Incoterms 2020 Guide
Overview
Incoterms 2020 are international commercial terms published by the International Chamber of Commerce (ICC). They define the responsibilities of buyers and sellers in international trade.
Key Terms
- EXW (Ex Works): Seller makes goods available at their premises. Buyer bears all costs and risks.
- FOB (Free On Board): Seller delivers goods on board the vessel nominated by the buyer. Risk passes when goods are on board.
- CIF (Cost, Insurance, Freight): Seller delivers goods on board the vessel. Seller pays costs, freight, and insurance.
- DDP (Delivered Duty Paid): Seller delivers goods cleared for import. Buyer bears all risks and costs.
Common Issues in L/C Documents
- Discrepancies between Incoterms and transport documents
- Incorrect insurance coverage requirements
- Wrong place of delivery specified
Resolution: Ensure the Incoterms are correctly reflected in the commercial invoice, transport documents, and insurance certificates. For CIF/CIP terms, verify insurance coverage is at least 110% of the contract value.
Quick Reference Summary
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