The International Chamber of Commerce (ICC) created Incoterms in 1936 and regularly updates them to keep pace with evolving trade practices. Due to these updates, contracts should clearly indicate which version of Incoterms they reference - for example, Incoterms 2010.
Trade terms utilized in various countries may seem identical at first glance, yet they can carry different implications in an international context. INternational COmmercial TERMS are standardized for global commerce. All parties engaged in international trade recognize and adhere to INCOTERMS. They delineate the essential components of freight forwarding for shipping firms, traders, purchasers, vendors, and financial institutions, ensuring a shared understanding of the terms. (https://www.tradefinanceglobal.com/freight-forwarding/incoterms/)
Traders and shipping companies globally comprehend and accept INCOTERMS, clarifying any uncertainties in international trade. Rather than attempting to precisely define expectations in a contract, the terms are already established by the ICC.
Replaced Terms
The terms DAF, DES, and DEQ are rarely utilized. Consequently, the ICC has replaced these, along with DDU, with two new terms (DAT, DAP).
DAF - Delivered At Frontier (2000)
This term indicates that the seller delivers when the goods are made available to the buyer on the arriving transport means, not unloaded, cleared for export but not cleared for import, at the specified point & location at the frontier - prior to the customs border of the neighboring country. This term is applicable for deliveries to a land frontier.
DES - Delivered Ex Ship (2000)
The seller delivers when the goods are made available to the buyer onboard the vessel, not cleared for import at the designated port of destination. The seller bears all costs & risks associated with transporting the goods to the named port before unloading. This term is exclusively used when goods are delivered by sea.
DEQ - Delivered Ex Quay (2000)
This term mirrors DES, except the seller is responsible for placing the goods at the disposal of the buyer, not cleared for import, on the quay (wharf) at the specified port of destination. The seller bears all costs & risks similar to DES, including unloading the goods at the quay. This term is applicable solely in maritime transport.
DDU - Delivered Duty Unpaid (2000)
This term signifies that the seller delivers the goods to the buyer, not cleared for import, and not unloaded from the arriving transport means at the specified destination. The seller assumes all costs & risks related to delivering the goods to the designated location, excluding "duty" (which encompasses the responsibility for customs formalities & payment of those formalities, duties & taxes) required for import into the destination country. The buyer is accountable for all customs & duties & taxes.
New Terms
The two new terms are:
DAT - Delivered at Terminal (specified terminal at port or location of destination) (2010)
The seller covers transportation costs to the terminal, except for expenses related to import clearance, and assumes all risks until the goods are unloaded at the terminal.
DAP - Delivered At Place (specified location of destination) (2010)
The seller is responsible for transportation costs to the specified location, excluding expenses related to import clearance, and assumes all risks up until the point that the goods are ready for unloading by the buyer.
