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Incoterms2000 Listening ReadingandDiscussing TEXT Sendinggoodsfromonecountrytoanother aspartofcommercialtransaction canbeariskybusiness Iftheyarelostordamaged orifdeliverydoesnottakeplaceforsomeotherreason theclimateofconfidencebetweenpartiesmaydegeneratetothepointwherealawsuitisbrought Therefore aboveall sellersandbuyersininternationalcontractswanttheirdealstobesuccessfullycompleted If whendrawinguptheircontract buyerandsellerhavesomecommonlyunderstoodrulestospecificallyreferto theycanbesureofdefiningtheirrespectiveresponsibilitiessimplyandsafely Insodoingtheyeliminateanypossibilityofmisunderstandingandsubsequentdispute ThepurposeofIncotermsistoprovideasetofinternationalrulesfortheinterpretationofthemostcommonlyusedtradetermsinforeigntrade Thus theuncertaintiesofdifferentinterpretationsofsuchtermsindifferentcountriescanbeavoidedoratleastreducedtoaconsiderabledegree Frequentlypartiestoacontractareunawareofthedifferenttradingpracticesintherespectivecountriesoftheirpartners Thiscangiverisetomisunderstandings disputesandlitigationwithallthewasteoftimeandmoneythatthisentails Inordertoremedytheseproblems theInternationalChamberofCommercefirstpublishedin1936asetofinternationalrulesfortheinterpretationoftradeterms TheseruleswereknownasIncoterms1936 Amendmentsandadditionswerelatermadein1953 1967 1976 1980 1990andpresently2000inordertobringtherulesinlinewithcurrentinternationaltradepractices Incotermshavebeenrevisedtotakeaccountofchangesintransportationtechniques suchastheunitizationofcargoincontainers multimodaltransportandrollon rollofftrafficwithroadvehiclesandrailwaywagonsin short sea maritimetransport certaintermshavebeenconsolidatedandrearranged andtorenderthemfullycompatiblewithnewdevelopmentsinelectronicdatainterchange EDI Themainreasonforthe1990revisionofIncotermswasthedesiretoadapttermstotheincreasinguseofelectronicdatainterchange Inthe1990versionofIncotermsthisispossiblewhenthepartieshavetoprovidevariousdocuments suchascommercialinvoices documentsneededforcustomsclearanceaswellastransportdocuments Particularproblemsarisewhenthesellerhastopresentanegotiabletransportdocumentandnotablythebillofladingwhichisfrequentlyusedforthepurposeofsellingthegoodswhiletheyarebeingcarried Intheseitisofvitalimportance whenusingEDImessages toensurethatthebuyerhasthesamelegalpositionashewouldhaveobtainedifhehadreceivedabillofladingfromtheseller The2000revisionofIncotermstookaccountofthespreadofcustoms freezones theincreaseduseofelectroniccommunication andthechangesintransportpractices Thenewversionoffersasimplerandclearerpresentationofthedefinitionsofalltheterms Asinthepreviousversion thetradetermsofIncoterms2000arepresentedinaformatwhichallowssellerandbuyertofollowastep by stepprocesstodeterminetheirrespectiveobligations Thetermshavebeengroupedinfourbasicallydifferentcategories namelystartingwiththeonlytermwherebythesellermakesthegoodsavailabletothebuyerattheseller sownpremises theE term Exworks followedbythesecondgroupwherebytheselleriscalledupontodeliverthegoodstoacarrierappointedbythebuyer theF termsFCA FASandFOB continuingwiththeC termswherethesellerhastocontractforcarriage butwithoutassumingtheriskoflossofordamagetothegoodsoradditionalcostsduetoeventsoccurringaftershipmentanddispatch CFR CIF CPTandCIP and finally theD termswherebythesellerhastobearallcostsandrisksneededtobringthegoodstothecountryofdestination DAF DES DEQ DDUandDDP Further underallterms therespectiveobligationsofthepartieshavebeengroupedunder10headingswhereeachheadingontheseller ssidemirrorsthepositionofthebuyerwithrespecttothesamesubjectmatter Thus