Incoterms 2020 - International Trade Regulations

Dive into the world of Incoterms 2020! Our article provides key information on international terms of sale governing risks, obligations and costs in commercial transactions. Learn how to use Incoterms to avoid misunderstandings and gain certainty in global trade. Find out why these regulations are an indispensable tool for exporters and importers!

INCOTERMS – International Trade Regulations

International Trade Regulations are a key element of international transactions. Unlike sales contracts, Incoterms focus on the regulation of the terms of delivery of goods. Like a contract, Incoterms specify who is responsible for what in the process of transporting the goods, but they do not deal with the specifications of the goods or the terms of payment.

These rules, developed by the International Chamber of Commerce, were first introduced in 1936. It is worth noting that their latest version, Incoterms 2020, has been in force since 1 January 2020. For companies that operate internationally, understanding how to apply these rules becomes a key tool in creating effective commercial contracts.

The Incoterms set includes 11 three-letter trade terms, such as EXW, CPT or DAP. Therefore, it is worth emphasising that, when choosing the appropriate Incoterms rule, the parties to the transaction must specify precisely the place of delivery in the sales document. In fact, the place determines who bears the risk in a given transport stage.

What, after all, are these Incoterms about?

They are not only a set of rules, but also a universal standard for interpreting trade rules in international trade. As such, these rules primarily apply to exporters and importers, not to transport or forwarding companies. Because every shipment should contain this information to avoid potential problems and misunderstandings.

Main objectives of Incoterms:

Firstly, to standardise terminology. Incoterms provide unambiguous definitions of terms used in commercial contracts, eliminating the possibility of misunderstandings due to differences in language, culture or in the interpretation itself.

Secondly, defining the responsibilities of the parties: the rules clarify which tasks related to transport, insurance, customs and other aspects of the transaction lie with the seller and which with the buyer.

Thirdly, avoiding misunderstandings: the unification of the Incoterms rules helps to avoid ambiguity and disputes between the parties to the transaction by making clear who is responsible for a particular transport stage, cost and risk.

In summary, understanding Incoterms 2020 – International Trade Regulations is the key to an efficient and secure international transaction. In the final analysis, the skilful use of these international terms of sale contributes to a smooth process for the delivery of goods, eliminating ambiguities and providing both parties with clear rules of trade.