I. Purpose and scope of Incoterms
The purpose of Incoterms is to provide a set of international rules for the interpretation of the most commonly used trade terms in international trade, so as to avoid or at least reduce the uncertainty caused by different interpretations in different countries.
Both parties to a contract often don't know the trade habits of the other country. This will lead to misunderstandings, disputes and lawsuits, thus wasting time and expenses. In order to solve these problems, the International Chamber of Commerce (ICC) first published a set of international rules for the interpretation of trade terms in 1936, and later published them in 1953, 1967, 1976 and 1986.
It should be emphasized that the scope of Incoterms is limited to the matters related to the delivery of sold goods (referring to "tangible" goods, excluding "intangible" goods, such as computer software) in the rights and obligations of the parties to the sales contract.
There seem to be two very common and special misunderstandings about the general rules for the interpretation of international trade terms. First, Incoterms are generally considered to be applicable to transport contracts rather than sales contracts. Secondly, people sometimes mistakenly think that it stipulates all the responsibilities that the parties may wish to include in the sales contract.
First of all, as ICC has always emphasized, Incoterms only involves the relationship between the buyer and the seller in the sales contract, and it is limited to some very clear aspects.
Importers and exporters certainly need to consider the actual relationship between various contracts needed to complete international sales. Completing an international trade requires not only a sales contract, but also a transportation contract, an insurance contract and a financing contract, and Incoterms only involves one of them, that is, a sales contract.
Nevertheless, when both parties agree to use certain trade terms, it will inevitably affect other contracts. For example, when the seller agrees to use CFR and CIF terms in the contract, he can only perform the contract by sea, because under these two terms, he must provide the buyer with the bill of lading or other maritime documents, which cannot be satisfied if other modes of transportation are used. In addition, the documents required by documentary credit will inevitably depend on the mode of transportation used.
Secondly, Incoterms involves some specific obligations set for the parties, such as the seller's obligation to place the goods at the buyer's disposal, or the obligation to deliver the goods or deliver them at the destination, and the division of risks between the parties.
In addition, Incoterms also involves the obligations of goods import and export customs clearance, goods packaging, the buyer's obligation to receive goods, and the obligation to provide proof that all obligations have been fully fulfilled. Although Incoterms are of great significance to the implementation of sales contracts, many problems that may arise in sales contracts are not involved, such as the transfer of goods ownership and other property rights, breach of contract, consequences of breach of contract and exemption in some cases. It should be emphasized that Incoterms are not intended to replace standard terms or agreed terms that need to be included in a complete sales contract.
Generally speaking, Incoterms does not involve the consequences of breach of contract or exemption clauses caused by various legal obstacles. These problems must be solved through other clauses in the sales contract and applicable laws.
Incoterms has been mainly used for cross-border sales and delivery of goods, so it is a set of international business terms. However, sometimes Incoterms are also used in contracts for the sale of goods in the pure domestic market. In this case, A2, B2 and any clauses related to import and export in Incoterms naturally become redundant.
Two. Why is it necessary to revise Incoterms?
The main reason for the constant revision of Incoterms is to adapt to the practice of contemporary business. 1980 revised edition introduces the term cargo carrier (now FCA) to adapt to the situation that often occurs in maritime transportation, that is, the place of delivery is no longer the traditional FOB point (the goods cross the ship's rail), but a point on land before the goods are loaded on board, where the goods are put into containers for further transportation by sea or other modes of transportation (so-called combined transport or multimodal transport).
In the revised version of 1990, the clause on the obligation of the seller to provide proof of delivery allows electronic data interchange (EDI) messages to replace paper documents if the parties agree to use electronic communication. Undoubtedly, in order to make Incoterms more conducive to practical operation, its drafting and expression have been improved.
