Curriculum
Understanding & Applying Incoterms 2020
Module 1: Introduction to Incoterms
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Module 2: Ex Works (EXW)
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Module 3: Free Carrier (FCA)
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Module 4: Carriage Paid To (CPT)
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Module 5: Carriage & Insurance Paid To (CIP)
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Module 6: Delivered at Place (DAP)
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Module 7: Delivered at Place Unloaded (DPU)
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Module 8: Delivered Duty Paid (DDP)
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Module 9: Free Alongside Ship (FAS)
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Module 10: Free On Board (FOB)
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Module 11: Cost and Freight (CFR)
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Module 12: Cost Insurance and Freight (CIF)
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Module 13: Choosing the Right Incoterm
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Module 14: Practical Application and Case Studies
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Obligations, Costs, and Risks
In international trade, using Incoterms allows clear segregation of roles and responsibilities. It is important to understand how Incoterms impact the buyer’s and seller’s obligations, costs, and risks. These are defined as:
- Obligation: Defines the duties that a party is contractually required to fulfill.
- Costs: Defines the expenses incurred by each party.
- Risks: Defines the responsibility of each party towards the cargo should any issues arise.
Understanding the Differences Between Obligations, Costs, and Risks
While obligations and costs typically go hand in hand, there are a few situations where they are not the same. For example, a seller may be obligated to provide additional documents to the buyer in order for them to obtain additional insurance for their cargo but the seller does not bear the cost for this request.
Similarly, the obligated party for a certain task does not mean that they will undertake the risks when fulfilling their obligations. For instance, some Incoterms require the seller to contract carriage on behalf of the buyer but not take on the risks involved. As such, should any damages or issues arise during the main carriage, the seller is not held accountable for the losses.