FOREWORD

Since the issuance of American Foreign Trade Definitions in 1919 many changes in practice have occurred. The 1919 Definitions did much to clarify and simplify foreign trade practice, and received wide recognition and use by buyers and sellers throughout the world. At the Twenty Seventh National Foreign Trade Convention, 1940, further revision and clarification of these Definitions was urged as necessary to assist the foreign trader in the handling of his transactions.
The following Revised American Foreign Trade Definitions - 1990 are recommended for general use by both exporters and importers. These revised definitions have no status at law unless there is specific legislation providing for them, or unless they are confirmed by court decisions. Hence, it is suggested that seller and buyers agree to their acceptance as part of the contract of sale. These revised definitions will then become legally binding upon all parties.
In view of changes in practice and procedure since 1941, certain new responsibilities for sellers and buyers are included in these revised definitions. Also, in many instances, the old responsibilities are more clearly defined than in the 1941 Definitions, and the changes should be beneficial both to sellers and buyers. Widespread acceptance will lead to a greater standardization of foreign trade procedure, and to the avoidance of much misunderstanding.
Adoption by exporters and importers of these revised terms will impress on all parties concerned their respective responsibilities and rights.

General Notes of Caution

1. As foreign trade definitions have been issued by organizations in various parts of the world, and as the courts of countries have interpreted these definitions in different ways, it is important that sellers and buyers agree that their contracts are subject to the Revised American Foreign Trade Definitions
- 1990 and that the various points listed are accepted by both parties.
2. In addition to the foreign trade terms listed herein, there are terms that are at times used, such as Free Harbor, C.I.F.&C. (Cost, Insurance, Freight, and Commission), C.I.F.C.&I. (Cost, Insurance, Freight, Commission, and Interest), C.I.F. Landed (Cost, Insurance, Freight, Landed), and others. None of these should be used unless there has first been a definite understanding as to the exact meaning thereof, It is unwise to attempt to interpret other terms in the light of the terms given herein. Hence, whenever possible, one of the terms defined herein should be used.
3. It is unwise to use abbreviations in quotations or in contracts which might be subject to misunderstanding.
4. When making quotations, the familiar terms "hundredweight" or "ton" should be avoided. A hundredweight can be 100 pounds of the short ton, or 112 pounds of the long ton. A ton can be a short ton of 2,000 pounds, or a metric ton of 2,204.6 pounds, or a long ton of 2,240 pounds. Hence, the type of hundredweight or ton should be clearly stated in quotations and in sales confirmations. Also, all terms referring to quantity, weight, volume, length, or surface should be clearly defined and agreed upon.
5. If inspection, or certificate of inspection, is required, it should be agreed, in advance, whether the cost thereof is for account of seller or buyer.
6. Unless otherwise agreed upon, all expenses are for the account of seller up to the point at which the Buyer must handle the subsequent movement of goods.
7. There are a number of elements in a contract that do not fall within the scope of these foreign trade definitions. Hence, no mention of these is made herein. Seller and buyer should agree to these separately when negotiating contracts. This particularly applies to so-called "customary" practices.

DEFINITIONS OF QUOTATIONS

(I) EXW (Ex Works - named place)

"Ex Factory", "Ex Mill", "Ex Mine", "Ex Plantation", "Ex Warehouse",
etc. (named point of origin)

Under this term, the price quoted applies only at the point of origin, and the seller agrees to place the goods at the disposal of the buyer at the agreed place on the date or within the period fixed.
Under this quotation :
Seller must (1) bear all costs and risks of the goods until such time as the buyer is obliged to take delivery therof ;
(2) render the buyer, at the buyer's request and expense, assistance in obtaining the documents issued in the country of origin, or of shipment, or of both, which the buyer may require either for purposes of exportation, or of importation at destination.
Buyer must (1) take delivery of the goods as soon as they have been placed at his disposal at the agreed place on the date or within the period fixed ;
(2) pay export taxes, or other fees or changes, if any, levied because of exportation ;
(3) bear all costs and risks of the goods from the time when he is obligated to take delivery whereof ;
(4) pay all costs and charges incurred in obtaining the documents issued in the country of origin, or of shipment, or of both, which may be required either for purposes of exportation or of importation at destination.

