The International Chamber of Commerce (ICC) has released its latest set of Incoterms which came into force on 1 January 2020.
Incoterms are a set of standardised rules for the use in domestic and international trading agreements.
They apportion responsibility between the buyer and seller in respect of key matters such as the transfer of risk in the goods, insurance, and responsibility for carriage and loading/unloading of the goods. They are not in themselves law but are voluntary and incorporated into contracts between traders.
The main advantages of Incoterms is that they cut down the size of contracts and being standardised they reduce uncertainties which arise from different interpretation of trade terms by different countries. This way traders know what has been agreed and the risk of conflict is greatly reduced.
Incoterms are not only used in international contracts though. We are finding they are increasing used in domestic supply agreements and standard terms and conditions of sale and purchase.
We also see the word “Incoterms” used in contracts but with the Incoterm version or place missing. At the very least it should say in the contract “[the chosen Incoterms rule] [named port or place or point] Incoterms 2020”. For example: ExW Freight Warehouse, Portland, UK - Incoterms 2020. Failure to do this causes confusion and potentially expensive argument.
If you are looking at reviewing your supply contracts or standard terms and conditions of trade, it would be worth considering incorporating Incoterms into those contracts. If you already use Incoterms and you are reviewing your terms then it would be worth considering updating to the 2020 version.
If you have any questions regarding your business trading agreements please call 01482 324591 or email info@sjplaw.co.uk
