Incoterms are international commercial terms which are used in the assignment of costs and responsibilities between buyers and sellers around the globe, which are very often mistaken and treated as shipping terms. Incoterms were proposed by the International Chamber of Commerce to provide a framework when dealing with matters of sales contracts such as: arranging and paying for transportation, customs clearance, duty and VAT payments, arranging necessary documentation and agreeing on the point where risk and insurance responsibility is passed over from the seller to the buyer.
Although there are 11 different incoterms, sellers and buyers regularly underestimate the importance of them and their impact on international trade. Many traders believe that the clear and plain language used in the contract will be enough to ensure that all parties keep their trading obligations. Traders very often cannot see that incoterms eliminate discrepancies in contract language by giving the same definition of specific trade agreement to all parties and reducing the risk of problems that may occur during the shipment. Failure to understand the correct definition of each Incoterm used will lead to problems throughout the supply chain and may affect payment of goods, delivery schedules and even cause conflict between seller’s and buyer’s responsibilities, including who completes the customs declarations and makes duty payments.
The Incoterms rules have become an essential part of the daily language of trade and it is extremely important that the terms of sale are discussed upfront, which will help you to reduce the risk in a transaction. By specifying the seller’s and buyer’s obligations, there is no confusion with regards to rules of transportation from one country to the other.
||1 Day Course
||22nd May 2019
21st November 2019