(II) F.O.B.(Free on Board)

Note : Seller and buyer should consider not only the definitions but also the "Comments on all F.O.B. Terms" given at the end of this section, in order to understand fully their respective responsibilities and rights under the several classes of "F.O.B." terms.

(II-A) "F.O.B.(named inland carrier at named inland point
of departure)"

Under this terms, the price quoted applies only at inland applies only at inland shipping point, and the seller arranges for loading of the goods on, or in, railway cars, trucks, lighters, barges, aircraft, or other conveyance furnished for transportation.
Under this quotation :
Seller must (1) place goods on, or in, conveyance, or deliver to inland carrier for loading ;
(2) provide clean bill of lading or other transportation receipt, freight collect ;
(3) be responsible for any loss or damage, or both, until goods have been placed in, or on, conveyance at loading point, and clean bill of lading other transportation receipt has been furnished by the carrier ;
(4) render the buyer, at the buyer's request and expense, assistance in obtaining the documents issued in the country of origin, or of shipments, or of both, which the buyer may require either for purposes of exportation, or of importation at destination.
Buyer must (1) be responsible for all movement of the goods from inland point of loading and pay all transportation costs ;
(2) pay export taxes, or other fees or charges, if any, levied because of exportation;
(3) be responsible for any loss or damage, or both, incurred after loading at named inland point of departure ;
(4) pay all costs and charges incurred in obtaining the documents issued in the country of origin, or of shipment, or of both, which may be required either for purposes of exportation, or of importation at destination.

(II-B) "F.O.B.(named inland carrier at named inland point of
departure) Freight Prepaid To (named point of exportation)"

Under this term, the seller quotes a price including transportation charges to the named point of exportation and prepays freight to named point of exportation, without assuming responsibility for the goods after obtaining a clean bill of lading or other transportation receipt at named inland point of departure.
Under this quotation :
Seller must (1) assume the seller's obligations as under II-A. except that under (2) he must provide clean bill of lading or other transportation receipt, freight prepaid to named point of exportation.
Buyer must (1) assume the same buyer's obligation as under II-A, except that he does not pay freight from loading point to named point of exportation.

(II-C) "F.O.B.(named inland carrier at named inland point of
departure) Freight Allowed To (named point)"

Under this term, the seller quotes a price including the transportation charges to the named point, shipping freight collect and deducting the cost of transportation, without assuming responsibility for the goods after obtaining a clean bill of lading or other transportation receipt at named inland point of departure.
Under this quotation :
Seller must (1) assume the same seller's obligations as under II-A, but deducts from his invoice the transportation cost to named point.
Buyer must (1) assume the same buyer's obligations as under II-A, including payment of freight from inland loading point to named point, for which seller has made deduction.

(II-D) "F.O.B.(named inland carrier at named
point of exportation)"

Under this term, the seller quotes a price including the costs of transportation of the goods to named point of exportation, bearing any loss or damage, or both, incurred up to that point.
Under this quotation :
Seller must (1) place goods on, or in, conveyance, or deliver to inland carrier for loading ;
(2) provide clean bill of lading or other transportation receipt, paying all transportation costs from loading point to named point of exportation ;
(3) be responsible for any loss or damage, or both, until goods have arrived in, or on, inland conveyance at the named point of exportation ;
(4) render the buyer, at the buyer's request and expense, assistance in obtaining the documents issued in the country of origin, or of shipment, or of both, which the buyer may require either for purposes of exportation, or of importation at destination.
Buyer must (1) be responsible for all movement of the goods from inland conveyance at named point of exportation ;
(2) pay export taxes, or other fees or charges, if any, levied because of exportation;
(3) be responsible for any loss or damage, or both, incurred after goods have arrived in, or on, inland conveyance at the named point of exportation ;
(4) pay all costs and charges incurred in obtaining the documents issued in the country of origin, or of shipment, or of both, which may be required either for purposes of exportation, or of importation at destination.

