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INCOTERMS 2020 released

The INCOTERMS 2020 come into force on 1 January 2020. These standard terms are of great importance in foreign trade, but also for deliveries within Germany and therefore also for every company in the confectionery industry. According to an estimate by the International Chamber of Commerce in Paris (ICC), they are used in 90 % of all international sales contracts.

The INCOTERMS regulate the transfer of risk in the event of damage to goods to be delivered, but also, for example, the costs of transport, packaging and insurance. They thus lay down many important conditions, the detailed negotiation of which in each individual case would be inefficient. The clear definition of the individual clauses enables the parties to a sales contract to carry out standardised international and national commercial transactions and thus save transaction costs.

The new version contains many changes in detail, but no real upheavals compared to the previous version of 2010. In particular, contrary to earlier rumors, the much-used “EXW” (ex works) clause, which can lead to customs difficulties in cross-border deliveries, has not been abolished. The DAT clause has been reformulated to DPU (Delivery At Place Unloaded). Those who have used the DAT clause in their contracts should now adjust it.

In general, every company should take the release of new version of the INCOTERMS as an inducement to check whether the clauses used so far still make sense. The rules issued by the ICC for the interpretation of INCOTERMS 2020, which contain very detailed and clear explanations (a clear improvement over the previous version), are a great help here. The text of the contract templates should also refer to the new version. Contrary to the generally less exact practice, it is also advisable not only to point out the location, but ideally also the exact address, so that it is clear where exactly the risk passes from the supplier to the buyer. An example of a good formulation is: “FCA Sample Street 1, 12345 Sample City, Germany (INCOTERMS 2020)”.

Published in Newsletter Confectionery Industry Special – 2020 edition.