INCOTERMS 2020 – revi­si­on of com­mer­cial terms

The Inco­terms (Inter­na­tio­nal Com­mer­cial Terms) defi­ne the rights and duties of buy­ers and sel­lers in inter­na­tio­nal trade.

They ser­ve as gene­ral terms and con­di­ti­ons who­se inclu­si­on in the con­tract requi­res an express agree­ment bet­ween the par­ties. The inter­na­tio­nal com­mer­cial terms of the ICC (Inter­na­tio­nal Cham­ber of Com­mer­ce) were last revi­sed in 2010. Publi­ca­ti­on of the Inco­terms which are to take effect on 1 Janu­ary 2020 has been announ­ced for 10 Sep­tem­ber 2019 and is eager­ly awai­ted. The terms have been revi­sed in order to account for chan­ges in ship­ping and com­mer­cial practices.

In terms of the con­tent of the new terms, it will be inte­res­t­ing to see if the pre­dic­tions made in the lite­ra­tu­re and com­men­ta­ries will pro­ve cor­rect: One pos­si­ble chan­ge which has been men­tio­ned is divi­ding the FCA (Free Carrier)Incoterms into terms for land and sea rou­tes. FCA means that the sel­ler deli­vers the goods to the buy­er at the seller’s pre­mi­ses or ano­ther desi­gna­ted location.

Both FAS (Free Along­side Ship) and EXW (Ex works) may be abo­lished. The lat­ter clau­se in par­ti­cu­lar, in which the sel­ler deli­vers the goods by making them available for pick-up by the buy­er at the seller’s pre­mi­ses, is con­side­red to be con­tro­ver­si­al sin­ce it mini­mi­zes the seller’s liability.

It is also pre­su­med that a com­ple­te reinter­pre­ta­ti­on is to be expec­ted for DDP (Deli­very Duty Paid). Con­side­ra­ti­on is also being given to the intro­duc­tion of a new CNI (Cost and Insu­rance) Inco­term, which will fill the gap bet­ween FCA, in which insu­rance cos­ts are not bor­ne by the sel­ler, as export­er, and CFR (Cos­ts and Freight)/CIF(Cost, Insu­rance and Freight), in which freight is included.

Under CNI, the risk that the goods will be lost at the port of ship­ment will pass to the buy­er. It is also to be expec­ted that the results of the ana­ly­sis of trans­port secu­ri­ty, trans­port insu­rance and the rela­ti­onship bet­ween Inco­terms and inter­na­tio­nal sup­p­ly con­tracts will also find their way into the new Incoterms.

In gene­ral, the chan­ges are expec­ted to result in much simp­ler and clea­rer rules, which are to find expres­si­on in graphs and tables.

How all this will affect the duties of the par­ties and lia­bi­li­ty ques­ti­ons, and how much weight can be atta­ched to pre­vious state­ments, will be seen short­ly. We’ll keep you informed!


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