Incoterms®: new rules from January 2020

From 1 January 2020 new International Chamber of Commerce Incoterms® rules will be effective. These rules, extremely important in international sales are recognized by UNCINTRAL – the United Nations Commission for international commercial law – and govern the basic principles of international contracts, like  the goods delivery mode, the risk transfer from seller to buyer, the person which bear the costs of transport and customs duties.

Their function is to facilitate international trade, allowing the operator involved in import/export to correctly interpret particular contract terms, understand their responsibilities and avoid future disputes.

The main aspects that characterize an international trade are sales contracts,  transport contracts, insurance contracts, customs procedures and   payment instrument: the Incoterms® are essential  in exchanges success and, because of that, they should be share in advance between the seller and the purchaser.

The new Incoterms® 2020 edition introduce more detailed explanatory notes and clarification of responsibilities for importers and exporters.

With the new rules effectiveness the customs repercussions will need to be checked. Indeed,  in order to a correct determination of the customs value, generally related to the trade value, the transport contracts terms become really important. For example, the first indication to know which elements are involved in the  exporter invoice value, is the return period of the goods, stated in the invoice itself.  The Incoterms® rules are essential to define that period.

Sara Armella was among the Commission set up by ICC – Italy to review Incoterms® 2020 rules.

 

Nicola Dimitri

October 2019

This post is also available in: itItaliano (Italian)

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