Trade Terms Due
This Month
Cross-border trade is difficult because it involves different cultures
and legal systems. Incoterms, the shorthand for international com-
mercial terms, are designed to remove the uncertainty inherent in
global shipments of goods.
Latest Version
of International
t’s been 10 years since the last set of
international commercial sales terms
went into effect, but that’s about to
change. This month, the Paris-based
Specifically, they signal exactly when
ownership of goods changes hands, and at
what point the duties and obligations of the
buyer, seller and transportation partner
begin and end.
The newest set of codes, referred to as
Incoterms 2010, actually don’t become
effective until January 2011. Even at that
point use of the terminology is entirely voluntary, but the coding is a clear recognition
that international commerce is fraught with
potential misunderstanding and risk. The
terms are designed to help parties bridge
I
different cultures and legal systems. Ideally,
with them, the parties can pinpoint not only
when ownership transfers but when the
obligation to pay for customs, insurance
and transportation costs changes hands,
and when the liability of partners commences and stops.
Plainly stated, Incoterms are meant to
end confusion in international commerce
not only of buyers and sellers in such global
transactions but of governments and courts.
The need for language precise enough to
bring certainty to contractual relations has
always been evident, of course. Incoterms
themselves have been around in one form
or another since 1936 (there have been
seven revisions) and in many ways are
much like the U. N. Convention on Contracts
for the International Sale of Goods. That
document likewise attempts to detail the
rights and duties of parties to cross-border
trade, but its 101 articles read a great deal
