Learning more about Incoterms®2010

According to the International
Chamber of Commerce (ICC)
the fourth of the Incoterms –
Carriage and Insurance Paid
To (CIP), at a named place of
destination, means that “the
seller delivers the goods to
the carrier or another person
nominated by the seller at an
agreed place (if any such place
is agreed by the parties) and
that the seller must contract
for and pay the costs of
carriage necessary to bring
the goods to the named place
of destination”.
The ICC’s Incoterms ®2010
identifies ten obligations that
the seller may need to fulfil in
terms of Ex Works: (1) general
obligations of the seller;
(2) licences, authorisations,
security clearances and other
formalities; (3) contract
of carriage and insurance;
(4) delivery; (5) transfer of
risks; (6) allocation of costs;
(7) notices to the buyer;
(8) delivery document; (9)
checking – packaging –
marking; and (10) assistance
with information and related
costs.
The general obligations
of the seller are essentially
the provision of goods
in conformity with the
contract, which implies that
the documents stipulated
in the contract of sale must
be provided. In respect of
the licences, authorisations,
security clearances and
formalities, the seller must
obtain these at his own risk
and expense, and also needs
to account for all export
(customs) formalities.
The seller must contract
or procure the contract of
carriage of the goods. Such
contract must be from the
agreed point of delivery.
The seller must, at his own
expense, arrange cargo
insurance. With respect to
such insurance, you should
consult the ICC literature in
this regard. As for the delivery
to be effected, the seller has to
deliver the goods by handing
them over to the carrier, as
per the specification of the
contract of sale. Once the
goods have been delivered
then all risks are transferred
from the seller to the buyer.
As for the allocation of costs,
the seller must pay all costs
until the goods have been
delivered. Effectively all costs
are in accordance with the
contract of carriage. The seller
must give notice to the buyer
of the delivery of the goods.
The seller must provide the
buyer with the usual transport
documents. With respect to
the checking, packaging and
marking, the seller must pay
those costs that are necessary
for the purpose of the delivery
of the goods. As for the
assistance with information
(including security-related
information) and related costs,
the buyer could request this
from the seller, but this would
be for the buyer’s account.
In next week’s issue we will
define Carriage and Insurance
Paid To (CIP) – The Buyer’s
Obligations.