Incoterms, or International Commercial Terms, contains a pre -defined set of business terms published by the International Chamber of Commerce on International Business Laws.
What are the rules of the Incoterms?
The main topics discussed in the rules of Incoterms are very broad, the most important of which are costs, contractual obligations and risks.
The main topics discussed in the rules of Incoterms are very broad, the most important of which are costs, contractual obligations and risks.
Determine the limits of the parties’ responsibility;
Determine the costs of both parties to the contract;
Determine the possible business risks between the buyer and the seller; And
They prevent the disputes arising from the misconceptions of the terms used in business contracts.
The terms defined in the incoterzes
Some of the terms in the incoterms have a different meaning. Incoterms terms are divided into two main categories:
- Incoterms terms suitable for a variety of transportation methods
- Incoterms’ terms suitable for marine freight and shipping
Below we introduce very important general concepts before introducing the idioms suitable for a variety of transportation, especially maritime transport. Some of the most important Incoterms terms include:
- Delivery: Or delivery is a point in the transaction where the risk of loss or damage to the goods is transferred from the seller to the buyer.
- Arrival: Or delivery, the point where the shipping cost is paid.
- Free: The seller is committed to bringing the goods to the point where they are transported.
- Carrier: Anyone in the transport contract takes the task of transportation by train, road, air, sea, river or a combination of these methods.
- Freight Forwarder: A company where the freight contract closes or participates.
- Terminal: Any indoor or non -indoor place such as warehouse, parking, container garage or road, rail, or air terminal.
- To Clear for Export: Get an export clearance certificate and obtain export license.
What are the disadvantages of non -use of Incoterms?
Every businessman or business must update himself every year with changes in the rules of the Incoterms. In fact, these rules are in the first place in their own advantage and help him to trade with other countries more easily, safer, and with the least disagreement. Lack of proper awareness of these rules can lead to a waste of time and energy as well as many financial losses in various fields, including imports.
Failure to use the rules of the Incoterms can also cause problems in the issue of cargo delivery. In these rules, the seller’s commitment to the timing and terms of delivery is specified. As a result, the Bargans can find out when they are able to receive damage from the seller by referring to this section of the rules.
However, Incoterms also has limitations that are very important to know the right use. First of all, you should remember that Incoterms is only part of the International Trade Agreement. One of the most important limitations of the Incoterms rules is the following:
- Failure to refer to the paid amount or payment methods used in transactions
- Non -abandoning formal and compulsory rules
- Failure to refer to the transfer of ownership of goods, violations of contracts and product liability (in other words, non -reference to the type of ownership)
- These terms cannot be used instead of a formal contract between the two parties.
- The liability of the goods has not been specified in any of the Incoterms terms except Group C. As a result, the parties to the contract must be paid separately.
