Incoterms 2010:
ICC Rules for Use in Contracts for the Supply of Goods By Kieron O’Callaghan & Ben Hornan
ON SEPTEMBER 16TH the International Chamber
of Commerce (ICC) launched the latest revision of its internationally recognised trade terms, Incoterms 2010. The Incoterms – short for “international commercial terms” – are a universally accepted set of trade terms which govern the practical arrangements for the delivery of goods from sellers to buyers (loading, export, import clearance, and so on), and allocate the costs and risks between the parties. They are therefore relevant for all businesses
involved in transactions for the supply of goods, and are an important tool in the negotiation of commercial contracts. Incoterms 2010 comes into force on January 1st
2011. The new rules have been updated to reflect developments in international trade since the last version of the rules in 2000.
Principal Changes in Incoterms 2010 Changes to the “Delivered” Terms Four of the rules in the previous version of
Incoterms have been abolished: Delivered at Frontier (DAF), Delivered Ex Ship (DES), Delivered Ex Quay (DEQ), and Delivered Duty Unpaid (DDU). They have been replaced by two new rules: Delivered at Terminal (DAT), and Delivered at Place (DAP). Under the new DAT rule, delivery takes place
when the seller unloads the goods from the arriving vehicle and places them at the disposal of the buyer at the named terminal. Under the new DAP rule, delivery takes place
when the seller places the goods at the disposal of the buyer on the arriving vehicle ready for unloading (i.e. not unloaded) at the agreed place. DAT can be used in cases where DEQ was used
under the previous Incoterms, and DAP can be used wherever DAF, DES, and DDU were previously used. Both DAT and DAP can be used irrespective of the method of transport: they are not limited to maritime transport.
Classification of the Incoterms 2010 The Incoterms rules are now presented in two
distinct classes. The first class of rules are suitable for any mode of transport. These 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). These rules can be used where there is no maritime transport; however, they can also be used where a ship is used for part of the carriage. The second class of rules are suitable for sea and
inland waterway transport only. These rules are Free Alongside Ship (FAS), Free On Board (FOB), Cost and Freight (CFR), Cost Insurance and Freight (CIF).
Security Clearances In light of heightened concern about security in
the movement of goods, there are more stringent security requirements for the export and import of goods, for example the scanning of containers is now mandatory in many jurisdictions. As a result, it has become necessary for both sellers and buyers to provide more information to the relevant authorities in order to obtain export/import clearance.
“The new rules have been updated to reflect
developments in international trade since the last version of the rules in 2000”
To take account of this, in addition to dealing
with the obligations on the seller and/or buyer (as the case may be under the relevant rule) to obtain export/import and security related clearances, the various Incoterms rules also include a new obligation to render assistance to the other party in this respect.
Insurance In Incoterms 2010, the CIF and CIP rules require
the seller to obtain insurance. The requirements of these two rules have been updated to reflect recent changes to the Institute Cargo Clauses. Note that Incoterms 2010 only require the seller
to obtain the minimum level of cover provided by Clause (C) of the Institute Cargo Clauses, which is a relatively low level of cover. Buyers that require a higher level of cover should ensure that the contract expressly provides for this.
Terminal Handling Charges Under Incoterms CPT, CIP, CFR, DAT, DAP, and DDP – each of which require the seller to make
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