Incoterms

The Incoterms rules or International Commercial Terms are a series of pre-defined commercial terms published by the International Chamber of Commerce (ICC) relating to international commercial law. Incoterms are international trade conditions, that govern the rights and obligations of the buyer and the seller. Who should do what and when? The system was set up to clearify international trading rules for both buyer and seller. In daily practice one might easily choose the wrong Incoterm, often caused by habit, laziness or ignorance. This can be a great risk with high financial consequences, for both the seller and the buyer.

The Incoterms were amended several times, most recently in 2020, taking into account, among other things, the increasing online business.

We list the most important changes here:

• DAT (Delivery at Terminal) has been replaced by DPU (Delivery at Place Unloaded). This to clarify that a DAT delivery can take place anywhere, not only at a “terminal”.
• The latest version responds to the demand for on-board bills of lading (BOL) under the Free Carrier (FCA) Incoterms rule. Something that is especially requested by banks in the case of payment under a L/C (Letter of Credit).
• Furthermore, these current regulations take into account the transport of goods with own means of transport using FCA, Delivery at Place (DAP), Delivery at Place Unloaded (DPU), and Delivered Duty Paid (DDP).
• Attention is also being paid to the various levels of insurance coverage under the Cost Insurance and Freight (CIF) and Carriage and Insurance Paid To (CIP) rules. An example of this is that the seller must agree on an insurance with a higher coverage (Institute Cargo Clauses A) if using CIP. It is possible that the parties mutually agree to use limited coverage.