Incoterms 2010

Introduction Removal of terms and introduction of new terms Categorisation Insurance Anicillary issues Changes to specific terms Conclusion Introduction

The risks attached to international trade are considerable and for business terminology to be effective, phrases must mean the same thing throughout the industry. That is why the International Chamber of Commerce created the Incoterms in 1936 and have updated them periodically with the current version being Incoterms 2010 coming into force from 1 January 2011.

The 2010 version of the Incoterms has been designed to take into account the spread of customs-free zones, the increase in use of electronic communications, heightened security concerns and the increase in use of door-to-door logistics.

The 2010 terms are simpler than the 2000 terms in that four of the terms have been removed and the categories have been changed and reduced from four to two. In addition, the new terms are designed to serve both domestic and international trade and insurance cover has been amended to reflect the alterations made to the Institute Cargo Clauses dealt with at a previous breakfast. The new terms also allocate parties' responsibilities to provide information in order to obtain security related clearances and expressly allocate responsibility for terminal handling charges.

What the new terms cannot do is remove all of the risks relating to international trade. The parties still need to: specifically incorporate the Incoterms; properly identify the correct one to use; and ensure that the selected term properly reflects both the parties' intentions and the logistical peculiarities of that route; and parties must remember the Incoterms are not a complete contract and they must add in terms dealing with the price, the method of payment and the passing of ownership;

Using Incoterms 2010 and avoiding the underlying pitfalls should ensure that any disputes and claims can be dealt with expeditiously.

Removal Of Terms And Introduction Of New Terms

In response to increasing containerisation and point to point deliveries the ICC have removed DAF, DES, DEQ and DDU and introduced two new terms, DAP (Delivered at Place) and DAT (Delivered at Terminal).

The new terms seek to avoid the confusion created by the four similar terms that have been retired.

As with the old "D" terms, DAP and DAT should be used in circumstances where the seller has to bear all the costs and risk required to get the goods to their destination...