Three. Incoterms 2000
During the two-year revision process, ICC tried its best to absorb the opinions and suggestions of international trade practitioners in various industries through the ICC National Committee, and completed several revisions to the revised draft. Happily, during the revision of Incoterms, ICC received more feedback from users all over the world than ever before. As a result of the communication between the International Chamber of Commerce and the users of Incoterms, Incoterms 2000 came into being, which seems to have little change compared with Incoterms 1990. The reason is obvious, that is, Incoterms have been recognized by the world at present, so ICC decided to consolidate the world recognition of Incoterms and avoid changing for the sake of change. On the other hand, in the process of revision, ICC tries its best to ensure that the language in Incoterms 2000 clearly and accurately reflects international trade practices. The new version has made substantial changes in the following two aspects:
Under FAS and DEQ terms, the obligation to go through customs clearance procedures and pay customs duties;
Loading and unloading obligations under FCA clause.
Both substantive and formal changes were made on the basis of extensive investigation of Incoterms users, and fully considered the suggestions received by Incoterms expert group (an organization providing additional services for Incoterms users) since 1990.
Four. Incorporate international trade terms into sales contracts
Since Incoterms will be revised from time to time, when both parties intend to incorporate Incoterms into the sales contract, it is very important to clearly show that the cited version of Incoterms is very important. It's easy to overlook this. For example, when the earlier version is quoted in a standard contract or purchase order, the latest version is not quoted, which may cause disputes whether the parties intend to quote the new version or the earlier version in the contract. Merchants who want to use Incoterms 2000 should clearly stipulate in the contract that the contract is bound by Incoterms 2000.
Verb (abbreviation of verb) Structure of General Rules for the Interpretation of International Trade Terms
In 1990, all terms are divided into four basic types for easy understanding. The first group is "e" (ex works), that is, the seller only prepares the goods for the buyer in his own place; The second group "F" (FCA, FAS, FOB) means that the seller needs to deliver the goods to the carrier designated by the buyer; The third group "C" (CFR, CIF, CPT, CIP) means that the seller must conclude a transport contract, but the seller is not responsible for the risk of loss or damage of the goods and the extra expenses caused by accidents after shipment; The fourth group "D" (DAF, DES, DEQ, DDU and DDP) means that the seller must bear all the costs and risks required to deliver the goods to the destination country. The following table reflects this classification method:
General rules for the interpretation of international trade terms 2000
Group e (delivery)
-
Ex-works EXW (… named place)
Group F (main freight unpaid)
-
FCA goods shall be delivered to the carrier (…… named place).
FAS FOB price (... named port of shipment)
FOB price (... named port of shipment)
Group C (main freight paid)
-
Cost and freight (… named port of destination)
The CIF cost, insurance and freight shall be paid to (……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
Group d (arrival)
-
DAF frontier delivery (… named place)
Free on board at the port of destination (… named port of destination)
Delivery at the port of destination (... named port of destination)
DDU duty-free delivery (... named destination)
Delivered duty paid (... Designated destination)
Like Incoterms 1990, in Incoterms 2000, the respective obligations of the parties under all terms are listed in 10, and the position of the seller in each item "corresponds" to the corresponding position of the buyer in the same item.
Interpretation of General Rules for the Interpretation of International Trade Terms
Author: unknown update date: March 7, 2005 Font: small and large to join the collection to print this article.
Incoterms was formulated by the International Chamber of Commerce in 1936 to unify the different interpretations of various trade terms, and was named Incoterms 1936. Subsequently, in order to meet the needs of the development of international trade practice, the International Chamber of Commerce made several revisions and supplements in 1953, 1967, 1976, 1980 and 1990, among which1.
In order to further adapt trade terms to the development of duty-free zones around the world, the increasing use of electronic information in transactions and the changes in modes of transportation, the International Chamber of Commerce revised Incoterms 2000 again and published Incoterms 2000 (hereinafter referred to as Incoterms 2000) in September 1999. The 2000 General Provisions came into effect on June 65438+1 October1day, 2000.
Scope of application of General Principle 2000:
The 2000 General Rules defines the scope of application, which is limited to the matters related to delivery in the rights and obligations of the parties to the sales contract. Its commodities refer to "tangible" commodities, excluding "intangible" commodities, such as computer software. The General Principles only deal with matters related to delivery, such as goods import and export customs clearance, goods packaging, the buyer's obligation to accept goods, and the provision of certificates to fulfill various obligations, and do not involve the transfer of goods ownership and other property rights, breach of contract, consequences of breach of contract and exemption in some cases. Consequences or liabilities related to breach of contract can be resolved through other clauses in the sales contract and applicable laws.
