A delivery term is a three-letter abbreviation in a sales contract. It states where the seller fulfils the obligation to deliver, which costs the seller bears and from which point the risk of loss or damage is the buyer's. The rules are published by the International Chamber of Commerce (ICC); the current version took effect on 1 January 2020.

In brief

  • There are 11 Incoterms® 2020 rules. Seven apply to any mode of transport, four only to sea and inland waterway transport.
  • A rule sets the place of delivery, the split of costs and the point at which risk passes.
  • It does not deal with transfer of ownership, payment terms or the consequences of a breach of contract.
  • It applies only when the contract refers to it — with the named place and the version, for example "FCA Bratislava, Incoterms® 2020".

Rules for any mode of transport

  • EXW — the seller places the goods at the buyer's disposal at a named place, such as its factory or warehouse. The seller does not load them and does not clear them for export.
  • FCA — the seller hands the goods to the carrier nominated by the buyer and clears them for export.
  • CPT — the seller pays for carriage to the named destination. Risk, however, passes when the goods are handed to the first carrier.
  • CIP — as CPT; the seller also takes out insurance to the level of Institute Cargo Clauses (A).
  • DAP — the seller delivers the goods to the named destination, ready for unloading.
  • DPU — the seller delivers the goods to the named destination and unloads them. It is the only rule that puts unloading on the seller.
  • DDP — the seller delivers the goods to the named destination, clears them for import and pays the duty.

Rules for sea and inland waterway transport only

  • FAS — the goods are delivered when they are placed alongside the vessel at the port of shipment.
  • FOB — the goods are delivered on board the vessel at the port of shipment.
  • CFR — the seller pays the freight to the port of destination. Risk passes on board the vessel at the port of shipment.
  • CIF — as CFR; the seller also takes out insurance to at least the level of Institute Cargo Clauses (C).

What changed from the 2010 version

  • DAT was renamed DPU. The destination no longer has to be a terminal.
  • Under FCA the parties may agree that the buyer instructs the carrier to issue an on-board bill of lading to the seller.
  • CIP requires a higher level of insurance cover (Clauses A). CIF kept Clauses C.
  • The rules now also cover carriage by the seller's or the buyer's own means of transport.
  • Security-related obligations and their costs are set out in more detail.

What is often confused

  • CPT, CIP, CFR and CIF have two different points: the place up to which the seller pays for carriage, and the place where risk passes. Risk passes earlier.
  • FOB, CFR and CIF assume delivery on board a vessel. For containerised goods handed to the carrier at a terminal, the ICC explanatory notes point to FCA, CPT and CIP.
  • The 2010 and 2020 versions exist side by side. What counts is which one the contract refers to.