Incoterms 2000 will make
international trading easier
Paris, 13
September 1999 - The
International Chamber of Commerce today published the millennium edition of
its standard trade definitions, Incoterms 2000.
Incoterms are a basic reference
for sales contracts, in constant daily use throughout the world. The new version
will make it easier for traders to do business in the new century, despite the
growing volume and complexity of international transactions.
Since Incoterms were first
published in 1936, they have been updated six times. They precisely define the
responsibilities of buyer and seller and are recognized as the international
standard by customs authorities and courts in all the main trading nations.
Among the best known Incoterms
are EXW (Ex works), FOB (Free on Board), CIF (Cost, Insurance and Freight),
DDU (Delivered Duty Unpaid), and CPT (Carriage Paid To).
This trade-marked ICC product
has become the cornerstone of international trade. Provided that the Incoterms
themselves are correctly used, the risk of costly misunderstandings and legal
disputes is greatly reduced.
They should now be incorporated
under the reference "Incoterms 2000" into contracts that are effective from
January 2000 or any date thereafter. Incoterms 1990 remain valid until the end
of 1999.
The latest edition takes
account of the increased use of intermodal transport by providing for the delivery
of goods from seller to buyer at any point in the transport chain instead of
concentrating as in the past on the moment the goods cross the ship's rail.
The term FCA (Free Carrier) gives a clear definition of the seller's delivery
obligation in the country of export, irrespective of the mode of transport.
Emmanuel Jolivet, ICC's
policy manager for international commercial practice, said the terms offer an
array of choices for buyers and sellers to express the main provisions of a
sales contract. For example EXW covers the seller's minimum obligations - putting
the goods at the buyer's disposal while they are still on the seller's premises.
At the other end of the
spectrum, Delivered Duty Paid (DDP) expresses the maximum obligations for the
seller - delivery is completed when goods are cleared for import and placed
at the buyer's disposal at the named place of destination. Under DDP, the buyer
is responsible for unloading the goods from the "arriving means of transport."
A big advantage of the new
edition of Incoterms is that they clearly allocate the loading and unloading
obligations of both buyer and seller. Mr Jolivet noted: "One of the most frequent
queries we received about the old version was on the allocation of terminal
handling charges under FCA. Previous ambiguities have now been removed."
Mr Jolivet said much anguish
and expense can be avoided if specific reference to Incoterms 2000 is made whenever
the terms are used. Another basic requirement is that relevant locations are
named whenever an Incoterm is inserted into a contract. For example, the term
Delivered at Frontier (DAF) should always be accompanied by a reference to the
exact place and on which frontier delivery is to be made.
"If the contract neglects
this fundamental detail, the buyer could be put to enormous inconvenience because
the seller would then be entitled to choose any place of delivery at the frontier,"
Mr Jolivet said.
Here are some examples
of the correct use of Incoterms:
FOB Liverpool Incoterms 2000
DDU Frankfurt Schmidt GmbH Warehouse 4 Incoterms 2000
CPT Smith Carriers, Inc. Main Warehouse New York Incoterms 2000
Incoterms 2000 are the culmination
of two years of work by ICC's Working Party on Trade Terms, consisting of more
than 40 trade experts from companies and business associations around the world.
The group carried out extensive consultations among users before agreeing on
the final draft.
Incoterms 2000 are available
in a bilingual English-French edition from ICC Publishing S.A. in Paris and
ICC national committees worldwide. They may also be ordered through the Business
Bookstore. To make sure the finer points are well understood, the launch
is accompanied by seminars in Austria, Britain, Chile, China, Finland, France,
Germany, Mexico, Peru Singapore and Sweden.
More
information on Incoterms 2000