Incoterms

By the parties agreeing the relevant Incoterms 2020 for the international supply chain (import / export) and then incorporating it into the contract, the buyer and seller will understand responsibilities in the event of loss and damage.

The new DPU Incoterms rule was introduced within the Incoterms 2020 on 1 January 2020. DPU Incoterms replaces the previously named Delivered at Terminal (DAT) due to both buyers and sellers requiring delivery of goods somewhere other than a terminal, such as a Transport Hub inland from the port of arrival. The ICC state that changes were made to highlight that the place of destination could be any location and not only the terminal. Some within the industry welcomed the change from DAT to DPU because the destination terminal was often confused with the customs terminal.

Selling on DDP sales terms is a workable solution for domestic transactions or with only some transactions within the European Union, but for other international trade it can be particularly problematic. Under the terms DDP, the seller is responsible for door to door delivery, the payment of import duties and any applicable taxes. Under the eleven Incoterms® Rules, DDP terms impose the maximum level of obligation on the seller.

Each Incoterm is covered by ten articles which clarify the responsibilities of both the seller and the buyer.

Incoterms® 2020 consider the latest developments in international trade and commercial practice. The new changes better assist the international trading community in selecting the correct Incoterms® rule for their sales contract.

The ICC has stated: More accessible and easier to use, Incoterms® 2020 includes more detailed explanatory notes with enhanced graphics to illustrate the responsibilities of importers and exporters for each Incoterms® rule. The introduction to Incoterms® 2020 also includes a more detailed explanation on how to choose the most appropriate Incoterms® rule for a given transaction, or how a sales contract interacts with ancillary contracts.

Incoterms® is a registered trademark of the ICC. Incoterms were first created by the ICC in 1936 and the latest set of Incoterms was published in 2010. The Incoterms rules are created and published by the ICC and are normally revised every 10 years, since 1980.

Include Incoterms in your contract to cover who is responsible for every stage of the international supply chain, including customs clearance and insurance requirements.