Incoterms define who arranges and pays for each part of the journey and where risk passes. They do not cover payment, ownership or tariff-change clauses — those belong in the contract.
The six rules you will meet most
| Rule | Seller arranges | Risk passes | Notes for Vietnam–US |
|---|---|---|---|
| EXW | Goods ready at factory | At factory | Buyer must handle Vietnamese export clearance — often impractical |
| FCA | Export clearance, delivery to carrier | When handed to carrier | Recommended for containers instead of FOB |
| FOB | Export clearance, loading on vessel | On board | Most common; intended for sea freight |
| CIF | Freight and insurance to US port | On board in Vietnam | Minimum insurance cover; risk still passes early |
| DAP | Delivery to named place, duties unpaid | At destination | Replaces old "DDU" — see DDU/DAP |
| DDP | Everything including US duties | At destination | Seller is responsible for import — see IOR rules |
Common mistakes
- Writing "FOB Los Angeles" — FOB names the port of loading, e.g. "FOB Cai Mep".
- Using CIF but expecting the seller to bear transit risk.
- Agreeing DDP without deciding who is importer of record.
Related: DDP vs FOB · cargo insurance.