The ICC has published the latest version of its Incoterms for use in domestic and international sale agreements.
Since 1936, the International Chamber of Commerce (ICC) has published a set of three-letter trading terms for use in sale and purchase contracts. Known as ‘Incoterms’, these deal with the obligations between buyer and seller.
Incoterms consist of 11 three-letter trading terms grouped as follows:
In the D, E and F rules, risk passes from seller to buyer at a named place, which is where the goods are legally ‘delivered’ under the sale contract.
Each Incoterm carries with it a series of obligations on both the seller and the buyer. These may address the obligations of each party, such as:
These definitions of the obligations on the seller and buyer apply only where Incoterms are explicitly referenced in the sale contract. Many three-letter trading terms – for example, ‘FOB’ and ‘CIF’ – have a legal meaning which is independent from and varied by the Incoterms definitions.
In September 2019, the ICC published the latest version: Incoterms 2020.
The changes made to Incoterms 2020 since the 2010 edition are largely presentational and clarificatory. The substantive changes include:
A number of terms have been modified to allow the seller or the buyer, as the case may be, to perform the carriage itself.
All Incoterms now contain an express allocation of the responsibility for security-related obligations.
Incoterms are not often included in contracts of carriage, but instead apply under many underlying sale contracts which underpin international trade.
It is sensible for buyers and sellers to specify which edition of Incoterms are being adopted (e.g. “Incoterms 2020”).
Deputy Director (Cargo)