INternational COmmercial TERMS (INCOTERMS)

1、INternational COmmercial TERMS (INCOTERMS)INternational COmmercial TERMS (INCOTERMS)Presented by:John Taylor INCOTERMSTopics to be discussedWhat are INCOTERMS?How do companies use INCOTERMS? How are they referenced in contract negotiation or formation?What if INCOTERMS conflict with statutes or regu

2、lations?Key changes in 2000 revisionElements of the various terms, such as Ex Works and CIF Topics outside the scope of this seminarExplanation of responsibilities under the United States Principal Party in Interest rules (USPPI Rules)Potential tax implications of INCOTERMS selectionsExport and impo

3、rt declaration responsibilitiesRelated party transactions regarding tax and reporting obligationsTransfer pricing issues related to income tax issuesCarrier selection issues Key PointsINCOTERMS are not statutory or regulatoryRegulatory reporting requirements, such as the American SED, may require a

4、different “price” calculation than called for in the contract or INCOTERMINCOTERMS provide for some, but not all, elements of a well negotiated agreementUnderstand the elements of each term, and do not select an INCOTERM that is inconsistent with your commercial intent What are INCOTERMS?Published b

5、y International Chamber of Commerce since 1936 Abbreviation of International Commercial Terms (INCOTERMS)Define key elements of international contracts of sale (not the contract of carriage)Reflect the parties agreement to divide costs and risks between partiesProvide the Buyer and Seller instructio

6、ns regarding:Carriage of goods, andExport and import clearance except regulatory obligations under the United States Principal Party in Interest rules of Census and the Bureau of Export Administration (BIS)How do you reference INCOTERMS in a contract of sale?Parties are strongly advised to indicate

7、“INCOTERMS 2000” on their documentationCheck form contracts for references to earlier version of INCOTERMS and supercede those references with the phrase “INCOTERMS 2000”1980 U.N. Convention on Contracts for the International Sale of Goods (CISG) does not deal with interpretation of trade terms unde

8、r the belief this is best left to the ICC and its INCOTERMSWhat changes to the 1990 INCOTERMS were made by the 2000 revisions?Under the FAS term, the export clearance obligation is placed on the Seller (previously on the Buyer)Under the FCA term, the Seller is obligated to load the goods on a carrie

9、r nominated by the Buyer, or if no carrier is nominated by the Buyer, the Seller may nominate a carrier. The Seller is not responsible for unloading if delivery occurs at a place other than the Sellers premises. Under the DEQ term, the import clearance obligation is placed on the Buyer (previously o

10、n the Seller) INCOTERMS do not:Interpret documentary creditsInterpret contracts of carriage or storageOvercome explicit force majeure provisions of a contractRelieve parties of statutory or regulatory obligationsWhat if INCOTERMS are contrary to other provisions of a contract or contrary to applicab

11、le law?Other terms of the contract prevailat least other more explicit terms (the best practice is to avoid conflicting provisions)Provisions of law prevailExample, the export invoice indicates an FOB value U.S. port, and the importing countrys valuation regulations are based upon a CIF valueExample

12、, USPPI rules regarding export clearance prevail over INCOTERMSRegulations may require adjustments to stated value Standardized Trade TermsUniform Commercial CodeINCOTERMS Ordering the INCOTERMS bookICC Publishing, Inc ., 156 Fifth Ave., NY, NY 10010 ($31.95 not including taxes). Why Do Co

13、mpanies Use Trade Terms?Provide quotations & prepare Pro Forma invoicesIdentify price at a specific geographic locationIdentify basic responsibilities & liabilities of all parties to the transactionImprove the common understanding by the parties to international Distribution and Sales Contra

14、ctsUnderstanding the Convention for the International Sale of Goods (CISG)The United Nations created legal standards for international trade The United States became a signatory to the CISG in 1988The CISG supercedes U.S. lawParties can “opt-out” of the CISGLading*Loaded (laden or laded) on board: P

15、laced on carrierNot Unloaded: Still on carrierUnloaded: Taken off carrierAvailable: Placed at the disposal of the Buyer * INCOTERMS define lading and unlading responsibilitiesWhen Does Transfer of Risks Pass Under INCOTERMS 2000?ContractAt the moment of delivery stipulated in the contract (CISG)No C

16、ontractWhen the Buyer takes delivery of the goods (Property Laws) INCOTERMSGroup E Term: (Departure) Delivery at the Sellers premises or another named place (international carriage and delivery are the Buyers cost and responsibility)EXWGroup F Terms: (Main Carriage Unpaid) International carriage is

17、paid by the BuyerFCA, FAS, FOBGroup C Terms: (Main Carriage Paid) International carriage is negotiable, i.e. named port of destination or named place of destination CFR, CIF, CPT, CIPGroup 9D Terms: (Arrival) International carriage and delivery are the Sellers cost and responsibilityDAF, DES, DEQ, D

18、DU, DDP Ex Works (EXW)SummarySeller must place the goods at the disposal of the Buyer at the Sellers premises or another named place, not loaded, on the date or time period specifiedUSPPI rule prevails and is not consistentTransfer of RisksAt the agreed time, named place, and date of deliveryCustoms

19、 Clearance Seller is not responsible for any outbound Customs or licensing from the country of export or inbound Customs formalities for the country of importMode of TransportationBuyers decision and responsibilityFree Carrier (FCA)SummarySeller must load the goods on the Buyers carrier, if no carri

20、er is nominated by the Buyer, the Seller may nominate a carrierThe Seller is not responsible for unloading if delivery occurs at a place other than the Sellers premisesTransfer of RisksSeller bears all risks of loss or damage to the goods until such time as delivered in accordance with the agreed up

