INCOTERMS - Chapter 9 - Introduction and Categories

Sep 17, 2026

INCOTERMS Chapter 9 explains the practical role of Incoterms in international documentary credit and how specifying delivery terms avoids disputes between buyer and seller. It presents the 2016 grouping of delivery and transportation into four main categories—E, F, C, and D—describing the allocation of cost, risk, and responsibilities. It further clarifies key trade terms including Ex-Works, FAS, FOB, FCA, CFR & CIF, CPT, CIP, DAT, DDP, and DAP, with brief guidance on when obligations transfer.

LanguageEnglish

CategoryExam

FormatPDF

Pages3

Reading Time8 min

AccessFree to download

9.1 Introduction

9.2 Categories

9.2.1 Ex-Works (or Ex-Factory, Ex-Mill, Ex-Warehouse, etc.)

9.2.2 Ex-works (packing)

9.2.3 FAS

9.2.4 FOB

9.2.5 FCA

9.2.6 CRF & C&F

9.2.7 CIF

9.2.8 CPT

9.2.9 CIP

9.2.10 DAT

9.2.11 DDP

9.2.12 DAP

CHAPTER-9 INCOTERMS # 9.1 Introduction Since 1936 INCOTERMS,the term used in international documentary credit in respect ofmode/style of delivery of goods,have recognised as practical,cost saving tools,used worldwideto smooth international trading practice.When both the parties i.e.buyer and seller,specify thedelivery as being according to the INCOTERMS,there need be no disputes arising from thataspect of transactions. # 9.2 Categories In INCOTERMS 2016 the delivery and transportation of goods are grouped into four categoriesas under:- 1)'E'Term implies Ex-works,where under,the seller only makes the goods available to thebuyer at the seller's own premises.The responsibility of providing the Carrier is that of the buyer. 2)'F'Term FCA,FAS and FOB are various clauses of F'term under which the seller is called upon to deliverthe goods to a carrier appointed by the buyer.The responsibility of providing the carrier is that ofthe buyer. 3)'C'Term CFR,CIF,CPT and CIP are various clauses of 'C'term under which the seller has to contract forcarriage,but without assuming the risk of loss or damage of the goods or additional costs due toevents occurring after shipment and despatch. 4)'D'Term DAT,DAP and DDP are various clauses of 'D'term under which the seller has to bear costs andrisks needed to bring the goods to the place of destination. ## 9.2.1 Ex-Works(or Ex-Factory,Ex-Mill,Ex-Warehouse,etc.) It usually means that the prices quoted are for the price of goods at seller's premises.The buyerbears all costs and risks involved (including packing)in taking the goods from the seller'spremises to the destination. ## 9.2.2 Ex-works (packing): It usually means the price of goods plus packing.It is the responsibility of the buyer to bear allthe costs and risks involved in taking the goods from the seller's premises to destination. 9.2.3 FAS is Free Along Ship.The seller has to place the goods alongside the vessel on the quarry or inthe lighters at the named port of shipment,during its loading period and pay all charges upto thatpoint. 9.2.4 FOB is Free On Board and is widely used terms.FOB prices actually comprise FOB Port Townplus charges incidental to actual shipment of goods but minus ocean freight and marine insurance.The seller's responsibility ends the moment the contracted goods passes ships rail at the port ofshipment named in the sales contract.This means that the buyer has to bear all costs and risks ofloss or damage to the goods from that point. 9.2.5 FCA is “Free Carrier”."Free Carrier”means that the seller delivers the goods,cleared for export,to the carrier nominated by the buyer at the named place.This term may be used irrespective ofthe mode of transport,including multi-modal transport.“Carrier”means any person who,in acontract of carriage,undertakes to perform or to procure the performance of transport by rail,road,air,sea,inland waterway or by a combination of such modes.If the buyer nominates aperson other than carrier to receive the goods,the seller is deemed to have fulfilled his obligationsto deliver the goods when they are delivered to that person. 9.2.6 CRF&C&F is Cost &Freight named port of destination.The seller must pay the costs andfreight charges necessary to bring the goods to named port of destination,but the risk of loss ordamage to the goods as well as other costs due to events occurring after the time of goods havebeen delivered on board is transferred from seller to buyer when the goods pass the ship's rail inthe port of shipment 9.2.7 CIF is Cost,Insurance &Freight to the named port of destination.Again one of the mostcommonly used terms.It is FOB price plus cost of ocean freight and marine insurance upto theport of destination.It is a preferred type of quotation because importer knows what exactly thegoods will cost him at his port. 9.2.8 CPT is Carriage Paid To (named port of destination).It means that the seller delivered the goodsto the carrier nominated by him an

FAQs

Why are INCOTERMS used in international trading practice?

INCOTERMS are practical tools that help smooth international trading. When buyers and sellers specify delivery according to INCOTERMS, disputes can be avoided.

How are delivery and transportation of goods grouped in INCOTERMS 2016?

They are grouped into four categories: E, F, C, and D. Each category reflects how costs and risks are handled between seller and buyer.

What does Ex-Works (Ex-Factory/Ex-Warehouse) mean for buyers and sellers?

Ex-Works prices relate to goods at the seller’s premises. The buyer bears all costs and risks (including packing) for moving goods to the destination.

Sep 17, 2026

Uploaded by Evangeline