Application of Incoterm in purchase Contract, Transfer of Risk and Cost, Implications of Incoterms

What are Incoterms?
Contractual terms developed by the International
Chamber of Commerce (ICC) in Paris
A standard three-letter abbreviated terminology
Translated into various languages
Covers thirteen main options
The purpose is to clearly describe the key
obligations of sellers, buyers and carriers with
regard to:

Delivery of the Goods
Incoterms
Transfer of Risks
Transfer of Costs

ITC M8:U6:6.2-1

, Hierarchy of contractual terms
and clauses

CONTRACT FOR SALE OF GOODS
Terms, conditions and
applicable jurisdiction
Any specific clause relating
to carriage and delivery
INCOTERM
specified in the

§§§ contract

ITC M8:U6:6.2-2

, Incoterms: There are 4 groups
The E group:
 The carriage is arranged by the buyer
 Risks & costs are transferred to the buyer when the goods are
made available

The F group:
 The carriage is arranged by the buyer
 Risks & costs are transferred to the buyer as from just after export
clearance

The C group:
 The carriage is arranged by the seller
 Risks are transferred to the buyer just after export clearance
but costs are on the seller up to import clearance at named destination

The D group:
 The carriage is arranged by the seller
 Risks are transferred just before import clearance but costs are on the
seller up to import clearance when duty is unpaid or including import
clearance when duty is paid.

ITC M8:U6:6.2-3

, The 13 Incoterms:
Group E - Departure

EXW “EX WORKS” (…named place)

The seller delivers when he places the goods at
the disposal of the buyer at the seller’s premises
or another named location (I.e., works, factory,
warehouse, etc.) not cleared for export and not
loaded on any collecting vehicle.

Mode of transport: Any mode


ITC M8:U6:6.2-4