REFERENCE INFORMATION

THE TYPES OF TRANSPORTATION

ANY TYPE OF TRANSPORTATION

Group E (shipment) EXW EX Works (… named place) – Ex Works (… name of the place)

The term EXW Ex Works means that the seller has fulfilled own contractual delivery obligations if he delivered the freight in the disposition of the buyer on own enterprise or in the other agreed place (for example, on factory, plant, storehouse and so on). The seller is not responsible neither for the loading of the freight onto vehicle nor for the customs clearance.

This term thus gives the minimal responsibilities onto seller and the buyer has to carry all the expenses and risks associated with the delivery of the freight from the enterprise to the destination place. However, if parties want to entrust the seller the obligations for the loading of the freight in the place of shipment and to carry all the risks and expenses associated with such shipment, this must be clearly and unambiguously stated in the according addition to the contract concluded between the seller and the buyer. This term may not apply when the buyer isn’t capable of performing the export formalities directly or indirectly. In such situation, there must be used FCA term, if the seller agrees to carry every expense associated with the risks and loading of the freight.

Group F (The main delivery isn’t paid by the seller) FCA Free Carrier (… named place) – Free Carrier (… name of the place)

The term Free Carrier means that the seller delivers the goods that passed the customs clearance to the carrier (transportation company) nominated by the buyer to the specified location. The specified place of the delivery shall influence the obligations on loading and unloading of the freight in the specific place. If the delivery is performed on the premises of the seller, then the seller is responsible for the delivery and unloading. If the delivery is performed not on the premises of the seller, then the seller is not responsible for the delivery and unloading. This term may be applied to the transportation by means of any type of the transport, including the farraginous transportation.

Under the term “transportation company” or “carrier” is understood any person or entity, which accepts the obligations to deliver the freight by road, railway, air, sea, internal water transport or by means or a combination of these.

If the buyer entrusts to another person, who is not the carrier, to accept the freight, the seller is considered the one who has fulfilled the obligations from the point of time of the freight passing to such third person.

Group C (The main delivery is paid by the seller) CTP Carriage Paid To (… named place of destination) – Carriage Paid To (… name of the place of destination)

The term CTP Carriage Paid To means that the seller will deliver the freight to the carrier named by him. In addition to this, the seller is obliged to pay the expenses connected with transportation of the freight to the place of destination. This means the buyer takes all the risks of damage or loss of the freight, as well as the other expenses after the delivery of the freight to the carrier.

Under the term “transportation company” or “carrier” is understood any person or entity, which accepts the obligations to deliver the freight by road, railway, air, sea, internal water transport or by means or a combination of these.

In the case of delivery to the agreed destination by several carriers, the transfer of the risk happens after the delivery of the freight under the liability of first of them.

The CTP conditions impute the liability to perform the customs clearance of the freight for the export.

This term may be applied during the delivery of the freight by means of any kind of transport, including the farraginous delivery.

CIP Carriage and Insurance Paid Тo (… named place of destination) – Carriage and Insurance Paid Тo (… name of the place of destination)

The term CIP Carriage and Insurance Paid Тo means that the seller will deliver the freight to the carrier named by him. Along with this, the seller is obliged to pay for the expenses connected with the delivery of the freight to the stated point of destination. This means that the buyer accepts all risks and any other additional expenses that may happen, during delivery in such a way. However, according to CIP contract, the seller also carries the liability to make an insurance of risks of damages and losses of the freight during the delivery, in the favor of the buyer. Consequently, the seller concludes the insurance contract and pays the insurance fees. The buyer should know that according to CIP contract, the seller is required to have the minimal insurance with as small as possible insurance coverage.

If the buyer wants to deal with the bigger insurance coverage, he must specifically discuss this issue with the seller or to make measures to provide the additional insurance agreement.

Under the term “transportation company” or “carrier” is understood any person or entity, which accepts the obligations to deliver the freight by road, railway, air, sea, internal water transport or by means or a combination of these.

In the case of delivery to the agreed destination by several carriers, the transfer of the risk happens after the delivery of the freight under the liability of first of them.

The CTP conditions impute the liability to perform the customs clearance of the freight for the export.

This term may be applied during the delivery of the freight by means of any kind of transport, including the farraginous delivery.

