With the aid of eleven standard clauses, the ICC Incoterms® regulate the obligations of contracting parties for the sale of goods. They do not represent an independent contract, but always part of a contract: The respective Incoterms® clause defines the obligations of the contracting parties in costs, in transport and customs clearance of the goods and at which point the transfer of risk from the seller to the buyer takes place.
To ensure that it is indisputable which rules become part of the contract, the year of publication of the respective clause should always be indicated and supplemented by information on the respective port, place or geographical points.
Incoterms® clauses for buyers and sellers describe obligations in the following areas:
Obligations of the buyer
A1 General obligations
A3 Transfer of Risk
A6 Delivery/Transport Document
Obligations of the seller
B1 General obligations
B3 Transfer of Risk
B6 Proof of delivery
Seven of the eleven Incoterms® clauses apply to all types of transport, four only for sea and inland waterway transport. They consist of the four groups C, D, E and F.
E and D with the clauses EXW and DDP indicate exceptional delivery conditions in the Incoterms® rules: EXW only obliges the seller to provide the buyer with goods at a previously determined location – which may also be on the seller‘s premises.
This means that the place of delivery in this case is located closest to the seller. Meanwhile, DDP requires the seller to make the goods, cleared for import, available at a named place at destination. This means that the place of delivery is closest to the buyer.
In group E, the transfer of risk between the seller and the buyer takes place very early – before the actual transport of the goods begins. In group D, where the goods are only delivered at the place of destination, the transfer of risk is correspondingly very late at the end of the transport. In groups F and D, on the other hand, the transfer of risk from the seller to the buyer takes place in the initial phase of a transport. However, the seller‘s obligation to deliver is fulfilled – in contrast to Group D, where the place of delivery and the place of destination are the same – irrespective of whether the goods actually arrive at the place of destination. Since the place of delivery is on the seller‘s side, these sales are called forwarding purchases.
Group C and F differ insofar as, in case of the C clauses, sellers commission, organize and pay for the transport of a commodity beyond the place or port of delivery. Group C is the only group in which transport, insurance and risk are not transferred from one party to another at the same time and place, but instead are separated in time or space. In Group F, the buyer is responsible for commissioning, organizing and paying for the transport of the goods beyond the place or port of delivery, unless otherwise agreed by the parties.