FCA (free carrier):

Can be used for all modes of transportation including multimodal transport. The seller delivers the goods into the custody of the first carrier, and this is where the passing of risk occurs. The buyer pays for the transportation.

FOB (free on board):

Is similar to FAS, but the seller also pays for the loading costs. The passing of risks occurs when the goods pass the ship's rail at the port of shipment. Internationally the term specifies the port of origin, e.g. «FOB New York» or «FOB Vancouver». With the advent of e-commerce, most commercial electronic transactions occur under the terms of «FOB shipping point» or «FCA shipping point». Most analysts see this as a disadvantage of online shopping compared to traditional in-person purchasing, where "FOB destination" is more prevalent. When counting inventory, merchandise in transit plays a crucial role depending on whether it is added to the company's balance sheet. Items under «FOB shipping point/destination» are checked to see if the purchaser has title of the goods. If it does, then they are added to the inventory count, but not the balance sheet. If not, they are treated as would items under consignment, meaning they still belong to the supplier (consignor).

CIF (cost, insurance, freight):

CIF is a common term in a sales contract that may be encountered in international trading when ocean transport is used. When a price is quoted CIF, it means that the selling price includes the cost of the goods, the freight or transport costs and also the cost of marine insurance. CIF is an international commerce term. CIF is identical in most particulars with Cost and Freight (CFR), and the same comments apply, including its applicability only to conventional maritime transport. In addition to the CFR responsibilities, the seller under CIF must obtain in transferable form a marine insurance policy to cover the risks of transit with insurers of repute. The policy must cover the CIF price plus 10 per cent and where possible be in the currency of the contract. Note that only very basic cover is required equivalent to the Institute «C» clauses, and buyers should normally insist on an «all-risk» type of policy such as that under the Institute «A» clauses. The seller's responsibility for the goods ends when the goods have been delivered to the marine carrier or have been delivered on board the shipping vessel, depending upon the terms of the contract. This term is only appropriate for conventional maritime transport, not ro/ro or international container movements.

DDU (delivered duty unpaid):

It means, that the seller pays for all transportation costs and bears all risk until the goods have been delivered, but does not pay for the duty.

DDP (delivered duty paid):

It means, that the seller pays for all transportation costs and bears all risk until the goods have been delivered and pays the duty.

Letter of Credit (L/C, LC, LOC):

A letter of credit is a document issued by a financial institution which essentially acts as an irrevocable guarantee of payment to a beneficiary. This means that if the applicant obtaining the LC fails to perform its obligations, the bank pays. The LC can also be the source of payment for a transaction, meaning that an exporter will get paid by redeeming the letter of credit. Letters of credit are used nowadays almost exclusively in international trade transactions of significant value, for deals between a supplier in one country and a wholesale customer in another. The parties to a letter of credit are usually an applicant who wants to send money, a beneficiary who is to receive the money, the issuing bank of whom the applicant is a client, and the advising bank of whom the beneficiary is a client. In executing a transaction, letters of credit incorporate functions common to giros and travellers cheques.

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