Paris based the International Chamber of Commerce (ICC) has launched the latest revision of its internationally-recognized trade terms Incoterms® 2010. The rules, used by companies in countless business transactions all over the world, will come into effect on 1 January 2011.
Short for ‘international commercial terms’, the Incoterms® rules – were first created by ICC in 1936 to help traders avoid misunderstandings by clarifying the costs, risks, and responsibilities of both buyers and sellers in the delivery of goods. Representing a radically new concept in an industry regulated by local rules of law, the rules caused a sensation in the international business world when ICC first introduced them because they were a first real attempt to bring legal certainty to business transactions while simplifying the drafting of international contracts.
“Before ICC developed the Incoterms® rules, the different terms were often subject to varying interpretations in different countries, often giving rise to disputes and litigation,” said ICC Chairman Rajat Gupta. “Today the Incoterms® rules for the usage of terms such as Ex Works (EXW), Free on Board (FOB), Cost and Freight (CFR) and Cost, Insurance and Freight (CIF) are part of the recognized canon defining the responsibilities of buyers and sellers in transactions for the sale of goods worldwide.”
The Incoterms® 2010 rules take into account developments in global trade since they were last revised in 2000. These include changes in cargo security, which has been at the forefront of the transportation agenda for many countries since 9/11, and the increased use of electronic communications in business transactions.
Revisions have been made to ensure that the wording of the Incoterms® rules clearly and accurately reflects present-day trade practices.
The number of rules has been reduced from 13 to 11 and two new rules have been created: Delivered at Terminal (DAT) and Delivered At Place (DAP). The latest version also features guidance notes at the beginning of each of the rules to help clearly steer the user to the correct Incoterms® rule.
“ICC has a long history of developing rules of practice for business,” Mr Gupta said. “Because our rules are developed by experts and practitioners brought together by ICC in a thorough consultative process, they are globally accepted and have become the standard in international business rules-setting.”
A launch conference for the new rules will take place at ICCs international headquarters in Paris on 27 September. A series of masterclasses will follow on 28-29 October and 29-30 November, with another in 2011 on 31 January-1 February.