- International trade has increased significantly in recent decades due to factors like globalization, regional economic blocs, and advances in transportation and communication technologies. - When disputes arise in international contracts, it is often unclear which country's laws apply, which court has jurisdiction, or if access to favorable courts can be ensured. - Incoterms provide standardized trade terms that clarify the obligations and allocation of costs, risks, and responsibilities between buyers and sellers in international commercial transactions.

2. • During the last three and four decades
international trade has increased remarkably
The most important factors contributing to this
increase:-
Globalization
The formation of regional economic and political units
Developments in transportation and communication
Innovation in the field of information
telecommunications and technology
The possibility of concluding contracts electronically by
telefax, email or over the Internet

3. Every contract is governed by an applicable legal system.
When a dispute arises it is often uncertain which
country's law governs the transaction, which court
is to be approached for legal relief, or whether
there will be access to a favorable court at all.
The multiplicity of legal systems relevant to the
transaction results not only in problems of forum
shopping, but also in uncertainty as to the
respective rights and obligations of the parties to
the contract.

4. Although the parties are in general free to
choose the law applicable to their contract, in
practice, the choice of a legal system is often not
provided for in the contract.
Traditionally, trade terms only indicated that the
goods should be delivered in a particular way
and that certain basic costs should be paid by
either the seller or the buyer.

5. The questions are:-
who should clear the goods for export and/or
import?
who should pay the costs of loading and
discharging the goods?
how the risk of loss or damage to the goods
should be divided between them?
who should take out insurance as protection
against the risks?
All these are need to be answered!!

6. A more detailed elaboration of the trade term,
either by specific provisions in the contract of
sale or by the applicable law or custom of the
trade, was therefore required.
Because contracting parties normally do not
elaborate these points specifically, there was an
additional need for a more extensive
standardization of customs and practices in this
regard.

7. • The history and development of trade terms
reflect the history and development of
international trade generally.
• Trade terms evolution is not a purely legal
matter, but has been shaped by:
Economic, political and technological factors as well
as
Developments in transportation techniques,
Containerization and
 The movement towards paperless trading.

8. • Trade conducted in the late eighteenth and
nineteenth centuries differed considerably from
those prevailing today.
• The transfer of costs and risks followed the
methods of cargo handling at that time.
• Hence, costs and risks transferred at the
moment of shipment.
• The first Incoterms were issued in 1936. The
most recent version (8th Version) of Incoterms,
Incoterms 2010, were launched in September
2010 and became effective January 1, 2011.

9. • Def: The word INCOTERM is an abbreviation for
International Commercial Terms which provide a
common set of rules used for defining the
responsibilities of sellers and buyers in the delivery of
goods under sales contracts.
• They are widely used in international commercial
transactions.

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12. o Set international rules for commonly used
terms in foreign trade;
o Define obligations of both parties
involved in the transaction;
o Determine the distribution & transfer of
risks regarding the goods delivered from
seller to buyer;
o State the clear sharing of expenses
between the parties during transport;

13. oFirst conceived by International Chamber of
Commerce (ICC) in 1921 and implemented
starting from 1936, since they have been updated
6 times in order to keep pace with the evolution
of international trade.
oIn 1923, a Trade Terms Committee developed the
first 6 rules : FOB, FAS, FOT, FOR, Free
Delivered CIF and C&F, as the precursor for
what would later be known as INCOTERM
rules.

14. • In order to keep up with the continuous evolution of
commercial practices, types of goods and transport and
international law, INCOTERMS need to be regularly
updated by specialized experts.
• 1980 ‐ FCA was introduced, for dealing with cases where
the reception point was no longer the ship's rail, but a
point on land where goods were stored in a container.

