F.A.S. stands for "Free Alongside Ship" and is used in conjunction with a named port of shipment. The seller's obligation to deliver is fulfilled when the goods have been placed alongside the vessel at the named port of shipment. From that moment, the buyer bears all costs and risks of loss of, or damage to, the goods. As its name implies, this term can only be used for sea or inland waterway transport.

Under F.A.S., the seller's main obligations are to:

• deliver the goods alongside the named vessel at the loading place and port of shipment named by the buyer on the date or within the period stipulated and in the manner customary at the port; and

• pay all costs relating to the goods until the seller has fulfilled his delivery obligations. The seller is not required to provide or pay for the contract of carriage or insurance.

1. Clear the goods for export. This involves obtaining the necessary export and import licenses or authorizations and whatever other customs formalities are required. It, therefore, should not be used if the buyer is unable to carry out the export formalities.

2. Contract at his own expense for the carriage of the goods from the named port of shipment.

3. Bear all risks of loss of or damage to the goods from the time seller has fulfilled his delivery obligations. If the buyer fails to meet his obligations with regard to clearing the goods for export, he bears all additional risks of loss of or damage to the goods that result. If the buyer fails to give the seller sufficient notice of the vessel name, loading place, and required delivery time, or if the vessel he has named does not arrive on time or is unable to take the goods, he bears all risks of loss of or damage to the goods from the agreed date of delivery.

4. Pay all costs relating to the goods from the moment the seller has delivered the goods alongside the named vessel. Buyer must pay any additional costs incurred either because the vessel it named has not arrived on time or is unable to take the goods, or because the buyer has not met his obligations to obtain the necessary import and export authorizations.

F.O.B. stands for "Free On Board" and means that the seller fulfills his obligation to deliver when the goods have passed over the ship's rail at the named port of shipment. Thus, the transfer of risk is as follows: the seller bears all risk of loss of, or damage to, the goods until they have passed the ship's rail at the named port of shipment; and the buyer bears all costs and risk of loss of, or damage to, the goods from that point. As with F.A.S., if the buyer fails to give sufficient notice to the seller of the vessel name, loading point, and required delivery time, or if the vessel named by him does not arrive on time or is unable to take the goods, he bears all risk of loss of, or damage to, the goods from the agreed date of delivery, provided they have been clearly set aside and identified as the contract goods. As with F.A.S., F.O.B. is used in conjunction with a named port of shipment and can only be used for sea or inland waterway transport.

In contrast to F.A.S., the F.O.B. term requires the seller to clear the goods for export. This still leaves the burden on the buyer to carry out all customs formalities necessary for the importation of the goods.

Under C. & F., the seller must pay all the costs and freight necessary to bring the goods to the named port of destination, but the risk of loss of or damage to the goods, as well as any additional costs due to events occurring after the time the goods have been delivered on board the vessel, is transferred from the seller to the buyer when the goods pass the ship's rail in the port of shipment. Again, this term can only be used for sea and inland waterway transport.

The seller is required to:

• clear the goods for export.

• provide the contract of carriage, which means that he must contract on the customary terms for the carriage of the goods to the named port of destination at his own expense, but is not required to provide insurance; and

• pay all costs incurred to bring the goods to the port of destination, including freight, costs of loading the goods on board and any charges for unloading at the port of discharge, and costs of clearing the goods through customs for exportation, plus whatever duties, taxes, or other official charges are payable upon exportation.

C.I.F. stands for "Cost, Insurance, and Freight." The seller's obligations are the same as under C. & F., but with the additional obligation of procuring marine insurance against the buyer's risk of loss of, or damage to, the goods during the carriage. The seller arranges for the insurance and pays the insurance premium. The buyer should be aware that under the C.I.F. term, the seller is only required to obtain the minimum insurance coverage, so the buyer may wish to purchase additional coverage. Again, this term can only be used for sea and inland waterway transport.