Group D (Delivery) DAF Delivered At Frontier (… named place) – Delivered At Frontier (… name of the place of destination)

 

 

The term Delivered At Frontier means that the seller is considered the one who performed the delivery if he delivered the unloaded freight customs-cleared for the export, but not cleared for the import, on the arrived vehicle under the liability of the buyer in the named destination or a point at the frontier before the freight was delivered onto the customs’ territory of another country. The term “frontier” means any frontier, including the frontier of the export country. That is why the specific place or location matters significantly.

 

 

 

 

 

 

However, if parties wish that the seller took the liability for the unloading of the freight from the arrived vehicle and carried all risks and expenses connected to such unloading this must be strictly and unambiguously stated in the addition to the existing purchase-sell contract.

 

 

This term may apply to the shipment of any freight by any type of transportation when the freight is delivered to the land frontier.

 

 

If the delivery takes place to the port of destination, on the board of the sea vessel or at the harbor/pierce, DES or DEQ terms should be applied.

 

 

 

 

 

 

DDU Delivered Duty Unpaid (… named place of destination) – Delivered Duty Unpaid (… name of the place of destination)

 

The term Delivered Duty Unpaid is applied when the seller provides the freight that had not pass the customs clearance and not unloaded, from the arrived vehicle under the liability of the buyer to the specified location. The seller is obliged to carry all the expenses and risks connected to the delivery of the freight to this destination, exclusive (if applicable, see the Introduction, paragraph 14) of any fees collected for the import in the destination country (under the “fees” term must be understood the responsibility and risks for the provision of the customs clearance as well as the payment for the customs formalities like customs fees, wages, and other commissions). The responsibility for such fees must carry the buyer as well as for other expenses and risks arisen due to delays in the customs clearance procedure.

 

 

 

 

 

 

However, if parties desire to empower the seller to handle all risks and expenses connected to the customs clearance, as well as the part of expenses connected to the freight’s import, this must be clearly and unambiguously stated in the according addition to the sell-purchase contract.

 

 

The responsibility, risks, and expenses for unloading and transshipment of the freight depend on the party, under which control the destined location is.

 

 

This term may be applicable independently from the type of vehicle but when the delivery takes place on the board of the sea vessel or at the harbor/pierce of the destination DES or DEQ terms should be applied.

 

 

 

 

 

DDP Delivered Duty Paid (… named place of destination) – Delivered Duty Paid (… name of the place of destination)

 

 

The term Delivered Duty Paid means that the seller provides the freight that had passed the customs clearance and not unloaded from the arrived vehicle under the liability of the buyer to the specified location. The seller is obliged to carry all the expenses and risks connected to the delivery of the freight, inclusive (if applicable, see the Introduction, paragraph 14) of any fees collected for the import in the destination country (under the “fees” term must be understood the responsibility and risks for the provision of the customs clearance as well as the payment of the customs formalities like customs fees, wages, and other commissions).

While the EXW term implies the minimal responsibility on the seller, DDP term implies the maximal responsibilities on the seller.

This term cannot be applicable when the seller cannot provide the reception of the import license directly or indirectly. When the parties agree about the exclusion from the seller’s responsibilities some of the expenses like payment of fees during the export (as VAT), this must be clearly and unambiguously stated in the according addition to the sell-purchase contract.

If the parties wish to impose all the risks and expenses at the freight’s import to the buyer, the DDU term should be applied. This term can be applied independently from the type of transportation but when the delivery is carried out on the board of the sea vessel or at the harbor/pierce of the destination DES or DEQ terms should be applied. This is applicable only to the sea and internal water types of transport.

Group F (the main delivery isn’t paid by the seller) FAS Free Alongside Ship (… named port of shipment) –  Free Alongside Ship (… name of the port of unloading)

The term Free Alongside Ship means that the seller has performed the shipment when the freight is located alongside the vessel in the dock or pierce in the required port of the unloading. It means that starting from this moment, all risks associated with the damage or loss of the freight must be carried out by the buyer. According to FAS terms, the seller is obliged to carry the customs clearance of the freight for the export. However, if the parties wish to oblige the buyer with the responsibility of customs clearance of the freight for the export, this must be clearly and unambiguously stated in the according addition to the sell-purchase contract.

