Incoterms® 2020
The Incoterms® terms are internationally recognized as the definitive rules matrix, helping define responsibilities of buyers and sellers operating in the international trade system. Every ten years, the International Chamber of Commerce (ICC) reviews and refreshes the Incoterms® in an on-going and pro-active effort to adapt the latest developments established in commercial practice.
The most recent update is named “Incoterms® 2020” which effectively replaces “Incoterms® 2010” and sets the rules for use of the 11 Incoterms® trade terms. The new rules enter into force on January 1, 2020. As of that date, all sales contracts, purchase orders, etc. should make reference to Incoterms® 2020 as the latest version of the Incoterms® terms.
Some of the differences between Incoterms® 2010 and Incoterms® 2020:
Useful information:
Incoterms® 2020 terms do not constitute complete contracts of sale; they rather become a part of those contracts. For application, the following structure should be used:
“[The chosen Incoterm® rule] [Named port, place or point] Incoterms® 2020”
Examples:
“FCA Port Los Angeles CA, USA Incoterms® 2020”
“CIP 10 Downing Street, London, Great Britain Incoterms® 2020“
If there is no year stated in the Incoterms® then the following applies:
If a different year is stated, e.g.: Incoterms® 1980, then the respective terms of that revision would apply. It would benefit all relative parties to specify the Incoterms® date, giving preference to the most recent edition.
The Incoterms® terms are internationally recognized as the definitive rules matrix, helping define responsibilities of buyers and sellers operating in the international trade system. Every ten years, the International Chamber of Commerce (ICC) reviews and refreshes the Incoterms® in an on-going and pro-active effort to adapt the latest developments established in commercial practice.
The most recent update is named “Incoterms® 2020” which effectively replaces “Incoterms® 2010” and sets the rules for use of the 11 Incoterms® trade terms. The new rules enter into force on January 1, 2020. As of that date, all sales contracts, purchase orders, etc. should make reference to Incoterms® 2020 as the latest version of the Incoterms® terms.
Some of the differences between Incoterms® 2010 and Incoterms® 2020:
- FCA (Free Carrier) now provides the option to make an on-board notation on the Bill of Lading prior to loading of the goods on a vessel.
- The respective cost obligations, where listed, now appear under sections A9 & B9 of each Incoterms® rule.
- CIP (Carriage & Insurance Paid To) now requires insurance with the minimum cover of the Institute Cargo Clause (A) (All risks, subject to itemized exclusions).
- CIF (Cost, Insurance & Freight) requires at least insurance with the minimum cover of the Institute Cargo Clause (C) (with listed risks and subject to itemized exclusions).
- Incoterms® 2020 terms FCA (Free Carrier), DAP (Delivered at Place), DPU (Delivered at Place Unloaded) and DDP (Delivered Duty Paid) now allow for the seller or buyer to arrange for and use their own means of transportation.
- DPU (Delivered at Place Unloaded) replaces the term DAT (Delivered at Terminal) to clarify that the place of destination may not only be a “terminal”, but may be any designated and agreed-to place.
- Incoterms® 2020 now includes security-related requirements and ancillary costs within the carriage obligations.
- Explanatory notes for users are provided.
Useful information:
Incoterms® 2020 terms do not constitute complete contracts of sale; they rather become a part of those contracts. For application, the following structure should be used:
“[The chosen Incoterm® rule] [Named port, place or point] Incoterms® 2020”
Examples:
“FCA Port Los Angeles CA, USA Incoterms® 2020”
“CIP 10 Downing Street, London, Great Britain Incoterms® 2020“
If there is no year stated in the Incoterms® then the following applies:
- Until December 31, 2019 the Incoterms® 2010 apply.
- From January 1, 2020 the Incoterms® 2020 apply.
If a different year is stated, e.g.: Incoterms® 1980, then the respective terms of that revision would apply. It would benefit all relative parties to specify the Incoterms® date, giving preference to the most recent edition.