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INCOTERMS

Incoterms, International commercial terms - international rules in dictionary format, the purpose of which is an unambiguous interpretation of the most widely used trade terms in the field of foreign trade.

In this way, the uncertainty of different interpretations of terms in different countries can be greatly reduced. Often the contracting parties are not familiar with the different trading practices in their respective countries. This can lead to misunderstandings, disagreements and litigation.

To resolve possible misunderstandings, the International Chamber of Commerce published for the first time in 1936 a set of international rules for the precise definition of trade terms. These rules are known as "Incoterms 1936". Amendments and additions were issued in 1953, 1967, 1976, 1980, 1990,2000,2010years to bring these rules into line with modern international trade practices.

International trade terms are standard terms of international sales contracts that are defined in advance in an internationally recognized document, in particular, are used in the standard sales contract developed by the International Chamber of Commerce.

The main principles laid down in terms of Incoterms are

1. The distribution between the seller and the buyer of transport costs for the delivery of goods, that is, the determination of what costs and for how long the seller bears, and which, starting from what moment, the buyer.

2. The moment of transfer from the seller to the buyer of risks (responsibility) for damage, loss or accidental loss of cargo.

3. Determining the date of delivery of the goods, that is, determining the moment the seller actually transfers the goods to the disposal of the buyer or his representative.

It should be borne in mind that the scope of Incoterms is limited to issues related to the rights and obligations of the parties to the contract of sale in relation to the supply of goods sold (the word goods here means "tangible goods", excluding "intangible goods" such as computer software).

Outside the Incoterms are the rules for the transfer of ownership from the seller to the buyer, as well as the consequences of failure by the parties to fulfill their obligations under the contract for the sale of goods, including the grounds for exempting the parties from liability, which is regulated by the applicable law or the Vienna Convention. The structure of the terms is formed in the sequence of increasing scope of the seller's obligations in relation to the basic terms of delivery.

The key condition for the application of Incoterms is that the regulation of the moment of transfer of ownership must be regulated separately in the contract, it is important that the transfer of ownership coincides with the transfer to the buyer of the risk of accidental loss or risk of damage to the goods.

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Most often in practice there are two options for misunderstanding Incoterms.

1. Misunderstanding the terms of Incoterms as having more to do with the contract of carriage than with the contract of sale.

2. The misconception that they should cover all the obligations that the parties would like to include in the contract.

Incoterms regulates only relations between sellers and buyers within the framework of sales contracts, moreover, only in certain aspects. At the same time, it is important for exporters and importers to consider the actual relationship between the various contracts necessary for the implementation of an international sale transaction - where not only a sales contract is needed, but also transportation, insurance and financing contracts.

Incoterms refer to only one of these contracts, namely the contract of sale.

It should be emphasized that Incoterms are not intended to replace the terms of the contract required for a full contract of sale, either through the inclusion of statutory terms or individually negotiated terms.

Incoterms generally does not regulate the consequences of breach of contract and exemption from liability due to various obstacles. These issues should be resolved by other terms of the contract of sale and the relevant laws.

Incoterms were always originally intended to be used when goods were sold for delivery across national borders: thus Incoterms are international trade terms.

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Each of the Incoterms rules are grouped into basic categories, each of which has its own clear direction, defined as a term.

Each term is an abbreviation, the first letter indicates the point of transition of obligations and risks from the seller to the buyer.

• Group E- shipment, transfer of obligations - at the place of dispatch (departure). The seller is obliged to provide the goods to the buyer directly at the manufacturing plant, his warehouse, the seller does not perform customs clearance of the goods; The seller is not responsible for loading the goods onto the vehicle.
• Group F- the main carriage is not paid by the seller (main carriage unpaid), the transfer of obligations at the departure terminals for the main carriage. The seller undertakes to place the goods at the disposal of a carrier hired by the buyer himself.
• Group C- the main carriage is paid by the seller (main carriage paid), the transfer of obligations - at the terminals of arrival for the main carriage. The seller is obliged to conclude a contract for the carriage of goods, but without assuming the risk of its accidental loss or damage to the goods.
• Group D- arrival, transfer of obligations from the buyer, full delivery (arrival). The seller bears all shipping costs and assumes all risks until the goods are delivered to the country of destination.