2. Rules for any mode or modes of transport.

Question 1

EXW? (6)

Answer 1

EXW (insert named place of delivery) Incoterms® 2010 - Ex Works.

● May be used irrespective of the mode of transport.

● May also be used where more than one mode of transport is employed.

● Suitable for domestic trade, while alternatively FCA suitable for international trade.

● Seller delivers when it places the goods (!)at disposal of the buyer (!)at the seller’s premise or another named place.

● No obligation of loading of the goods (transport).

● No obligation of clearance of the goods for export.

Question 2

FCA? (4)

Answer 2

FCA (insert named place of delivery) Incoterms® 2010 - Free Carrier.

● May be used irrespective of the mode of transport.

● May also be used where more than one mode of transport is employed.

● Goods can be delivered at seller’s premises (!)or another place - identify specific place of delivery.

● Seller obliged to clear the goods for export (!)but NOT obliged to clear the goods for import.

Question 3

CPT? (3)

Answer 3

CPT (insert named place of destination) Incoterms® 2010. Carriage paid to.

● Seller delivers the goods:

○ to the carrier or another person nominated by the seller at an agreed place.
○ Seller must contract for and pay the costs of carriage necessary to bring the goods to the named place of destination.

● May be used irrespective of the mode of transport.

● May also be used where more than one mode of transport is employed.

Question 4

CIP? (5)

Answer 4

CIP (insert named place of destination) Incoterms® 2010. Carriage and Insurance paid to.

● The seller delivers the goods to the carrier or another person nominated by the seller at an agreed place.

○ Seller must contract for and pay the costs of carriage necessary to bring the goods to the named place of destination.

○ Seller also contracts for insurance cover against the buyer’s risk of loss of or damage to the goods during the carriage.

○ The buyer should note that under CIP the seller is required to obtain insurance only on minimum cover.

○ Should the buyer wish to have more insurance protection, it will need either to agree as much expressly with the seller or to make its own extra insurance arrangements.

Question 5

DAT? (3+5)

Answer 5

DAT (insert named terminal at port or place of destination) Incoterms® 2010. Delivered At Terminal.

● “Delivered at Terminal” means that the seller delivers when:
○ the goods, once unloaded from the arriving means of transport,
○ are placed at the disposal of the buyer at a named terminal at the named port or place of destination.

● “Terminal” includes any place: 
○ whether covered or not, 
○ such as a quay, 
○ warehouse, 
○ container yard or road, 
○ rail or air cargo terminal. 

● The seller:
○ bears all risks involved in bringing the goods to and,
○ unloading them at the terminal at the named port or place of destination.

Question 6

DAP (2)

Answer 6

DAP (insert named place of destination) Incoterms® 2010. Delivered at Place.

● “Delivered at Place” means that the seller delivers when:

○ the goods are placed at the disposal of the buyer on the arriving means of transport
○ ready for unloading at the named place of destination.

● The seller bears:
○ all risks involved in bringing the goods to the named place.

Question 7

DDP? (2+6)

Answer 7

DDP (insert named place of destination) Incoterms® 2010. Delivered Duty Paid.

● “Delivered Duty Paid” means that the seller delivers the goods when:

○ the goods are placed at the disposal of the buyer,
○ cleared for import on the arriving means of transport ○ ready for unloading at the named place of destination.

● The seller:
○ bears all the costs and risks involved in bringing the goods to the place of destination,
○ has an obligation to clear the goods not only for export but also for import,
○ to pay any duty for both export and import and to carry out all customs formalities.

Question 8

FAS?

Answer 8

FAS (insert named port of shipment) Incoterms® 2010. FREE ALONGSIDE SHIP.

● “Free Alongside Ship” means that the seller delivers when:

○ the goods are placed alongside the vessel (e.g., on a quay or a barge)
○ nominated by the buyer at the named port of shipment.
○ The risk of loss of or damage to the goods passes when the goods are alongside the ship, and the buyer
bears all costs from that moment onward.

● The seller is required:
○ Either to deliver the goods alongside the ship
○ or to procure goods already so delivered for shipment.

• The reference to “procure” here caters for multiple sales down a chain (‘string sales’),
  particularly common in the commodity trades.

