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Information International rules and organization Incoterms 2010 [iNKOTERMS 2010]

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Incoterms 2010

Incoterms 2010

Incoterms rules are abbreviated by the first three letters of the trade terms that reflect business practices in Contracts for the International Sale of Goods. Incoterms rules mainly determine the responsibilities, costs and risks involved in bringing the goods from sellers to buyers.

HOW TO USE RULES INCOTERMS 2010.

1. By incorporating Incoterms® 2010 (Incoterms 2010) in your contract of sale. If you wish to apply Incoterms® 2010 (Incoterms 2010) should clearly specify this in your contract as follows: "[the chosen Incoterms, including a named place, in accordance with] Incoterms® 2010" / Incoterms 2010 ".

2. By electing the appropriate Incoterms. Elected Incoterms must meet the product, a method of transport and, in addition, reflect the extent to which the parties intend to make additional commitments, for example, the obligation of the seller or buyer on the organization of transportation or insurance. Explanations of each term contains information useful for the implementation of such a choice. Whatever term is chosen, the parties should bear in mind that the interpretation of the agreement may affect customs ports or other points.

3. By perhaps more accurately determine the point or port. Elected Incoterms can work only if the parties have identified the item or the port, or even better, if the parties have identified as possible as accurately as possible a point or port.
A good example of this specification is as follows; "FCA 38 Cours Albert ler, Paris, France Incoterms® 2010".
According to the terms of Incoterms Ex Works (EXW, EXW), Free Carrier (FCA, Free Carrier), Delivered at Terminal (DAT, delivery at the terminal), Delivered at Place (DAP, the destination delivery), Delivered Duty Paid (DDP, Delivery with payment of fees), Free alongside ship (FAS, Free alongside ship) and the Free on board (FOB, Free on board), a named item is a place where carried out delivery and passing of risk to the buyer.

According to Incoterms Carriage Paid To (CPT Carriage Paid To), Carriage and Insurance Paid To (CIP, Carriage and Insurance Paid To), Cost and Freight (CFR, Cost and Freight) and Cost, Insurance and Freight (CIF, Cost, insurance and freight), a named item is different from the place of delivery. According to these four Incoterms named item indicates the destination to which the paid transportation. To avoid any doubt or dispute indications on a place as item or destination can be further defined by reference to the precise point at this point or destination.

4. Indeed it is necessary to remember that Incoterms are not a complete contract of sale
The rules of Incoterms only indicate which of the parties to the contract of sale must carry out the actions necessary for transportation and insurance, when the seller transfers the goods to the buyer, and how much each party incurs. The Incoterms do not specify the price or method of payment to be paid. They also do not regulate the transfer of ownership of the goods or the consequences of breach of contract. These issues are usually defined in clearly expressed terms in the contract of sale or in the law applicable to such a contract. However, the parties must take into account that a strictly mandatory national law (mandatory local law) may have an advantage with respect to any aspect of the contract of sale, including the chosen term Incoterms.

MAIN FEATURES OF INCOTERMS 2010

1. Two new Incoterms - DAT (Delivery to the terminal) and DAP (Delivered at the destination) - Replace the following Incoterms 2000 terms: DAF (delivery at the frontier), DES (Delivered Ex Ship), DEQ (Delivered Ex quay) and DDU (Delivery without payment of fees)
The number of Incoterms reduced from up to 13 11. This is made possible by the inclusion of two new terms, which can be used regardless of the agreed mode of transport, namely: DAT (Delivery to the terminal) and DAP (Delivered at the destination) instead of Incoterms 2000 DAF (on the border of Supply), DES ( Delivered Ex ship), DEQ (Delivered Ex quay) and DDU (Delivered duty unpaid).

According to these two new terms delivery is the agreed destination: on the term the DAT (Delivery to the terminal) by placing the goods at the buyer's disposal unloaded from the arriving means of transport (as it was earlier on the term the DEQ (Delivered berth) on the DAP term (Supply the place of destination) by providing goods to the buyer, but ready for unloading (as it was previously on the terms of DAF (delivery at the border), the DES (Delivered Ex ship) and the DDU (Delivered duty unpaid).
These new rules will make unnecessary rules Incoterms 2000 DES (Delivered Ex Ship) and DEQ (Delivered berth). Note to the terminal in the term DAT (Delivery to the terminal) could be in the port, and therefore the term DAT can safely be used in cases where the term used Incoterms 2000 DEQ (Delivered berth).

Similarly, arrived "vehicle" in the term DAP (Delivered at the destination) can be a vessel, and the agreed destination - the destination port: consequently, DAP (Delivered at the destination) can safely be used in cases where the term of Incoterms used 2000 DES (Delivered Ex ship). These new rules, like their predecessors, are the terms' arrival (delivered terms) ", ie, the seller bears all costs (except the costs of customs clearance for import, if applicable), and the risks associated with the delivery of goods to the agreed destination.

