Lesson 1 - Introduction to the Incoterms® 2020 rules

Summary

In this introductory video on Incoterms 2020, Bob Ronai, a member of the ICC’s drafting group, provides an insightful overview of these vital trade rules. He explains the role of Incoterms in defining the responsibilities and risks between buyers and sellers in international trade. While not legally binding, these guidelines simplify complex trade agreements. Ronai emphasizes the importance of understanding Incoterms for smoother global transactions, detailing what the rules cover and what they don't, such as payment methods or customs restrictions. The course aims to offer a thorough, practical understanding of Incoterms 2020.

Takeaways

• 😀 Incoterms 2020 are not laws but guidelines to be referenced in contracts, primarily focused on logistics.
• 😀 The International Chamber of Commerce (ICC) developed the Incoterms rules to promote trade and prevent misunderstandings between buyers and sellers.
• 😀 Incoterms rules are not mandatory, and many transactions still occur without their use, especially when traders are unaware of them or misuse them.
• 😀 The rules help clarify the responsibilities of the seller and buyer, including risk transfer, delivery, and costs involved.
• 😀 While Incoterms do not cover contract existence, goods details, payment methods, or disputes, they specify the responsibilities related to transportation and logistics.
• 😀 The rules don’t address issues like export/import restrictions, sanctions, or force majeure; these should be handled in separate contractual terms.
• 😀 The rules also do not cover intellectual property rights or consequences for breaches in the contract.
• 😀 The Incoterms 2020 rules do not address Verified Gross Mass (VGM), as it’s not related to the mutual obligations between buyer and seller but specific to shipping processes.
• 😀 The ICC’s publication provides the official definitions of Incoterms 2020, which can be obtained through their website, national committees, or major retailers like Amazon.
• 😀 The series of lessons aims to provide a comprehensive and practical understanding of Incoterms 2020, focusing on their correct application and implications in global trade.

Q & A

What is the main purpose of the Incoterms 2020 course introduced in the video?

The main purpose of the course is to provide a comprehensive understanding of the Incoterms 2020 rules, ensuring viewers can apply these rules effectively in international trade transactions.

Who is Bob Ronai, and what is his involvement with the Incoterms 2020?

Bob Ronai is the presenter of the course and was a member of the International Chamber of Commerce's Incoterms 2020 drafting group, which created the rules.

Are the Incoterms rules legally binding?

No, Incoterms are not laws. They are considered 'soft law' and become part of a contract of sale only if specifically referenced. They guide logistics aspects but are not enforceable by courts unless incorporated into a legal contract.

Can businesses use versions of Incoterms other than 2020?

Yes, businesses can continue to use previous versions of the Incoterms, and there are other specific rules in certain industries, such as the GAFTA rules for grain and feed trade.

Why were Incoterms first introduced, and how has the concept evolved?

Incoterms were introduced to provide a universal set of rules for international trade, avoiding confusion between different countries' trade terms. Over time, they have evolved to keep pace with changing transport methods, like rail, air cargo, and container shipping.

What is the significance of the Incoterms 2020 publication?

The Incoterms 2020 rules are a complete rewrite of the previous version, presented in plain language. They aim to clarify mutual obligations in trade, but leave underlying concepts largely unchanged.

What key areas do the Incoterms 2020 rules NOT address?

Incoterms 2020 do not address contract existence, goods specifics, payment methods, export/import prohibitions, tariffs, sanctions, dispute resolution, intellectual property rights, or force majeure issues.

What is the VGM (Verified Gross Mass), and why isn't it addressed by the Incoterms 2020 rules?

VGM refers to the verified gross mass of a full container load (FCL). It is not addressed by Incoterms because it is specific to maritime transport and involves parties other than the seller, such as the shipping line, and is governed by separate regulations.

How are the Incoterms 2020 rules applied in contracts of sale?

The Incoterms 2020 rules are referenced in a contract to define logistics responsibilities, such as delivery points, risk transfer, and cost obligations between the seller and buyer.

Where can someone access the official Incoterms 2020 rules?

The official Incoterms 2020 rules can be accessed through the International Chamber of Commerce's website, where it is available as a hard copy, ebook, or from national ICC committees. It is also available on platforms like Amazon.