December 31, 2019

INCOTERMS® 2020: New Edition and Innovations as of January, 1st 2020

Periodically revised by the International Chamber of Commerce (ICC), the newest edition of Incoterms® 2020 rules entered into force on 1st January 2020.

 

What the Incoterms® 2020 rules do and do not do: reminder of the basic principles by ICC.

  • ICC 2020 rules now include a list of what Incoterms® rules cover and what should, on the contrary, be expressly provided for in the commercial contract between buyer and seller, such as retention of title clause, payment methods or the competent jurisdiction and applicable law in case of dispute

  • Incoterms® rules FAS, FOB, CFR and CIF should only be used for sea and inland waterway transport where goods are placed by seller onboard or alongside a vessel at a sea or river port (non-containerized goods, raw materials for instance). On the contrary, Incoterms® rules EXW, FCA, CPT, CIP, DAP, DPU and DDP can be used for any modes of transport

  • The applicable Incoterms® rule should always be mentioned on all commercial and shipping documents and should always indicate which version applies (2020? 2010? older version?) as well as the exact delivery point where costs and risks transfer from seller to buyer

  • Any alteration of the Incoterms® rules should always be clearly described in the commercial contract between buyer and seller and mentioned in all commercial and shipping documents

  • Whenever possible, Incoterms® rules EXW and DDP should be avoided for international operations as they may cause distress to buyer or seller, especially regarding fiscal and customs obligations

  • Regarding the SOLAS regulations and the related Verified Gross Mass (VGM), it has been decided that Incoterms® 2020 rules would not determine who is responsible for the provision of the VGM prior to loading: therefore, this obligation should be discussed between buyer and seller and provided for in the commercial contract

  • Incoterms® rules DAP and DPU indicate that the seller is responsible for customs transit formalities in the country of export whereas the buyer is responsible for customs transit formalities in the country of import

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