Incoterms & trade contracts

Named place (point of delivery)

The city, port, terminal or premises written after the Incoterm abbreviation, marking where costs and risk change hands. The more precisely it is stated (e.g. “FCA Gebze, seller’s warehouse, 4 Yeni St.”), the lower the risk of dispute. Writing only a country, or no place at all, is a common mistake that leaves the transfer of risk and the split of costs unclear.

Related terms

Incoterms 2020

The eleven standard delivery terms published by the International Chamber of Commerce (ICC) that define where the seller delivers, when risk passes to the buyer and who pays for freight, insurance and customs formalities. Incoterms do not set the price, the payment method or the transfer of ownership; those must be written separately in the contract. A rule should always be quoted with a named place and the version, e.g. “FOB Mersin Port, Incoterms 2020”.

Free On Board FOB

One of the most common terms in raw material trade, used only for sea and inland-waterway transport. The seller loads export-cleared goods onto the vessel nominated by the buyer at the port of shipment, and risk passes once the goods are on board. The buyer arranges freight and insurance; for bulk cargo the loading rate, laytime and demurrage must be agreed separately. For containerised goods FCA is the more accurate choice.

Delivered at Place DAP

The seller places the goods at the buyer’s disposal on the arriving means of transport, ready for unloading, at the named destination, bearing all costs and risks up to that point. Unloading, import clearance, duties and VAT are for the buyer. Widely used for delivered truck sales; the contract should say who pays waiting charges if import formalities cause delays.

Explained in the trade handbook

Trade handbook