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INCOTERMS - International Commercial Terms

  • A set of international rules
  • Interpretation of commonly used trade terms
  • Outline cost, responsibility and risk
  • Deal with buyers and sellers under sales contract

Ex-works (EXW) - P.S. 在仓亦当已卖出

  • Sellers deliver when they place goods at disposal of buyers at sellers' premises or another named place
  • Not cleared for export
  • Not loaded on any collecting vehicle
  • Minimum obligation for sellers

Free on Board (FOB) P.S.: 上船后seller's risk past

  • Sellers deliver when goods pass ship's rail at named port of shipment
  • Sellers clear goods for export
  • Buyers bear all costs and risks of loss of or damage from that point
  • Only for sea or inland waterway transport
  • Marked "Freight Collect" on Bills of Lading

Free Carrier (FCA) P.S.: 同FOB,except是其他类型交通工具

  • Sellers deliver goods to carrier nominated by buyers at named place
  • Sellers clear for export
  • Irrespective of mode of transport including multi modal transport

Cost and Freight (CFR/CPT) P.S.: 与上面的不同在亦运输费seller承当

  • Sellers deliver when goods pass ship's rail in port of shipment (CFR) or to named carrier (CPT)
  • Sellers clear goods for export
  • Sellers pay costs and freight necessary to bring goods to named port of destination
  • Risk of loss of or damage to goods are transferred from sellers to buyers after time of delivery

Cost, Insurance and Freight (CIF / CIP) P.S.: 与上一项不同在保险费等费用亦由seller承当

  • Sellers deliver when goods pass ship's rail in port of shipment (CIF) or delivered to named carrier (CIP)
  • Sellers pay costs and freight necessary to bring goods to named port of destination
  • Risk of loss of or damage to goods are transferred from sellers to buyers after time of delivery
  • Sellers have to procure marine insurance against buyer's risk of loss of or damage to goods during carriage
  • Marked "Freight Prepaid" on Bills of Lading

Revenue recognition for sales of goods (HKAS 18)

  • Transfer to buyer significant risks & rewards of ownership of goods
  • Retain neither continuing managerial involvement to degree usually associated with ownership nor effective control over goods sold
  • Amount of revenue can be measured reliably
  • Probable that economic benefits associated with transaction will flow to entity
  • Cost incurred or to be incurred in respect of transaction can be measured reliably
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Summary Table for INCOTERMS (Source: Year 2009 CPD seminar)

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