When the seller and the buyer contract for trade, they have to agree on certain issues, e.g. goods, their specification, price, terms of payment and delivery of the goods from the seller to the buyer. The delivery of the goods includes several matters for further decisions, e.g. delivery and taking delivery, contract of carriage, division of costs, transfer of risk, export and import formalities, documents, packaging, inspection, and information. The parties may either every time agree on these issues or they may use a term of delivery, which defines the division of mutual obligations.
The contents of a contract of sale.
Incoterms is a set of definitions of international trade custom. Incoterms 2010 includes the definitions of eleven international custom of trade. Each of them has got a name which is abbreviated with three letters. When the seller and the buyer decide to include such an abbreviation in their contract of trade, it means that they will follow that custom of trade and decide about mutual obligations.
The term of delivery is
part of the contract of trade
definition of the custom of trade
intended for the international sale of goods
It defines e.g. following things in the mutual relation between the seller and the buyer
delivery and taking delivery
division of costs
transfer of risk
other mutual obligations
The term of delivery does not define
relations between the seller/ the buyer and any third party
title to the goods (“ownership”)
The term of delivery is not a part of the contract of carriage. It may give third parties information about seller’s and buyer’s obligation concerning the delivery of goods.
Because the term of delivery defines the obligations in delivering the goods, the term should always be in accordance with the agreed custom of trade.
Incoterms-terms of delivery define the mutual obligations of the seller and the buyer. The terms do not define those matters, which are in the own interest of the contracting party.
The seller and the buyer are the parties to the contract of trade. All subcontractors, such as carriers, forwarding agents and stevedores, are acting either on behalf of the seller or on behalf of the buyer.
Incoterms 2010 includes eleven terms of delivery. They are
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