Description

At times parties entered in international salecontracts are unaware of the different trading practices in theirrespective countries. This can give risk to misunderstandings,disputes and litigation, with all the waste of time and money thatthis entails. In order to remedy these problems, the InternationalChamber of Commerce (ICC) - www.iccwbo.org - first published in1936 a set of international rules for the interpretation of tradeterms. These are known as the INCOTERMS® rules. The word is anabbreviation of International commercial terms and the chosenIncoterms® rule is a term of the contract of sale (please note: notof the contract of carriage).

Since then these rules several times have been amended in orderto bring them in line with international trade development andglobal market changes. In recent years, Incoterms® rules have beenrevised at 10-year intervals (Incoterms® 1980, 1990, 2000, 2010).From first January 2011 new version of the rules “Incoterms®2010”(ICC Publication № 715 E) came into force, which consists of 11following terms - EXW, CPT, CIP, DAT, DAP, DDP, FCA, FAS, FOB, CFR,CIF.

Very often sellers and buyers do not pay attention that eachchosen term of the Incoterms® rules requires that contents of salescontract must match to the conditions of the term. By mistake theyfeel that all aspects of the deal are stipulated by the Incoterms®rules and are included in the rules. Sometimes this is the reasonof the problems they have in their trade transaction. Ourrecommendations will help to avoid such mistake and in a correctway prepare trade contract.

To avoid confusion and difficulties in applying Incoterms® rulesa reference to the current version should always be made in thecontract of sale. Presently, when parties negotiate their contractindividually, they should take care not only to refer to Incoterms®rules but also to add the year 2010.

If they use a standard contract, they should check whether ithas been updated to include reference to “Incoterms®2010”. If not,the previous year should be replaced by the year 2010.

It is very important to understand that all details ofsale/purchase transaction for each chosen term are not included inIncoterms® rules. Therefore the needed details to be listed in salecontracts.

The recommendations of what should be included in the contractsof sale are included.

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Trademark Notice:

“Incoterms” is a trademark of the International Chamber ofCommerce (ICC).

ICC has authorized the use of the “Incoterms” trademark on thisapplication. Such authorization does not imply any endorsement, orentail any responsibility, on the part of ICC for this product,which remains the sole responsibility of the Licensee. TheTrademark is being used in accordance with ICC’s “Incoterms”trademark rules as available on the ICC website.