Basic conditions of delivery

(According to international rules of trade terms interpretation — "INCOTERMS")

In business correspondence the following terms of delivery are most common:

Ex-Factory, Ex-Mill, Ex-Works — under these conditions the price of the goods is prime cost plus the profit of the manufacturer. The buyer bears all the expenses of transportation of goods from the manufacturer’s factory.

Ex-Store — the buyer receives the goods from the manufacturer’s or the seller’s store. The price is in this case includes prime cost, manufacturer’s profit and the cost of transportation to the store.

Ex-Stock — these conditions are similar to ex-store and usually used for current supply of goods. The price is subject to change.

Ex-store and ex-stock conditions are used for short distance delivery of goods and in contracts between wholesalers and retail dealers.

FAS (Free alongside Ship). The seller at his expense does the following:

• delivers and stores the goods on quay in the port;

• provides quality certificates, adequate packing and marking;

• notifies the buyer of the delivery of goods to the port.

The buyer freights a vessel, informs the seller of the name and the arrival date of the vessel in the port of loading, insures the cargo, pays the lading expenses and pays for the goods. The buyer receives the property in the goods and takes the risks of damage and loss of the goods in the port.

FOB (Free on Board) — under these conditions the seller fulfills the above mentioned operations and also provides export license, fixes customs formalities, loads the goods on board the ship, informs the buyer of the lading and sends the documents to the buyer. The buyer receives the property in the goods and takes the risks of damage and loss of the goods as the cargo is on board. Similar to FOB are FOR (Free on Rail), FOT (Free on Truck), FOC (Free on Car).

FOB Airport — Similar to FOB, but the seller also makes an agreement with the airline for the loading and delivery of goods.

C&F, CAF (Cost and Freight) – the condition of FOB plus the seller freights a vessel to the destination port.

CIF (Cost, Insurance, Freight) – similar to CAF plus the seller insures the goods against the transportation risks.

FRC (Free Carrier "named port/point") — similar to FOB, but the buyer receives the property in the goods and takes the risks of damage and loss of the goods in the named point. These conditions are used when several kinds of transport are used for delivery.

DCP (Freight/Carriage Paid to "named port/point"). The seller at his expense:

- supplies goods and documents to prove the correspondence of goods to the terms of contract;

- organizes and pays the delivery of the goods to the named place;

- hands the goods over to the carrier at the agreed upon time;

- notifies the buyer and sends to the buyer the set of documents;

- provides export license and pays export duties.

The buyer pays for the goods, insures the cargo, covers transportation expenses except delivery and the import expenses as customs duty, clearance fees and so on. The risks and property in the goods pass from the seller to the buyer when the first carrier receives the goods. These conditions are used when several carriers are involved.

CIP (Freight or Carriage and Insurance Paid to) – similar to DCP, but the seller insures the cargo.