2. Classification 11 2010 Incoterms terms.
Eleven Incoterms 2010 can be divided into two separate groups:

RULES FOR ANY KIND OR TYPES OF TRANSPORT

EXW Ex Works ex mill
FCA Free Carrier Free carrier
CPT Carriage Paid to Carriage paid to
CIP Carriage and Insurance Paid to Carriage and Insurance Paid To
THAT Delivered at Terminal Supply terminal
DAP Delivered at Place Delivery to destination
DDP Delivered Duty Paid Delivered Duty Paid

Rules for Sea and inland waterway transport

FAS Free Alongside Ship Free Alongside Ship
FOB Free on Board Available on board
CFR Cost and Freight Cost and freight
CIF Cost Insurance and Freight Cost, insurance, freight

The first group includes seven terms that can be used regardless of the chosen mode of transportation and regardless of whether one or more modes of transport are used. This group includes the terms EXW (Ex Works), FCA (Free Carrier), CPT (Carriage Paid To), CIP (Transport and Insurance Paid To), DAT (Delivery on Terminal), DAP (Delivered at Destination) and DDP ( Delivery with payment of duties). They can be used even if there is no sea transport at all. At the same time, it is important to remember that these terms can be applied when the ship is used in part during transportation.

In the second group of terms Incoterms 2010, both the delivery point and the place to which the goods are transported by the buyer are ports, and therefore these terms are referred to as "maritime and inland water regulations". This group includes the terms FAS (Freely alongside the ship), FOB (Free on board), CFR (Cost and Freight) and CIF (Cost, Insurance and Freight). In the last three terms, any mention of the ship's rail as a delivery point is omitted, since the goods are considered delivered when it is "on board" the ship. This more accurately reflects modern commercial reality and excludes the notion that the risk moves back and forth with respect to an imaginary perpendicular line.

3. Rules for intra-national and international trade Incoterms have traditionally been used in international sales contracts when the goods crossed the border. In different parts of the world, the creation of trade unions, such as the European Union, made it less important for visible control of goods when passing through the border of the parties concerned. Therefore, the subtitles of the Incoterms 2010 rules explicitly state that these rules can be used both in contracts for the international sale of goods and in intra-national sales contracts. As a result, the rules of Incoterms 2010 in a number of paragraphs clearly emphasize that the obligation to implement export-import formalities is available only when applicable.

Two phenomena have convinced ICC to timely progress in this direction. First, traders commonly use Incoterms rules in intra-national sales contracts. Secondly, there is an increasing desire to use in the United States in domestic trade Incoterms instead of the previously set forth in the Uniform Commercial Code US shipment and delivery terms.

4. Explanations
Before each term of Incoterms 2010 you will find an explanation. They secrete highlights of each Incoterms, for example, when they should be used when the risk passes, how costs are allocated between the seller and the buyer. These explanations are not part of the current 2010 Incoterms rules, their purpose is to help the user in an orderly and efficient selection of the appropriate international trade terms for a particular transaction.

5. Electronic communications
Previous versions of the Incoterms rules specify the documents that could be replaced by electronic data (EDI messages). Articles A1 / B1 Incoterms 2010 of electronic means of communication recognizes the same effect as that of the paper-based communications, if agreed by the parties or if it is accepted. This formula facilitates the evolution of new electronic procedures in steps Incoterms 2010 period.

6. Insurance cover
Incoterms rules 2010 represent the first version of Incoterms from the revision of the Rules of London Underwriters (the Institute Cargo Clauses) and made to take account of these rules changes. In Incoterms 2010 information concerning duties on insurance placed in the article AZ / BZ, which referred to the contract of carriage and insurance. These provisions were removed from the articles A10 / B10 Incoterms 2000, had general. The wording of Article AZ / BZ Insurance supplemented to clarify the responsibilities of the parties in this regard.

7. Security checks and necessary information
Currently growing concern for the safety of movement of goods, which requires verification that the product is not a threat to human life or property, for reasons related to its natural properties. Therefore, this article A2 / B2 and A10 / B10 Incoterms 2010 between the seller and the buyer assigns responsibilities to implement or assist in the performance of formalities related to security control, such as a system of information on the seizure.

8. The cost of handling at the terminal
According to Incoterms CPT, CIP, CFR, CIF, DAT, DAP and DDP the seller must take all necessary measures to ensure the transportation of goods to the agreed destination.
When the freight is paid by the seller, in essence it is paid by the buyer, since freight costs are usually included by the seller in the total price of the goods. Transportation costs sometimes include the costs of handling and moving goods in the port or container terminal, and the carrier or terminal operator may charge these costs to the buyer receiving the goods. In such circumstances, the buyer is interested in avoiding double payment for the same service - once to the seller as part of the total price of the goods and the second time separately to the carrier or operator of the terminal. Incoterms 2010 managed to avoid this by clearly allocating such costs in the articles Ab / Bb of the relevant terms.

