Commerce intl

1. Introduction

Commerce practices differ from one country to another which may cause misunderstandings, disputes or lawsuits. To avoid these risks, the International Chamber of Commerce (ICC) has developed the first International Commercial Terms (Incoterms) in 1936. These Incoterms have undergone several changes in 1953, 1967, 1980, 1990 and finally in 2000. Incoterms are trade termsrecognized internationally determining the devolution of risk and costs under a contract to buy abroad. These are internationally accepted commercial terms defining the respective roles and responsibilities of the buyer and seller in the arrangement of transportation and other obligations. We begin this section with a presentation of Incoterms. Then we will detect the most common problems of risks inIncoterms 2000, first concerning their limitations and second concerning the wrong use. Then we will implement some rules to properly manage these risks. Finally, we propose criteria for selecting the appropriate Incoterm.

2. Purpose and Scope of Incoterms 2000

The main objectives of Incoterms 2000 resolve around the contract of Foreign Trade concerned with the loading, transport,insurance and delivery transactions. Its main function is the distribution of goods and regulation of transport charges. Another significant role played by Incoterms is to identify and define the place of transfer and the transport risks involved in order to justify the ownership for support and damage of goods by shipments sent by the seller or the buyer in an event of execution of transport.[pic]

2.1 Incoterms codification

These terms, in the form of codifications, specify what are the obligations of the parties (see Table 1).

|Incoterms 2000 |
|Group E |EXW |Ex Works (…named place)|
|Departure | | |
|Group F |FCA |Free Carrier (…named place) |
|MainCarriage Unpaid | ||
| |FAS |Free Alongside Ship (…named port of shipment) |
| |FOB |Free On Board (…named port of shipment) |
|Group C |CFR|Cost and Freight (…named port of destination) |
|MainCarriage Paid | | |
| |CIF |Cost, Insurance and Freight (…named port of destination) |
||CPT |Carriage Paid To (…named port of destination) |
| |CIP |Carriage and Insurance Paid To (…named port of destination) |
|Group D |DAF |Delivered at Frontier (a named place)|
|Arrival | | |
| |DES |Delivered Ex Ship (…named port of destination) |
| |DEQ |Delivered Ex Quay (…named port of destination)…