(II-E) "F.O.B. Vessel (named port of shipment)"

Under this term, the seller quotes a price covering all expenses up to, and including, delivery of the goods upon the overseas vessel provided by, or for, the buyer at the named port of shipment.
Under this quotation :
Seller must (1) pay all charges incurred in placing goods actually on board the vessel designated and provided by, or for, the buyer on the date or within the period fixed ;
(2) provide clean ship's receipt or on-board bill of lading ;
(3) be responsible for any loss or damage, or both, until goods have been placed on board the vessel on the date or within the period fixed ;
(4) render the buyer, at the buyer's request and expense, assistance in obtaining the documents issued in the country of origin, or of shipment, or of both, which the buyer may require either for purposes of exportation, or of importation at destination.
Buyer must (1) give seller adequate notice of name, sailing date, loading berth of, and delivery time to, the vessel ;
(2) bear the additional costs incurred and all risks of the good from the time when the seller has placed them at his disposal if the vessel named by him fails to arrive or to load within the designated time ;
(3) handle all subsequent movement of the goods to destination ;
(a) provide and pay for insurance ;
(b) provide and pay for ocean and other transportation ;
(4) pay export taxes, or other fees or charges, if any, levied because of exportation;
(5) be responsible for any loss or damage, or both, after goods have been loaded on board the vessel ;
(6) pay all costs and charges incurred in obtaining the documents, other than ocean ship's receipt or bill of lading, issued in the country of origin, or of shipment, or of both, which may be required either for purposes of exportation, or of importation at destination.

(II-F) "F.O.B.(named inland point in country
of importation)"

Under this term, the seller quotes a price including the cost of the merchandise and all costs of transportation to the named inland point in the country of importation.
Under this quotation :
Seller must (1) provide and pay for all transportation to the named inland point in the country of importation ;
(2) pay export taxes, or other fees or charges, if any, levied because of exportation;
(3) provide and pay for marine insurance ;
(4) provide and pay for war risk insurance, unless otherwise agreed upon between the seller and buyer ;
(5) be responsible for any loss or damage, or both, until arrival of goods on conveyance at the named inland point in the country of importation ;
(6) pay the costs of certificates of origin, consular invoices, or any other documents issued in the country of origin, or of shipment, or of both, which the buyer may require for the importation of goods into the country of destination and, where necessary, for their passage in transit through another country ;
(7) pay all costs of landing, including wharfage, landing charges, and taxes, if any ;
(8) pay all costs of customs entry in the country of importation ;
(9) pay customs duties and all taxes applicable to imports, if any, in the country of importation.
Note : The seller under this quotation must realize that he is accepting important responsibilities, costs, and risks, and should therefore be certain to obtain adequate insurance. On the other hand, the importer or buyer may desire such quotations to relieve him of the risks of the voyage and to assure him of his landed costs at inland point in country of importation. When competition is keen, or the buyer is accustomed to such quotations from other sellers, seller may quote such terms, being careful to protect himself in an appropriate manner.
Buyer must (1) take prompt delivery of goods from conveyance upon arrival at destination.
(2) bear any costs and be responsible for all loss or damage, or both, after arrival at destination.

Comments on All F.O.B. Terms

In connection with. F.O.B. terms, the following points of caution are recommended :
1. The method of inland transportation, such as trucks, railroad cars, lighters, barges, or aircraft should be specified.
2. If any switching charges are involved during the inland transportation, it should be agreed, in advance, whether these charges are for account of the seller or the buyer.
3. The term "F.O.B. (named port)", without designating the exact point at which the liability of the seller terminates and the liability of the buyer begins, should be avoided. The use of this term gives rise to disputes as to the liability of the seller or the buyer in the event of loss or damage arising while the goods are in port, and before delivery to or on board the ocean carrier. Misunderstandings may be avoided by naming the specific point of delivery.
4. If lighterage or trucking is required in the transfer of goods from the inland conveyance to ship's side, and there is a cost therefor, it should be understood, in advance, whether this cost is for account of the seller or the buyer.
5. The seller should be certain to notify the buyer of the minimum quantity required to obtain a carload, a truck-load, or a barge-load freight rate.
6. Under F.O.B. terms, excepting "F.O.B. (named inland point in country of importation)", the obligation to obtain ocean freight space, and marine and war risk insurance, rests with the buyer. Despite this obligation on the part of the buyer, in many trades the seller obtains the ocean freight space, and marine and war risk insurance, and provides for shipment on behalf of the buyer. Hence, seller and Buyer must have an understanding as to whether the buyer will obtain the ocean freight space, marine and war risk insurance, as is his obligation, or whether the seller agrees to do this for the buyer.
7. For the seller's protection, he should provide in his contract of sale that marine insurance obtained by the buyer include standard warehouse to warehouse coverage.

