Contracts · 8 min read
Incoterms 2020 without the jargon
EXW, FOB, CIF, DDP — what each one actually commits you to, and which ones tend to cause disputes.
What an Incoterm decides
An Incoterm settles three things: who arranges carriage, where risk passes from seller to buyer, and who clears the goods at each border. It does not decide when payment is due or who owns the goods.
Always write the term with a named place. 'FOB Chennai' is a contract term; 'FOB' on its own is an argument waiting to happen.
The four you will use most
EXW puts nearly everything on the buyer, including export clearance, which many buyers cannot legally do in India. FCA is usually the better choice.
FOB works for containerised sea freight where the buyer nominates the line. CIF adds carriage and insurance to the destination port. DDP places import duty and clearance on you, which is risky unless you know the destination regime well.
Where disputes come from
Using sea-only terms such as FOB and CIF for air or multimodal shipments. Use FCA, CPT or CIP instead.
Assuming CIF insurance is generous — the default is minimum cover. If the buyer wants all-risks, agree CIP with Institute Cargo Clauses A in writing.
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