15. • 1990 ‐ the seller was permitted to provide the proof
of delivery electronically by EDI‐messages instead
of paper documentation.
• 2000 ‐ export clearance and other formalities under
FAS are placed on the seller (previously buyer).
In FCA, it became the seller's obligation to load the goods
on the buyer's vehicle or the buyer's obligation to receive
the seller's arriving vehicle unloaded

16. • The answer is Yes ‐ because of the rapid expansion of
world trade and the continuous changes in international
market's structure, the same rules cannot be applied
effectively in any circumstances without considering the
new factors and influences that might occur.
The most recent key drivers include :
a need for improved cargo security
changes in the Uniform Commercial Code in 2004 resulting
in a deletion of US shipment and delivery terms
new trends in global transportation

17. • Entered into force 1st January 2011, containing
the following amendments:
reduction from 13 to 11 terms by replacing 4 delivery
terms : DEQ, DAF, DES, DDU with 2 new ones :
DAT(Delivery at Terminal) and DAP(Delivery at
Place)
terms grouped in 2 categories, according to the means
of transport used :

20. delivers goods at his own
premises (factory/warehouse)
minimal obligations, risks
&costs
responsible for loading goods
onto carrier and all other
cost, duties and
insurance
clearance of goods for export
bears the whole risk on his own.
minimal costs & risks for exporter
lowest service offered  loss of competitiveness

21. completes and bears costs of export
clearance and obtaining necessary
documents
delivers goods at agreed place to
carrier
liable for the load if delivery is
made on his premises
import clearance formalities
clearance of goods for export
responsible for unload if
delivery occurs in a facility or
transport infrastructure
flexible, various delivery points
any type of cargo and different payment methods
best suited for goods transported in containers

22. contracts and pays transport to
the buyer's country delivery
place
completes formalities and bears
export customs clearance costs
risk of transport is transferred
when the goods are delivered to
the first carrier in the seller's
country
supports transport costs starting
from the moment goods have
reached the place of delivery in
his country
import clearance costs and
formalities
supports the transport risk since
the goods have been delivered
to 1st carrier and the insurance
for international transport

23. bears the same costs and
obligations as in case of CPT
the obligation of hiring
insurance to cover the buyer's
risk during international
transport
contracts the insurance and pays
the premium
beneficiary of the insurance paid
by the seller
‣ must take into account that
the buyer is obliged only to a
minimum coverage insurance
he needs to agree with the seller
to hire additional insurance if he
wants a larger coverage

24. delivers goods unloaded at a port
terminal or another place of
destination in the buyer's country
complete the formalities and bear
costs of customs clearance for
export
transport risk passes to the buyer at
the time of delivery to destination
country
import customs clearance
and tariffs paid
clearly mention the specific
point chosen for delivery


25. delivers goods ready for unloading in
the country of destination, in a place
other than a transport terminal, such
as the buyer's premises or a place
nearby
risk is transferred to buyer in the
same place where goods are delivered
complete formalities and bear export
clearance costs
pays the costs of import
clearance customs
useful for sales between
countries of same
economic area (EU) as
there are no import
customs

26. delivers goods ready for unloading
in the country of destination,
usually at buyer's premises
all costs and risks borne by seller
customs clearance of export and
import also covered by seller
any import tax, including VAT are
paid by the seller
only cost he assumes is the
unloading of goods at
delivery place
if the parties agree in the
contract of sale, the VAT or
other taxes can be paid by
the buyer, in what is known
as a variant of DDP, called
'DDP VAT unpaid‘

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28. delivers the goods placing them
alongside the ship chosen by the
buyer
export clearance must be
covered by the seller
responsible for loading the
goods on the ship
must have very good knowledge
of the practices in the port of
shipment
only used for certain commodities and materials that are
not packed and cannot be individualized (grain, timber,
minerals, etc.)
delivery is done in ports with specialized terminals

29. delivers goods by placing them
on board of the ship named by
the buyer
covers the terminal costs and
export clearance
assumes the transportation risk
after the goods have been
delivered on board of the ship

 oldest Incoterm and one of the most widely used
 preferably used with bulk, heavy loads and in case of complex
goods (machinery) whose loading involves certain risks

30. delivers the goods on board of a
ship but he also pays the cost of
freight to the destination point
covers terminal cost and export
clearance
the risk is transferred to the
buyer after the goods had
reached the board of the ship
must hire an insurance for
transport from the port of
shipment to the destination, as
the seller is not obliged to do
this

used mainly for large volumes of general cargo

31. same obligations that CFR implies
seller is obliged to hire insurance for
transport covering at least the way
from the port of shipping to the port of
destination
insurance shall cover the price of the
contract + 10%
he might want to hire
additional insurance, as
the seller is only obliged
to purchase a minimum
coverage insurance

 used for general cargo of consumer or industrial products of high value
CIF value is used in most of the customs to apply tariffs and import
taxes, facilitating the clearance of goods for export

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