(III) F.A.S. (Free Along Side)

Note : Seller and buyer should consider not only the definitions but also the "Comments" given of the end of this section, in order to understand fully their respective responsibilities and rights under "F.A.S." terms.

"F.A.S. Vessel (named port of shipment)"

Under this term, the seller quotes a price including delivery of the goods along side overseas vessel and within reach of its loading tackle.
Under this quotation :
Seller must (1) place goods along side vessel or on dock designated and provided by, or for, buyer on the date or within the period fixed ; pay any heavy lift charges, where necessary, up to this point ;
(2) provide clean dock or ship's receipt ;
(3) be responsible for any loss or damage, or both, until goods have been delivered along side the vessel or on the dock ;
(4) render the buyer, at the buyer's request and expense, assistance in obtaining the documents issued in the country of origin, or of shipment, or of both, which the buyer may require either for purposes of exportation, or of importation at destination.
Buyer must (1) give seller adequate notice of name, sailing date, loading berth of, and delivery time to, the vessel ;
(2) handle all subsequent movement of the goods from along side the vessel :
(a) arrange and pay for demurrage or storage charges, or both, in warehouse or on wharf, where necessary ;
(b) provide and pay for insurance ;
(c) provide and pay for ocean and other transportation ;
(3) pay export taxes, or other fees or charges, if any, levied because of exportation;
(4) be responsible for any loss or damage, or both, while the goods are on a lighter or other conveyance along side vessel within reach of its loading tackle, or on the dock awaiting loading, or until actually loaded on board the vessel, and subsequent thereto ;
(5) pay all costs and charges incurred in obtaining the documents, other than clean dock or ship's receipt, issued in the country of origin, or of shipment, or of both, which may be required either for purposes of exportation, or of importation at destination.

F.A.S. Comments

1. Under F.A.S. terms, the obligation to obtain ocean freight space, and marine and war risk insurance, rests with the buyer. Despite this obligation on the part of the buyer, in many trades the seller obtains ocean freight space, and marine and war risk insurance, and provides for shipment on behalf of the buyer, In others, the buyer notifies the seller to make delivery along side a vessel designated by the buyer and the buyer provided his own marine and war risk insurance. Hence, seller and Buyer must have an understanding as to whether the buyer will obtain the ocean freight space, and marine and war risk insurance, as is his obligation, or whether the seller agrees to do this for the buyer.
2. For the seller's protection, he should provide in his contract of sale that marine insurance obtained by the buyer include standard warehouse to warehouse coverage.

(IV) CFR (Cost and Freight)

Note : Seller and buyer should consider not only the definitions but also the "CFR Comments" and the "CFR and C.I.F. Comments", in order to understand fully their respective responsibilities and rights under CFR terms.

"CFR(named point of destination)"

Under this term, the seller quotes a price including the cost of transportation to the named point of destination.
Under this quotation :
Seller must (1) provide and pay for transportation to named point of destination ;
(2) pay export taxes, or other fees or charges, if any, levied because of exportation;
(3) obtain and dispatch promptly to buyer, or agent, clean bill of lading to named point of destination ;
(4) where received-for-shipment ocean bill of lading may be tendered, be responsible for any loss or damage, or both, until the goods have been delivered into the custody of the ocean carrier ;
(5) where on-board ocean bill of lading is required, be responsible for any loss or damage, or both, until the goods have been delivered on board the vessel ;
(6) provide, at the buyer's request and expense, certificates of origin, consular invoice, or any other documents issued in the country of origin or of shipment, or of both, which the buyer may require for importation of goods into country of destination and, where necessary, for their passage in transit through another country.
Buyer must (1) accept the documents when presented ;
(2) receive goods upon arrival, handle and pay for all subsequent movement of the goods, including taking delivery from vessel in accordance with bill of lading clauses and terms ; pay all costs of landing, including and duties, taxes, and other expenses at named point of destination ;
(3) provide and pay for insurance ;
(4) be responsible for loss of or damage to goods, or both, from time and place at which seller's obligations under (4) or (5) above have ceased ;
(5) pay the costs of certificates of origin, consular invoices, or any other documents issued in the country of origin, or of shipment, or of both, which may be required for the importation of goods into the country of destination and, where necessary, for their passage in transit through another country.

