What are the International Commercial Terms (INCOTERMS)?

International Commercial Terms (INCOTERMS)

When one negotiates a business deal it is most essential to know exactly the duties and obligation of each dealer. The following are the International Commercial Terms explaining the duties and responsibility of each party.

Sale ex Godown (Ex Works) – The importer is entitled to collect the goods from the outside godown or works of the exporter. The importer shoulders all the risks involved immediately the goods leave the exporter’s godown.

Sale free on Rail (FOR)) The exporter is to arrange for transport to the nearest railway station. From thereon the risks pass on to the importer.

Sale free on Wharf (FOW) The exporter takes care to transport the goods until the nearest wharf. From thereon the risks pass on to the importer.

Sale free long side ship (FAS) This includes transporting the goods to the wharf, reloading them into lighters and conveying them to the side of the ocean going vessel

Sale free on broad (FOB) The exporter incurs all the risks involved in the transportation of goods until they are loaded into the ship. The importer takes over from that point.

Sale cost and freight (CF) The exporter incurs all costs involved in transportation of the goods until the port of destination. The exporter doesn’t pay for the insurance.

Sale cost, insurance and freight (CIF) The exporter is responsible for all the costs until the port of destination. In addition the exporter pays for the insurance.

Sales cost insurance freight and free out (CIFFO) The exporter is responsible for all charges until the goods have been discharged at the port of destination

Franco Domicile (FD) The exporter pays for all costs until the goods arrive at the buyer’s place of business

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