ifforinstance accordingtoA 3 thesellerhastoarrangeandpayforthecontractofcarriagewefindthewords Noobligation undertheheading Contractofcarriage inB 3 settingforththebuyerposition However withrespecttothedivisionbetweenthepartiesofduties taxesandotherofficialcharges aswellasthecostsofcarryingoutcustomsformalities thetermsexplainforthesakeofclarityhowsuchcostsaredividedbetweenthepartiesalthough ofcourse thesellermightnothaveanyinterestatallinthebuyer sfurtherdisposalofthegoodsaftertheyhavebeendeliveredtohim Conversely undersometermssuchastheD terms thebuyerisnotinterestedincostswhichthesellermightincurinordertobringthegoodsallthewaytoanagreeddestinationpoint FollowingisachartsettingouttheclassificationofIncoterms2000 Incoterms2000EXWEXWorksFCAFreeCarrierFASFreeAlongsideShipFOBFreeOnBoardCFRCostandFreightCIFCost InsuranceandFreightCPTCarriagePaidToCIPCarriageandInsurancePaidToDAFDeliveredAtFrontierDESDeliveredEXShipDEQDeliveredExQuayDDUDeliveredDutyUnpaidDDPDeliveredDutyPaid Comparedwiththeformerversion Incoterms2000seemtohavefewchanges ThatshowsthewiderecognitionoftheIncotermswhichmakesitnecessarytoconsolidateontherecognitionwithoutmakingmanychanges However substantivechangeshavebeenmadeinthefollowingareas 1 thecustomsclearanceandpaymentofdutyobligationsunderFASandDEQ 2 theloadingandunloadingobligationsunderFCA Exercises 1 Answerthefollowingquestions 1 Whatsortofriskscanarisewhengoodsarebeingmovedfromoneplacetoanother Ifrisksdooccur whatconsequenceswouldtheybringabout 2 WhyisitnecessarytohaveIncoterms AndwhatisthepurposeofmakingamendmentsandadditionstoIncoterms 3 Doyouknowanythingaboutcontainertransport Isitarevolutionaryinnovationintransportationtechniques Giveyourreasons 4 Canyouexplaintheword negotiable inthephrase negotiabletransportdocument 5 WhatarethemaincharacteristicsofIncoterms1990 6 WhatarethefourdifferentcategoriesoftermsinIncoterms2000 7 HowdoyouunderstandthefirstsentenceofParagraph6 TrytoputitintoChineseandthenparaphraseitinEnglish 8 WhyshouldthecompilersofIncoterms2000takethetroubletosetforthindetailthedivisionofduties taxes costsandchargesetc ofbothsellersandbuyers assomeofthemareirrelevanttoeitherthesellerorthebuyer 9 ExplainbrieflythetermsFOB CFRandCIF 10 InwhatareasaresubstantivechangesmadewithIncoterms2000 2 Fillineachofthefollowingblankswithanappropriateword Somewordsaregiventhefirstletterorletters Theriskforlossofordamaget thegoods asw astheobligationtobearthecostsrel tothegoods passesfromthesellertothebuyera thesellerhasfulfilledhisobligationtodeliverthegoods Sincethebuyershouldnotbegiventhepossibilitytodelaythetran oftherisksandcosts alltermsstipulatethatthepassingofrisksandcostssh occurevenbeforedelivery ifthe doesnottakedeliveryasagreedorfailstogiveinstructions withrespecttotimeforshipmentand orplacefordelivery asthesellermayrequirein tofulfillhisobligationtosh thegoods Thisrequirementism importantunderEXW sinceunderallothertermsthegoodswouldnormallyhavebeenidentifiedasintendedforthebuyerwhenmeasureshavebeentakenfortheirdispatch 3 TranslatethefollowingpassageintoChinese Traditionally theonboardbillofladinghasbeentheonlyacceptabledocumenttobepresentedbythesellerunderthetermsCFRandCIF Thebillofladingfulfillsthreeimportantfunctions namely Proofofdeliveryofthegoodsonboardthevessel Evidenceofthecontractofcarriage andAmeansoftransferringrighttothegoodsintransitbythetransferofthepaperdocumenttoanotherparty Itiscustomarytoissuebillsofladinginseveraloriginalsbutitis ofcourse ofvitalimportanceforabuyerorabankactinguponhisinstructionsinpayingthesellertoensurethatalloriginalsaresurrenderedbyth

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