Incoterms 2020
The Incoterms rules define the rights and obligations of the buyer and the seller regarding the delivery of goods, the allocation of costs, and the transfer of risk from the seller to the buyer.
These are uniform international rules for the interpretation of trade terms, which also prevent different understandings between different countries. Incoterms clauses are used only if the parties expressly or implicitly agree to them. Currently, Incoterms 2020 are in use, so it is advisable for the parties to expressly refer to a specific edition of Incoterms.
A sales contract that refers to a specific Incoterms clause significantly reduces the risk of legal complications, as it is clearly defined:
1. Country and time of delivery of goods buyer
2. Allocation of merchandise costs between the parties of the sales contract
3. Country and time of the transfer of the risk of loss or damage of goods from the seller to the buyer
4. Other rights and obligations of the parties, such as obligations of export and import customs clearance, insurance of goods, conclusion of a transport contract, packaging of goods, etc.
Incoterms clauses do not address some important issues, such as:
warranty
product liability
payment terms
breach of contractual obligations
the law applicable to the contractual relationship
jurisdiction of the court in case of a dispute
definition of force majeure
remaining, which is not related to the transport and supply of goods
Incoterms 2020 encompass trade clauses that contain provisions on the delineation of obligations of the contracting parties under the sales contract. They are most commonly used in international trade. With their correct application, companies can avoid misunderstandings and costs that often arise due to insufficiently defined rights and obligations of the contracting parties.
