International Trade Blog

The International Chamber of Commerce (ICC) has developed several publications providing sellers and buyers with guidance on the use of Incoterms 2010. My favorite is Incoterms rules, Publication No. 715e.

According to the ICC, Delivered Duty Paid (DDP) means:

[T]he seller delivers the goods when the goods are placed at the disposal of the buyer, cleared for import on the arriving means of transport, ready for unloading at the named place of destination. The seller bears all the costs and risks involved in bringing the goods to the place of destination and has an obligation to clear the goods not only for export but also for import, to pay any duty for both export and import and to carry out all customs formalities.

The ICC was succinct in its description of obligations for the seller in this paragraph. However, there’s more detail to consider for the seller and for the buyer when establishing a contract that references DDP.

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Incoterms are the official International Chamber of Commerce (ICC) rules for the explanation of trade terms.

Incoterms 2010 is adhered to by all major trading nations of the world, and it is the authoritative text for determining how costs and risks are allocated to parties conducting international transactions. Incoterms facilitate the conduct of international business by defining the responsibilities of the involved participants.

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Companies that ship domestically within the United States often use the trade term FOB—Free On Board. But FOB has a completely different meaning under the international trade terms, Incoterms 2010. Exporters who want to use the international equivalent to FOB often use the Incoterm FCA—Free Carrier At.

Like all 11 of the 2010 Incoterms rules, FCA identifies whether it is the seller or the buyer who pays the domestic, international and on-carriage freight charges. So, let’s compare the domestic use of FOB with the international use of FCA.

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Incoterms are the official International Chamber of Commerce (ICC) rules for the explanation of trade terms. Incoterms 2010 is adhered to by all major trading nations of the world, and it is the authoritative text for determining how costs and risks are allocated to parties conducting international transactions. Incoterms facilitate the conduct of international business by defining the responsibilities of the involved participants.

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Incoterms are the official International Chamber of Commerce (ICC) rules for the explanation of trade terms. Incoterms 2010 is adhered to by all major trading nations of the world, and it is the authoritative text for determining how costs and risks are allocated to the parties conducting international transactions. Incoterms facilitate the conduct of international business by defining the responsibilities of the involved participants.

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When companies negotiate a sale of goods, they typically specify the terms of the sale including when the seller transfers ownership of the goods to the buyer, who then assumes the associated risk of loss. This can occur before the buyer takes actual possession of the goods.

Perhaps the most familiar of these terms is FOB; however, there are several others. Such terms are also known as trade terms or mercantile symbols.

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Incoterms are the official International Chamber of Commerce (ICC) rules for the explanation of trade terms.

Incoterms 2010 is adhered to by all major trading nations of the world, and it is the authoritative text for determining how costs and risks are allocated to the parties conducting international transactions. Incoterms facilitate the conduct of international business by defining the responsibilities of the involved participants.

This is the eighth article in our series investigating the basic meaning of all 11 Incoterms.

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Incoterms are the official International Chamber of Commerce (ICC) rules for the explanation of trade terms. Incoterms 2010 are adhered to by all major trading nations of the world, and it is the authoritative text for determining how costs and risks are allocated to the parties conducting international transactions. Incoterms facilitate the conduct of international business by defining the responsibilities of the involved participants.

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At a recent workshop on Incoterms 2010, I prepared my usual outline, using the technique of ranking the Incoterms rules from least responsibility for the seller to most responsibility for the seller.

Initially, exporters like the term with least responsibility for them, Ex Works. In laymen's terms, the seller says, "The goods are at my back door, come and get them." As the workshop develops, exporters learn that the Ex Works rule has risks, such as the potential of a diverted shipment. (See my article, Incoterms Lesson: The Danger of Using Ex Works for Your Exports.)

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Incoterms are the official International Chamber of Commerce (ICC) rules for the explanation of trade terms.

Incoterms 2010 are adhered to by all major trading nations of the world, and it is the authoritative text for determining how costs and risks are allocated to the parties conducting international transactions. Incoterms facilitate the conduct of international business by defining the responsibilities of the involved participants.

This is the sixth article in our series investigating the basic meaning of all 11 Incoterms.

Read More