Unit 6 Price terms
Incoterms are used in international import/export contracts to show the
responsibilities of the buyers and sellers. They define who is responsible for
freight or carriage (transportation), insurance against risks, “duty”(import taxes) and clearance (import and export documentation). Group E Departure EXW(工Ex works (…named place) All modes of
Group F Main FCA(货交Free Carrier(…named place) Ditto
Carriage Unpaid 承运人)
FAS(船边Free Alongside Sea and inland
交货) Ship(…named port of waterway transport
上交货) Free on Board(ditto)
Group C Main CFR(成Cost and Freight(named port Ditto
Carriage Paid(出本加运费) of destination)
口商付所有运费) CIF(成本,Cost, Insurance and Ditto
CPT(运费Carriage Paid To(named All modes of
付至) place of destination) transport
CIP(运费Carriage and Insurance Paid Ditto
Group D Arrival DAF(边境Delivered at Frontier(named Ditto
交货) place )
DES(目的Delivered EX Ship (named
港船上交port of destination)
DEQ(目Delivered EX Quay(ditto)
交货) Delivered Duty
DDU(未Unpaid(named place of
DDP(完税Delivered Duty Paid (ditto)
It indicates that the seller delivers when the goods pass the ship’s rail(过船弦) at the named port of shipment (启运港). This means that the buyer has to bear all
costs and risks of loss of or damage to the goods from that point. The FOB term
requires the seller to clear goods for export (卖方报关). If the parties don’t intend to deliver the goods across the ship’s rail, the FCA term should be used.
The essence of an FOB contract is the notion that a seller is responsible for getting goods on board a ship designated by a buyer. For example, FOB Singapore (starting port 起运港) requires the buyer to name the ship that will
accept delivery in Singapore.
The seller’s responsibilities in detail are:
1) Obtaining export license, authorizations(official documents) (官方许可证)and
carrying out all customs formalities(海关手续) for the export of the goods.
2) Take responsibility of all the risks and costs before the goods are transferred to the vessel by crossing the rail at the port of shipment
3) Delivering the goods on board the vessel designated by the buyer at the port of shipment within the period stipulated in the contract and inform the buyer in due course.
Providing the commercial documents including invoice and contract of carriage(B/L) and so on, or its equivalent electronic messages to the buyer.(提交商业发票, 以及运
The buyer’s responsibilities are:
1) Chartering ships or booking liner spaces (班轮)
2) Obtaining all kinds of documents required for import clearing and carrying out import formalities).
3) Taking delivery of the goods, making payment to the seller.
4) Take responsibility of all the costs and risks after the goods has been on the board at the port of shipment.
The FOB term is commonly used in the sale of bulk commodity cargo such as oil, grain, and ore (矿石)where passing the ship’s rail is important. However, it’s also
commonly used in shipping container loads of other goods. And the buyer often can find its own domestic carriers or own their vessels in seller’s country.
Under the CFR term, the seller also delivers when the goods pass the ship’s rail
at the port of shipment but the seller must pay the costs and freight necessary to bring the goods to the named port of destination.
The cost refers to those in production or some occurring in dealing with export license, formalities and so on. The cost in CFR is the same to the all the costs occurring in FOB except that the freight that refers to the main carriage given to the shipping company should be paid to the port of destination in stead of the port of shipment and that the seller(shipper) instead that the buyer is responsible for making arrangement of the ship (chartering a ship or booking a space). But the insurance is paid by the buyer.
Under the CIF term, the seller also must pay the costs and freight necessary to
bring the goods to the named port of destination and must procure marine insurance against the buyer’s risk of loss of or damage to the goods during the carriage.
The responsibility under CIF is the same to CFR except the seller should buy the insurance instead of buyer.
CIF is the most important and commonly used shipping term. It’s preferred by
buyers because it means that they have little to do with the goods until the goods arrive at a port of destination in their own countries.
Useful expressions about enquiry
1. A. I would like to make an enquiry regarding you’re your silk garments.
B. Here is our catalogue and price list.
2. A. What particular items are you interested in?
B. I am very interested in your wool carpets.
3. A. I am buying for some chain stores in America. They are interested in
Chinese woolen fabrics. I would like to make and enquiry.
B. Thank you for your enquiry. Please tell us the quantity you require so that
we can work out the offer.
4. Please quote us your lowest price for the CDMA mobile phone. 5. A. Could you tell me the indication of the price?
B. Sure. Here is out latest FOB price list. All the prices in the list are subject
to our confirmation.
A. For how long does your price remain open?
B. It is open for three days.
6. Please quote us your most competitive prices in order to conclude business. 7. Please make us a offer on CIF Hongkong bases for hand made leather gloves.
Useful expressions about quotation
1. Here is our best CIF NY price. You will find they are very competitive in the
2. A. Can you tell me how many discounts you would allow/ grant us?
B. Oh, it depends on the quantity of your order?
A. What about 5 sets?
B. We will give you 10% for 10 sets and 15% for 20sets.
3. A. I will quote for this type of computer at US$ 800 each CIF NY, May
B. I am afraid that your price is 10% higher.
A. But if you consider our quality and the latest shipment, you will not have
4. We are interested in making you a offer on our hand-make carpets which is well received in the overseas market.