Frequently Asked Questions

Clear, globally valid and proven standards simplify international as well as national trade transactions and minimise potential misunderstandings regarding the individual obligations of the contracting parties. Incoterms can be included in sales contracts and do not have to be detailed and negotiated. A clear system of clauses from EXW (Ex Works) to DDP (Delivered Duty Paid), which gradually shifts obligations and costs from the buyer to the seller, helps in deciding on which Incoterm to agree. The grouping according to the initial letter (from E- to F- and C- to D-clauses) also supports systematisation. For example, all D-clauses are "arrival clauses", where the seller bears transport costs and risks up to the country of arrival.

In principle, yes, because they are not laws, but proven delivery clauses that regulate the tasks and responsibilities of the contractual partners. They only become effective if they are included in the purchase contract by mutual agreement, and thus a supplement or variation to the "standard scope" can also be made by mutual agreement. This is made possible by the principle of "freedom of contract", provided this does not run counter to mandatory existing regulations. In practice, there are a number of adaptations which worked out with a sense of proportion and appropriate experience - can bring added value. As a rule, however, it is not advisable to modify Incoterms, as their usefulness as a generally valid and unambiguous standard is lost, and amendments to the text can lead to different interpretations.

Every goods transport involves risks. Whether it is a damaged pallet during loading, a container that goes overboard on the high seas, the spoilage of insufficiently cooled goods, delivery to the wrong recipient or even loss through theft - there are a wide variety of ways in which goods can come to harm. At the moment of the transfer of risk, these risks and thus the bearing of possible consequences are transferred. Unless otherwise agreed, the carrier is responsible for damage, deterioration and loss as long as they transport the goods. Exceptions to this are, among others, damage over which the carrier could not have had any influence or also due to inadequately packed goods by the seller.

Important: If the seller has knowledge of a damaging event that could occur after the transfer of risk, they remain responsible (e.g. knowledge of an upcoming general strike). The damaging event must be beyond the seller's knowledge, reach and control.

For the E, D and F clauses of the Incoterms 2020, the transfer of risk and cost occurs at the same time, which is why they are also referred to as one-point clauses. For all C-clauses, these differ from each other ("two-point clauses").

First of all, Incoterms are a matter of negotiation between the two contracting parties. Which Incoterm is agreed upon may depend on the "market power" of the parties or the market conditions. In a seller's market, the seller is more likely to be able to set terms that transfer costs and risks to the buyer early (e.g. EXW or FCA). In a buyer's market, on the other hand, the buyer is more likely to be able to enforce "arrival clauses" from the D group. On the other hand, the seller may also have an interest in retaining as much control over the process as possible by taking on an Incoterm with far-reaching responsibilities. Example: In the EXW (Ex Works) agreement (which actually favours the seller), he is dependent on the buyer taking delivery of the goods on time (and thus realising the turnover). Also, the loading processes within one's own factory premises are not always willingly left in the hands of third parties. The choice of a carrier (e.g. in the case of C-clauses) can also serve the purpose of quality assurance. Another question can be whether the buyer or seller, beyond the specific order, has better possibilities to organise logistics processes rationally and favourably.

Yes, the Incoterms 2020 explicitly point this out in their introduction. They are deliberately designed to serve the typical needs of buyers and sellers in as many countries around the world as possible - not only in international trade, but also in transactions within a country.

The International Chamber of Commerce (ICC) is the world's largest private business organisation based in Paris. It is active worldwide to promote international trade, among other goals. To this end, it sets voluntary rules or standards, which only become valid when they are included in contracts. Furthermore, they support arbitration proceedings (e.g. through the ICC Rules of Arbitration). The ICC was founded in 1919 by entrepreneurs, merchants and financiers to promote international cooperation and economic relations against the background of a disrupted world order after the First World War.

Incoterms are not the only standardised terms. Below are examples of other important standard clauses.

FIDIC: This community of engineers, founded by engineers, has developed standards for different types of contracts, with a focus on construction and facilities. The terms are recommended by the World Bank and used in its standard contracts.

ECE clauses: In order to promote pan-European economic integration, the United Nations Economic Commission for Europe has developed general terms and conditions of supply, which are mainly used in the export of machinery and equipment.

RAFTD: Standard clauses have existed in the United States since 1919; in 1941 they were reissued as "Revised Foreign Trade Definitions", or RAFTD for short. They have a large overlap with the Incoterms, but there are also deviations in detail in clauses with the same name (e.g. FOB). To avoid problems, one should therefore combine abbreviations with the source (e.g. Incoterms 2020). Even if the use of Incoterms is recommended and the RAFTD are no longer to be used, they are still used in the USA.

Although Incoterms are a registered and protected trademark of the ICC, it is not necessary to use the trademark symbol in sales contracts.