Incoterms® variants : greater precision or more uncertainty? : notes

• Date: 01 January 2013
• Author: J. Coetzee
• Published date: 01 January 2013
• Pages: 583-591
• DOI: 10.10520/EJC145898

583

Aantekeninge/Notes

Incoterms® variants: greater precision or more

uncertainty?

1Introduction

The International Chamber of Commerce introduced Incoterms® to

achieve some form of international standardisation pertaining to the

delivery of goods, passage of risk, allocation of costs and customs

formalities under an international contract of sale. These rules “explain

a set of three-letter trade terms reflecting business-to-business practice

in contracts for the sale of goods” (ICC Incoterms® 2010 (2010) 5). They

are formulated with reference to the most consistent busin ess practices

and customs at a given point in time and are regularly updated to keep

up with developments in international commercial practice (Foreword to

Incoterms® 2010). By standardising trade term content Incoterms®

achieve legal certainty, which means a reduction in disputes and, hence,

also in transaction costs.

The latest revision, Incoterms® 2010, came into operation on 1

January 2011. It introduced a new classification of trade term rules by

making a distinction between rules appropriate for all modes of

transportation (the EXW, FCA, CPT, CIP, DAT, DAP and DDP rules), and

rules aimed exclusively at maritime and waterway transport (FAS, FOB,

CFR and CIF). The distinction facilitates the general use of the rules. In

addition, the Guidance Note preceding each rule contains advice on the

appropriateness of such rule in a particular trade context.

The standardised definitions may, however, be overridden by

customs applicable at the place or port where the rule is used (Incoterms®

2010 5 par 2). Furthermore, they can be adapted by using Incoterms®

variants. Additions to or variations of the basic term can either add to or

derogate from the parties’ obligations (Raty “Variants on Incoterms (Part

2)” in Incoterms in Practice (ed Debattista) (1995) 152-153). For example,

an added obligation for the seller to load the goods on the buyer’s

collecting vehicle in the case of the EXW term, or to pay for costs of

discharge in the case of the CIF term. Variants such as “free on board

stowed” (FOBS) and “free on board stowed and trimmed” (FOBST) are

also regularly used in international trade to extend the seller’s delivery

obligations.

Whilst Incoterms® merely reflect the commercial practice most

commonly used, trade term variants are primarily aimed at obtaining

greater precision (ICC Incoterms 2000 (1999) Introduction par 11;

Ramberg Guide to Incoterms® 2010 (2010) 41; Raty 152-153). Incoterms®

recognise the principle of party autonomy and therefore do not prohibit