow
the shipping company or the agent to issue the BL (Bill of Lading) with the on
Board notation.
It should be noted that Incoterms 2020 apply, if 2010 cannot be applied.
CONCLUSION
INCOTERMS are the most important tool when exporting and importing, since they
allow traders from different countries to understand each other and thus facilitate
international trade.
Bibliographic
es.slideshare.net
blogspot.com
economipedia.com
diariodelexportador.com
vicentferrer.com
kanvel.com
wikipedia.org
transeop.com
businesscol.com