Incoterms 2000 points out that Incoterms is a set of international business terms, which is applicable to both cross-border goods sales and goods sales contracts in the domestic market. In this case, clauses A2 and B2 of Incoterms and any clauses related to import and export in Incoterms are invalid. The General Principles also clarify that if the parties to a contract indicate that it should be handled in accordance with the provisions of the General Principles when signing a sales contract, in order to avoid unnecessary disputes, the version to be used should be clearly agreed in the contract, that is, it should be handled in accordance with the provisions of the General Principles of 2000.
Major changes in the 2000 General Rules
Compared with the general rules of 1990, the general rules of 2000 have not changed much. Incoterms 2000 still adopts the structure of Incoterms 1990, with a total of 13 trade terms, which are divided into four basic types. The first group is "Group E" (EXW); The second group is "group F" (DAF, FAS, FOB); The third group is group C (CFR, CIF, CPT, CIP); The fourth group is group D (DAF, DES, DEQ, DDU, DDP). Like General Rule 1990, in General Rule 2000, the obligations of the buyer and the seller under 13 are listed in Item 10, but instead of separately listing the obligations of the buyer and the seller, the obligations of the buyer and the seller are combined under the same heading, that is, each obligation of the seller "corresponds" to the obligations of the buyer.
The General Principles of 2000 have been substantially revised in the following two aspects:
1. Obligation to go through customs clearance and pay customs duties under FAS and DEQ conditions.
Incoterms 2000 points out that it is usually desirable for customs clearance procedures to be handled by a party or other representative of the host country. Therefore, exporters should go through customs clearance procedures for exports and importers should go through customs clearance procedures for imports. However, FAS terminology in General Principles 1990 requires the buyer to go through customs clearance procedures for the export of goods, while DEQ terminology requires the seller to go through customs clearance procedures for the import and export of goods, which is inconsistent with the above principles. Therefore, the FAS and DEQ terms in the 2000 General Rules changed the obligation of handling export and import customs clearance procedures to be handled by the seller or the buyer respectively. This change is more reasonable and convenient to handle. However, the terms EXW and DDP, which represent the minimum and maximum obligations of the seller, have not changed. EXW clause still stipulates the buyer's obligation to go through export customs clearance procedures. The literal meaning of DDP term is delivered duty paid, which means that the seller will go through the import customs clearance formalities and pay all relevant fees.
The concept of "customs clearance" was clearly defined in the 2000 General Principles. "Customs clearance" means that whenever the seller or buyer promises to pass the goods through the customs of the exporting country or the importing country, it includes not only paying customs duties or other fees, but also performing all administrative procedures related to the goods passing through the customs, providing necessary information to the authorities and paying relevant fees. The General Principles also pointed out that in some areas, such as within the European Union or other free trade areas, import and export goods do not need to go through customs declaration procedures, and all or part of them are exempt from customs duties. Therefore, in the General Principles, the words "where applicable" are added to relevant clauses A2 and B2 (licenses and other licenses and procedures) and A6 and B6 (cost allocation), and accordingly, it is clear that the import and export goods in these duty-free zones can be exempted from going through import and export customs clearance procedures, paying related duties, donations and other fees without going through customs formalities.
2. Loading and unloading obligations under 2.FCA terms.
The FCA terms in the 2000 General Principles delete the differences between related modes of transport and between container goods and non-container goods, and stipulate that FCA terms can be applied to various modes of transport including multimodal transport. The general principles also point out that the seller's choice of delivery place in FCA clause will affect the obligation of loading and unloading at that place. If the seller delivers the goods at the place where the goods are located, the seller shall be responsible for loading the goods; If the seller delivers the goods at any other place, the seller is not responsible for unloading, that is, when the goods are on the seller's means of transport and have not been unloaded, the goods are handed over to the carrier or other person designated by the buyer or selected by the seller, and the delivery is completed.
