What are the Incoterms®, and why do we need them?
The Incoterms® were brought into existence in 1936 by the experts of the International Chamber of Commerce (ICC), including lawyers and trade practitioners, with the idea of creating a set of international rules for the interpretation of the most commonly used trade terms in foreign trade. The Incoterms® rules are an internationally acknowledged standard and are used all over the world when it comes to international and national contracts for the sale of goods.
How do the Incoterms® facilitate trade?
By the use of the Incoterms®, you can keep clear of costly mistakes, arising from misinterpretations, since the tasks, costs and risks involved in the delivery of the goods from seller to buyer are all clarified. The Incoterms® rules are acknowledged by UNCITRAL, the core legal body of the United Nations in the field of international trade law.
The concept of the Incoterms® rules was born in 1921, and then came into effect in 1936. With the passing of time, commercial practices, types of goods and transports, and international laws have become more and more elaborated, therefore the Incoterms® rules need to be regularly amended by trade experts.
The rules have been modified six times already since 1936, to bring them up-to-date with the development of international trade. The latest version, called Incoterms® 2010, came into force on 1st January, 2011. The 11 Incoterms® 2010 rules are presented in two distinct classes, one being the rules for any mode or modes of transport: EXW, FCA, CPT, CIP, DAT, DAP, DDP, while the other consists of the rules for sea and inland waterway transport: FAS, FOB, CFR, CIF.
It is recommended to use Incoterms®2010 after 2011, however traders might choose whichever version of the Incoterms® they want to use, but in this case, the parties of the sales contract need to clarify which version they chose.
For you to have a better idea, please see our Infographic for further, more detailed information on the Incoterms® rules.
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'The importance of the Incoterms'
Eva Kerekes is the Overseas Development Manager of Multicargo, who takes care of the vast network of international contacts Multicargo has at its disposal. As well as being in contact with the agents on a daily basis, she also represents the company at various forwarding conferences abroad.
