Incoterms®

1. What are the Incoterms® rules?

The Incoterms® rules are ICC Paris regulations. They define delivery conditions between contracting parties for the domestic and international trade in goods. They consist of 11 Incoterms® rules. (PDF, 536 KB)
The most recent version, Incoterms® 2010, ICC publication no. 715, entered into force on 01 January 2011.

The previous version, Incoterms® 2000, ICC publication no. 560, has been in force since 01 January 2000. (PDF, 85 KB)

2. Purpose

The purpose of the Incoterms® rules is to create an internationally uniform set of rules governing the interpretation of the most commonly used contractual terms mainly in foreign trade agreements. Inconsistencies and uncertainties arising from the varying interpretation of such terms in different countries can be avoided or significantly reduced. Uniform guidelines reduce both the risk of legal complications and misunderstandings resulting from different trading practices.

3. Application - Validity

The application of the Incoterms® rules is confined to the delivery of movable, tangible goods. The Incoterms® rules are only valid if they have been agreed upon in explicitly contractual terms, and have been named in purchase agreements, offers/quotations, general purchase and sale conditions, orders, order confirmations etc., or included in a separate agreement. Formulation proposal: e.g. CPT Madrid Incoterms® 2010.

4. What areas do they cover – What do they not cover?

The Incoterms® rules are always to be interpreted as a component of a purchase agreement. They define the rights and obligations of buyers and sellers with regard to:

  • Delivery and transportation documentation (or equivalent electronic record or procedure)

  • Allocation of costs

  • Transfer of risks

The Incoterms® rules do not govern:

  • the transfer of ownership and other rights arising from ownership

  • breaches of contract and the consequences thereof

  • exclusions of liability as the result of special circumstances (force majeure, embargos etc.)

  • deadlines (delivery dates/periods are to be fixed)

  • types of transport (only limited)

  • conditions of other contracts

  • conditions with forwarders / carriers

5. Most important amendments to the Incoterms® 2010 rules compared to the Incoterms® 2000 rules

  • Number of rules reduced: 11 instead of 13

  • Two new Incoterms® rules: DAT, DAP replacing DAF, DES, DEQ and DDU

  • Rules presented in two classes: EXW, FCA, CPT, CIP, DAT, DAP, DDP for any mode or modes of transport and FAS, FOB, CFR, CIF for sea and inland waterway transport

  • Introduction of the notion of security-related clearances

  • introduction of the notion of "procuring" goods in case of string sales

6. Weaknesses remaining in the Incoterms® 2010 rules

CIF (as in the Incoterms® 2000 rules): The seller is obliged to provide only minimum coverage in line with Institute Cargo Clauses C = cover for loss or damage between the port of departure and the port of discharge.

CIP (as in the Incoterms® 2000 rules): The seller is obliged to provide only minimum coverage in line with Institute Cargo Clauses C = cover for loss or damage between the point of departure and the destination stated.