Final Notes on Incoterms

As might be obvious from the previous posts on incorterms, several Incoterms are applicable to waterway transportation only: FAS, FOB, CFR, CIF, DEQ, and DES.

The following Incoterms apply to all modalities, including Intermodal: EXW, FCA, CPT, CIP, DAF, DDU, and DDP.

In some cases, it is advisable to attach wording to Incoterms that clarifies the responsibilities of the buyer, seller, and carrier. For example, use of the term “DDP VAT unpaid” indicates unambiguously that the seller does not bear responsibility for the payment of VAT.

While undeniably useful, Incoterms also have their limitations:

  • Incoterms do not define ownership, i.e. “the title”, of goods.
  • Incoterms do not describe the transfer of title of goods.
  • Incoterms do not apply service contracts.
  • Inco terms do not define contractual rights or obligations beyond delivery.
  • The definitions of Incoterms can be genuinely or wilfully misunderstood.
  • Comprehension of and compliance with Incoterms, although generally widespread and in principle internationally endorsed, are not universal. To mitigate against this possibility, supplementation of Incoterms with plain language conditions and instructions is often beneficial.
  • Incoterms do not specify breach of contract conditions or remedies.
  • Incoterms do not protect parties against own risk or loss.
  • Incoterms do not cover goods prior to or following delivery.
  • Incoterms do not specify any details relating to the transfer, transportation, or delivery of goods.
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