More specifically, the seller is required to:

• clear the goods for export and bear the associated expenses;

• arrange and pay for the carriage of the goods on the customary terms to the named port of destination;

• obtain and pay for cargo insurance so that the buyer, or any other person having an insurable interest in the goods, will be able to claim directly from the insurer any loss, and provide the buyer with the insurance policy or other evidence of insurance cover. (The insurance will be contracted with underwriters or an insurance company of good repute and, unless agreed otherwise, be in accordance with minimum cover of the Institute Cargo Clauses (Institute of London Underwriters) or any similar set of clauses. The minimum insurance shall cover the price stated in the contract, plus 10 percent (i.e. 110 percent), and shall be provided in the currency of the contract.); and

• bear all risks of loss of or damage to the goods until they have passed the ship's rail at the port of shipment.

Brief descriptions of other shipping terms that an international trader may encounter are provided below. Each of these terms imposes different duties and rights on the parties.

The seller has fulfilled his obligation to deliver when he has cleared the goods for export and has handed them over into the charge of the carrier named by the buyer at the named place or point. If a precise point is not indicated by the buyer, seller may choose where the carrier will take the goods into his charge so long as it is within the stipulated place or range. This term may be used for any mode of transport, including multimodal transport.

The seller's duty to deliver is met when he has made the goods available at his premises (i.e. factory, warehouse, etc.) to the buyer. This means that he is not responsible for loading the goods onto the vehicle provided by the buyer or for clearing the goods for export, unless otherwise agreed. The buyer bears all the costs and risks involved in taking the goods from the seller's premises to the desired destination. This term represents the minimum obligation for the seller. It should not be used when the buyer cannot carry out directly or indirectly the export formalities.

C.P.T. requires the seller to pay the freight for the carriage of the goods to the named destination. The risk of loss of, or damage to, the goods, plus any additional costs due to events occurring after the time the goods have been delivered to the carrier, is transferred from the seller to the buyer when the goods have been delivered into the carrier's custody.

The seller's obligations are the same as under C.P.T., but with the additional duty of procuring cargo insurance against the buyer's risk of loss of, or damage to, the goods during the carriage. The seller contracts for the insurance and pays the premium. This term may be used for any mode of transport.

The seller has met his duty to deliver when he has cleared the goods for export and has made them available at the named point and place at the frontier, but before the customs border of the adjoining country. The term "frontier" may be used for any frontier including that of the country of export. While the term may be used for any mode of transport, it is primarily intended to be used when goods are to be carried by rail or road.

The seller's duty to deliver is met when the goods are made available to the buyer on board the ship at the named port of destination, although uncleared for import. The seller bears all the costs and risks involved with bringing the goods to the named port of destination. This term can only be used for sea or inland waterway transport.

When the seller has made the good available to the buyer on the quay (wharf) at the named port of destination, cleared for importation, he has met his duty to deliver. He bears all risks and costs including duties, taxes, and other official charges of delivering the goods thereto. If the parties wish the buyer instead of the seller to clear the goods for importation and pay the duty, the words "duty unpaid" should be used instead of "duty paid." The parties can also exclude from the seller's obligations some of the costs payable upon importation of the goods, such as value-added tax (VAT). This should be made clear by adding words to this effect: "Delivered ex quay, VAT unpaid, (...named port of destination)." This term can only be used for sea or inland waterway transport.

When the goods have been made available at the named place in the country of importation, the seller's duty to deliver is fulfilled. The seller bears the cost and risks incurred in bringing the goods to that point, but is not responsible for duties, taxes, and other charges payable upon importation, as well as the costs and of carrying out customs formalities. If the buyer fails to clear the goods for import in time, he pays any additional costs and bears any risks that result. If the parties wish to include in the seller's obligations some of the costs payable upon importation of the goods, such as value-added tax (VAT), this should be made clear by adding words, such as, "Delivered duty unpaid, VAT paid, (...named place of destination)." This term may be used with any mode of transport.

The seller has completed his duty to deliver when the goods have been made available at the named place in the country of importation. The seller bears all risks and costs, including duties, taxes, and other charges of delivering the goods to that point and from clearing them for importation. While the E.X.W. term represents the minimum obligation for the seller, the D.D.P. term represents the maximum obligation. If the parties wish the buyer to clear the goods for importation and to pay the duty, the term D.D.U. should be used. If the parties wish to exclude from the seller's obligations some of the costs payable upon importation of the goods, such as value-added tax (VAT), this should be made clear by adding words such as: "Delivered duty paid, VAT unpaid (...named place of destination)." This term may be used in conjunction with any mode of transport.