Incoterms in force from 1 January 2011
Incoterms are not legislation but a number of standardised rules which are known and used in most of the world and which a buyer or seller can use in the in purchase and sales agreement.
Incoterms in general
The Incoterms clauses regulate the obligations of the seller and the buyer to each other under a purchase agreement (incl. order/order confirmation). Thus the clauses cannot be used under freight, insurance and financing agreements even though the Incoterms is of course taken into account in the individual case as agreed in the purchase agreement. Despite the fact that Incoterms regulate most liabilities of the seller/buyer, some important exceptions are, however, present which can be mentioned particularly in the contract. The most important matters which Incoterms take into account are:
The liability of the seller to place the cargo at the buyer's disposal or transfer it for transportation or deliver it at the destination.
Delegation of risks and passing of risk between the parties
- Liabilities regarding customs processing upon export and import.
- Packaging of the cargo.
- The buyer’s liability to take delivery).
- The liability to present documentation that the respective demands are correctly
EXCEPTIONS – Incoterms do not regulate:
- The transfer of the rights of ownership.
- Breech of agreement and the consequences thereof.
- Exceptions from aspects relating to liability.
- Terms of payment.
The new Incoterms rules
ICC’s work on renewing and improving the rules has lasted several years. The work is finished now and the result, Incoterms 2010, was presented in the middle of September. Officially the rules took effect on 1 January 2011.
Incoterms 2010 – innovations – 11 clauses instead of 13 clauses
ALL TYPES OF TRANSPORT:
EXW Delivered at the seller’s place
FCA Delivered at the buyer’s carrier in the seller's country
CPT Delivered at the seller’s carrier in the seller’s country - incl. freight
CIP As CPT – the seller pays insurance on limited conditions
DAT Delivered at terminal - unloaded/the buyer handles the import clearance procedures
DAP Delivered at named place – not unloaded/the buyer handles the import clearance procedures
DDP Delivered at named place – not unloaded/the seller handles the import clearance procedures
SEA TRANSPORT ONLY - from harbour to harbour:
FAS Delivered alongside ship provided by the buyer
FOB Delivered on board the ship provided by the buyer
CFR Delivery on board the ship provided by the seller – incl. freight
CIF As CFR – the seller pays insurance on limited conditions
DAT DELIVERED AT TERMINAL
DAP DELIVERED AT PLACE
DAF DELIVERED AT FRONTIER
DES DELIVERED EX SHIP
DDU DELIVERED DUTY UNPAID
DEQ DELIVERED EX QUAY
Besides the changed clauses, part of the wording is changed and improved and after the clauses the place must be indicated as a minimum.