21、on termsCustoms ClearanceSeller clears outbound Customs and licensing from the country of exportMode of TransportationAny mode Free Alongside Ship (FAS)SummarySeller must place the goods alongside the vessel nominated by the Buyer, at the named port and date or time period specified, and in the mann

22、er customary at that portBuyer is responsible for insurance and international carriageTransfer of RisksSeller bears all risks of loss or damage to the goods until such time as delivered in accordance with the agreed upon termsCustoms Clearance Seller clears outbound Customs and licensing from the co

23、untry of export Mode of TransportationSea or inland waterway transport only Free On Board (FOB)SummarySeller is responsible for the costs of loading the goodsDelivery occurs when the goods pass the ships rail at the named port of shipmentPassing the ships rail is very important to this term Transfer

24、 of RisksSeller bears all risks of loss or damage to the goods until the goods pass the ships rail at the named port of shipmentCustoms Clearance Seller clears outbound Customs and licensing from the country of export Mode of TransportationSea or inland waterway onlyCost & Freight (CFR)SummarySe

25、ller must deliver the goods (pass the ships rail) on board the vessel at the port of shipment on the date or within the agreed periodSeller contracts for carriage to the port of destination but has no obligation to buy insurance for the international carriageTransfer of RisksSeller bears all risks o

26、f loss or damage to the goods until the goods pass the ships rail at the port of shipmentCustoms ClearanceSeller clears outbound Customs and licensing from the country of exportMode of TransportationSea and inland waterway onlyCost, Insurance & Freight (CIF)SummarySeller must deliver the goods (

27、pass the ships rail) on board the vessel at the port of shipment on the date or within the agreed periodSeller contracts for carriage to the port of destination, and marine insurance for the international carriage, at his own expenseTransfer of RisksSeller bears all risks of loss or damage to the go

28、ods until the goods pass the ships rail at the port of shipmentCustoms ClearanceSeller clears outbound Customs and licensing from the country of exportMode of TransportationSea and inland waterway onlyCarriage Paid To (CPT)SummarySeller, at his own expense, contracts for carriage and is responsible

29、for each leg of a multimodal movement, to the agreed point, and to the named place of destination on the date or within the agreed periodSeller contracts for carriage, but has no obligation to buy insuranceTransfer of RisksSeller bears all risks of loss or damage to the goods until the goods are del

30、ivered in accordance with the agreed upon termsCustoms ClearanceSeller clears outbound Customs and licensing from the country of exportMode of TransportationAll, including multimodalCarriage & Insurance Paid To (CIP)SummarySeller, at his own expense, contracts for carriage, and is responsible fo

31、r each leg of a multimodal movement, to the agreed point, and to the named place of destination on the date or within the agreed periodSeller must purchase insurance against the Buyers risk of loss or damage during carriage and is responsible for the insurance premiumTransfer of RisksSeller bears al

32、l risks of loss or damage to the goods until the goods are delivered in accordance with the agreed upon termsCustoms ClearanceSeller clears outbound Customs and licensing from the country of exportMode of TransportationAll, including multimodalDelivered At Frontier (DAF)SummarySeller contracts for c

33、arriage to the named place of destination, delivers the goods not unloaded to the frontier of the destination countrys border, (before the customs border)Transfer of RisksSeller bears all risks of loss or damage to the goods until the goods are delivered in accordance with the agreed upon termsCusto

34、ms ClearanceSeller clears outbound Customs and licensing from the country of export and transit countriesBuyer clears inbound Customs, pays import duties, taxes and other chargesMode of TransportationAny mode, if delivered by land Delivered Ex Ship (DES)SummarySeller must place the goods at the disp

35、osal of the Buyer on board the vessel at the port of destination, on the date or within the agreed period, and allow removal of the goods with unloading equipment appropriate for the goodsSeller has no obligation to contract for insuranceTransfer of RisksSeller bears all risks of loss or damage to t

36、he goods until the goods are delivered in accordance with the agreed upon termsCustoms ClearanceSeller clears outbound Customs and licensing from the country of export and transit countriesBuyer clears inbound Customs, pays import duties, taxes and other chargesMode of TransportationSea or inland wa

37、terway or multimodal transport on a vessel in the port of destinationDelivered Ex Quay (DEQ)SummarySeller must place the goods at the disposal of the Buyer, on the quay at the named port of destination, on the date or within the agreed periodSeller has no obligation to contract for insuranceTransfer

38、 of RisksSeller bears all risks of loss or damage to the goods until the goods are delivered in accordance with the agreed upon termsCustoms ClearanceSeller clears outbound Customs and licensing from the country of export Buyer clears inbound Customs, pays import duties, taxes and other chargesMode

39、of TransportationSea or inland waterway or multimodal transport on discharging from a vessel onto the quay in the port of destinationDelivered Duty Unpaid (DDU)SummarySeller must deliver the goods to the Buyer or the Buyers agent at the named place of destination, not unloaded, on the date or within

40、 the agreed period for deliverySeller has no obligation to contract for insuranceTransfer of RisksSeller bears all risks of loss or damage to the goods until the goods are delivered in accordance with the agreed upon termsCustoms ClearanceSeller clears outbound Customs and licensing from the country of export and transit countriesBuyer clears inbound Customs, pays import duties, taxes and other chargesMode of TransportationAny mode Delivered Duty Paid (DDP)SummarySeller must deliver the goods to the Buyer or the Buyers agent, not unloaded, to the named