INCOTERMS-2010 and national law, Summary - International trade

INCOTERMS-2010 and national law

Although the rules for the interpretation of INCOTERMS trade terms are used throughout the world, they can not be considered an international treaty, since they do not pass the recognition procedures by national legislatures and are not ratified by the governments of states. Nevertheless, when the parties, when concluding an external economic contract, undertook to take into account INCOTERMS rules as a basis for regulating their relations, the judicial national authority that deals with economic disputes related to foreign economic activity, in this case takes into account the provisions of these rules in its activity. However, INCOTERMS rules apply only if they do not contradict the basic requirements of national legislation.

Governments of different countries have a definite choice in determining the status of INCOTERMS rules on their sovereign territory. For example, the provisions of Spanish law rules INCOTERMS are elevated to the rank of national law. In the United States, other conditions of supply regulated by federal legislation are widespread, but business entities are allowed to apply INCOTERMS rules in determining the basic terms of supply. At judicial reviews of foreign economic transactions by the German and French judicial authorities, the rules for the interpretation of trade terms are usually equated with international trade custom.

In the United States, the INCOTERMS rules are considered as an unofficial code and do not have independent legal force. When considering disputes with the application of United States laws, only the provisions of the foreign trade contract, in which there is a reference to INCOTERMS-2010 rules, will be legally significant.

Summary

• The aim of INCOTERMS is to provide a set of international rules on the interpretation of the most widely used trade terms in the field of foreign trade, which significantly reduces the uncertainty of the various interpretations of such terms in different countries.

• The main reason for successive editions of INCOTERMS was the need to adapt them to modern commercial practices, which allows them to meet the requirements of scientific and technological progress, adequately reflect the best practices of commercial operations, including the introduction of new ways of processing and transporting goods.

• The INCOTERMS rules developed by the International Chamber of Commerce concerning the use of national and international trade terms tend to facilitate the conduct of international trade, since they clearly define the respective responsibilities of the parties, thereby reducing the risk of legal complications.

• When assessing INCOTERMS-2010, it is important to highlight the significance of this document and its features, which distinguish it from previous versions. First, its effect extends not only to international, but also to domestic trade. Second, the least frequently used terms of the D group were excluded. As a result, the total number of terms has been reduced to 11. Third, two new terms appeared in the new rules: DAT (Delivery at the terminal) and DAP (Point delivery), which will allow the parties to the relationship to more clearly determine the moment of risk transfer from the seller to the buyer.

• INCOTERMS-2010 allows participating parties to use a more advanced and cheaper scheme of delivery of goods, taking into account the location of warehouses of the seller (the supplier) and the recipient (buyer), as a result of which all participants in the foreign economic transaction receive certain benefits in the form of reducing the costs of implementing the contract in general.

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