Who could better introduce
Incoterms® 2010 rules than Mr. Rajat Gupta, Chairman of the International Chamber of Commerce (ICC)? In the Foreword of the book titled Incoterms
® 2010, Mr. Gupta writes the following:
“The global economy has given businesses broader access than ever before to markets all over the world. Goods are sold in more countries, in larger quantities and in greater variety. But as the volume and complexity of global sales increase, so do possibilities for misunderstandings and costly disputes when sale contracts are not adequately drafted.
The Incoterms® 2010 rules, the ICC rules on the use of domestic and international trade terms, facilitate the conduct of global trade. Reference to an Incoterms® 2010 rule in a sale contract clearly defines the parties’ respective obligations and reduces risks of legal complications. …”
In essence, Incoterms® 2010 rules explain and distribute tasks and responsibilities between buyer and sellers embarked in a sale of goods contract, and the costs and risks bared by each of the parties to same contract.
The 11 Incoterms® 2010 rules are presented in two distinct classes; the first applies to any mode or modes of transport and the second one applies to sea and inland waterway transport only. The Incoterms® 2010 rules are also divided in 4 smaller groups distributing tasks, responsibilities, costs and risks from the seller to the buyer at specific points during the transit.
- The E group places all tasks, responsibilities, costs and risks on the buyer from the point of origin of the goods usually the seller’s premises.
- The F group places the transfer of tasks, responsibilities, costs and risks from the seller to the buyer at a specified point always located before the long distance carriage.
- The C group also places the transfer of tasks, responsibilities, costs and risks from the seller to the buyer at a specified point located before the long distance carriage to the exception of transportation and, in some instances, insurance coverage. The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination. He also has, in some instances, to contract for insurance cover against the buyer’s risks of loss of or damage to the goods during the carriage.
- The D group places the transfer of tasks, responsibilities, costs and risks from the seller to the buyer at a specified point always located after the long distance carriage.
Emergence of trade blocks and implementation of security rules simplifying border crossing makes border formalities between different countries less significant. Consequently, the subtitle of Incoterms® 2010 rules formally recognises that they are available for application to both international and domestic sale contracts.
Incoterms® 2010 rules give electronic means of communication the same effect as paper communication as long as the parties so agree or where customary. In relation with the insurance coverage, Incoterms® 2010 rules take account of the latest alterations made to the Institute Cargo Clauses
It is important to remember Incoterms® 2010 rules apply only to the parties’ rights and obligations in connection with the delivery of tangible goods object of a sale contract. They do not give the parties a complete contract of sale. The Incoterms® 2010 rules say nothing about the price to be paid or the method of its payment. Neither do they deal with the transfer of ownership of the goods, or the consequences of the breach of contract; they always give way to any specification included in the sale contract.
“Incoterms” is a trademark of the International Chamber of Commerce (ICC). The Incoterms ® rules and guidance notes and all other content of ICC’s publications on the Incoterms ® rules are subject to ICC's copyright.
Reference and bibliography:
Incoterms® 2010
par la Chambre de Commerce Internationale (ICC)
version bilingue anglais-français
ICC publication No. 715EF
ISBN : 978-92-842-0089-4
Official documentation available from
International Chamber of Commerce
ICC publications
38 Cours Albert 1er
75008 Paris
France
www.iccbooks.com
OR
Ms Angela Roy
ICC Canada's Bookstore Representive | Représentante, Librairie de la CCI Canada
Canadian Chamber of Commerce | La Chambre de commerce du Canada
420 – 360 rue Albert Street | Ottawa, ON K1R 7X7
Tel.: 613.238.4000 x 265
Fax: 613.238.7643
www.chamber.ca
