They determine the point of change of responsibility between the buyer and seller. Incoterms inform sales
contracts defining respective obligations, costs, and risks involved in the delivery of goods from the seller to
Some commonly used Inco Terms:
Ex Works (EXW): Seller has to place the goods at the disposal of the buyer. Carriage and Insurance are
arranged by buyer.
Free On Board (FOB): Seller delivers when the goods pass the ship’s rail at the named port of shipment. This
means the buyer has to bear all costs &risks to the goods from that point.
Cost, Insurance, Freight (CIF): The seller delivers when the goods pass the ship’s rail in the port of shipment.
The seller must pay the cost & freight necessary to bring goods to the named port of destination, but the risk
is transferred from seller to buyer.
Other INCO Terms used in the market :
Rules for Any Mode (or modes) of Transport
- CIP - Carriage and Insurance Paid
- CPT - Carriage Paid To
- DAP - Delivered At Place
- DAT - Delivered At Terminal
- DDP - Delivered Duty Paid
- EXW - Ex Works
- FCA - Free Carrier
Rules for Sea and Inland Waterway Transport Only
Note: New Incoterms 2020 has been published recently.
- CFR - Cost and Freight
- CIF - Cost, Insurance and Freight
- FAS - Free Alongside Ship
- FOB - Free On Board