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What are Incoterms rules?

The Incoterms rules are the International Chamber of Commerce (ICC) rules for the use of domestic and international trade terms

Incoterms® rules are key commercial tools developed and maintained by ICC and used in certain contracts for the sale of goods all over the world. They define the responsibilities of buyers and sellers for the delivery of goods under sales contracts and determine how costs and risks are allocated.

What do they cover?

Incoterms® rules describe mainly the tasks, costs and risks involved in the delivery of goods – excluding intangibles - from sellers to buyers.

Why Incoterms® rules? Why are Incoterms® rules successful worldwide?

Incoterms® rules are international rules that are accepted by governments, legal authorities and practitioners worldwide for the interpretation of the most commonly used terms in domestic and international trade. They facilitate business transactions globally by helping traders avoid uncertainties arising from differing interpretations of such terms in different countries.

Do Incoterms® rules apply to international or domestic contracts of sales?

Incoterms® rules apply to both domestic and international sale contracts.

What are the 11 Incoterms® rules?

RULES FOR ANY MODE OR MODES OF TRANSPORT

EXW Ex Works

FCA Free Carrier

CPT Carriage Paid To

CIP Carriage And Insurance Paid To

DAT Delivered At Terminal

DAP Delivered At Place

DDP Delivered Duty Paid

RULES FOR SEA AND INLAND WATERWAY TRANSPORT

FAS Free Alongside Ship

FOB Free On Board

CFR Cost And Freight

CIF Cost, Insurance and Freight

How are Incoterms® rules correctly used?

ICC recommends that Incoterms® 2010 be referred to specifically whenever the terms are used, together with a location. For example, the term "Free Carrier (FCA)" should always be accompanied by a reference to an exact place to which delivery is to be made. To prevent misunderstandings, parties need to make the intended effect of any variants of the three-letter Incoterms® rules extremely clear in their contract. Incorrect use of Incoterms® 2010 rules has the potential to lead to legal consequences.

Why do Incoterms® rules need revising periodically?

Incoterms® rules are revised periodically to adapt them to contemporary commercial practice. For instance in the 2000 version, increased use of FCA (Free Carrier) prompted ICC to simplify delivery obligations under this rule. Technological changes and developments in electronic communication have influenced contemporary trade and shaped the revision of Incoterms® rules.

Can you name some of the main innovations in Incoterms® 2010?

Two major innovations are the number of rules and their classification . There are 11 rules instead of 13. In addition, the new rules are classified according to the mode of transport (maritime vs. any other mode[s]), reflecting a consolidation and updating of the delivered rules, replacing the precedent categorization into families of rules. In addition it includes the importance of cargo security and the 2004 revision of the United States’ Uniform Commercial Code, which resulted in a deletion ofthe former US shipment and delivery terms. The revised Incoterms® rules also reflect the adoption in2009 by insurance markets of the revised Institute Cargo Clauses (LMA/IUA) (2009). The most recent revision presents practitioners with comprehensible and useful Guidance Notes to facilitate their correct choice of Incoterms® rules.

How can I find out which Incoterms® rule is the right one for my contract of sale?

When agreeing on a contract of sale, the parties should choose an Incoterms® rule that is appropriate to the goods and means of transport. Detailed Guidance Notes in each of the Incoterms® 2010 rules help buyers and sellers decide which rule is appropriate for their contract of sale.

When is the risk of loss or damage to the goods transferred from the seller to the buyer?

The risk of loss or damage of the goods is generally transferred when the seller has fulfilled its delivery obligation in accordance with A4 (Delivery) of the particular Incoterms® rule.

Date: 2016-01-14; view: 774