Incoterms Flashcards
- EXW (Ex Works)
Question: Where does the responsibility of the seller end in EXW?
The seller’s responsibility ends when the goods are made available at their premises. The buyer is responsible for all transportation, customs, and insurance costs from this point.
- FCA (Free Carrier)
Question: What is the seller responsible for under FCA?
The seller delivers the goods to a carrier or a location nominated by the buyer. Risk transfers to the buyer once the goods are handed over.
- CPT (Carriage Paid To)
Question: Who bears the risk in CPT, and when does it transfer?
The seller pays for carriage, but risk transfers to the buyer once the goods are handed over to the first carrier.
- CIP (Carriage and Insurance Paid To)
What additional responsibility does the seller have under CIP compared to CPT?
The seller must provide insurance for the buyer’s benefit during transit, in addition to paying for carriage.
5.DAP (Delivered at Place)
Question: What is the seller’s responsibility under DAP?
The seller is responsible for delivering the goods to the specified location. The buyer is responsible for unloading and import duties.
- DPU (Delivered at Place Unloaded)
What is unique about DPU compared to other Incoterms?
The seller is responsible for delivering and unloading the goods at the destination. The buyer handles customs duties.
- DDP (Delivered Duty Paid)
What costs and risks does the seller take on in DDP?
The seller is responsible for delivering the goods to the destination, covering all costs, including import duties and taxes.
- FAS (Free Alongside Ship)
When does the risk transfer from the seller to the buyer in FAS?
The risk transfers when the goods are delivered alongside the vessel at the port of shipment.
FOB (Free on Board)
What is the seller’s obligation under FOB?
The seller must load the goods onto the vessel. Risk passes to the buyer once the goods are on board.
- CFR (Cost and Freight)
What costs does the seller cover under CFR, and when does the risk transfer?
The seller pays for shipping to the port of destination, but the risk transfers to the buyer once the goods are loaded onto the ship.
- CIF (Cost, Insurance, and Freight)
What additional responsibility does the seller have under CIF compared to CFR?
In addition to paying for shipping, the seller provides insurance for the goods. Risk still transfers to the buyer when the goods are loaded onto the ship.
- Risk Transfer in Incoterms
What does “risk transfer” mean in the context of Incoterms?
Risk transfer refers to the point at which the responsibility for loss or damage to the goods shifts from the seller to the buyer.
- Cost Responsibility
How do Incoterms help in determining cost responsibility?
Incoterms specify which party is responsible for transportation, loading, unloading, insurance, and customs duties, clarifying financial responsibilities.
- Documentation Requirement
Why is documentation important in Incoterms, and how does it vary?
Depending on the Incoterm, different documents are required, such as insurance policies under CIF or proof of delivery under FOB. This ensures clarity in each party’s obligations.
- Choosing the Right Incoterm
What factors should be considered when choosing an Incoterm?
Factors include the nature of goods, logistics capabilities, familiarity with customs procedures, and negotiation leverage between the buyer and seller.
