International Terms of Sales

A glossary of frequently used terms in international sales.

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Ex Works (EXW) is an international trade term that describes an agreement in which the seller is required to make goods ready for pickup at his or her own place of business. All other transportation costs and risks are assumed by the buyer.


Free Carrier (named place of delivery) FCA is a very flexible Incoterm because it allows the delivery of the goods, both on the premises of the seller and at various points such as transports centers, ports, airports, container terminals, etc., which are located in the country of the seller.


Free Alongside Ship” means that the seller fulfills his obligation to deliver when the goods have been placed alongside the vessel on the quay or in lighters at the named port of shipment.


FOB (Free On Board) is a term in international commercial law specifying at what point the seller transfers ownership of the goods to the buyer. Under the Incoterms 2010 standard published by the International Chamber of Commerce, FOB is only used in containerized sea freight, and also defines ownership transfer.


Cost and Freight requires the seller to clear the goods for export, deliver them onboard the ship at the port of departure and pay for the transport of the goods to the named port of destination. The risk passes from seller to buyer when the goods are delivered onboard the ship.


CIF Cost Insurance and freight (Port of destination) Incoterms® 2010 Seller must pay the costs and freight to bring the goods to the port of destination. However, risk is transferred to the buyer once the goods are loaded on the vessel (this rule is new!). Maritime transport only included Insurance for the goods.


Carriage Paid To (named place of delivery). In Incoterm CPT the delivery of goods occurs when the seller makes them available to the carrier that he has hired to perform international transport, although the seller also manages and assumes the costs of international transport to the place of destination.


Carriage and insurance paid to (CIP) is a commercial term indicating that the seller delivers the goods to a carrier or to another person nominated by the seller, at a place mutually agreed upon by the buyer and seller, and that the seller pays the freight and insurance charges to transport the goods to the specified destination.


Delivered At Terminal refers to the seller delivering the goods, once unloaded from the arriving means of transport. Goods are placed at the disposal of the buyer at the named terminal, at the named port or place of destination.


Delivered at Place (DAP) Can be used for any transport mode, or where there is more than one transport mode. The seller is responsible for arranging carriage and for delivering the goods, ready for unloading from the arriving conveyance, at the named place.


Delivered Duty Paid – is another useful incoterm that can be used with any mode of transport. It is very similar to DDU except that with DDP the seller is also responsible for all import customs formalities and duty and for final delivery of the goods to the buyer at the named place of destination.

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