In addition, the 2000 Incoterms also explained the meaning of "carrier". "Carrier" refers to any person who undertakes to perform transportation or handle transportation business by railway, highway, aviation, sea transportation, inland river transportation or the combination of the above transportation. It can be seen that FCA terms are widely used and will play an increasingly important role in international trade.
Trade terms in Incoterms 2000
In the 2000 General Rules, the trade terms 13 are divided into the following four groups according to the different obligations of the seller:
Group e (departure):
This group only includes EXW as a trade term.
Delivery is completed when the seller hands over the goods to the buyer at his place or other designated place (such as factory, workshop or warehouse). The seller is not responsible for handling the customs clearance procedures for the export of goods or loading the goods on any means of transport. EXW term is the term with the least responsibility of the seller.
Group F (unpaid main freight):
This group includes three trade terms: FCA (Freight Forwarder), FAS (Shipside Delivery) and FOB (Shipside Delivery). When the transaction is conducted according to the delivery terms of the place of shipment or the port of shipment, and the main freight is unpaid, that is, when the seller is required to deliver the goods to the carrier designated by the buyer, the F clause should be adopted.
The sales contract signed according to Group F terms belongs to the delivery contract. In Group F, the risks of FOB clauses are divided into three categories: CFR and CIF clauses in Group C are the same, and both clauses are bound by the ship at the port of shipment. "The ship's side is the boundary" is a rule left over from history. Because the boundary is clear and easy to understand and accept, it has been used all the time. However, with the change of transportation technology, it has no practical significance to take the ship's side as the boundary when using container transportation, multimodal transportation and ro-ro transportation. This issue has caused many disputes among people concerned in international trade in the past, and it is suggested to cancel this unrealistic provision. However, some people think that this kind of regulation is familiar to businessmen engaged in international trade and insist on retaining this traditional regulation. In this regard, the 2000 General Principles adopted a compromise clause, that is, the provision of "the ship's side is the boundary" has not changed. FOB, CFR and CIF clauses still stipulate that the buyer and the seller shall bear all risks of loss or damage to the goods, with the goods exceeding the ship's rail at the designated port of shipment as the boundary. However, at the same time, it is stipulated that if the parties to the contract do not intend to deliver the goods across the ship's rail, terms such as FCA, CPT and CIP can be adopted accordingly.
Group C (main freight paid):
This group includes four trade terms: CFR (cost plus freight), CIF (cost, insurance plus freight), CPT (freight to destination) and CIP (freight/insurance to destination).
In the case of delivery at the place of shipment or the port of shipment and the main freight has been paid, Group C trade terms shall be adopted. To conclude a transaction under such conditions, the seller must conclude a transportation contract and pay the freight, but the seller is not responsible for the risk of loss or damage of the goods and the expenses incurred by the events after the goods are loaded. Clause C includes two "cut-off points", namely, the risk cut-off point and the expense cut-off point are separated. The sales contract signed according to Group C terms belongs to the delivery contract. As can be seen from the above, the clauses in group C and group F have the same nature, that is, the seller completes the delivery obligation in the country of departure or shipment. Therefore, the sales contract concluded according to the terms in Group C and Group F belongs to the contract of shipment. The 2000 General Rules pointed out that the characteristic of the shipment contract is that the seller must pay the usual transportation expenses required to transport the goods to the agreed place according to the usual route and mode, and the risk of loss or damage of the goods and the extra expenses incurred after the goods are delivered for transportation in an appropriate way should be borne by the buyer.
Group D (arrival): This group includes five trade terms: DAF (frontier delivery), des (FOB destination), DEQ (destination dock delivery), DDU (duty-paid delivery) and DDP (duty-paid delivery). Using group D terms, the seller shall be responsible for transporting the goods to the border or destination port of the importing country or the agreed destination (place) or point, and bear all risks and expenses before the goods are transported there. The sales contract concluded according to the terms of Group D is an arrival contract.
In the 2000 General Rules, it is more scientific and reasonable to use the above-mentioned classification and arrangement method for various trade terms, which makes people clear at a glance and easy to understand and use.