CFR Comments

1. For the seller's protection, he should provide in his contract of sale that marine insurance obtained by the buyer include standard warehouse to warehouse coverage.
2. The comments listed under the following C.I.F. terms in many cases apply to CFR terms as well, and should be read and understood by the CFR seller and buyer.

(V) C.I.F. (Cost, Insurance, Freight)

Note : Seller and buyer should consider not only the definitions but also the "Comments", at the end of this section, in order to understand fully their respective responsibilities and rights under "C.I.F." terms.

"C.I.F. (named point of destination)"

Under this term, the seller quotes a price including the cost of the goods, the marine insurance, and all transportation charges to the named point of destination.
Under this quotation :
Seller must (1) provide and pay for transportation to named point of destination ;
(2) pay export taxes, or other fees or charges, if any, levied because of exportation;
(3) provide and pay for marine insurance ;
(4) provide war risk insurance as obtainable in seller's market at time of shipment at buyer's expense, unless seller has agreed that buyer provide for war risk coverage (See Comment 10 (c)) ;
(5) obtain and dispatch promptly to buyer, or his agent, clean bill of lading to named point of destination, and also insurance policy or negotiable insurance certificate ;
(6) where received-for-shipment ocean bill of lading may be tendered, be responsible for any loss or damage, or both, until the goods have been delivered into the custody of the ocean carrier ;
(7) where on-board ocean bill of lading is required, be responsible for any loss or damage, or both, until the goods have been delivered on board the vessel ;
(8) provide, at the buyer's request and expense, certificates of origin, consular invoices, or any other documents issued in the country of origin, or of shipment, or both, which the buyer may require for importation of goods into country of destination and, where necessary, for their passage in transit through another country.
Buyer must (1) accept the documents when presented ;
(2) receive the goods upon arrival, handle and pay for all subsequent movements of the goods, including taking delivery from vessel in accordance with bill of lading clauses and terms ; pay all costs of landing, including any duties, taxes, and other expenses at named point of destination ;
(3) pay for war risk insurance provided by seller ;
(4) be responsible for loss of or damage to goods, or both, from time and place at which seller's obligations under (6) or (7) above have ceased ;
(5) pay the cost of certificates of origin, consular invoices, or any other documents issued in the country of origin, or of shipment, or both, which may be required for importation of the goods into the country of destination and, where necessary, for their passage in transit through another country.

