Trade terms, also known as trade conditions or price terms, are generated in the long-term international trade practice. They are specialized terms used to express the price composition of goods, explain the place of delivery, and determine issues such as risk, cost and responsibility division.
Common terms:
1.EXW (Ex Works)
EXW "Ex Works (... designated place)" means that the seller delivers the goods to the buyer at his location or other designated place (such as a workshop, factory or warehouse), and the seller does not handle export customs clearance or load the goods on any means of transport. This term is the trade term with the least obligations for the seller. If the buyer cannot directly or indirectly handle the export procedures for the goods, it is not advisable to use this method. However, if both parties want the seller to be responsible for loading the goods and bear all the costs and risks of loading the goods at the time of shipment, it must be clearly stated in the sales contract. When the buyer cannot directly or indirectly handle the export procedures, this term should not be used, but FCA should be used if the seller agrees to load the goods and bear the costs and risks.
2. FCA (Free Carrier)
FCA stands for free carrier, which means "free carrier (... designated place)". It means that the seller has completed the delivery as long as he delivers the goods to the carrier designated by the buyer at the designated place and completes the export customs clearance procedures. It should be noted that the choice of delivery place will affect the obligations of loading and unloading at that place. If the seller delivers the goods at its location, the seller shall be responsible for loading. If the seller delivers the goods at any other place, the seller is not responsible for unloading.
3.CIF (Cost, Insurance and Freight)
Definition: CIF is the first capital letters of the three words COST, INSURANCE, AND FREIGHT (NAMED PORT OF DESTINATION). In Chinese, it means cost plus insurance plus freight (named port of destination). It means that when the goods pass the ship's rail at the port of shipment (actually in the ship's hold), the seller has completed the delivery. The freight and insurance premiums of the goods from the port of shipment to the port of destination are paid by the seller, but the risk of damage and loss of the goods after loading is borne by the buyer.
4.CPT (Carriage Paid to)
CPT means Carriage Paid to (… named place of destination). This term means that the seller, in addition to the same obligations as under the term, must also obtain cargo insurance for the buyer's risk of loss or damage of the goods during transportation, enter into an insurance contract, and pay the insurance premium.
5.CIP (Carriage and Insurance Paid to)
The English name of Carriage and Insurance Paid to (CIP) is Carriage and Insurance Paid to (… named place of destination), which means that the seller, in addition to the same obligations as in the Carriage Paid to (… named place of destination) term, must also arrange for marine insurance for the risk of loss or damage of the goods during transportation that should be borne by the buyer and pay the insurance premium. This term applies to any mode of transport.
6.DAF (Delivered At Frontier)
DAF is the abbreviation of Delivered At Frontier, which is translated into Chinese as "Delivery at Frontier". The term is followed by a designated place (… named place). DAF means that when the seller delivers the goods that are still on the delivery vehicle and have not been unloaded to the buyer at the designated place and specific delivery point at the border, before the customs border of the adjacent country, and completes the export customs clearance procedures for the goods but has not yet completed the import customs clearance procedures, the delivery is completed.
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