Baker McKenzie in Australia in June, as a part of its Defence and Space Industries Newsletter, published a useful guide to the use of Incoterms, developed by the International Chamber of Commerce to promote a common understanding between the parties of their respective operational obligations within various delivery arrangements. It says that they are often incorporated by reference into ‘off the shelf’ or ‘precedent’ supply contracts with insufficient thought and consideration given to the specific Incoterm selected and what aspects of their supply contracts need to change to properly incorporate the relevant Incoterm. This failure results in supply contracts that contain inherent inconsistencies with the Incoterms selected. These inconsistencies create uncertainty and may give rise to potential disputes. The article provides a good, quite thorough but brief guide to the terms themselves.
Note that Incoterms 2020 are due to replace the current Incoterms 2010 with effect from 1st January 2020 (though the 2010 rules will continue to apply for those using them).
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