Incoterms 2010

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Contents

Short History

The Incoterms® 2010 rules are the International Chamber of Commerce (ICC) rules for the use of domestic and international trade terms. Historically, beginning from 1936, different editions and revisions of Incoterms have been carried out to update the rules in accordance with current international trade practices and technological changes (namely, Incoterms versions of 1953, 1967, 1976, 1980, 1990, and 2000 were in use before the current version - Incoterms® 2010.The latest 8th revision, - the Incoterms® 2010 rules, - take account of contemporary changes in transport practice, together with the spread of customs-free zones, increased use of electronic communication and security issues became more important due to the international terrorism development. Controlling source document is written in British English and is to be translated into 35+ languages over 2011. Incoterm Variants are generally used to further clarify the responsibilities of the exporter and of the importer in a given transaction.E.g., variant “EXW loaded” clarifies that the exporter agrees to load the goods on the vehicle provided by the importer, when the official Incoterm is silent on that specific point.

Incoterms Defined

Incoterms are a collection of international rules (coded in three-letter acronyms: from EXW till DDP), with voluntary character for parts, that set the range of commercial clauses included in international sale and purchase contract; easy to understand for both contract parties as well as for a third party (e.g., case of arbitration).Incoterms are internationally accepted commercial terms defining the respective roles of the buyer and seller in the arrangement of transportation and other responsibilities and clarify when the transfer of ownership of the merchandise takes place; are used in conjunction with a sales agreement or other method of transacting the sale. In other words Incoterms are formalized convenient terms of trade regulated by the International Chamber of Commerce (ICC) which specify and split the responsibilities of the exporter and the responsibilities of the importer in an international transaction. Therefore, in accordance with the rule of Incoterms selected it should be clear:

Which tasks will be performed by the seller/exporter

Which tasks will be performed by the buyer/importer

Which activities will be paid by the seller/exporter

Which activities will be paid by the buyer/importer

When the transfer of risk for the goods will take place


Incoterms® 2010 Classified

Example.jpg

Some terms in the Incoterms® 2010 context

The rules of Incoterms® 2010 are aplicable for international transactions as well as for domestic ones. Some of frequently used terms are explained below depending on domestic and international application, respectively.

Delivery is used to indicate where the risk of loss of or damage to the goods passes from the seller to the buyer.”

Pre-carriage: inland transportation on the seller’s side - Domestic: from the place where the shipment starts to any subsequent transportation carriage. International: from the place where the shipment starts to the departure point on the seller’s side.

Main Carriage - Domestic: subsequent transportation beyond pre-carriage. International: transportation from the point of departure on the seller’s side to the arrival point on the buyer’s side.

On-carriage - Domestic: subsequent transportation beyond main carriage. International: transportation from the arrival point on the buyer’s side.

Door – to – Door - Contract of carriage that includes pre-carriage, main-carriage and on-carriage by the same carrier

Door – to – (Air) Port - Contract of carriage including pre-carriage and main-carriage to airport or ocean port or truck terminal port or rail port.

(Air) On-carriage - (Air) Port – to – Door

Omni-modal - Used with terms that use all modes of transportation (truck, airplane, vessel, train…)

Marine-restricted - Terms that only apply to carriage by vessel.

Shipment Contract - Sales/purchase contract where the seller’s responsibility ends when goods are handed over to the first carrier.

Arrival Contract - Sales/purchase contract where seller’s responsibility ends when goods have arrived at agreed place.

Incoterms® 2010 as tasks/payments allocation tool

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