Most commonly used Incoterms (simplified):

EXW (Ex Works): The seller makes the goods available at their premises, or at another named place. The buyer is responsible for all the rest.

FCA (Free Carrier): The seller takes care of export clearance and loads the goods on vehicle. If named place is port/airport, the seller delivers the goods up to terminal, but buyer is responsible for unloading the vehicle.

FOB (Free on Board): The seller bears all costs and risks up to the point the goods are loaded on board the vessel. The buyer is responsible for the freight and destination costs. The seller should remember to check the port/terminal charges before signing the contract.

CFR (Cost and Freight): The seller pays for the carriage of the goods up to the named port of destination. Risk transfers to buyer when the goods have been loaded on board the ship in the country of export. The seller is responsible for origin costs including export clearance and freight costs for carriage to named port. CFR does not include insurance. The buyer should remember to check the destination charges before signing the contract.

CIF (Cost, Insurance & Freight: Otherwise same as CFR, but the seller is required to obtain insurance for the goods up to named port/airport of destination.

DAP (Delivered at Place): The seller delivers goods up to final place of delivery. The buyer is rensposible for import customs clearance, import duties and unloading the goods from vehicle.

DDP (Delivered Duty Paid): The seller delivers goods up to final place of delivery duty paid. The buyer is rensposible for unloading the goods from vehicle. When importing to Finland, importer should remember to check which party pays import VAT.


Incoterms are always a combination of two parts: the actual term and a place. When negotiating the contract, it’s recommended to clearly define exact place (for example: “after loaded on truck”) where risk and cost are handed over, to avoid misinterpretations. Even though the Incoterms have been a standard in international sales for almost 100 years, we see outdated or wrongly used terms every day.

The Incoterms or International Commercial Terms are a series of pre-defined commercial terms published by the International Chamber of Commerce (ICC) relating to international commercial law. Latest version has been published in 2010, next version is expected in 2020. “Incoterms” is a registered trademark of the ICC. They are intended to reduce or remove altogether uncertainties arising from differing interpretation of the rules in different countries. As such they are regularly incorporated into sales contracts worldwide.

Wikipedia has detailed article about this subject. Information on this page is mostly based on that article.