9. Subsequent sales
In commodity trade, unlike the trade in finished goods, the goods are often sold several times in the period of transportation. If this is the case, the seller in the middle of the chain "does not ship" the goods, since the goods have already been shipped by the first seller in this chain. Therefore, the seller in the middle of the chain fulfills its duties with respect to the buyer, not carrying out the shipment of the goods, but providing the shipped goods. For clarification, the relevant terms of Incoterms 2010 include the obligation to "provide shipped goods" as an alternative to the obligation to ship goods in the appropriate terms of Incoterms.

Changes made to Incoterms

Sometimes, the parties wish to add a rule of Incoterms. Incoterms 2010 prohibits such addition, but for that there is a risk. To avoid unpleasant surprises appropriate parties in their contract as closely as possible to provide for the expected effect of such additions. For example, if the contract changed the allocation of costs, compared with Incoterms 2010, the parties must clearly indicate whether they intend to change the point at which the risk is transferred from the seller to the buyer.


EXPLANATION used in Incoterms 2010 TERMS

As in Incoterms 2000, duties of seller and buyer are in a mirror, in column A contains the obligations of the seller, and in column B - responsibility of the buyer. These duties may be performed directly by the seller or buyer, or sometimes in accordance with the terms of the contract or by applicable law, through intermediaries such as carriers, forwarders or other person nominated by the seller or by the buyer with a purpose.

Incoterms 2010 text is self-contained. However, to facilitate users to the content below the symbols used throughout this text.
Carrier: For the purpose of Incoterms 2010 carrier is a party with which the contract of carriage.
Customs formalities: the requirements that must be performed in accordance with applicable customs regulations and may include obligations in respect of documents, security, information, or an actual examination of the goods.

Shipping: This is a multidimensional concept in business law and practice, but Incoterms 2010 uses it to refer to the time when the risk of loss or damage to the goods passes from the seller to the buyer.

Shipping documents: This term is used in the title of the item A8. It means a document confirming delivery (transfer) of goods. For many Incoterms 2010 shipping document is the transport document or electronic record of the corresponding. However, in terms EXW, FCA, FAS and FOB shipping documents can be a receipt. Shipping documents may have other functions, for example, be part of the mechanism of payment.

Electronic record or procedure: a set of information that consists of one or more electronic communications and, where applicable, functionally performs the same function as a paper document.

Packaging: This term is used for several purposes:
1. Packaging of the goods shall conform to the contract of sale
2. Packaging of the goods means the product is suitable for transportation.
3. Storage of packaged goods in a container or other means of transport.
In Incoterms 2010 concept package includes both the first and second specified value. Incoterms 2010 not regulate the obligations of the parties for packing the goods into the container, and, moreover, if necessary, the parties is appropriate to provide in the contract of sale.

A comment:
Incoterms are not treaties. But in the case of reference to the basis for the supply of INCOTERMS in the contract, various state bodies, especially customs authorities, as well as state courts considering foreign economic disputes, are obliged to take into account the provisions of INCOTERMS. In some countries, INCOTERMS has the force of law and is especially important when concluding supply contracts with residents of these countries, regarding the definition of the applicable law for the transaction. For example, when concluding a contract for the supply of goods between a Russian company and a Ukrainian company when determining the applicable law is the law of Ukraine, INCOTERMS is subject to mandatory application even if it is not specifically stipulated in the contract. Therefore, after concluding a deal with partners from these countries and not wishing to be guided by INCOTERMS, this circumstance should be specially stipulated. In our country, INCOTERMS is advisory in nature, and only the provisions of the contract bearing the reference to ICOTERMS are valid. But, if the contract refers to the delivery basis for INCOTERMS, but other items of the contract are inconsistent with the terms of delivery used in accordance with INCOTERMS, the relevant clauses of the contract should be applied, and not INCOTERMS: it is considered that the parties have determined certain exemptions from INCOTERMS in interpreting the individual supply bases.

When choosing a delivery basis must strictly adhere to the terminology INCOTERMS. It is better to specify a specific term in English (as in Incoterms). Applying a particular term, it is necessary to specify a particular geographic location (and sometimes the exact location such as in the case of delivery at the basis ExWorks), in which the seller is deemed to have fulfilled its obligations under the transportation of goods, performance of the risk of loss of or damage to the goods, etc.
Be sure to refer to Incoterms.

By entering into foreign economic contract is necessary to identify the basic parts delivery conditions. Ie before you set in the contract such as delivery basis FOB ..., read carefully the customs port specified in the basis fixture, to the exact distribution of costs between the buyer and seller.
All bases of supply, requiring the seller to obtain insurance in the event of insurance claims are covered by insurers for minimal conditions (cost of goods + 10%).

ILLUSTRATION Incoterms 2010