● FAS requires the seller:

○ to clear the goods for export, where applicable.
○ However, the seller has no obligation to clear the goods for import, pay any import duty or carry out any import customs formalities.

• Where the goods are in containers, it is typical for the seller to hand the goods over to the carrier at a terminal and not alongside the vessel. In such situations, the FAS rule would be inappropriate, and the FCA rule should be used.

Question 9

FOB?

Answer 9

FOB (insert named port of shipment) Incoterms® 2010.
Free on board.

● “Free on Board” means that the seller:

○ delivers the goods on board the vessel nominated by the buyer at the named port of shipment
○ or procures the goods already so delivered.
○ The risk of loss of or damage to the goods passes when the goods are on board the vessel, and
○ the buyer bears all costs from that moment onwards.

● The seller is required:

○ either to deliver the goods on board the vessel
○ or to procure goods already so delivered for shipment.

• The reference to “procure” here caters for multiple sales down a chain (‘string sales’), particularly common in the commodity trades.

● FOB requires the seller:

○ to clear the goods for export, where applicable.
○ However, the seller has no obligation to clear the goods for import, pay any import duty or carry out any import customs formalities.

• FOB may not be appropriate where goods are handed over to the carrier before they are on board the vessel, for example goods in containers, which are typically delivered at a terminal. In such situations, the FCA rule should be used.

Question 10

CFR?

Answer 10

CFR (insert named port of destination) Incoterms® 2010.
Cost and Freight.

● “Cost and Freight” means that the seller:

○ delivers the goods on board the vessel
○ or procures the goods already so delivered.
○ The risk of loss of or damage to the goods passes when the goods are on board the vessel.
○ The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination.

● When CPT, CIP, CFR or CIF are used:

○ the seller fulfils its obligation to deliver when it hands the goods over to the carrier in the manner specified in the chosen rule
○ not when the goods reach the place of destination.

• This rule has two critical points, because risk passes and costs are transferred at different places. While the contract will always specify a destination port, it might not specify the port of shipment, which is where risk passes to the buyer. If the shipment port is of particular interest to the buyer, the parties are well advised to identify it as precisely as possible in the contract.

● The seller is required:
○ either to deliver the goods on board the vessel
○ or to procure goods already so delivered for shipment to the destination.
○ In addition, the seller is required either to make a contract of carriage or to procure such a contract.

• The reference to “procure” here caters for multiple sales down a chain (‘string sales’), particularly common in the commodity trades.

● CFR requires the seller:

○ to clear the goods for export, where applicable. ○
○ However, the seller has no obligation to clear the goods for import, payany import duty or carry out any import customs formalities.

• CFR may not be appropriate where goods are handed over to the carrier before they are on board the vessel, for example goods in containers, which are typically delivered at a terminal. In such circumstances, the CPT rule should be used.

Question 11

CIF?

Answer 11

CIF (insert named port of destination) Incoterms® 2010.
Cost Insurance and Freight.

● “Cost, Insurance and Freight” means that:

○ the seller delivers the goods on board the vessel
○ or procures the goods already so delivered.
○ The risk of loss of or damage to the goods passes when the goods are on board the vessel.
○ The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination.

● The seller also:

○ contracts for insurance cover against the buyer’s risk of loss of or damage to the goods during the carriage. ○ The buyer should note that under CIF the seller is required to obtain insurance only on minimum cover.
○ Should the buyer wish to have more insurance protection, it will need either to agree as much expressly with the seller or to make its own extra insurance arrangements.

● When CPT, CIP, CFR, or CIF are used the seller:

○ fulfills its obligation to deliver when it hands the goods over to the carrier in the manner specified in the chosen rule and not when the goods reach the place of
destination.

● This rule has two critical points:

○ because risk passes and costs are transferred at different places. While the contract will always specify a destination port, it might not specify the port of shipment, which is where risk passes to the buyer. If the shipment port is of particular interest to the buyer, the parties are well advised to identify it as precisely as possible in the contract.

● The seller is required:

○ either to deliver the goods on board the vessel
○ or to procure goods already so delivered for shipment to the destination.
○ In addition the seller is required either to make a contract of carriage or to procure such a contract.

• The reference to “procure” here caters for multiple sales down a chain (‘string sales’), particularly common in the commodity trades.