International Commercial Terms 2010

7/23/2019 International Commercial Terms 2010

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INTERNATIONALINTERNATIONALCOMMERCIAL TERMSCOMMERCIAL TERMS

20102010

Areej Aftab Siddiqui


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International Commercial Terms

History Initially created in 1936 by the International Chamber of Commerce (ICC)

and have been periodically revised (Incoterms 21 is the ! threvision)

Incoterms are "enerally "ood for appro#imately 1 years $ not a ma"icn%mber& b%t historically abo%t acc%rate

Incoterms reflect 'orld'ide trade practices& as practices chan"e&Incoterms are revised

Incoterms 21 'ere 'ritten by the ICC& represented by ! individ%alsfrom vario%s co%ntriesareas of the 'orld

*et 11 times in person

+eceived over 2 s%""estions in first re,%est

+efined s%""estions over - proposals

Controllin" so%rce doc%ment is 'ritten in .ritish /n"lish and 'ill betranslated into 30 lan"%a"es over the ne#t year


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hat are Incoterms 214

/leven (11) Incoterms 21 (%sed to be 13 terms)

5o%r (-) terms 'ere deleted and t'o (2) ne' terms 'ere

created

Incoterms 21 'ill be"in an%ary 1& 211

7vailable 'orld'ide thro%"h 1 International Chamber ofCommerce 8ational Committees

The terms arent la'

Co%ntry ne%tral : they dont favor one co%ntry over

another ;elfcontained : all information that determines

responsibility and ris< are in one place


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Who Uses The!

.%yers and ;ellers& directly

7nd indirectly

.an


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Use b" #a$%s

Most credits will state an Incoterm

This enable banks to check, to an extent, that:

The documents called for in the credit are

consistent with the term used

The documents presented are consistent with theterm used

Only few credits state that the term used is actuallyan Incoterm.

To aoid ambi!uity and aail the benefit of thisreision, it is recommended to state the Incotermsspecifically statin! Incoterms "#$#


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Use b" I$surers

If there is loss or dama"e to a car"o&

ins%rers 'ill be at pains to establish

e#actly 'here it has occ%rred and

therefore 'hether the b%yers or sellers'ere responsible

Incoterms determine 'hether it is the

b%yer or seller that is at ris


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Use b" Carriers&'or(ardi$)a)e$tsTo determine 'hich party (b%yerseller)

'ill be responsible for payment of frie"ht

char"es

To determine 'hich party (b%yerseller)'ill be responsible for the vario%s

activities in transportation


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*e+$itio$s,--


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=ey >efinitions

hat is >elivery4

It is not al'ays?

hen the "oods arrive in yo%r c%stomers hands or

hen the "oods leave yo%r docefined the same in all co%ntries

@o% m%st


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Transportation >efinitions

Arecarria"e? inland transportation on the sellers side

>omestic? from the place 'here the shipment starts to any

s%bse,%ent transportation carria"e

International? from the place 'here the shipment starts to the

depart%re point on the sellers side

*ain Carria"e?

>omestic? s%bse,%ent transportation beyond precarria"e

International? transportation from the point of depart%re on the

sellers side to the arrival pint on the b%yers side

Bncarria"e?

>omestic? s%bse,%ent transportation beyond main carria"e

International? transportation from the arrival pint on the b%yers side


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Transportation >efinitions

>oor : to : >oor Contract of carria"e that incl%des precarria"e& maincarria"e

and oncarria"e by the same carrier

>oor : to : (7ir) Aort? Contract of carria"e incl%din" precarria"e and maincarria"e to

airport or ocean port or tr%c< terminal port or rail port

(7ir) Aort : to : (7ir) Aort?

Contract of carria"e for main carria"e only

(7ir) Aort : to : >oor?

Contract of carria"e incl%din" main carria"e and oncarria"e


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Type of Transportation4Company 7

Company .

%oor to %oor one contract for all

carria!e &pre', main, and on'carria!e(


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T".e of Tra$s.ortatio$!

