Importance of Incoterms
What is the importance of incoterms? Explain your views with example?
The goal of incoterms is to alleviate or reduce confusions over interpretations of shipping terms by outlining exactly who is obligated to take control, pay costs or passing of risk of loss or damage at a particular point in the shipping process.
The INCOTERMS were created by the ICC and regulate the rights and obligations of buyers and sellers in international commodity handling.
The incoterms are international rules for structuring a particular group of contractual clauses that are used in commercial agreements. Incoterms identify the physical point in the supply chain where risk of loss or damage passes from the seller to buyer.
It also determines the point in the supply chain where responsibility for transportation and customs related costs shift from the seller to buyer. Finally, incoterms identify specific functional responsibilities between the seller and buyer related to the delivery of goods. In general it shows and regulates: * The division of costs * Point at which risk passes from seller to buyer * Delivering and taking delivery of goods * Proof of delivery , transport documents or equivalent electronic message * When merchants conclude a contract for purchase and sale of goods, they are entitled to freely negotiate the special terms with regard to price, quantity, properties, etc., as well as carriage, risks and surrender of the goods. Businesses involved in exports, however, are frequently faced with different interpretations of identical formula and national commercial practices. To counteract the resulting imponderables, the parties to the contract can use what are known as Incoterms©, which offer a range of international rules for interpreting the main forms of contract used. Specifically, the Incoterm agreed by the parties determines which party is liable for the respective costs in the transport chain, for loading and unloading the goods and Customs clearance
The goal of incoterms is to alleviate or reduce confusions over interpretations of shipping terms by outlining exactly who is obligated to take control, pay costs or passing of risk of loss or damage at a particular point in the shipping process.
The INCOTERMS were created by the ICC and regulate the rights and obligations of buyers and sellers in international commodity handling.
The incoterms are international rules for structuring a particular group of contractual clauses that are used in commercial agreements. Incoterms identify the physical point in the supply chain where risk of loss or damage passes from the seller to buyer.
It also determines the point in the supply chain where responsibility for transportation and customs related costs shift from the seller to buyer. Finally, incoterms identify specific functional responsibilities between the seller and buyer related to the delivery of goods. In general it shows and regulates: * The division of costs * Point at which risk passes from seller to buyer * Delivering and taking delivery of goods * Proof of delivery , transport documents or equivalent electronic message * When merchants conclude a contract for purchase and sale of goods, they are entitled to freely negotiate the special terms with regard to price, quantity, properties, etc., as well as carriage, risks and surrender of the goods. Businesses involved in exports, however, are frequently faced with different interpretations of identical formula and national commercial practices. To counteract the resulting imponderables, the parties to the contract can use what are known as Incoterms©, which offer a range of international rules for interpreting the main forms of contract used. Specifically, the Incoterm agreed by the parties determines which party is liable for the respective costs in the transport chain, for loading and unloading the goods and Customs clearance