Exercise 14 a) Read the text about Incoterms

Incoterms were created by the International Chamber of Commerce in 1936. They are used to create a bridge between different members of the industry by acting as a uniform language. According to the Incoterms 2010 taken effect on January 1^st 2011, there are 11 different terms, each of which helps users deal with different situations involving the movement of goods. These Incoterms are:

Sea and Inland Waterway Transport only

1. CFR (Cost & Freight + named destination port) – вартість та фрахт (the seller pays the costs and freight to bring the goods to the port of destination, risk is transferred to the buyer once the goods have crossed the ship’s rail, insurance for the goods is not included, it is at the cost of the buyer)

2. CIF (Cost, Insurance and Freight + named destination port) – вартість, страхування та фрахт (exactly the same as CFR except that the seller must in addition procure and pay for insurance for the buyer)

3. FAS (Free Alongside Ship + named loading port) – франко вздовж борта судна (the seller must place the goods alongside the ship at the named port, clear the goods for export; it is NOT used for multimodal sea transport in containers, typically used for heavy-lift or bulk cargo)

4. FOB (Free on Board + named loading port) – франко борт судна (the seller must themselves load the goods on board the ship nominated by the buyer, cost and risk being divided at the ship’s rail, the seller must clear the goods for export, the buyer must instruct the seller the details of the vessel and port where the goods are the be loaded, not for multimodal sea transport in containers)

Any Mode of Transport

5. CIP (Carriage and Insurance Paid to + named place of destination) – перевезення та страховка сплачені до (the containerised transport/multimodal equivalent to CIF, the seller pays for carriage and insurance to the named destination point, but risk passes when the goods are handed over to the first carrier)

6. CPT (Carriage Paid to + named place of destination) – перевезення сплачено до (the general/containerised/multimodal equivalent of CFR, the seller pays for carriage to the named point of destination, but risk passes when the goods are handed over to the first carrier)

7. DAP (Delivered at Place + named place) – поставка у місці призначення (under it, delivery is when the seller puts the goods at the disposal of the buyer at a named place, on a vehicle ready for unloading, but not unloaded)

8. DAT (Delivered at Terminal + named place) – поставка на терміналі (delivery under it takes place when the seller puts the goods at the disposal of the buyer unloaded at the named terminal)

9. DDP (Delivered, Duty Paid + named destination place) – сплачена доставка та мито (the seller pays for all transportation costs and bears all risk until the goods have been delivered and pays the duty)

10. EXW (ex works + named place) – франко завод (the seller makes the goods available at his premises, the buyer is responsible for all charges, it places the greatest responsibility on the buyer and minimum obligation on the seller)

11. FCA (Free Carrier + named place) – франко перевізник (the seller hands over the goods, cleared for export, into the custody of the first carrier, named by the buyer, at the name place, it is suitable for all modes of transport, including carriage by air, rail, road, and containerised/multimodal sea transport)

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