The Incoterms 2010 rules are widely used to arrange cargo delivery from Ukraine. They are an important part of the routine world trade language. The Incoterms (abbreviation from English International commercial terms) – are international rules, which are set forth as a dictionary, approved by governmental bodies, commercial and legal companies around the world. They are used for determine interpretation of terms, most frequently used in the world trade. The first Incoterms rules were accepted as early as in 1936 and since then have been constantly supplemented and specified, Incoterms 2010 have been in force since January 01, 2011.
The main principles, regulated by the Incoterms terms, are as follows:
- procedure of cargo (goods) delivery costs distribution between seller and buyer, i.e. it is defined which costs and till what place are covered by seller and which (from which place) – by buyer;
- since which moment the risk of accidental loss or cargo damage is being transferred from seller to buyer;
- specifying the goods delivery date, in other words – a moment is defined, when the goods are actually delivered by the cargo (goods) seller in charge of buyer (as an option – its representative, shipping company, etc.). Considering the delivery date defined, a conclusion is drawn on whether supplier has fulfilled his obligations or not concerning the terms of delivery.
All rules, set forth in the Incoterms 2010 (there are 11 in total) are divided into two classes:
- the first class consists of seven rules, which cover all means of transport, whereas their action is also kept in case of multimodal transportation, when several means of transport are used. Distinctive feature of this class of rules resides in the fact that they can be used when marine transport is used to carry out a part of transportation. This class includes FCA, EXW, CIP, CPT, DAP, DAT and DDP;
- the second class regulates the rules for maritime and inner (river) water transport, its particulars are that ports are considered both as place of departure and place of delivery for goods to buyer. This class of rules includes CFR, FAS, FOB and CIF.
Herewith it should be understood that the Incoterms 2010 cannot substitute the sales contract, but only describe how the cargo freight from Ukraine is to be arranged. Mostly, the rules do not regulate the ownership transfer issue – this moment should be detailed separately in a contract. The Incoterms 2010 rules just define strictly and explicitly the following rules: each party, participating to the contract, undertakes responsibility to conduct the cargo delivery from Ukraine and in which scopes, where the seller is to deliver the cargo (goods) to the buyer, which costs are assumed by each of the parties. The Incoterms 2010 rules do not establish the payment procedure, as well as parties’ liabilities for failure to comply with sales contract conditions.