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Concepts

INCOTERMS 2010

Trade terms: time, place, manner

Parties define terms: ICC, US, UK, Japan, CISG (Art 6) - Parties should be clear

INCOTERMS:

- private trade terms (ICC) apply to contracts of sale NOT carriage

- 4 groups - E,F,C,D: maritime/any means

www.iccwbo.org/incoterms

Passing of Risk:

Delivery - place & time

Obligation Transport Costs - inspections

Customs Formalities - which party?

Shipping Documents - which party?

'Free': Seller's obligation to deliver to named place for transfer to carrier

E-group: EXW - named place (seller's pob)

F-group: FCA, FAS, FOB - seller pays transport to named place of shipment

C-group: CFR, CIF, CPT, CIP - buyer pays transport to named place of destination

D-group: DAT, DAP, DDP - seller pays all costs to named place of destination

Liability:

EXW, FCA, FAS, FOB, CFR, CPT = buyer

CIF, CIP = seller

DAT, DAP, DDP = no obligation

"FAS (FOB) Rotterdam, Incoterms 2010"

August et al. 11A, Exs 1,2,4,5 /Wevers Ch 8

Ex 5: CIF - port of destination

Ex 1: FOB - port of shipment

Seller ships potatoes FOB Washington to Japan - buyer chooses ship to take delivery - potatoes dumped - buyer sues seller

IS SELLER LIABLE? Yes

FOB: seller to deliver, clear, - risk at rail

Seller responsible even after buyer's ship begins to take goods off dock - goods did not cross ship's rail

Seller agrees to ship goods CIF San Francisco to London - goods loaded & documents SF - seller asks immediate payment - buyer refuses, cites right to inspect goods in London - seller sues for immediate payment

WILL SELLER WIN? Yes

CIF (CFR + insurance): seller to pay to port, load, insurance & risk at rail (CISG, Arts 30, 33, 38)

Buyer may claim insurance if goods lost - seller's obligations complete when documents tendered to buyer - so buyer obliged to pay - buyer can inspect goods after delivery (Art 38(2))

Carriage: Obligation of delivery, resulting from international sales contract

Carrier > goods on behalf of sender

Contract of Carriage: Freedom of sender & carrier limited by international treaties

CoC - between carrier & seller or buyer

Parties: Sender (3rd Party loading)

Consignee (3rd Party accept delivery) & goods at own risk Carrier (3rd Party transport) then carrier is sender

Ex 4: CIF - port of destination

Ex 2: FAS - port of shipment

Seller ships potatoes FAS Washington to Japan - buyer chooses ship to take delivery - potatoes dumped - buyer sues seller

IS SELLER LIABLE? No

FAS: seller to place goods at port, clear for export & risk passes alongside ship

Seller's responsibilities end upon delivery of goods alongside - buyer to pay for lighter alongside Russet

Seller agrees to ship goods CIF Sydney to Honolulu - late delivery but rail & ship bills of lading & insurance - buyer refuses to pay - seller sues buyer to enforce contract

WILL SELLER WIN? No

CIF (CFR + insurance): seller to pay to port, load, insurance & risk at rail (CISG, Arts 30, 33)

Seller failed to ship by 31 Dec - deficiency of service - did not deliver goods at contracted date, place & time

Documents tendered to buyer, so seller's obligations complete, buyer liable - BUT - seller failed to perform, so buyer can avoid

Contract of Carriage & INCOTERMS

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