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Terms of sale

If obliged to purchase from abroad on a supplier's terms of contract, it is important to determine what is included in the purchase price, and when risk and ownership pass to the purchaser. Commonly used terms include:

ExW (Ex Works) - buyer pays insurance and transport from the time the goods leave the sellers warehouse
FOB (Free on Board) - seller pays for packing and delivery to the place of loading and any loading charges. Buyer is responsible for goods from the time the goods pass "over the ship's rail" or when they reach the airport or depot.
CIF (Cost, Insurance, Freight) - seller pays these costs for the goods in transit to the agreed destination.
CIP (Carriage and insurance paid) - carriage and insurance to be arranged by the seller. Risk passes from the seller to the buyer when the goods pass the ships rail. Buyer responsible for arranging carriage from port.
CFR (Cost and Freight) - seller pays for freight, buyer pays for insurance.
DDP (Delivered duty paid) - all costs borne by the supplier, to the agreed buyer destination.



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