Article
26.06.2019

Bad Practices in the Use of “INCOTERMS”

Optimize your global trade: The precise use of INCOTERMS is the key to an unambiguous and conflict-free transfer of risks.

INCOTERMS are a set of rules issued by the International Chamber of Commerce (ICC) that are used in international sales contracts to establish the responsibility of the parties in relation to various issues, in particular the transfer of the domain and the delivery of goods.

INCOTERMS are commonly reviewed by the ICC every ten years and are adapted to adapt them to the changes that international trade is undergoing. For example, INCOTERMS 2010 - which are the rules that we must use today - underwent significant changes since it was reduced from 13 INCOTERMS to 11 INCOTERMS and, out of these eleven, two are absolutely new, the INCOTERM DAT and the INCOTERM DAP.

It is a common practice that parties use the INCOTERM FOB for any type of sale of merchandise, without actually the agreements of the sales contract coinciding with those of an FOB. For example, in many cases the parties agree on an FOB at the buyer's plant, which cannot be because in said INCOTERM the delivery must always be made at the seller's plant.

Another unfortunate practice is that the parties never include the year of the INCOTERMS that will regulate their relationship, and it is important to include this information as well. An example of appropriate wording would be: “the seller will deliver the FOB INCOTERMS 2010 products to the buyer at its plant located in Mexico City”.

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