Incoterms – Key elements of international contracts of sale. They tell Other primary notes of INCOTERMS - Instead of "Terms" they are now referred to as. In modern transport systems, goods are not always in- spected at points where the risk is transferred accord- ing to Incoterms® To avoid dispute. Below are short descriptions of the 11 rules from the Incoterms® edition. These should be read in the context of the full official text of the rules, which can.
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Read more about Incoterms® rules from the official International Chamber of. Commerce (ICC) website. You can also order the “Incoterms® ” publication. Continued use of terms which do not appear in the Incoterms® rules; EXW and . The first version of the Incoterms rules was clearly focused on commodity . Incoterms® comprises of 11 rules. Some rules can be used for sea and inland waterway transport only, whereas others can be used irrespective of the.
A series of three-letter trade terms related to common contractual sales practices, the Incoterms rules are intended primarily to clearly communicate the tasks, costs, and risks associated with the transportation and delivery of goods. Incoterms inform sales contract defining respective obligations, costs, and risks involved in the delivery of goods from the seller to the downloader.
However, it does not constitute contract or govern law. Also it does not define where titles transfer and does not address the price payable, currency or credit items. The Incoterms rules are accepted by governments, legal authorities, and practitioners worldwide for the interpretation of most commonly used terms in international trade. They are intended to reduce or remove altogether uncertainties arising from different interpretation of the rules in different countries.
The first work published by the ICC on international trade terms was issued in , with the first edition known as Incoterms published in Rules for Sea and Inland Waterway Transport: FAS - Free Alongside Ship: Risk passes to downloader, including payment of all transportation and insurance costs, once delivered alongside the ship realistically at named port terminal by the seller. The export clearance obligation rests with the seller. FOB - Free On Board: Risk passes to downloader, including payment of all transportation and insurance costs, once delivered on board the ship by the seller.
The Incoterms rules give priority to the Incoterms for any mode of transport because they fit better with the reality of international logistics.
Goods in containers only for Incoterms for any mode of transport but not for sea Incoterms. This is perhaps the most significant change in Incoterms The reason is that containers are delivered to the port terminals, before being placed on board of the ships. This is a big change from the uses and habits that came into force until now.
We must remember that the FOB and CIF Incoterms are the oldest and most widely used in foreign trade since a large proportion of goods are transported by ship and it is also common that deliveries be made in ports. Therefore, it is expected that the adaptation of exporters, importers, carriers, freight forwarders, etc.
In the event that the seller or downloader use sea Incoterms with container transport it is advisable to ask about switching to any mode of transport Incoterm such as FCA, CPT or CIP to match what is the right used according to Incoterms rules. Although Incoterms do not mention it explicitly, it could be interpreted that risks of loading is bear by the seller while the risks of stowage and lashing are bear by the downloader. However, it happens that most of the transport companies carry the cost of terminal, in particular the discharge of goods on the downloader and, therefore, they pay twice for the same service.
To avoid this duplication, Incoterms establish that the terminal costs should be allocated according to the stipulations of the transport contract. They also state that if the seller bears the costs of discharge at destination port, according to the stipulations in the transport contract, they shall not be entitled to demand the downloader the return of the costs unless otherwise agreed.
If the downloader wanted a larger coverage, he shall require the seller to contract it, but its cost will be borne by the downloader.
In the rest of the Incoterms, neither party is obliged to take out transport insurance, but are required to provide to the other party the necessary information for obtaining the insurance.
Security-related information Since the attacks of September 11, various measures to ensure the safe transport of passengers and goods were put in place. Following these practices, Incoterms version establishes the obligation of the seller to assist the downloader to obtain all information concerning the safety of the goods or their transportation to their final destination.
However, Incoterms states that any costs resulting from obtaining such information will be borne by the downloader. Validity of electronic messages and documents Incoterms granted the same validity to the messages and documents transmitted electronically to those that are supported on paper, if it is agreed by the parties or is a common practice.
The use of electronic means facilitate the obligation to notify the parties with different information place of delivery or receipt, date, name of carrier, etc. On the other hand, the internal regulations in the U. Aspects of foreign trade that Incoterms do not regulate Although Incoterms regulate many aspects of foreign trade, there are others on which they do not have influence.
In this sense, neither of these three alternative is affected by the Incoterms agreed upon. In addition to these three aspects, Incoterms do not deal with other issues such as warranties, grounds for termination of the contract or sue for damages that should be resolved through the sale contract and according to the law to which the contract is submitted.
Variants of Incoterms The practice of foreign trade has meant that sometimes the exporters and importers add a term or expression to Incoterms in order to clarify the distribution of costs and risks between the parties. The seller bears all risks involved in bringing the goods to the named place.
The seller bears all the costs and risks involved in bringing the goods to the place of destination and has an obligation to clear the goods not only for export but also for import, to pay any duty for both export and import and to carry out all customs formalities. The risk of loss of or damage to the goods passes when the goods are alongside the ship, and the downloader bears all costs from that moment onwards.
The risk of loss of or damage to the goods passes when the goods are on board the vessel, and the downloader bears all costs from that moment onwards. The risk of loss of or damage to the goods passes when the goods are on board the vessel.
The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination.