Learning more about Incoterms®2010

Incoterms is the abbreviation
for International
Commercial Terms,
generally known or referred
to as trade terms, which are
used by contracting parties
in international contracts of
sale but not in contracts of
carriage.
Their application and use
in an international contract
of sale is to define:
• The roles of the
contracting parties in
respect of the carriage of
the goods;
• The responsibility for
the export and import
clearance; and
• The explanation of the
division of costs and risks
between the contracting
parties.
The International Chamber
of Commerce (ICC) first
created and coined the
word “Incoterms” in 1936,
although its development
started in 1919. “This
undisputed worldwide
contractual standard” has
been subject to regular
reviews and updates over
the years in order to take
account of developments in
international trade. The last
update was introduced on 01
January 2000, resulting in
the creation of what is known
as “Incoterms 2000”. (Please
consult the ICC publication.
Earlier versions of Incolearn
can also be requested in
hardcopy or accessed on
www.ftwonline.co.za.)
The lastest version of
Incoterms, which will be
known as “Incoterms®2010”
(it is now trademarked)
will enter into force on 01
January 2011.
The two obvious questions
are no doubt what the
changes are, and if these are
significant.
The answer to the first
question is evident in the
subtitle of Incoterms®2010
which reads “ICC Rules
for the use of Domestic and
International Trade Terms”.
Secondly, there are no
longer four categories or
groups i.e. E-terms, F-terms,
C-terms, and D-terms are
now replaced with two
distinct classes – “Rules
for any Mode or Modes of
Transport” and “Rules for
Sea and Inland Waterway
Transport”.
The Incoterms have
been reduced to 11 from
13, with four Incoterms
having been deleted and
two new Incoterms added.
The 3-letter Incoterms are
Ex Works (EXW), Free
Carrier (FCA), Carriage
Paid to (CPT), Carriage and
Insurance Paid to (CIP),
Delivered at Terminal (DAT),
Delivered at Place (DAP),
Delivered Duty Paid (DDP),
Free Alongside Ship (FAS),
Free on Board (FOB), Cost
and Freight (CFR), and Cost
Insurance and Freight (CIF).
The first seven Incoterms
are “Rules for any Mode or
Modes of Transport” while
the last four Incoterms are
“Rules for Sea and Inland
Waterway Transport”.
As to how to use the
Incoterms®2010 rules, the
ICC suggests that you:
• Incorporate the
Incoterms®2010 rules into
contracts of sale;
• Choose the appropriate
Incoterms®2010 rules;
• Specify the place or port as
precisely as possible; and
• Remember that
Incoterms®2010 do not
give a complete contract
of sale.