Vertex Law: Time to come to terms with new rules
09 February 2011
Companies buying or selling food products – especially overseas – need to be aware of new internationally recognised terms governing the sale, movement and delivery of goods
The new Incoterms 2010 rules (Incoterms is short for International Commercial Terms) have been drawn up by the International Chamber of Commerce and reflect the changes that have taken place in international trade since the last version of the rules was published in 2000.
Sarah Whibley, a food sector specialist at Vertex Law, said: “Incoterms are commonly accepted trading standards that are widely used across the world and to some extent within the UK domestic market.
“Each one determines when risk and title passes to the buyer and they are therefore important in terms of who is responsible for the goods at various stages of the journey from the supplier to the customer.
“These revisions, the first for 10 years, have resulted in some significant changes. Most notably, four Incoterms rules have been abolished and two new ones created. There are also changes to issues surrounding cargo security and insurance as well as some more general updating. This includes, for example, reflecting the role that electronic communications now play as well as clarifying who is responsible for increasingly contentious terminal handling costs.”
The new rules covering delivery are Delivered at Terminal (DAT) and Delivered at Place (DAP). They replace Delivered Duty Unpaid (DDU), Delivered Ex-Ship (DES), Delivered at Frontier (DAF) and Delivered Ex-Quay (DEQ). Delivered Duty Paid (DDP) remains unchanged.
Delivered at Terminal takes place when the seller puts the goods at the disposal of the buyer, unloaded at a named terminal. Delivered at Place is when the goods are available to the buyer at a named place, on a vehicle ready for unloading.
DAT and DAP apply to any mode of transport and the latter is suitable for both domestic and international trade.
Sarah Whibley added: “Historically businesses do not always use the correct Incoterms and it's important that they do or they could end up being responsible, for example, for the loss of goods during transit, when they didn't think they were responsible for them.
“Anyone in the food sector who is importing or exporting products – or moving large shipments around the country – must familiarise themselves with the new Incoterms and incorporate them correctly into their terms and conditions. Failure to do so could leave them exposed to some potentially heavy and unexpected costs – or at the very least a dispute about who is responsible for such costs.”
Sarah Whibley can be contacted at sarah.whibley@vertexlaw.co.uk or on 01732 224000
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