Shipping goods from country to country as part of a commercial transaction can be a risky business: your goods may go undelivered or be damaged, or even lost or stolen, leaving you with little choice but to take legal action against your supplier or your customer. In 1936, the International Chamber of Commerce (ICC), located in Paris, published Incoterms® 1936, an initial series of international rules for the interpretation of the most frequently used trade terms in international commerce. Issued in the form of abbreviations which have since been converted into standardized definitions, Incoterms® are practical and economical tools used worldwide to facilitate national and international trade procedures. In an effort to keep these rules in line with the latest national and international trade practices, amendments were made in 1953, 1967, 1976, 1980, 1990, 2000 and 2010.
By referring to any of the ICC's Incoterms® in their contract, a vendor and a purchaser specify, simply and reliably, their respective responsibilities and obligations. They also reduce the uncertainty inherent in any national or international transaction, due to interpretations and trade practices which vary from country to country. Incoterms® standardize practice and determine the transfer point of all risks. They dissociate the transfer of risk from the transfer of ownership, in addition to allocating costs and liability. Thus, Incoterms® determine whether the vendor or the purchaser will be responsible for assuming the following responsibilities or costs: freight and insurance charges, payment of duties and taxes, and all other costs associated with the movement of goods. They also determine which of the two is required to obtain various import and/or export permits and to handle other administrative procedures.
Despite such specific rules, care should be taken not to overlook local, practical or professional customs which the parties themselves may have established under a previous relationship (Article 9 of the 1980 United Nations Convention on Contracts for the International Sales of Goods). Any such provisions in a given contract would take priority over the interpretation rules of the various Incoterms®. Traders wishing to use these rules should specify that their contracts will be regulated by the "Incoterms® 2010" of the ICC.
The book "Incoterms® 2010" is available through the ICC's representative in Ottawa (the Canadian Council for International Business) or at Affiliated's main library, Montreal head office.
For more information, contact: firstname.lastname@example.org
There are eleven (11) terms divided into two (2) groups based on the mode of transportation.
|Group 1: Rules for any mode or modes of transport (including transportation by vessel)|
||Ex Works... named place of delivery|
||Free Carrier... named place of delivery|
||Carriage Paid To... named place of destination|
||Carriage and Insurance Paid To... named place of destination|
||Delivered At Terminal... named terminal at port or place of destination|
||Delivered At Place... named place of destination|
||Delivered Duty Paid... named place of destination|
|Group 2: Rules for sea and inland waterway transport|
||Free Alongside Ship... named port of shipment|
||Free On Board... named port of shipment|
||Cost and Freight... named port of destination|
||Cost Insurance and Freight... named port of destination|