What Are Incoterms

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Incoterms (international commercial terms) is a set of voluntary rules for interpreting commercial contract formulas in international trade. The incoterms were first established in 1936 by the International Chamber of Commerce (ICC).

The state of incoterms is characterized by specifying the date. They have been adapted several times, the latest version of the incoterms was released in 2000 (6th revision).

They are are expressed by a three letter abbreviation in English. These terms define the responsibilities and obligations of a seller and a buyer under international trade agreements, notably with regard to loading, transport, type of transport, insurance and delivery.

The second role of incoterms is to define the place of risk transfer, that is to say that the seller or the buyer has to bear the damage in case of bad performance of the carriage. The third function is without doubt currently the most important in world trade, incoterms define the obligations of the incumbent upon delivery, regarding time, etc.

Incoterms do not possess the force of law and are only effective if the buyer and seller agree on their validity. Recognition by the courts only pertains to their inclusion in a contract.

Thus to be legally valid, they must be mentioned in the contract, for example, “CIP INCOTERMS 2000” where 2000 refers to the version of Incoterms. Special provisions in individual contracts between the parties are represented with the incoterms.

The use of incoterms in the contract by giving the local abbreviation of the relevant clause is voluntary. The incoterms are used in a variety of statistics: in the external trade statistics for exports the FOB value of imports is always given as the CIF value. In the balance of payments statistics are used both for exports and for imports of the FOB value.

Attention incoterms do not define the time of transfer of ownership, but only the time regarding transfer of risk transportation, various fees and transportation arrangement. In particular, they specify the fact that the buyer or seller bears the transport insurance of goods.

This is an updated standard gradually associated with the development of world trade, which enables the buyer and seller to agree quickly without ambiguity of the terms of the transaction.

Incoterms evolve over time; parties that use them are invited by the International Chamber of Commerce to refer to the year of publication of the version they want to use. Preferably Incoterms 2000 pub. CCI 560.



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