1. Explicitly incorporate the Incoterms® rules into your sales contracts, as by the specific mention ‘FCA, 38 cours Albert 1er, Paris, France, Incoterms® 2010’. Always include the words ‘Incoterms® 2010’ in your contracts until an updated version of the rules is released, at which point you should begin to incorporate the newer version of the Incoterms® rules into your contracts.
  2. Have access to a copy of the full set of definitions of the Incoterms® 2010 rules, contained in the ICC publication ‘Incoterms® 2010’, included here at Annex 4.
  3. Recognize the 11 current Incoterms® 2010 rules, and refer to them by their 3-letter abbreviations:
    • EXW – Ex Works (… named place of delivery)
    • FCA – Free Carrier (… named place of delivery)
    • CPT – Carriage Paid To (… named place of destination)
    • CIP – Carriage and Insurance Paid To (… named place of destination)
    • DAT – Delivered At Terminal (… named terminal at port or place of destination)
    • DAP – Delivered at Place (… named place of destination)
    • DDP – Delivered Duty Paid (… named place of destination)
    • FAS – Free Alongside Ship (… named port of shipment)
    • FOB – Free On Board (... named port of shipment)
    • CFR – Cost and Freight (... named port of destination)
    • CIF – Cost, Insurance and Freight (... named port of destination)

Note that the Incoterms 2000 rules ‘DAF’, ‘DES’, ‘DEQ’ and ‘DDU’ have been removed and replaced by the more general Incoterms® 2010 rules ‘DAT’ and ‘DAP’. ‘DAP’ may be used instead of ‘DAF’, ‘DES’ and ‘DDU’, and ‘DAT’ may be used to replace ‘DEQ’, since in both DAT and the deleted DEQ, the seller unloads goods from the arriving vehicle at destination.

  1. Be very careful to distinguish between those Incoterms® 2010 rules that should be used exclusively for traditional maritime transport (for example, bulk goods and commodities loaded directly on board the ship), and the more general Incoterms® 2010 rules appropriate for all modes of transport, particularly containerized and multimodal transport:

[Page44:]

  • Containerized/multimodal/general – Use EXW, FCA, CPT, CIP, DAT, DAP and DDP for all modes of transport or a combination of modes of transport (this combination may include marine transport).
  • Maritime – Use FAS, FOB, CFR, and CIF, for traditional maritime transport (goods lifted directly on board the ship).
  1. Understand that the Incoterms® rules are meant for use in the contract of sale between buyer and seller, which should not be confused with the related contract of carriage between the shipper and carrier/transporter. Traders should give precise directions to their transporters as to the Incoterms® rule they have chosen in a particular contract of sale; this will ensure that the contract of carriage is consistent with the contract of sale.
  2. Understand that the Incoterms® 2010 rules basically cover the transfer of risks and costs between seller and buyer and certain customs and insurance responsibilities. However, several other important conditions of a sales contract may need to be specified in addition to the Incoterms® rule. You may be well-advised to:
    1. Specify how delivery will take place.
    2. Specify how much insurance coverage you want, and the geographical and time extent of the insurance coverage (where and when coverage begins and ends).
    3. Specify any necessary limitations on what kind of transport is appropriate (i.e., refrigerated containers, not carried on deck, etc.).
    4. Make sure that your contract contains force majeure, exoneration, or time-extension clauses if you are responsible for customs clearance or foreign delivery at an inland point.
  3. Understand that CIF, CFR, CIP and CPT are NOT ‘arrival contracts‘, they are ‘shipment contracts’. This means that the point of transfer of risk with these C rules is the same as with F rules: in the country of departure.