Post by account_disabled on Mar 13, 2024 3:48:18 GMT -5
Incoterms are rules issued by the International Chamber of Commerce (ICC). They consist of terms of sale, which regulate the obligations of each party (i.e. seller and buyer) regarding the conditions for supplying goods, notably with regard to transport, insurance, transfer of risks, customs procedures, the delivery operation and cost allocation. As you know, they are very important in the transaction of goods, especially in international trade. However, for Incoterms to be binding, the parties must make express reference to them in the contract or equivalent document.
On January 1st of this year, a new version of these rules came into force — the Incoterms 2020 —, which were released by the ICC in September 2019. Contrary to the expectations that had been created, the new version of the Incoterms does not present many changes regarding Incoterms 2010 (the latest version).
Incoterms continue to be divided B2B Lead into two categories: those applicable to any means of transport (seven Incoterms: EXW, FCA, CPT, CIP, DAP, DPU and DDP) and those applicable only when the transaction involves transport by sea or waterways ( four Incoterms: FAS, FOB, CFR and CIF). Fundamentally, each Incoterm corresponds to certain supply conditions.
Briefly, the most significant new developments are as follows:
Replacement of Incoterm DAT (Delivered at Terminal) by Incoterm DPU (Delivered at Place Unloaded)
Contrary to what happened with DAT, in DPU there is no doubt that the destination can be any place (including the buyer's premises) and not just one terminal in the strict sense. It should be noted that the only difference between the DPU and the Incoterm DPA (Delivered at Place) is that in the DPU the merchandise is only considered delivered after being unloaded by the seller at the destination. Therefore, the seller must check the conditions of the place as the risk inherent in unloading the goods is borne by him.
Flexibility of means of transport in the Incoterms FCA (Free Carrier), DAP (Delivered at Place), DPU (Delivered at Place Unloaded) and DDP (Delivered Duty Paid)
The party responsible for transport will no longer be obliged to hire a professional transporter, and may use your own means of transport.
Possibility of issuing a bill of lading on board the transport vehicle (“on-board bill of lading”) in Incoterm FCA (Free Carrier)
The parties may agree that the buyer will instruct the carrier to issue and deliver a bill of lading directly to the seller certifying that the merchandise was loaded into the vehicle. This option is intended to solve the problem faced by the seller in obtaining payment in this situation, given that as a rule the bank issuing the letter of credit requires the presentation of a bill of lading, but this document was not made available to the seller.
Differentiation between insurance required by Incoterm CIP (Carriage Insurance Paid to) and Incoterm CIF (Cost, Insurance and Freight)
In the 2010 version of Incoterms, both CIP and CIF required the seller to provide insurance that, in terms of risks covered, would satisfy clause C) of the “Institute Cargo Clauses” (i.e. the lowest level of protected risks). However, in the 2020 version of Incoterms, the CIP now requires the seller to take out insurance that complies with clause A) of the “Institute Cargo Clauses” (which is equivalent to the improperly called “insurance against all risks”). In the case of CIF (which is specific to maritime or waterway transport), the coverage offered by the aforementioned clause C continues to be sufficient). It should be noted that, in both modalities (CIP and CIF), Incoterms 2020 maintained, among other requirements, the requirement that insurance cover at least 110% of the price of the merchandise.