FOB Free On Board (… named port of shipment) –  Free On Board (…named port of shipment)

The term Free On Board means that the seller has performed the shipment when the freight had crossed the rails of the sea vessel in the specified port of the shipment. This means that from this moment, all expenses and risks of damage and loss of the freight are carried out by the buyer. According to FOB conditions, the seller is obliged to make the customs clearance of the freight for the export. This term may only be applied during the delivery of the freight by sea or the local water transportation. If the parties aren’t intended to deliver the goods over the rails of the sea vessel, they should apply FCA term.

Group C (the main delivery is paid by the seller) CFR Cost And Freight (… named port of destination) –  Cost And Freight (… name of the port of destination)

The term Cost And Freight means that the seller has performed the shipment if the freight had crossed the rails of the sea vessel in the specified port of the shipment.

The seller is obliged to pay the cost of freighting and other expenses required to deliver the shipment to the specified port of destination, HOWEVER, all risks of the damaging or losing the freight and any additional costs after the delivery are transferred from the seller to the buyer.

 

 

 

According to CFR, the seller has to perform the customs clearance of the freight to export it. This term may apply only when making the delivery of the freight by the sea or internal water transportation. If the parties aren’t intended to deliver the goods over the rails of the sea vessel, they should apply CPT term.

 

 

CIF Cost, Insurance, And Freight (… named port of destination) –  Cost, Insurance, And Freight (… name of the port of destination)

 

The term Cost, Insurance, And Freight means that the seller has performed the shipment if the freight had crossed the rails of the sea vessel in the specified port of the shipment.

 

The seller is obliged to pay the cost of freighting and other expenses required to deliver the shipment to the specified port of destination, BUT the risks of the damaging or losing the freight and any additional costs after the delivery are transferred from the seller to the buyer.

 

However, according to CIF, the seller is also obliged to perform the sea insurance at the benefit of the buyer against the risk of damaging of losing the freight during the delivery.

 

 

Thus, the seller is obliged to conclude the insurance contract and to pay the insurance fees. The buyer should know that according to CIF contract, the seller is required to have the minimal insurance with as small as possible insurance coverage.

 

If the buyer wants to deal with the bigger insurance coverage, he must specifically discuss this issue with the seller or to make measures to provide the additional insurance agreement.

 

 

 

According to CIF terms, the buyer has to provide the customs clearance of the freight for the export.

 

 

This term shall be only applied during the transportation of the freight by sea or internal water transport. If the parties aren’t intended to deliver the goods over the rails of the sea vessel, they should apply CIP term.

Group D (Delivery) DES Delivered Ex Ship (… named port of destination) –  Delivered Ex Ship (… name of the port of destination)

The term Delivered Ex Ship means that the seller has made the shipment if he provided freight not cleared in customs office for the import at the disposal of the buyer on the board of the sea vessel in the specified port of destination. The seller shall carry all the expenses and risks during the delivery of the freight in the specified port until the moment of its unloading. If parties want that the seller carried the risks and expenses associated with the unloading of the freight, the DEQ term must be applied.

This term shall be only applied during the transportation of the freight by sea or internal water transport or in the farraginous transportations when the freight arrives at the port of destination on the board of the vessel.

DEQ Delivered Ex Quay (… named port of destination) – Delivered Ex Quay (… name of the port of destination)

The term Delivered Ex Quay means that the seller has fulfilled his obligations by delivery of the freight if the freight that had not undergo the customs clearance was delivered at the disposal of the buyer in the harbor of the specified port of destination. The seller is obliged to carry all the expenses and risks associated with the transportation and unloading of the freight to the harbor. DEQ term gives the buyer the obligation to perform the customs clearance of the freight for the import, as well as to pay the fees, taxes, and charges during the import.

However, if parties wish to impose the total amount of expenses for import of the freight to the seller, this must be clearly and unambiguously stated in the addition to the existing buy-sell contract.

This term shall be only applied during the transportation of the freight by sea or internal water transport or by the farraginous transportations when the freight is unloaded from the vessel to the harbor of the point of destination. However, if the parties want to include to the seller’s obligations the risks and expenses connected with the delivery of the freight from the harbor to some other place (storehouse, terminal and so on) inside the port or outside the port, the terms DDU and DDP must be applied.

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