Incoterms

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WHAT ARE THE INCOTERMS RULES?

When international trade transactions take place, one of the aspects that must be clearly established is the location where the goods will be delivered. This location must be agreed upon in advance by the seller and purchaser, and it must appear in the international sales contract. In the contract, the terms under which the goods will be delivered can be established in two ways: 1) by defining as precisely as possible the delivery location, the responsibilities for transport, which party will assume the risk, which party must carry out the importing and exporting procedures, etc., all of this in different languages, or 2) use the Incoterms rules.

The Incoterms rules (an abbreviation for International commercial terms) are defined by the International Chamber of Commerce (ICC) in order to contribute to a state of legal security during international transactions for buying and selling goods and for standardising the terms of delivery for them.

WHAT DO THE INCOTERMS RULES REGULATE?

The purpose of the Incoterms rules is to delimit the rights and obligations of the parties involved in an international transaction for buying and selling goods, and they cover the following five aspects:

  • Obligations of the buying and selling parties.
  • Costs each party will assume.
  • Insurance for the goods.
  •  Customs procedures.
  • Time and place for delivery of the goods.

WHAT ASPECTS DON’T THEY REGULATE?

The following aspects remain outside of the scope of the Incoterms rules, although negotiation of these may be affected by the agreed-upon delivery terms:

  • Transfer of ownership for the goods.
  • Buying/selling price, payment methods and time periods.
  • Applicable regulations in the event of breach of the contract, including its termination and jurisdiction.
  • Waiver of liability in relation to the goods.

SUMMARY TABLE FOR THE INCOTERM 2010 RULES

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