CFR and C.I.F. Comments

Under CFR and C.I.F. contracts there are the following points on which the seller and the buyer should be in complete agreement at the time that the contract is concluded :
1. It should be agreed upon, in advance, who is to for miscellaneous expenses, such as weighing or inspection charges.
2. The quantity to be shipped on any one vessel should be agreed upon, in advance, with a view to the buyer's capacity to take delivery upon arrival and discharge of the vessel ; within the free time allowed at the port of importation.
3. Although the terms CFR and C.I.F. are generally interpreted to provide that charges for consular invoices and certificates of origin are for the account of the buyer, and are charged separately, in many trades these charges are included by the seller in his price. Hence, seller and buyer should agree, in advance, whether these charges are part of the selling price, or will be invoiced separately.
4. The point of final destination should be definitely known in the event the vessel discharges at a port other than the actual destination of the goods.
5. When ocean freight space is difficult to obtain, or forward freight contracts cannot be made at firm rates, it is advisable that sales contracts, as an exception to regular CFR or C.I.F. terms, should provide that shipment within the contract period be subject to ocean freight space being available to the seller, and should also provide that changes in the cost of ocean transportation between the time of sale and the time of shipment be for account of the buyer.
6. Normally, the seller is obligated to prepay the ocean freight. In some instances, shipments are made freight collect and the amount of the freight is deducted from the invoice rendered by the seller. It is necessary to be in agreement on this, in advance, in order to avoid misunderstanding which arises from foreign exchange fluctuations which might affect the actual cost of transportation, and from interest charges which might accrue under letter of credit financing. Hence, the seller should always prepay the ocean freight unless he has a specific agreement with the buyer, in advance, that goods can be shipped freight collect.
7. The buyer should recognize that he does not have the right to insist on inspection of goods prior to accepting the documents. The buyer should not refuse to take delivery of goods on account of delay in the receipt of documents, provided the seller has used due diligence in their dispatch through the regular channels.
8. Seller and buyers are advised against including in a C.I.F. contract any indefinite clause at variance with the obligations of a C.I.F. contract as specified in these Definitions. There have been numerous court decisions in the United States and other countries invalidating C.I.F. contracts because of the inclusion of indefinite clauses.
9. Interest charges should be included in cost computations and should not be charged as a separate item in C.I.F. contracts, unless otherwise agreed upon, in advance, between the seller and buyer ; in which case, however, the term C.I.F. and I. (Cost, Insurance, Freight, and Interest) should be used.
10. In connection with insurance under C.I.F. sales, it is necessary that seller and buyer be definitely in accord upon the following points :
(a) The character of the marine insurance should be agreed upon so far as being W.A. (With Average) or F.P.A. (Free of Particular Average), as well as any other special risks that are covered in specific trades, of against which the buyer may wish individual protection. Among the special risks that should be considered and agreed upon between seller and buyer are theft, pilferage, leakage, breakage, sweat, contract with other cargoes, and others peculiar to any particular trade. It is important that contingent or collect freight and customs duty should be insured to cover Particular Average losses, as well as total loss after arrival and entry but before delivery.
(b) The seller is obligated to exercise ordinary care and diligence in selecting an underwriter that is in good financial standing. However, the risk of obtaining settlement of insurance claims rests with the buyer.
(c) War risk insurance under this term is to be obtained by the seller at the expense and risk of the buyer. It is important that the seller be in definite accord with the buyer on this point, particularly as to the cost. It is desirable that the goods be insured against both marine and war risk with the same underwriter, so that there can be no difficulty arising from the determination of the cause of the loss.
(d) Seller should make certain that in his marine or war risk insurance, there be included the standard protection against strikes, riots and civil commotions.
(e) Seller and buyer should be in accord as to the insured valuation, bearing in mind that merchandise contributes in General Average on certain bases of valuation which differ in various trades, It is desirable that a competent insurance broker be consulted, in order that full value be covered and trouble avoided.

(VI) DEQ Delivered

Ex Quay (Duty Paid)

Note : Seller and buyer should consider not only the definitions but also the "DEQ Comments" at the end of this section, in order to understand fully their respective responsibilities and rights under "DEQ" terms.

Under this term, seller quotes a price including the cost of the goods and all additional costs necessary to place the goods on the dock at the named port of importation, duty paid, if any.
Under this quotation :
Seller must (1) provide and pay for transportation to named port of importation ;
(2) pay export taxes, or other fees or charges, if any, levied because of exportation;
(3) provide and pay for marine insurance ;
(4) provide and pay for war risk insurance, unless otherwise agreed upon between the buyer and seller ;
(5) be responsible for any loss or damage, or both, until the expiration of the free time allowed on the dock at the named port of importation ;
(6) pay the costs of certificates of origin, consular invoices, legalization of bill of lading, or any other documents issued in the country of origin, or of shipment, or of both, which the buyer may require for the importation of goods into the country of destination and, where necessary, for their passage in transit through another country;
(7) pay all costs of landing, including wharfage, landing charges and taxes, if any ;
(8) pay all costs of customs entry in the country of importation ;
(9) pay customs duties and all taxes applicable to imports, if any, in the country of importation, unless otherwise agreed upon.
Buyer must (1) take delivery of the goods on the dock at the named port of importation within the free time allowed ;
(2) bear the cost and risk of the goods if delivery is not taken within the free time allowed.

DEQ Comments

This term is used principally in United States import trade. It has various modifications, such as "Ex Quay", "Ex Pier", etc., but it is seldom, if ever, used in American export practice. Its use in quotations for export is not recommended.