What is 'effective date' in Incoterms?

Despite an ‘effective’ date of 1 January 2020, there is still no obligation to use Incoterms 2020. As long as both parties agree and clearly state so, they can use any set of Incoterms that they want - even the original Incoterms 1936 if they really want to (although we do not recommend this!). So what does 'effective 1 January 2020’ actually mean? If you haven’t made it clear in your contract which Incoterms version to refer to, or have a flexible contract which states that when the contract is effective, the latest Incoterms® rules apply, then the 2020 rules will apply in these circumstances. That said, it’s estimated that the Incoterms 2020 rules might take 1-2 years for the market to adopt.

The Incoterms are a series of pre-defined commercial terms designed to help prevent confusion in foreign trade contracts by clarifying the obligations of buyers and sellers. While they are in heavy use today, their origin dates back to the early 20th century.

Incoterms® 2020 - 7 key changes you need to know [update] - Trade Finance Global

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Incoterms® 2020 – 7 key changes you need to know [update]

By Bob Ronai

Bob’s background in exporting and importing stretches over more than 50 years, initially in international banking then in the world of international commerce.

Last updated on 22 Aug 2024

15 Oct 2019 3 min reading time

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