InTents June/July 2022 - 39

For example:
* where delivery takes place
* which party shoulders the risks of
loss and damage, and when
* who is responsible for clearance
by customs
* which party is liable for payment
of duties and taxes
* which party is responsible
for insurance
* when acceptance by the buyer occurs
* when the seller is permitted to
recognize sales revenue
* who is responsible for loading and/
or unloading of the goods
* when the purchaser's lender(s) can
safely provide funding for purchases
First published in 1936 and having
since been translated into 29 languages,
Incoterms have garnered general
acceptance throughout the shipping
industry worldwide, providing a crucial
means of expediting the shipping
process while enabling parties on both
sides to avoid misunderstandings. Note
that some countries still publish their
own independent shipping terms-
even in the U.S., UCC Sections 2-319
through 2-324 still apply-but none
have gained acceptance like the way
that Incoterms have.
So what are Incoterms? Most people
in the equipment industry are familiar
with at least two Incoterms, free on board
(FOB) and ex works (EXW). In fact, 11
exist, breaking down the shipping process
into its critical elements and allowing
the parties to shift costs and risks as
appropriate among them. The chart on
page 38 sets forth the basic terms and
how they can be divided between buyers
and sellers who elect to use them.
Explaining Incoterms
* EXW : The seller is deemed to have
completed delivery when the seller
places the goods at the disposal of
the buyer at the seller's premises or
at another named place. The seller
is not required to load the goods on
any vehicle or vessel, nor is the seller
required to clear the goods for export
where applicable.
* Free carriers (FCA): The seller delivers
the goods to the carrier or to
another party named by the buyer
at the seller's premises or at another
agreed upon delivery point. The parties
should specify as clearly as possible
the actual delivery point within
the named delivery destination, as the
risk passes to the buyer at that point.
* Free alongside ship (FAS): The seller
is deemed to have completed delivery
when the goods are placed alongside
the vessel named by the buyer at the
named port of shipment. The risk of
loss of or damage to the goods passes
from the seller to the buyer when the
goods are alongside the ship; thereafter,
the buyer bears all costs and risks.
* Free on board (FOB): The seller is
deemed to have completed delivery
when the goods are loaded on board
the vessel named by the buyer at the
named port of shipment. The risk of
loss of or damage to the goods passes
from the seller to the buyer when the
goods are on board the vessel, and the
buyer bears all costs and risks from
that point forward.
* Cost and freight (CFR): The seller is
deemed to have completed delivery
when the goods have been loaded on
board the agreed upon vessel. The risk
of loss and damage to the goods passes
from the seller to the buyer when the
goods are on board the vessel, but
the seller must still contract for and
pay the cost of the transportation
necessary to deliver the goods to the
agreed destination.
* Cost, insurance and freight (CIF):
The seller is deemed to have completed
delivery when the goods have been
InTentsMag.com 39
If you're considering
any large cross-border
transactions, engaging
an experienced
customs broker can
be a lifesaver.
http://www.InTentsMag.com

InTents June/July 2022

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