Application of «INCOTERMS» in drafting commercial transactions

Abstract

This article examines the legal nature, content and procedure of application of «International commercial terms» («Incoterms») when drafting commercial transactions. These rules are the development of the International Chamber of Commerce (ICC) and constitute an important component of the mechanism of international trade. They are widely used all over the world in the implementation of international and domestic commercial activities. «Incoterms» are systematically updated in accordance with the needs of commercial practice, the most recent edition is from 2020.
«Incoterms» by their legal nature are a codification of international trade customs and are not subject to mandatory application. In the case of reference in international commercial contracts to the basic terms of delivery of the «Incoterms», the parties to these contracts are obliged to be guided by the provisions of these rules.
«Incoterms» are aimed at the unified consolidation of the content of the «basic terms of delivery», which are significant for contracts of international sale of goods and regulate issues related to: the distribution of transport costs between the seller and the buyer; the moment of transfer from the seller to the buyer of the risks of damage, loss or accidental death of the goods; distribution of responsibilities for export (import) customs «clearance» of goods and payment of duties; distribution between the parties of responsibilities regarding product insurance.
In practice, «Incoterms» simplify the procedure for drawing up international commercial contracts, since instead of detailing the provisions in the contract regarding the «basic terms of delivery», it is enough to make a reference to the 3-letter abbreviation of «Incoterms», indicating (if necessary) their edition and the place of delivery of the goods.