Incoterms® is a set of international rules promoted by the International Chamber of Commerce (ICC) for the uniform interpretation of commonly used trade terms in foreign and domestic trade.
The ICC first published Incoterms® in 1936 with revisions in 1953, 1967, 1974, 1980, 1990, 2000 and 2010 (in effect from 1st January 2011).
For Incoterms®2010 rules to apply to a sale contract, an explicit reference to their application must be made.
The chosen Incoterm® rule should be appropriate to the goods and to the means of their transport. It will indicate which party to the sale contract, proforma invoice, agreement or purchase order has the obligation to complete the carriage or insurance arrangements, at which point the seller is considered to have delivered the goods to the buyer, and the costs each party is responsible for.
The chosen Incoterm® rule can work only if the parties name a place or port in association with that term i.e., CFR Felixstowe Port, and will work more efficiently if the parties specify the place or port as precisely as possible. For example, a named inland destination should have a full street address and not merely state ‘buyer's warehouse'.
The ICC has announced that a new update is currently in progress with implementation scheduled for 2020. This update is considered necessary in order to keep pace with the ever-evolving global trade landscape.
We trust that, once again, the ICC will produce ‘Guidance Notes' in conjunction with Incoterms® 2020.
It is also our hope, that in addition to the 11 Incoterms®, the revised publication will provide some definitive interpretations and meaning to terms such as CFR Free Out, Liner in/Liner out, etc. This would avoid a lot of disputes between banks and companies as to what detail, if any, should appear on documents to evidence compliance.