Facts you ought to know when using the Incoterms
- Incoterms are legally binding only if they have been properly agreed to.
- Modifying them jeopardizes legal certainty.
- The clauses are suitable solely for business-to-business transactions.
- The new Incoterms can also be applied in national trade.
- The Incoterms 2000 and older versions retain their validity; therefore, it is recommended that one specify the version in use.
- For container shipment, the ICC recommends using FCA instead of FAS and FOB, and CPT and CIP instead of CFR and CIF.
- Instead of delivering DDP, the sender had rather deliver DAP or DAT and add "including import customs clearance" or "excluding import customs clearance" as DDP represents the maximum obligation for sellers. The latter bears all costs and risk to the destination of the goods and is obliged to clear them for export and import, paying all the export and import fees as well as completing the customs formalities. Using DAP or DAT and adding the term "including import customs clearance", however, he only has to pay for any costs incurring at the border .
- For the buyer, using the clause "FCA named place of delivery" is preferable over EXW as the EXW clause represents the minimum obligation for sellers. Unlike the use of FCA, with EXW the seller has no obligation to the buyer to load the goods or to clear them for export. If the seller does do the loading, under the EXW clause, the buyer pays the risk and expense. Using FCA, however, the seller, too, stands to benefit from clearer rules as regards his liability, costs and the extent of his duties.