![Incoterms® 2020 – 7 key changes you need to know [update]](https://www.tradefinanceglobal.com/wp-content/uploads/2019/10/incoterms-2020-key-changes-to-the-rules.jpg "Incoterms® 2020 – 7 key changes you need to know [update]")
Estimated reading time: 3 minutes
Updated every 10 years, ICC Incoterms 2020 rules define the responsibilities of buyers and sellers for the delivery of goods under sales contracts.
They are the authoritative rules for determining how costs and risks are allocated to the parties.
Lesley Batchelor, OBE, Institute of Export and International Trade
Mark Heath, Open Borders Direct
David Lowe, ICC Incoterms® 2020, Gowling WLG
Sandra Strong, Strong and Herd LLP
Jon Walden, Crown Agents
Incoterms rules are all about the delivery, which is reflective of the key changes in Incoterms® 2020.
There are very few court cases on the interpretation of Incoterms rules, rather, the problems that normally arise are due to the wrong use of an Incoterms rule.
Buyers and sellers using the right Incoterms rules are often set up well, therefore it’s essential for businesses to fully understand the risks and delivery associated with each incoterms rule.
That’s not all folks! We’ve got two more points worth mentioning when it comes to Incoterms 2020!
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.
3 tips on how to use Incoterms correctly:
- Choose the right rule
- Specify the place / port precisely
- Incorporate them into the contract as well as the LC and invoice
Special thanks to Bob Ronai for his amends on this article. Read his e-book here.
We have an Incoterms 2020 Podcast for you, brought to you by the ICC United Kingdom
Incoterms – All you need to know
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.