Company 7

%oor to )ort contract for pre'carria!e

and main'carria!e

*ompany + responsible for arran!in!

pick up at rrial irport


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7 5e' *ore >efinitionsE

Bmnimodal? Fsed 'ith terms that %se all modes oftransportation (tr%c


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Aacefinitions

G The pac


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=ey ,%estions to as< in str%ct%rin"

a transaction

ho f%rnishes the "oods4 ho pac


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hat do Incoterms 21 >o4

>ivides %p tas


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Co$td-

7ddress Car"o ;ec%rity concerns

>efines mode of transportation by their %se

- Terms are for *arine+estricted for sea inland

'ater'ay transport only

Terms are Bmnimodal for %se 'ith all modes of

transportation

Increasin"ly considered replacement for Fniform

Commercial Code (FCC) shipmentdelivery terms


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hat Incoterms 21 >B 8BT

>oE

7%tomatically 7pply

>etermine hen B'nership Chan"es

hen delivery occ%rs or 'hen payment

happens can impact 'hen o'nership chan"es

*%st be addressed specifically in contract

Fnder F; Ja'& it is 'hen the prod%ct is delivered

If K%risdiction is %nder another soverei"n nation la'&yo% need to address per that co%ntry re"%lation

If contract is s%bKect to the Fnited 8ations

Convention on Contracts for the International ;ale

of Loods (C;IL) the la' does not specify if it is not

addressed specifically 'ithin the contract


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hat Incoterms 21 >B 8BT

>oE

Identify 'hen +even%e is +eco"niMed Identify if a .reach of Contract occ%rs& 'hen it happened

>oes not determine remedies for breach of contract

Arovide relief from obli"ationse#emptions from liability in%ne#pected or %nforeseeable sit%ations

7ddress Aayment iss%es

Tells yo% that the b%yer m%st pay& b%t not 'hen or 'here


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Co$td-

7ddress more than one contract

>rop ;hipments are TB Contracts

1) bet'een the seller and their s%pplier and

2) bet'een the seller and the b%yer Incoterms 21 co%ld be the same or

different in each contract

;pecifically tas< a party 'ith container

sto'a"e obli"ations


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Incoterms

2 vs 21

E/W E Wor%s

'CA 'ree Carrier 'AS 'ree Ao$)side Shi. 'O# 'ree O$ #oard

C'R Cost a$d 'rei)ht CI' Cost3 I$sura$4e 5 'rei)ht C6T Carria)e 6aid To CI6 Carria)e 5 I$sura$4e 6aid To

*E7 *ei8ered E 7ua" *ES *ei8ered E Shi. *A' *ei8ered at 'ro$tier **U *ei8ered *ut" U$.aid **6 *ei8ered *ut" 6aid

E/W E Wor%s

'CA 'ree Carrier 'AS 'ree Ao$)side Shi. 'O# 'ree O$ #oard

C'R Cost a$d 'rei)ht CI' Cost3 I$sura$4e 5 'rei)ht C6T Carria)e 6aid To CI6 Carria)e 5 I$sura$4e 6aid

*AT *ei8ered At Teri$a *A6 *ei8ered At 6a4e **6 *ei8ered *ut" 6aid

Marine RestrictedOmni-Modal


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9rou. Ter *e+$itio$s

' Ters

C Ters* Ters


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5Lro%p Terms

7re considered to be ;hipment ContractsD7re considered ;eller 5riendly

Seller

: Handles Export Clearance

: Handles Pre-carriage

: Named Place on SellersSide

Buyer

: Contracts for Main Carriage

: n c!arge of Carrier "andusually for#arder$ selection

: Control o%er &reig!t Costs

: Control of 'ocumentation


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CLro%p Terms

7re considered to be ;hipment ContractsD 7re considered .%ye 5riendly

Seller


: n c!arge of carrier "and

usually for#arder$ selection

: Handles pre-carriage

: Has control o%er freig!tcosts

: n control of documentation

: Passes ris( of loss"deli%ers$ to Buyer priormain carriage

: Handles export clearance

Buyer

: Named Place is on Buyersside

: Has ris( of loss #!ile goodsare in transit #it! carrierselected and paid for )yseller

: Must rely !ea%ily on Seller

for data elements re*uiredfor ocean s!ipments suc!as mporters +eneralmanifest

f informed, s!ould not

consider C. terms due todo#nside descri)ed


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>Lro%p Terms

7re considered to be 7rrival ContractsDSeller


: n c!arge of carrier "andusually for#arder$ selection

: Handles pre-carriage: Has control o%er freig!t costs

: n control of documentation

: Passes ris( of loss "deli%ers$to Buyer at freig!t arri%alpoint

: Handles export clearance

: Seller may !a%e re%enuerecognition issues sincedeli%ery. occurs on arri%alside, meaning re%enue is

recogni/ed only upon arri%al

Buyer

: Named Place on Buyersside

: Must rely !ea%ily on Seller

for data elements re*uiredfor ocean s!ipments suc!as mporters +eneralmanifest

: 0nderta(es less ris( t!an inC. terms

: f inexperienced, or doesnot !a%e good relations!ip#it! carriers, is ser%ed #ill)y '. terms


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International Commercial Terms 2010