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Incoterms 2010 (Incoterms 2010)

Incoterms 2010 (Incoterms 2010) are international rules recognized by government agencies, law firms and merchants around the world as an interpretation of the most applicable terms in international trade. The scope of Incoterms 2010 (Incoterms 2010) covers the rights and obligations of the parties under a purchase and sale agreement regarding the supply of goods (terms of delivery of goods).

The Incoterms Rules represent trade terms shortened in the first three letters, reflecting entrepreneurial practice in contracts for the international sale of goods. They mainly determine the duties, costs and risks arising from the delivery of goods from sellers to buyers.

The purpose of Incoterms is to provide a set of international rules for the interpretation of trade terms most commonly used in foreign trade. It is important to keep in mind that Incoterms regulate only the relationship between sellers and buyers and do not relate to the aspects of contracts of carriage, insurance and financing. Incoterms deal with certain obligations of the parties, such as the seller’s obligation to place the goods at the buyer's disposal or transfer it to him for transportation or deliver it to the destination, as well as the distribution of risk between the parties in these cases.

Incoterms 2010 structure

To facilitate understanding in Incoterms 1990, the terms were grouped into four categories, which differ in substance: starting with the term according to which the seller only places the goods at the buyer's disposal in his premises (the term "E" - EX WORKS); then comes the second group, in accordance with which the seller is obliged to transfer the goods to the carrier specified by the buyer (the terms "F" - FCA, FAS and FOB); further, the terms "C", in accordance with which the seller is obliged to conclude a contract of carriage, but not taking the risk of loss or damage to the goods or additional costs due to events that occurred after shipment and shipment (CFR, CIF, CPT and CIP); and, finally, the terms "D", in which the seller must bear all the costs and risks necessary for the delivery of goods to the destination (DAF, DES, DEQ, DDU and DDP). The following table presents the classification of trade terms.

As in Incoterms 1990, in all terms, the respective obligations of the parties are summarized in ten headings, in which each provision in relation to the seller mirrors the position of the buyer on the same issue. Incoterms are focused on the seller’s obligation to deliver. The exact distribution of functions and costs in connection with the delivery of goods by the seller usually does not cause problems when the parties have a long trade relationship. At the same time, they establish between themselves the practice ("business practice"), which they follow in subsequent transactions as they did before.

Terminology Incoterms

During the development of Incoterms 2000, considerable efforts were made to achieve the maximum possible and desired consistency with respect to the various expressions used in thirteen terms. This made it possible to avoid using different formulations to express the same concept. In addition, whenever possible, the expressions used in the 1980 UN Convention on contracts for the international sale of goods were used.

In some cases, it was necessary to use the same term to convey two different meanings, since there was no suitable alternative. Employees of the trade are familiar with this difficulty as applied to contracts of sale and to contracts of carriage. For example, the term "shipper" (shipper) means both the person delivering the goods for shipment and the person who concludes an agreement with the carrier: however, these two "shippers" may be different persons, for example, under an FOB agreement, where the seller sends goods for transportation, and the buyer enters into a contract with the carrier.

t is important to note that the term "delivery" is used in Incoterms in two different ways. Firstly, it is used to determine the moment when the seller fulfilled his obligation, defined in paragraph A4 of the terms Incoterms. Secondly, the term "delivery" is also used in relation to the duty seller to receive or accept delivery of goods. When used in this second case, the word "delivery" means, firstly, that the buyer "accepts" the very nature of the terms "C", namely that the seller fulfills his obligations after the goods are shipped, and, secondly, that the buyer is obliged to accept product. This last duty is important in order to avoid unnecessary payments for storage of the goods until the buyer takes the goods. Thus, according to the CFR and CIF terms, the buyer must accept the delivery of the goods and receive it from the carrier. If the buyer fails to fulfill this obligation, he may be obliged to pay damages to the seller who has concluded the contract of carriage with the carrier, or the buyer will have to pay the demurrage in order for the goods to be issued to him by the carrier. When in this case it is stated that the buyer is obliged to “take delivery”, this does not mean that the buyer accepts the goods as complying with the contract of sale, but means that the seller has fulfilled his obligation to transfer the goods for carriage in accordance with the contract of carriage. Consequently, if, after accepting the goods at the destination, the buyer finds that the goods do not comply with the terms of the contract of sale, he can use the means of protection against the seller, which are provided to him by the contract of sale and the applicable law. These questions are completely outside the scope of Incoterms.

Transfer of risks and costs associated with the product

The risk of loss or damage to the goods, as well as the obligation to bear the costs associated with the goods, passes from the seller to the buyer after the seller has fulfilled his obligation to deliver the goods. Since the buyer does not have the right to delay the transfer of risks and expenses, all terms provide that the transfer of risks and expenses may occur even before delivery if the buyer does not accept delivery as agreed or does not transmit instructions (regarding shipping time and / or place of delivery) that the seller may need to fulfill their obligations to deliver the goods.