New International Commercial Terms (Incoterms) for the year 2000.

To view the 2011 updated french version

On January 1, 2000, the new Incoterms 2000 came into effect. As of this date, it would be advisable to make reference to "Incoterms 2000" in your international sales and distribution contracts to specify the obligations involved in the delivery of goods.

After two years of consultation, the International Chamber of Commerce (ICC) published a sixth version of these commercial terms, which are the most recognized and widely used terms in international trade.

Responsibilities of Seller and Buyer

Incoterms, which were first published in 1936, provide a series of interpretation rules for commercial terms used in sales contracts. These terms specify in particular the respective responsibilities of the buyer and seller as regards the following :

• The point where the seller has performed his obligation of delivery;

• The point where the risk of loss of or damage to the goods passes from the seller to the buyer;

• The allocation of the costs relating to the goods (e.g. carriage, checking, packing and insurance); and

• The responsibility to complete the customs formalities when importing and/or exporting.

Few Changes from Incoterms 1990

Compared to the previous 1990 version, Incoterms 2000 have been changed very little. The amendments introduced reflect the most common trading practices and, in particular, take into account the increase in intermodal shipping and customs-free zones. The changes in Incoterms 2000, which have been clearly improved as to their presentation and terminology, include :

• The term FCA is modified so as to specify loading and unloading obligations. The previous version, which was not precise, often led to conflicts over the issue of whether it was the seller, or the carrier appointed by the buyer, who had to load the goods on the vehicle. The new version distinguishes between the two following situations :

  1. if delivery takes place in the seller's premises, he is responsible for loading the goods on the buyer's vehicle;

  2. if delivery occurs elsewhere than the seller's premises, the seller is not responsible for loading the buyer's vehicle.

• There is a reversal of the obligations regarding customs clearance and payment of duties under the terms DEQ and FAS in that these obligations now belong to the party domiciled in the country where customs must be cleared. Unlike the previous version, the terms FAS and DEQ now respectively impose on the seller the obligation to clear the goods through customs when exporting and on the buyer the obligation to pay the import duties.

• Several Incoterms have been modified so as to facilitate intermodal shipping. For instance, the term FCA only refers to the point of delivery without distinguishing, as did the previous version, between the modes of shipping chosen. The term DEQ may henceforth be used for intermodal shipping provided the last portion of the trip is by water.

• The terms may be used within a customs union (e.g. the European Union) or a free-trade zone, where duties are no longer payable. The words "where applicable" have been added to the obligation to complete customs formalities (A2, B2, A6, B6) in order to eliminate any ambiguity when using Incoterms where no customs procedures apply.

For more information on Incoterms 2000, do not hesitate to ask for advice from us. We will be more than pleased to assist you in your international business transactions.

" E "

Departure
The seller places the goods at the disposal of the buyer at the appointed place, generally his own premises.
EXW Ex Works (… named place)

" F "

Main Carriage Unpaid
The seller is called upon to deliver the goods to a carrier appointed by the buyer.
FCA Free Carrier (… named place)
FAS Free Alongside Ship (… named port of shipment)
FOB Free On Board (… named port of shipment)

" C "

Main Carriage Paid
The seller must arrange for the shipping contract without assuming the risk of loss of or damage to the goods or additional costs due to events occurring after shipment and dispatch.
CFR Cost and Freight (… named port of destination)
CIF Cost, Insurance and Freight (… named port of destination)
CPT Carriage Paid To (… named place of destination)
CIP Carriage and Insurance Paid To (… named place of destination)

" D "

Arrival
The seller must assume all costs and risks needed to bring the goods to the place of destination.
DAF Delivered At Frontier (… named place)
DES Delivered Ex Ship (… named port of destination)
DEQ Delivered Ex Quay (… named port of destination)
DDU Delivered Duty Unpaid (… named place of destination)
DDP Delivered Duty Paid (… named place of destination)

Updated : February 5, 2003.

Disclaimer : This article has been prepared for the intended reference by interested individuals and is not intended to create an attorney - client communication. This information is available through The Quebec Network without any guarantee relative to its content or its accuracy and thus it should not be interpreted as constituting legal advice. If you need legal advice of any kind, you should consult an attorney.

© Copyright, Bernard Colas, 2000, All rights reserved