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Incoterms 2010: How To Use Them In A Contract

By Simon Minett

Common errors made by importers and/or exporters in the use of Incoterms in contracts 

Despite the fact that Incoterms were developed to simplify international transactions and to make their application in international trade more precise, there are still a number of reasons why they often fail to achieve their intended purpose. In most cases, it is due to a lack of knowledge of the terms as well as inaccuracy and even too little effort put in when utilizing or applying them. The following have been identified as the problems most frequently associated with the use of Incoterms:

1.  Most people use a sea-freight term such as FOB or CIF when consigning goods by air or road freight.

2.  Incoterms are not quoted at all in the contracts. This makes it very difficult to apportion responsibilities to either the buyer or seller and even to manage and/or monitor these contracts

3.  Doing more under the term than required, for example, loading under ‘Ex-Works’.

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