Glossery - Inco Terms

Published: 2023-DEC-13

Published by: Christopher Schoeder

Source: ChatGPT Prompt

INCO Terms, which stands for International Commercial Terms, are a standardized set of rules used in international trade to define the rights and obligations of the buyer and seller regarding the delivery of goods. These terms were established by the International Chamber of Commerce (ICC) and are widely recognized and used in commercial contracts worldwide.

When it comes to freight, there are several INCO Terms that specifically deal with the transportation of goods. These terms outline who is responsible for various costs, risks, and tasks associated with the transportation of the goods from the seller to the buyer. The following are some commonly used freight-related INCO Terms:

  • EXW (Ex Works): The seller makes the goods available at their premises, and the buyer is responsible for all transportation costs, risks, and tasks from that point onwards.

  • FCA (Free Carrier): The seller is responsible for delivering the goods to a carrier or a named place, typically the seller’s location or another agreed-upon place. The buyer assumes responsibility for transportation costs and risks from that point forward.

  • CPT (Carriage Paid To): The seller is responsible for delivering the goods to a carrier or another agreed-upon place. The seller covers the transportation costs up to the named destination, while the buyer assumes risks and any additional costs after delivery to the carrier.

  • CIP (Carriage and Insurance Paid To): Similar to CPT, the seller delivers the goods to a carrier or named place. However, in CIP, the seller also bears the cost of insurance for the goods during transit to the named destination.

  • CFR (Cost and Freight): The seller is responsible for delivering the goods to a carrier or named port of shipment. The seller covers the costs of transportation to the port, while the buyer assumes risks and any additional costs once the goods are on board the vessel.

  • CIF (Cost, Insurance, and Freight): Similar to CFR, the seller delivers the goods to a carrier or named port of shipments and covers the costs of transportation to the port. Additionally, the seller provides insurance coverage for the goods during transit to the named destination.

These are just a few examples of freight-related INCO Terms. Each term defines specific obligations and responsibilities for the buyer and seller, relating to the delivery and transportation of goods in international trade. It’s important for parties involved in international transactions to clearly specify the chosen INCO Term in their contracts to avoid misunderstandings and disputes.